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MONEY MATTERS

China Risk

Steve Dodge thinks back.

They say nostalgia is a thing of the past but I was just sitting here thinking how different the reaction to the “China” crisis has been compared to nearly 30 years ago when the Independent Financial Advice Centre started out in Billericay.

I have no idea what the current situation will be when you read this item but we have been through several major market falls since we were established and client’s reactions to them have changed considerably.

On my desk is a model of a Dodge Viper, an American sporty car, given to me by a client following his first year or so of investing his money with us. It was a turbulent time, markets were moving down rapidly and every time there was a major headline quoting how much value had been “wiped off” the FTSE 100 he would phone me and ask if he should sell.

I always gave him the same explanation, which was that his money was invested for the long term, his 25 years or more in retirement not just for a few weeks or days. After many calls, (I must confess my patience was wearing a little thin,) I suggested he should take advantage of low market prices to invest a little more, buy cheap sell dear is an old market adage. I cannot print his reply.

That crisis came to a halt and the market recovered rapidly so I phoned him and told him the market was considerably up. “I know” he said “why are you calling me?” “You call me when it goes down” I replied “so I thought I would reciprocate!” The model car was both a thank you and an apology. He is still a client and a very happy one at that.

We used to get lots of similar calls in those days but this time it is noticeable that virtually no-one has phoned with similar concerns about the recent falls in values, to the contrary I have had several people ask to invest a little more.

Investing is about time, spread (don’t have all your eggs in one basket) and not following the herd. Markets rise and fall but 250 million people in Europe will pay their gas, electricity and water bills and spend money on their health so virtually no matter what happens those companies will still make profit and create dividends (income).

Please remember most IFAs have been through several market collapses, and those clients that hold their nerve in difficult times and invest a little more are the ones who reap the highest rewards without taking excessive risk.

If you are concerned do speak to your IFA to ensure you have a properly constructed and balanced portfolio which should see you through hard times.
For further details call 01277 630873


It may not be romantic, but...

The Office for National Statistics (ONS) tells us that cohabiting couples are on the increase.  From 1996 to 2012 the number of people choosing to live together rather than marry almost doubled and it’s a trend that’s continuing to rise.  The ONS confirms that this is now the fastest growing type of family in the UK.

What few people realise, however, in the excitement of planning their future, is that should they and their partner split, they could be in for an acrimonious financial mess as well as a broken heart. 

There’s no denying that a cohabitation agreement is less than romantic but it is something that everyone should consider before moving in together.  Lots of relationships stand the test of time but it is wise to be cautious.  Statistics go unrecorded for the number of cohabiting couples who split, but the ONS quotes the current divorce rates in the UK at 42% - and it would be reasonable to assume that couples who live together have a similar rate of relationship breakdown.

So what exactly is a cohabitation agreement and how much will it cost?  A cohabitation agreement is a legal document that sets out what each party brings to the relationship, and how the assets of the relationship might be divided in the event of a split.  Although not legally binding in the UK, courts are often willing to uphold these agreements so long as the provisions are fair and both parties entered into the agreement having had the benefit of advice and knowledge of the other person’s assets. 

Fees for drawing up an agreement are around 1,000.  That may seem a lot of money but it pales into insignificance against the possibility of losing a chunk of equity that you amassed in a property before your partner came on the scene. 

Sam Ellis, a specialist family law solicitor, says: “I have watched couples lose out financially because they didn’t take the precaution of a legal document that states how assets will be divided up should the relationship end.  A legal agreement drawn up when you are in love, rather than when you are at war, is much easier to broker and, in the long run, could save you a great deal of money should the unthinkable happen.”

To find out more call Samantha Ellis at Birkett Long LLP on 01206 217345 or email samantha.ellis@birkettlong.co.uk