Tag Archives: Finance

2015 Election: Financial Policies of the Major Parties

The three main parties and a host of minor ones are now battling for votes as next month’s general election approaches – an election which has been called one of the hardest to predict in many years. They have very different policies on many important issues, so the election results could have a significant impact on many aspects of the UK. Perhaps one of the main ways that the election result could affect everyday life for the average UK household is through their policies on financial matters such as taxation.

Labour, the Conservatives and the Liberal Democrats have always decidedly dominated election results, and are widely considered the three main parties. These three key players in the UK political scene have the following policies on matters of finance:

Labour

Labour’s big plans for the UK economy as a whole involve reducing the UK’s levels of national debt “as soon as possible” and bringing about a situation of budgetary surplus. In order to keep the national debt in check and ultimately bring it down, they would cease new borrowing for government spending. They also plan to lead a campaign against tax avoidance, with UK overseas territories that refuse to cooperate with these efforts threatened with a place on an international blacklist.

Regarding the issues that more directly affect the average household, Labour plans to bring back the 10p bottom tax rate, which would result in an income tax break for 24 million UK citizens. The party would drop the Married Couples’ Tax Allowance in order to fund this. They would also introduce the much-talked-about concept of “mansion tax,” levied on properties worth more than £2 million, raising an estimated £1.2 billion. Furthermore, Labour would bring back the top 50 rate of income tax for those earning more than £150,000 annually, tax bankers’ bonuses and cut every government minister’s pay by 5%.

Conservatives

The Tories hope to get rid of the UK’s deficit by 2018, and by 2019/2020 they hope to follow this with an overall surplus in the budget. Their plan is to bring this about through cuts in spending rather than through new or increased taxes.  NHS spending would not be in line for cuts. Rather, the Conservatives plan to increase health spending.

By 2020, the Tories hope to cut income tax for 30 million UK citizens. The personal allowance would be raised to £12,500 a year, and the 40p top rate of tax would take effect from £50,000 a year rather than the current level of £41,900.

Liberal Democrats

The Lib Dems plan to get rid of the deficit by April 2018 through “strict new fiscal rules.” Like Labour, the Liberal Democrats plan to bring in a “mansion tax,” which would operate in bands much like council tax.  UK banks would be subject to an extra 8% corporation tax rate, raising £1 billion a year to help get rid of the deficit.

The Lib Dems plan to raise the personal allowance to £11,000 in April of next year, and bring it to £12,500 by 2020. They would raise capital gains tax to 35%, from the current rate of 28%.

Survey Says UK Families are Positive About Future Finances

Financial information company Markit noted that its Household Finance Index (HFI) has reached a higher level in three years. This means that UK citizens are more positive about their household finances since the year 2010.

The HFI’s index, which hit 40.8 in June, signifies a very high number but because it is still below 50, many people found a decline in the standards of living. Anything above 50 is a sign of improvement.

Job security expectations have also improved in the next few years, but many still expect the economy and their financial situations to get worse. Workplace activity indexes fell from 53.3 to 52.8 in June, indicating people are less confident about job security. However, being above 50 in its fifth month indicates people expect more jobs to be stable and only concerns about finances are left.

Analysts said that the labour market condition’s improvement helped increase upturn in household financial expectations in June. Workplace activity had reached very high levels, indicating a decrease in job insecurities.

However, the UK remains having a high unemployment rate, significantly affecting those in the younger age group. The OECD warned that the younger generation spend more time out of work, spending 2.3 years unemployed, because they lack the skills or requirements needed for many occupations.

Retirement Investments: Knowing Your Framework as an Investor

Creating your investor portfolio properly is very important as it ensures your financial capability and helps you gain finances, even when you’re already retired. Retirement investing is a relaxing activity depending on which kind of investor you may be. Whether you are a reactive or systematic investor, you could do well in the stock market. Knowing your framework first determines the kind of investor you can be.

Objective

Retirement investment helps you earn more money while having economy giants work for it. However, you need to know your objective while you are investing in the stock market. Are you there for increasing your profit? Or are you there just so you could earn enough for your yearly needs aside from pension? Your objective clarifies the type of investor you could be.

The Reactive Investor: Profit-Oriented

If you want to increase the amount you earn every day and you are clearly affected by economical movements on a daily basis, you might be a reactive investor. A reactive investor is one who adjusts his or her own portfolio based on every economic movement available. For example, an investor might invest into gold and bonds when inflation in a country occurs. They may also purchase defensive stocks and bonds when the economy begins to collapse. Spontaneity is everywhere for a reactive investor, but it is equally important that they listen advisers to ensure their success.

The Systematic Investor: Stability and Balance

If you are only looking to have a stable income and just worry about recovering from losses, you might be a systematic investor. A systematic investor, through trial and error or advice from experts, can make a good portfolio with a good set of bonds and stocks that would help them gain enough profit and losses at a stable rate. If one seems to balance the other out, the systematic investor will only buy and sell stocks to re-adjust their financing. Their profits don’t grow, but it doesn’t grow less either.

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How General Economy Affects Your Budgets

Budgets are often made based on economic factors that arise in different areas and times of every country or the world itself. Without a consideration for economy, budgets can instantly fail. Economy involves the supply and demand, the prices of products and services and the ability to predict the future prices of products and services, which would greatly be helpful in determining the next financial step in the future.

Economy deals with supply and demand. When a country’s industry sector is strong, there can be a surplus of items. Surplus, by definition, are excess items that would be sold at a lower price to be rid of, regardless of initial costs as it is doing well in exportation or local sales. Clearly, the lower price is because of the lacking demand for the items or services. The higher price of items can be due to the demand while having a lacking production of the products and services.

Knowing these basic principles, you can determine that the items you can purchase today and the services you enjoy today can rise or fall depending on the outlook of the product or service’s original country. In making your budget, take into consideration the economic outlook; if the prices will go up or go down, then decide purchasing items based on quality and quantity.

Quality and quantity are two different things. High-demand products that are deemed “needs” by the public are usually mass-produced and have lower quality. High quality items that are also needs are essential depending on their price and the future “demand” for them, especially if their manufacturers are limiting the supply in the near future.

General economy, even the oil industry, affects everything including your budget. Oil affects the prices of sending goods; when the oil prices are high, chances are the items you receive get higher prices as well.

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For Which People is Car Leasing Advisable?

Every country nowadays offers you a chance to lease a vehicle and it’s quite a good opportunity for people as it can save them from having to deal with future car problems. However, who can actually make good use of vehicles aside from avoiding mileage issues and re-sale values in the future? Take a look.

Cars are built per model and new models come in per year. A car blogger or someone who writes about cars can use leasing to their advantage. Leasing usually brings one a vehicle every 3-4 years. A good in-depth writing about a vehicle will take such average time to get to know the car better and at least point out some of its issues. A writer may opt to lease a second hand vehicle, which would be useful for pointing out future issues of the vehicles without costing them so much money in the process.

Vehicle owners who want to change their cars on a frequent basis can also take advantage of car leasing. Having only to pay for mileage and decreasing car value can be advantageous especially if you love leasing luxury cars or other “show” cars. For once in your life at least, you could have said that you’ve owned a Ferrari, a Mercedes-Benz and Camry and leasing makes that possible.

People who often get more mileage for their vehicles than the intended amount they can only make use of due to daily use for work and errands may have an advantage with car leasing. If they consume more mileage than they should, chances are they’ll be spending less with car leasing. Remember, in leasing, you only pay for the mileage and depreciating value of the vehicle. If you owned the car and racked up the mileage, you’ll be facing problems within the 3-4 years time you own the vehicle.

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The First Signs of PPI Mis Selling

While many have blamed banking incentive systems for the mis selling of PPI on almost every loan, mortgage and credit card in the UK, the main solution to the problem is if customers can become as vigilant as they are with their financial advisers. Customers need to watch out for “bonus chasers”, financial advisers who only merit customers with high rated products to increase their personal commission. Here are a few ways to know if you’re being ripped off and tips how to avoid it.

1. Your Actual Needs

If you’re getting financing, you know what you need it for and how much you need to spend. You depend on financial advisers to help you make your monthly repayments more flexible for your budget. However, if they’re telling you that you’ll need additional loans that are secured to lower your rates or an insurance policy to ensure that you have some time to financially recover as it is a high-risk and unsecured loan, assess the situation carefully first.

2. Your Financial Stature

Always make it a point to review your financial status before you purchase anything that your financial adviser recommends to you. If you find that you have a good and stable economic situation, then proceed to reviewing if you really need the insurance product. If not, carefully review and explain to your financial adviser your particular financial situation in depth. Many people making payment protection insurance claims today are victims of trusting their financial advisers and lacking knowledge about their own personal assets.

3. Know More About Your Financial Adviser

Not all financial advisers are trustworthy. It all depends on how they earn their money. Commission-based financial advisers are well-known “bonus chasers”, who would risk a fair deal with customers just to earn more from their commissions. A fixed-rate financial advisers would practice fair dealing with customers and pay more heed to smaller details. However, ensuring that the financial adviser is never commission based is top priority to know if you’re making a fair deal.

How The Libor Scandal Exactly Affects You

One of the hottest topics in international banking nowadays is the Libor scandal committed by the biggest international banks found in the United Kingdom. Last August, U.S. regulators have fined several high-street UK banks for alleged adjustments of the Libor rates for greater return of investments. It might seem that Libor only affects the bigger banks. If you understand how it works, no matter in which country you live in, you can be affected.

The Libor or London Interbank Offered Rates, is a published average of interest rates that banks can charge each other as they borrow money from one day to a year. It is actually the price of money for international banks. It dictates the retail cost of borrowing for credit cards, mortgages and loans worldwide. Creditors usually use the Libor rates to adjust depending on the market and environment their establishment is located to help them gain enough profit.

With almost every loan, mortgage and credit card set on Libor standards, customers worldwide may be getting less than they ought to get. It affects more than just large business investments; it actually affects simple credit card rates, student loans and home mortgages.

Huge banks such as Barclays and RBS from the United Kingdom were fined around $500 million dollars by regulators for “rate-rigging” the Libor rates for their company’s personal interests.

In reality, Libor may actually have had you to pay the same fee and get more in return. Take note that Libor does not only extend to personal transactions; they also border government transactions. Taxpayer money actually got some financial deals that involved “rate-rigged” Libor worldwide.

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Martin Wheatley Calls for Extensive Reforms in Banking Incentives for PPI Claims

Martin Wheatley calls forward reforms and new banking incentives systems as they play a huge factor in the mis selling of payment protection insurance or PPI. Financial advisers, brokers and bank representatives have mis sold PPI on the context of earning more profit through the incentives system, which fueled the “greedy” attitude of professionals deviating from their true, professional advice.

Financial Services Authority Managing Director Wheatley claims that the incentives system is based on a profitable bonuses system, which enable financial advisers to earn larger cuts from more expensive products. The bonuses motivate many to disregard customer need and instead force them to purchase products that they don’t necessarily need or may over-fund the current situation. PPI is mostly included with these products.

PPI or payment protection insurance is designed to cover loan repayments when customers become sick or have an accident. Disabled to provide income, the PPI pays for the loan to ensure no outstanding debt exists for customers. But because of the exclusions in the policy unknown to most customers, the insurance policy became useless to many customers.

Customers actually paid thousands to tens of thousands of pounds for the insurance policy prescribed or concealed by the financial adviser as part of the financial package. This made the product one of the greatest financial scandals in the United Kingdom.

Banks such as Lloyds, Barclays and HSBC have provisioned a £9 million compensation package for the entire United Kingdom. To date, half the amount has been given back to customers.

Claims handling companies such as www.PPIClaimCo.org continue their efforts to help customers get back the money they deserve. Customers are advised to seek professional help from claims experts before filing their own claim to ensure their success.

Using Credit Cards Effectively and Properly

Credit cards are like weapons. They can be used to your advantage or used against you. Properly using them is the key to financial stability. Here are a few things you should remember when using your credit cards.

1. Keep Tabs

A card holder should know their credit limits as soon as they have their card. However, because they only know the credit limit of their card, chances are they’ll only know they’ve used up their cards as soon as it is maxed out. When making advances with your card, keep tabs on your purchases. This helps you have a good bird’s-eye-view of your card usage.

2. Make Small Purchases

When using a credit card, don’t settle for paying the minimum fee per month. It is better to make small purchases that you could repay in the next month. Not only does this improve your credit score, but it helps you save more money.

3. Use Only When Necessary

Credit cards should be used on things you need, not the things you want. To implement the number 2 tip effectively, use your card for purchasing groceries, getting financing for new appliances and other things that are necessary for your home or financing improvement.

4. Avoid Delayed Repayments

The best tip to provide to card holders is to pay their total amount of advances in full and on time. Late repayments can wound up becoming problems for most card holders. This means penalty fees and high interest rates as well.

5. Only Spend on One Financing

Credit cards allow you to finance products through payment plans. However, it is important that you take care of only one financing. Take things slowly when making advances. Don’t try to overwhelm your financial capabilities as well.

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Disability Living Allowance: Making an Effective Claim

A Disability Living Allowance (DLA) is a benefit provided by most countries and governments for disabled children or adults to aid them with additional expenses caused by their physical incapability. If someone in the family has a physical or mental disability and these individuals require help in doing basic functions, you can make them a claim for DLA. Here’s a comprehensive guide.

1. Finding a Claim Form

Most DLA forms are available from most local benefit offices in your area. You can ask local charity groups and local government units to find the local benefit offices. Remember that you only have 6 weeks to return the form from the date you requested the form.  For the United Kingdom,  The Guardian has a unique and easier way to make a DLA application that serves as your form for application.

2. Filing the Claim Form

The DLA claim form might be quite intimidating, but it is really quite simple. First, be sure to know why you are filling in the form. You can ask the help of other people who have requested a form. Also, since you have 6 weeks to return the form, you can keep a diary of the problems and the care you provide for the individual and indicate these in the form. Be sure that you have a backup copy of the form as well.

3. The Mobility Component

Most DLA claim forms have this item. Ask yourself or the person you are applying for the following questions:

-Distance the person can walk before they are in extreme discomfort, need rest, reasons for stopping.

-How long they need to rest before continuing

-How they feel while walking

-How long it takes to cover the distance

-What aids they use in walking

4. Care Component

The DLA form’s care component asks you about details regarding how external aid from another person can make things easier for you or the person you’re applying for perform basic tasks, such as getting out of bed, showering, eating, what they feel when they wake up or during a specific time of the day, if they find trouble clothing themselves and other details.

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