Poor returns on cash

  • by Graham Bond
  • 10 May, 2017

A dilemma for savers

A recent report from one of the UK’s investment providers makes gloomy ready, especially if you have held large amounts of cash deposits for the last few years. This year marks seven years of the Bank of England Interest rates at 0.5%. The report confirms that over this period the average return on cash Isa’s was just 1% p.a.

The analysis of average annual cash ISA rates shows an average cash ISA saver has received just 6.8% over the seven-year period since interest rates were cut by the Bank of England.

Even though inflation is currently low the report reveals that in four of the last seven years Cash Isa savers have lost money in real terms as the return they have received has been less than the rate of inflation.

The report shows someone who has used their full allowance into the average cash Isa investment would have saved £24,911 since March 2009 and seen it grow to £26,272. The gain of £1,729, a 6.8% return before inflation.

Annual average cash ISA rates have at the highest point been up to 2.8% and have been as low as 1.4%. Inflation on the other hand has ranged between 4.48% and as low as 0.04%. In 2010, through to 2013 inflation was higher than average cash ISA rates.

Although inflation is expected to increase over the next few years, that does not mean to say the returns on cash will improve.

Investors need to be aware if we have a few more years of low inflation and low returns on cash then they could be faced with a whole decade whereby the total return on cash is less than inflation over the same period. A question I would always ask savers is whether they want the return on their investments and pensions to at least keep up with the rate of inflation. If the answer is yes, then it might be worth discussing the issue with your financial advisor.

Alternatively you can look at the   moneyfacts   site to find the best rates

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by Graham Bond 25 May, 2017

Personal Finance Portal (PFP) has evolved and can now give you access to your entire financial portfolio including all short, medium and long-term savings and investment information in one place 24/7 – anywhere, on any mobile or web device. It features redesigned screens and layouts which makes it much easier for you to use. There’s even a dedicated mobile phone app for iPhone and Android users coming soon.

As well as the great functionality you currently enjoy with PFP, you can also now get:

Additional access to PFP Premium

PFP Premium is an additional service that enables you to collate information on your short-term finances like bank account(s), credit cards, loans and mortgages together your advised products, giving you powerful insight into your total net worth. Plus, you’ll also be able to receive alerts and insights into spending and saving habits so you can keep track on how you’re progressing against the goals you’ve set. Why not give it a try?

Of course you can still view your fund information and financial portfolio at the click of a button. So whether you’re looking for an up-to-date valuation of your portfolio, want to assess how you’re progressing against your goals or simply wish to get in touch, PFP has it covered.

Secure messaging between us and you

With email and post increasingly open to being intercepted, we treat the security of the data you share with us with utmost importance. PFP provides you with a secure messaging service, so you can quickly get in touch with us and have the peace of mind of knowing that any information you share is encrypted and completely private.

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If you are not already using the PFP facility and would like to please contact us.

by Graham Bond 25 May, 2017

Capital Gains tax on shares and investments. When you sell shares, you will either make a profit or a loss. Profits made are classed as a capital gain.

There are some exemptions where capital gains tax (CGT) is not liable:

  • Individual savings accounts (Isa’s)
  • Venture Capital Trusts
  • Enterprise Investment schemes
  • Gifts to Charity
  • Government Securities
  • Corporate Bonds of a qualifying status
  • Transfers of shares between spouses or partners in a civil partnership
  • betting, lottery or pools winnings

Apart from the exemptions, sales or disposal of the shares will normally be classed as a potential capital gain.

Each person has an allowance each year they can use to reduce the amount of CGT they might pay. If your total gains for the tax year are below the “annual exempt allowance” you will not have to pay any tax.

If your gains are over the allowance then tax would be due on the balance. It might also be possible to offset any losses from previous tax years. If you do not use your annual exempt allowance for CGT in a tax year, then you lose it and you cannot carry it forward to another year. The CGT tax rate payable will depend on your total income and any gains made for the tax year in question.

The government changed the way Capital Gains were taxed from April 2015. The amount of tax due will depend whether you are a basic or higher rate taxpayer.

by Graham Bond 23 May, 2017

If you sell a property, you might have to pay tax. This tax is called capital gains tax. The amount you might have to pay will depend on the amount of profit you make.

If the property you are considering selling is your main residence then you would normally be entitled to “Principle private residence relief”. This relief normally allows you to you to sell your home without incurring capital gains tax (CGT).

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