Fans of Queen and those with a basic understanding of the markets, might find the attached link amusing http://www.ecademy.com/node.php?id=101373 especially if you put on the music Bohemian Rhapsody.

This arrives just before I think about the 4 weeks since I have last been to tango so Easter Sunday finds me back at Wessex Hall in St John’s Hill, Clapham Junction. Alan’s wonderful mix of old, new and traditional tango, milongas and waltzes keeps me on my feet most of the time but as always, there is something new. Compatibility as opposed to ability never ceases to fascinate me at dancing, and Sunday is no exception. With some ladies, improvisation comes very easily, one hardly puts a foot wrong and one could easily spend more time with them than the usual turn of 3 dances – for some tango/salsa etiquette see http://www.georgeemsden.co.uk/?p=33 In an afternoon, there will typically be 3 or 4 outstanding or memorable ones and the first few seconds with a new partner normally shows how the rest of them will go. Being told by one new lady that my leading is good enough for her to relax and practically go to sleep while I am taking her round the dance floor, really makes my day.

Near my office in Shoreditch, the local school has sold off their small playing field and a new development is going up http://www.bezierlondon.com/ but one wonders how many Olympic athletes will be missed here. Odd when we have the 2012 Olympics to look forward to and our cyclists seem to be doing well at the World Indoor Championships http://www.worldtrackcycling.com/ Bussing schoolchildren to a new playfield seems a strange way to reduce carbon footprints and stuff.

It also makes me wonder how much good the new hybrid cars actually do. Do the miles per gallon figures allow for the extra petrol consumed lugging two hundred weight of batteries around all the time? Has anyone calculated for example, how much energy and resources manufacturing, transporting and installing all these extra gadgets cost??

A review meeting with a client gives a welcome break to the daily doom and gloom when he tells me that his bespoke suits are now given as a perk to buyers of a new Bentley – ladies get a nice handbag apparently www.terencetrout.net

In my usual rounds of meeting other professionals, comes a case where the client has recently died apparently intestate, overseas and with assets in the UK and elsewhere. Can we help? In a classic example of why I prefer to remain a generalist rather than a specialist financial adviser, the two obvious points to clarify are: what is the situation regarding domicile? and is there a valid will? If there is a will, it can be rewritten if necessary under a Deed of Variation but the domicile issue is crucial from a tax point of view. More generally, further information is needed about the estate and potential beneficiaries. Once this is received, we can give a written estimate of the work involved and no fees will be payable by the client until Terms of Business etc are signed.

The week finishes off with a fascinating 10 minute presentation at my Friday morning networking group http://www.brxnet.co.uk/bondstreet/index.html where £300 million of second-round funding is being sought for a world-wide group of indoor SCUBA diving centres. Here one will be able to swim in water of say, 26 degrees Celsius rather than 4 degrees, swim with real fish, do the training and everything else. The BRX Bond Street Group itself goes from strength to strength with other people wanting to transfer from other groups which is fine as long as there is no clash of disciplines.

Among my search phrases that turn up in my web stats are: how long does it take for life insurance to be paid out in UK? Answer, usually week or two after all paperwork has been sent to insurer. Sometimes people just can’t cope with the forms and this is often the cause of delay. But if the policy has not been put in trust (see last week’s blog) then you will have to wait for probate.

Lady pension calculator? Female life expectancy is about 4 years longer than males in the UK (although the difference here is slowly decreasing) so females get a lower annuity rate from an insurance company as they will receive it for longer. http://www.pensioncalculator.org.uk/ Most people start saving too late and with too little for a decent pension.

Is my foreign property safe from UK creditors? Probably not but it depends on where the property is.

Investing in Gambing? An oxymoron if ever there was one, unless you are going to open a casino perhaps.

Checking your horoscope before investing? Sounds like fun and if passive investing is to be the new fashion, see http://www.georgeemsden.co.uk/?p=105 then it may be just as useful. And I’m an Aries!

Have a lucky weekend.

Five noisy jays flying past my window on Maundy Thursday morning remind me of the old nursery rhyme which starts as above and continues…three for a girl, four for a boy, five for silver….. But in current investment markets few people feel like doing anything to get to the next bit…six for gold. We all like to think that we are logical, intelligent, rational etc but in times like the present, we are just as emotional and illogical as any herd of animals. People are reluctant to invest now when things look gloomy and when by some parameters shares are cheap. But we will happily wait until the Stock Market i.e. the same investments, are maybe 50 per cent higher and put our hard-earned money in then or often finally get in just before the bubble bursts. Other IFAs tell me that some clients are putting off investing as things might get worse but I have yet to see any investment pundit who ever got the bottom of the market right.

Sadly, one man who did get the bottom of the market was our dear Prime Minister Gordon who sold off half the UK’s gold reserves at US$ 275 an ounce a few years ago. The price has been climbing steadily ever since and is now over US$1,000 an ounce. In a classic example, of people getting in at the top of a market, another IFA tells me of a client who wants to buy gold for their ISA.

If you believe what you read in the Press, the gloom in the housing market gets worse by the day and as a perfect example, a friend who was top salesman in a firm of central London estate agents and did far more business than the director/owners, has been laid off. But in a sign of the times, he wisely took an employment solicitor along to his final meeting with them, as there is lot of commission from his deals still in the pipeline. I look forward to seeing him opening his own firm in the not too distant future.

At the same time, another property investor tells me of an auction property which needed a lot of work and had a guide price of around £500,000 which went for nearly £800,000. They also point out that there do not seem to be so many make money from property programmes on television these days. But there are still plenty of people offering courses for this at several thousand pounds a time.

In any event, living standards are set to fall over the next few years partly because of economic recession or depression (take your pick) and of course, higher taxation which does not bode well for the housing market. Home Information Packs costing several hundred pounds could not have been introduced at a worse time. With lenders now running scared (stricter lending criteria) on one hand and without access to cheap or even reasonable money on the other hand, the volume of property sales is set to drop drastically. The most amusing example of this is one part of Docklands where I am told there are more estate agents offices than properties for sale.

On a more cheerful note, some colleagues take a day off to visit Portsmouth to see H M S Victory http://www.hms-victory.com/ If you have ever wondered where phrases like: taking something with a pinch of salt, being on the fiddle and slush fund originate, the guided tour will explain.

Just when I have forgotten my exotic diet in Thailand http://www.georgeemsden.co.uk/?p=116 Alex in the Daily Telegraph on 12th March 2008 reminds me http://www.telegraph.co.uk/money/Alex/pAlexTemplate.jhtml;jsessionid=1JFJITRVUWZUTQFIQMFCFFWAVCBQYIV0?pTitle=Alex.Telegraph but the fried bees or wasps larvae will have to wait for my next visit to Thailand.

Financial Journalist Lorna Burke pitches in to the pensions debate with a call to end compulsory annuities http://www.citywire.co.uk/personal/-/news/money-property-and-tax/content.aspx?ID=299210 With the rate of return available from pension annuities similar to the rate from income funds, many people feel that they are a rip-off. Anyone who is offered say 6 per cent for their pension fund where they give the capital away to an insurance company but can earn the same amount with a portfolio of low-risk investments and keep their capital is bound to feel a bit aggrieved.

Unsurprisingly, in2 Consulting has done a lot of this type of business over the years. Where clients for example, have perhaps sold their businesses and who now have a serious amount of cash, want a better return than available from cash deposits but without the volatility associated with shares, a portfolio of dull and boring funds which chug away at around 7 per cent a year, is quite attractive. I also know of IFAs who no longer sell pensions for retirement planning and in a memorable quote, one said to me, Annuities are Theft!

For a change, I will finish on a sporting note and anyone with an interest in football who feels that the millions going into The Beautiful Game have rather spoiled things, maybe interested in this review http://www.telegraph.co.uk/sport/main.jhtml?xml=/sport/2008/02/21/sobook121.xml

A Happy Eastertide to you all.

Sunday finds me round the corner from my former residence at Mill Hill for a Barnet Symphony Orchestra concert http://www.barnetsymphony.org.uk/sponsors.html where two of my daughters are playing French Horn and Trumpet. First piece in what turns out to be a very enjoyable evening, is La Petite Symphonie by a French composer I have never heard of called Charles Gounod http://www.8notes.com/biographies/gounod.asp . His best known work is Faust so during an amusing introduction to this rare piece, the conductor relates how one of the oboe players mentioned that their part was well … a bit dull. Turns out this was deliberate as when writing it, the oboe player was having a fling with Gounod’s better half and this was a small way of getting back at him.

Non-stop news about the credit crunch reminds me of one surprise from revising for my mortgage qualifications sometime ago. The word foreclosure is often used when a lender takes possession of a secured property when things have gone pear-shaped but this process is no longer used in this country. When people cannot keep up their mortgage payments and the arrears go beyond 6 months, a lender may apply for possession of the property under the terms of the mortgage deed – hence the warning YOUR HOME IS AT RISK etc. But after the sale, any surplus is returned to the borrower. If this were done via foreclosure proceedings the borrower would get nothing. Where the liabilities exceed the assets, any distinction here is probably academic but courts these days are unlikely to allow creditors to use foreclosure proceedings with the last case I have been told about dating from 1955. Collectors of trivia might wish to remember that this is called poynding the ground north of the border in Scotland.

Still on the cheerful subject if money, it is the tax season and I am doing the rounds of accountants who have recovered from sending out an avalanche of tax returns in January and are now looking at tax saving ideas before 5th April. At one meeting before the Budget, http://www.bradburystell.co.uk/ we end up speculating if this will turn out to be the second longest suicide note ever written echoing Gerald Kaufman’s famous comment about the Labour Party’s disastrous 1983 manifesto.

The Budget really does smack of desperation and has examples of unintended effect. For example, about 1.8 million of the poorest people will be worse off with Gordon Brown’s tax changes and sometimes paying higher marginal rates of tax than millionaires. As a classic disincentive to work or perhaps not declare earnings, the rate applied to tax credits when they are clawed back has been increased when people are on benefits and start earning over the fantastic sum of £6,420 a year http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/13/cccowie113.xml

Looking at my viewer stats, I note that someone asked “Does an Agreement in Principle (AIP) mean I will definitely get a mortgage?” Definitely get a mortgage offer? No. Even if you have a mortgage offer, the lender can withdraw it and quite a few have been doing this recently. Some mortgage offers even state this explicitly “This offer is not legally binding until the funds have been drawn”. But an AIP is still worth doing as checking if a borrower is good for the money is what usually takes most time and where people sometimes lose out if they are in a race against another buyer. Checking out the property is done by means of an independent survey and can sometimes be done very quickly.

Another question asks “Is life insurance part of someone’s estate if they die?” The answer here is Yes. Since the value of the policy proceeds might increase the liability for Inheritance Tax, a simple way round this is to put the policy in trust. The guy who sold the policy should be able to do this but if not, any IFA ought to be able to arrange it. Putting a policy in trust also means that the proceeds can be paid out more quickly i.e. without waiting for Probate.

Walking through Smithfield and thinking of the Budget reminds me of a hidden gem which ought to be of interest to my many American readers should they visit London. Benjamin Franklin famously said “Nothing in this life is certain save death and taxes” and in his autobiography, mentions his residence in a City Street called Little Britain (nothing to do with the BBC TV comedy series) where he had his printing press. This street is still there but the former location of his old press is now apparently in the Lady Chapel of the church of St Bartholomew the Great next to Bart’s Hospital, which some may recognise from the film Four Weddings and a Funeral.

Still on funerals, Friday finds me west of London in Bracknell for a workshop on seminars with Phil Calvert of Calvert Media. http://www.ecademy.com/account.php?id=53930 Making one’s business different from the hundreds of others doing the same thing is important and he gives a very memorable example in the story of Motorcycle Funerals. This was started by a vicar apparently and its sidecar hearse won the Hearse of the Year Award in 2003 http://www.motorcyclefunerals.com/

Finally, as part of my wish to stay out of a hearse for as long as possible and keep in shape, I finally get round to booking a place with Bev Breeze an established Shiatsu practitioner who practises in the Wren Clinic http://www.wrenclinic.freeuk.com/ in the curiously named Idol Lane in the City. When hearing the word Shiatsu, some wags ask if it is a small Chinese dog but it is rather a form of muscular therapy based on the Chinese medical philosophy that we have five main energy meridians. As expected, I feel much better afterwards but am given some amusing gyratory exercises to do before my return visit in 4 weeks. As one might guess, the Wren Clinic is situated in All Hallows, a ruined Christopher Wren church with a peace garden nearby – another one of London’s hidden gems.

Just to prove the old saying that One man’s meat is a another man’s poison and show where the property market shakeout is hitting now, my colleague reminds me of a recent enquiry where one man has bought 5 Buy To Let properties. These were offered at 15 per cent below market value or to use the new jargon BMV, as the owner was desperate to sell. The deal was financed by Bridging Finance with exchange of contracts and completion the same day. For one of my earliest blogs which covers this subject see http://www.georgeemsden.co.uk/?p=5 This short-term and expensive finance was then paid off the next day by a cheaper standard Buy To Let mortgage. A purchaser will only enter into such a deal if both loan agreements are in place. But since there are two lenders involved, and there is no contractual obligation to lend with either party much less an obligation of one lender to lend if the other one does, there is always the opportunity for someone to change their mind (Sod’s Law) after say, some catastrophic event during the day but then maybe, I am just being too nervous.

Midweek finds me back in the doctor’s chair with my pension surgeries and everyone who does not sign up to the employer’s pension scheme then, at least takes the forms away with them. One guy who was able to join years ago declined to do so as his employers went bust in 1988 and he has had no joy from the previous broker or administrators of the scheme. It might be a candidate for the Pension Protection Fund http://www.pensionprotectionfund.org.uk/ but without any correspondence I cannot do much. I tell him to bring it next month’s meeting. What is really worrying here is that he has missed out on 20 years of pension contributions plus the growth they would have had.

Just to keep me cheered up, an emotive article by Keith Robertson Risk and Reward published in the PFS magazine Financial Solutions rubbishes nearly all risk assessment methods used by many IFAs. The basis here is that one’s attitude to risk is dynamic rather than static which presumably means that this would have to be assessed regularly – rather like visiting the psychiatrist every year or whatever. Much of what he says makes sense but sadly he offers no solution. For the moment, we will have to show a proper process as to why we chose a particular solution and fund, imperfect though it may be.

In my experience, clients do not always know what investment approach is best for them and the mistake most make is in being too cautious – which is why they often end up talking to an IFA. As Henry Ford famously said, if you had asked people what they wanted in the late nineteenth century, they would have probably have said faster horses rather than motorcars. In one sense, Keith Robertson completely misses the point, as the vast majority of people I see about pensions do not save anywhere near enough. If the fund is too small at retirement and underfunded from outset, the fact that it should (with hindsight, of course) have been invested in a more adventurous, more cautious or different type of fund is largely academic.

One statistic here that pops up in a national newspaper is that you need to save 10 per cent of your income from age 20 to get half of your income at age 65. If everyone suddenly did this though, the economy would go into a nosedive. No one would have any money for leisure activities for example, and many businesses related to this sector would close. Anyone feeling brave and who has read their horoscope, might wish to check their own life expectancy here and see how long (on average) they will have to survive on a small pension http://www.gad.gov.uk/Demography_Data/Life_Tables/Interim_life_tables.asp

On a masonic note, being in the chair of a lodge means a lot of invites and I am invited as a guest again on Tuesday. The master of this lodge actually lives in New York and flies over for the 4 meetings in London each year, learning the ritual on the 6 hour flight from New York. Everyone is glad to see him as he has missed the previous two meetings. 6 months ago, just as he was going through passport control at New York, it was pointed out to him that he could leave but would be unable to return as his visa was not the kind he thought he had. As his family and business are all in New York, he decided to return home. Now his US citizenship has come through, he no longer has this problem and will shortly be moving to Texas.

Returning to the opening theme, the changes in Capital Gains Tax have created panic and opportunity. For example, people who were going to pay 40 per cent tax and who will now only have to pay 18 per cent are happy, whereas others who held business assets and would only have paid 10 per cent tax are up in arms at the 80 per cent increase. In a simple example of tax arbitrage, people who have recently paid 40 per cent capital gains tax can defer this bill for 3 years by making the appropriate kind of investment. After this they can settle it at the lower rate of 18 per cent. Should work a treat, as long as someone doesn’t move the goal posts……..