Friday, 29 March 2013

Don’t put ALL your eggs in ONE basket

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During the recent, and ongoing, CYPRUS BAILOUT, I was moved by the reaction of an elderly lady in Nicosia. She said that she was worried about losing all of her ‘life savings’ if anything happened to the Bank of Cyprus. After my immediate feelings I did wonder…..

Why do people put ALL of their savings with one bank? Is it that they know no better? Do they think banks are safe?

The EU bank guarantee scheme ‘protects’ funds in any one institution UP TO €100,000. Even with sums lower than this there is still a strong argument to spread your savings. In the event of a catastrophe, it could be weeks or even months before you can get your hands on YOUR OWN money!

In the last week, the Bank of England has announced that UK Banks need an ADDITIONAL £25 Billion in reserves to be certain that no more taxpayer bailouts are necessary.

It’s just an opinion but I have serious doubts about the security of Spanish banks. Assurances from politicians are certainly no comfort! Could Spain, Greece, Italy or Portugal follow the example of Cyprus and put a tax on savings? I’m not certain one way or the other.

So not only do I believe in spreading amongst banks, I also think that other institutions should be considered. In particular I would advise that everyone should first of all consider the difference between savings & investments.

Initially you might think there is no difference, but I’d like to suggest the following distinction

  • Savings are almost an unconscious decision to put money in a deposit account or even under the mattress! The historic view is that the money is ‘safe’. The Cyprus experience is evidence that the capital is NOT necessarily safe. In addition, in most of Europe it is the norm that interest rates are lower than the level of inflation.

So if the capital is NOT safe and the value is deteriorating through inflation, deposit accounts are RISKY NOT SAFE.

  • Investing is much more of a conscious decision to provide for a future event and usually over a longer period than savings. Traditionally, it has been thought that there is more RISK involved in investing, yet spreading your investment is an obvious strategy.

Some of the ways of spreading include investing in more than one currency and another is being in more than one ‘asset class’ such as Government Stocks, Property, Stockmarket investment and much more. Also remember than pension plans ARE investments.

I make no apologies for repeating my often repeated plea;

Get Professional Advice which is summarised in a previous post. There really is no alternative but who gives that advice is VITAL. Professional advisers must offer the following:

  • No upfront fees
  • Be fully regulated to give advice
  • Carry Professional Indemnity Insurance (just in case something goes wrong)
  • Give regular reviews of your investments (I recommend annually)

I can recommend professional advisers in both UK & Spain but will only refer them if I have satisfied myself that they meet MY CRITERIA, mentioned above. Please email me with brief details for a professional referral.

A professional adviser will discuss ALL of your options.

This post is of course generic and based on my personal experience, advice should only be given on a personal basis taking into account your own objectives and preferences.

David Goodall
Financial Pages in Spain

La Torre FX – Foreign Currency
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Tuesday, 26 March 2013

Getting Professional Advice

IMPORTANT : I never recommend advisers who charge up front fees

Follow Financial Pages in Spain

This is one of the major issues affecting British and Irish expats and property owners in Spain. On first view it may not look ‘major’ but I know from emails received that it certainly is, especially if things go wrong.

No trick question but where do think is the best place to seek advice?

  • Hearsay. The classic quote I hear so often is ‘I heard somewhere  ……’ What often follows is either wrong or out of date!

  • An unauthorised, non regulated and unqualified person or company who call themselves an ‘adviser’. Always ask about their qualifications.

  • A properly trained, fully qualified, authorised and regulated, individual or company who not only give you the best advice, but as part of their professionalism carry PI (professional indemnity) cover in case things go wrong.

Is there really a choice?

Why would you not use a professional? If you think that cost might be a problem, ask up front! I am playing my part in establishing why expats should always get PROFESSIONAL advice, whilst at the same time convincing professionals that their advice should represent VALUE FOR MONEY.

Apart from owning property in Spain for ten years and originally struggling to find professional advice, in the last year and a half through my Blog I have found many professionals. If you need advice, please email me.

My own connections included the following professionals;

  • Regulated financial advisers
  • Suitably qualified accountants
  • Professional lawyers
  • Chartered surveyors in Spain
  • Members of the Association of International Property Professionals (AIPP)
  • Company formation for property ownership specialists

If you email please let me know your question and where you live. I may be able to answer myself, just point you in the right direction or refer you to a suitably qualified person.

Never trust Unauthorised Advisers

I always recommended qualified and regulated advisers

Please remember that my Blog is about unbiased, factual financial information. You can look elsewhere for information but remember that an advert will certainly be biased towards the company who paid for it. I have no problem with that but remember it’s biased!

David Goodall
Financial Pages in Spain


 "I stumbled across David's blog one Sunday afternoon when looking for advice on living and working in Spain. 

Each post encouraged me to email him for advice, so I did. However, imagine my surprise when I got an answer a few hours later. Don't forget this is a Sunday! He's referred me to a specialist who sounds like she can help.

Thanks again David.

Al Elliott, Manchester, UK '