How to save a £1 million pension
A seven-figure pot would give you an income of about £40,000 a year. Lily Russell-Jones finds out how to hit the target
4%? On a pension?
Whut?
Annuity rates are about 6.5% aren’t they?
4% is assuming you’re not eating your capital. Hell, make the assumption you’ll live 20 years (to 85) and you can eat £50k of capital a year entirely ignoring income from the pot.
I know we’ve pensions experts around here. But 4% looks like an insane assumption.
Hunts have been banned from taking card payments by a major financial services firm in the latest example of de-banking.
SumUp, a card reader provider, has included “hunting clubs/activities” on its list of “restricted businesses” alongside “illegal or legally questionable businesses and products”, escort services and fortune tellers.
A number of hunts have had their machines switched off during fundraising events, potentially losing thousands of pounds, The Telegraph can reveal.
Companies linked to shooting are also targeted as “guns, firearms, airsoft guns, munitions sale and distribution” are on the blacklist.
Card readers are used to take payments at events and the move means the hunts are unable to accept credit or debit cards from their customers.
Couple of questions – is this normal among such firms? So, are all hunts gun clubs, being unbanked?
Secondly, how many customers does such an intermediary need? I would imagine that the software, readers, all that, is a “company in a box” style arrangement.
So, if some few hundred makes a business, why not have a go at it? If it’s a few tens of thousands then that would be more difficult.
Anyone actually know the nuts and bolts here?
Of course, this is also how Wirecard started out (with sex sites) but I know how that scam worked so once we’re up and running we can make a fortune. For a bit.
Last week, Lewis was forcibly shoved into the limelight he has long sought to avoid. On Tuesday night, the US attorney for the Southern District of New York, Damian Williams, released a statement revealing that his office had indicted the businessman for allegedly “orchestrating a brazen insider trading scheme”.
To prove this they’ve got to prove he had insider information. Take the Oz cattle company. If the CEO called him up, as an investor, to say “The cows have dronwed” and he traded then that’s inside information. If he looked at the weather, saw where the land holdings were, assumed that Daisy was hooves up in the river and traded then that’s not inside information, that’s being well informed.
Insider trading does involve a breach of fiduciary duty after all…..
Think it was Megan McArdle where I first saw this idea, decades back. The thing about the internet is that we all thought it was just us. But the ease of communication means we can find out that no, it’s more common than that. And so what is indeed still a small minority can find out that they’re part of a group when totted up nationwide. And thus there’s social and political power:
‘Help me to help you’
He believes the full scale of de-banking has only just come to light because most victims “don’t say anything to anyone”. “They are embarrassed, they are humiliated. And they fear that, if they speak out in any way at all, it will damage their credit rating for the future. And there is strong evidence that’s true.”The de-banking phenomenon, he thinks, has been driven by “complete overkill” in the application of anti-money laundering and “politically exposed person” directives, along with a creeping politicisation of banks.
Mr Farage claimed the latter issue is endemic throughout corporate culture, saying: “It has run through the public and private sectors at the most extraordinary speed, accelerated particularly by the Black Lives Matter movement.”
Taxpayers face a bill for an extra £50bn to cover losses on the Bank of England’s money printing, after stubborn inflation triggered frenzied bets on higher interest rates.
The Bank’s latest estimate of losses it will suffer over the next decade on government bonds amassed during the pandemic and financial crisis has ballooned by around £50bn to £270bn in just three months.
…
The loss also dwarfs the £123.8bn in QE profits sent to the Treasury between 2009 and 2022, suggesting a net cost to the taxpayer of £150bn by 2033.
Printing money to spend it wasn’t free then, was it?
Ministers are considering the benefits of Dutch-style, long-term fixed mortgages for first-time buyers who are struggling to afford shorter-term fixes which are stressed at higher rates.
Floaters are cheaper at any given level of interest rates. With, of course, the problem that the rate might change. Fixed is more expensive at any given interest rate – with, of course, the benefit that the rate won’t change.
But that difference in cost isn’t going to go away just because some Minister wants it to. Floaters are cheaper and riskier.
This is even before we get to what happens next – who carries the risk of refinancing when rates decline?
Of course, it’s possible, sure it is. But it ain’t easy.
You know, that deposit rates haven’t risen like lending rates thing?
From Lloyds 2006:
The banking net interest margin decreased by 6 basis points to 2.78 per cent. Much of this margin decline has been caused by the impact of
lower earnings on the Group’s capital and other interest-free liabilities and, excluding this funding impact, the margin was broadly stable year
on year. The banking net interest margin in the second half of 2005 actually increased by 5 basis points to 2.80 per cent, compared with
2.75 per cent in the first half of 2005.
From memory that net margin’s about 2.83 at present.
So, things have returned to normal after 15 years of suppression then.
Shrug.
The BBC double-checked whether a “senior source” at NatWest was happy for it to publish private information about Nigel Farage’s finances, The Telegraph can reveal.
Deborah Turness, the chief executive of BBC News, said the corporation was directly given the go-ahead to run a controversial story about the closure of his Coutts account.
The piece ran claims from “people familiar with the matter” that the former UK Independence Party leader was removed as a customer because he had fallen below the bank’s wealth threshold.
Privacy rules are a thing, no? And that the CEO sat next to the BBC reporter who broke the story the night before at a dinner gives us something of a clue as to who loses their job too.
But willing to make a deal here. Jail the entire board of the Post Office, 2000 AD to today, and we’ll say no more about it.
Goldman Sachs’ former recruitment chief has accused it of creating a “culture of bullying” that caused staff to “sob” through meetings and led to him having a mental breakdown.
Ian Dodd, who left the bank in 2021, claimed that Goldman employees frequently “express distress” by crying and that “sobbing through meetings” was common behaviour, according to documents filed in the High Court.
Mr Dodd also alleged that there was a “culture of bullying” at Goldman and that comments such as “take that as your first punch in the face” or references to staff members receiving a “slap” or “punch” were condoned.
There are many investment banks out there. Each with their own specific culture. This on, GS, has long been known for being vile. Well, don’t work there then. Some folk like intense competition. Others don’t. So, have different institutions each with their own culture and allow folk to choose which one to work at……
Longer-term fixes in the US are possible through a different mortgage funding model to the UK, where home loans are propped up by current accounts and short-term fixed rate deposits.
Christian Hilber, a university professor at the London School of Economics, said: “In the US, they sell their mortgages to Fannie Mae and Freddie Mac [firms which guarantee most of America’s mortgages]. They then bundle these mortgages and sell the risk to investors. This allows them to spread the risk.”
The system has its flaws, of course. During the 2007 financial crisis, the subprime market collapsed and lending froze. This was exacerbated by lax regulation, much like in the UK, which had allowed lenders to issue mortgages based on shaky affordability.
But Professor Hilber said it does enable US borrowers to lock in fixed interest rates for a very long time. The professor added: “The UK market is diametrically different, with the typical mortgage being a two-year fixed – a teaser rate – before you roll on to a variable one.
“This means that in the UK, many more borrowers are exposed much more to interest rate risks. So, many more lower and middle income households will face difficulties paying their mortgages, and will experience hardship as a consequence.
“It is an additional consideration the Bank of England needs to take into account, making combating inflation even harder.”
They’ve missed that that different modeal meant both Fannie and Freddie going resoundingly bust.
It’s also not true that floating rates make dealing with inflation more difficult. It makes it easier. More people are exposed to changed interest rates more quickly. Therefore addressing inflation by changing interst rates is easier.
Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), will say in a speech today that the dominance of big tech combined with a boom in AI could pose “significant risks to market functioning”.
“What does it mean for competition if Big Tech firms have access to unique and comprehensive data sets such as browsing data, biometrics, and social media?,” he is expected to say to an audience at the Economist Impact Finance Transformed event.
He will suggest that such access will enable big tech companies to predict consumer behaviour around the world with greater accuracy than any financial institution.
The idea that people can predict consumer behaviour is a problem because?
The real problem here is that some tosser who doesn’t grasp this is actually in a position of bureaucratic power.
A little something I noticed elsewhere about PTT Exploration stock:
PTT Exploration and Production (OTCPK: PEXNY) (SET: PTTEP) stock has jumped 400% on the OTC. PEXNY stock also seems to have absolutely no reason for doing so. We can see no news or announcements out there. Sure, that could be an issue with our skill at looking for them. But we think not at least. Quite the most confusing aspect here is that the underlying stock in Thailand seems not to have changed. Certainly, not to anything like the same extent.
If the price of one instrument has changed, but not of the other, then there’s an arbitrage there, right? The price difference is large, liquidity low.
Boris Johnson’s brother-in-law claims he was blocked from using currency exchange abroad because of his political links.
Ivo Dawnay, who is married to the former Prime Minister’s younger sister Rachel, said he was told by an official at the bureau de change in the baggage hall of Mexico City airport he could not use the service owing to his status.
Writing in The Spectator Mr Dawnay said that while attempting to exchange $200 he was asked to fill out several forms, one of which asked him if he was a “politically exposed person”, otherwise known as a PEP.
A PEP is someone who “through their prominent position or influence, is more susceptible to being involved in bribery or corruption,” according to Lexis Nexis risk solutions.
The 70-year-old journalist said that the cashier’s machine prompted the form asking him if he was classified as politically exposed after scanning his passport.
The actual and correct response here is to cancel the entire set of regulations about who may bank. Yep, sure, that will indeed mean that POutin’s buddies get to use the City of London. But better that than the bureaucracy having the power to bad anyone involved in politics at all from the use of the financial system.
Because, of course, we know that at some point those in favour of political nefarity are going to gain power (choose whom according to your own paranoia) and we really don;t want *those* bastards to have this power over us. Therefore don’t let anyone have this power.
Better to allow fraud and corruption than to have a system that anyone can – and will – be cleansed from.
Water cooler conversations are in danger of becoming a thing of the past after the digital bank Monzo scrapped its office drinks dispensers as part of a net zero drive.
Bosses removed the coolers from Monzo’s London office to cut its carbon emissions, in a move that could be copied by other companies around the country.
Not so much the action – tho’ if they’re buying green leccie why bother? – it’s the idea that a corporation has senior management worrying about such trivia. Sell Monzo therefore…..
Telegraph, today:
But the lawsuit is the latest setback for Hipgnosis, which has come under scrutiny for the way it values its song catalogue amid rising interest rates and in November was forced to secure a new $700m revolving credit facility after maxing out its previous $600m debt package.
The company’s market value has plunged to below £1bn – less than half the £2.2bn price tag it places on its portfolio – leaving it unable to buy any more songs.
Rising interest rates damage – even if not quite destroy – the Hipgnosis offering.
Here’s Worstall in Jan 2021.
The reason being that I don’t see much, if any, capital appreciation over time in the values of those songbooks. Quite the opposite in fact, they’re a depreciating asset. That’s fine, there’s still that margin to be made from the different time horizons of the parties involved. Songwriters in their 60s have a different time value of money from investors putting money in now to invest for the next 20 or 30 years. That’s what the economic – as opposed to business – play really is here.
But the flip side of that is that the income from Hipgnosis is going to remain at about what it is. Currently, the yield is around 4%, which is perfectly acceptable in today’s market. But while that is inflation protected – to a degree, royalties will rise with inflation, even if with a lag – it’s not going to rise if interest rates in general rise. That is, the real valuation of Hipgnosis here is as with an inflation protected bond.
My supposition is that the general interest rate environment is going to rise in the coming years. Certainly, we’re at the end of the long bull market for bonds. I would insist that QE and money printing are going to lead – over an indeterminate horizon – to a rise in the real interest rate. Exactly the thing which Hipgnosis leaves us exposed to. It offers protection against a rise in nominal rates, but not real.
Further, because it’s equity, it will price like a perpetual bond. That means, the capital loss from a rise in interest rates will be greater than would happen to a time limited bond of the same interest rate/risk profile.
It’s locking in a yield when I expect interest rates to be rising. That doesn’t sound like a clever deal to me.
Ho well.
Wings Over Scotland, then Nigel, but more?
The decision comes after other Right-wing figures including Richard Tice, the leader of Reform UK, and Toby Young, who established the Free Speech Union, said their accounts had been closed or restricted.
Seriously?
Hmm. There’s bank in a box software these days. Could be 100% reserve because you get 4.5% off the BoE these days. A purely transactional bank.
The problem would be finding someone viable to hold a banking licence. And if the folk affected aren’t viable to hold a bank account then…..
For a decade and more I’ve been saying that QE was fine until. It’s the until that matters.
The money equation is MV=PQ, this is definitional. The amount of money, times the number of times we use money, equals the price of things we use money for times the number of times we use money for things. It’s not possible to argue with that.
So, if V falls dramatically we can have lots more M without having P rising. Indeed, wed might actually want to engineer that in order not to have deflation and thus a depression.
OK, So we print lots more M and go spend it, happy days. But that all works until V turns. And only until V turns. Once it does, and MV starts rising, then we get the inflation.
M can also be thought of (not wholly accurately, but well enough) as base money, M0, MV as broad money, or M3, maybe M4.
By popular demand (Sid and Doris B.), here’s an update of an favourite, relating UK broad money growth and #inflation… 👇
(It’s not working as well now as I would like, but was only ever meant to be ‘illustrative’ 😉) pic.twitter.com/D4mShoRKKW
— Julian Jessop (@julianHjessop) June 25, 2023
Hmm, OK. And yes, I know this is from the US but the UK will be roughly the same, in directions at least. V has been recovering.
The thing I’ve been telling you all these years was true. Expanaind ghe money supply, QE, doesn;t cause inflation while V is falling. But once V starts rising again you’ve got to sell those bonds back into the market – reverse QE – so as to kill off the increase in M and thus the inflation.
This description isn’t right but it is useful.
Now let’s recast this RC365 Holding idea. RCGH is being paid some £1.5 million to write a wealth management app for an £8 million a year turnover company. It’s also just an upgrade to the extant product. This collaboration, this contract, has added £80 million to the market capitalisation of RC365 Holdings in London? No, we do not believe that this is a rational reaction, nor do we believe it’s a justified one on the substance of the deal.
Sadly, this is not an easy thing to go short on……
The head of investment giant Schroders has warned against meddling after Labour unveiled interventionist plans to dictate how pension funds invest £50bn.
Chief executive Peter Harrison says that retirement scheme managers must not be inhibited in selecting investments amid a wider backlash over the unintended consequences of restricting investment decision-making.
Writing in The Telegraph (below), Mr Harrison said that “we need a change in our whole investment culture” if Britain is not to fall further behind on the global stage.
He added: “We need to ensure their pension managers are not inhibited in selecting these investments on their behalf.”
It comes after the think tank the Tony Blair Institute on Monday called for thousands of UK retirement schemes to be merged into just half a dozen £400bn superfunds to turbocharge investment in businesses and infrastructure.
Labour MP Rachel Reeves, the shadow chancellor, has also backed proposals to create a £50bn “future growth fund”, with every defined contribution pension fund forced to divert 5pc of their assets into it.
Why not change the incentives to invest – say, restore the dividend tax relief – and just watch the money flood in?