Savings and Investments thread

RaplhMilne said:

Whilst I think I know a fair bit in general about pensions, I’m not so sure about the GMP element of a DB scheme. However, I’m sure we have that knowledge on here ?

I have been in receipt of my Lloyds Bank pension for 4 years, I am 65 in September an get my state pension at 66. I currently receive an annual RPI increase on my whole pension each April.

However, my pension doc says this with Regard to GMP

On or after my birthday in September 2022 (age 65) the scheme will pay increases on the GMP built up after the 5th April 1988 of £1954.68 in line with price inflation up to 3% or CPI which ever is lower.  No increases will be paid on GMP built up before April 6th 1988.

I am not sure what this means, does this mean that £1954.68 of my pension will no longer be raised by RPI MAX 5% but by CPI MAX 3% ?

Having dealt with a couple of GMP examples for friends. They have received increases in pension at 65, where backed dated annual increases to GMP is applied on their 65th birthday. Should I expect an increase in my pension due to this ?

Hope somebody can help. Thanks

WishIdStayedinthePub said:

Can't believe I'm the fifth most pessimistic of the group.  I sincerely hope (most of) you are right but I'm very worried about China and a Euro crisis.  Hopefully that's just my confirmation bias ****ing with me.

Stu_of_Kunming said:

WishIdStayedinthePub said:

kentaddick said:

Siv_in_Norfolk said:

WishIdStayedinthePub said:

Can't believe I'm the fifth most pessimistic of the group.  I sincerely hope (most of) you are right but I'm very worried about China and a Euro crisis.  Hopefully that's just my confirmation bias ****ing with me.

What about China are you concerned about?

the fact they're deploying tanks to stop people going on a bank run, that one of their largest property developers defaulted at the beginning of the year and their property market is stalling. Something really dodgy is going on.

Thanks @kentaddick, this is what I'm concerned about.  They are also using the health app to stop deposit holders travelling to protest that they can't get to their money.  Construction industry suppliers are defaulting on mortgage payments because property companies aren't settling their bills (and not just Evergrande).  

China unravelling has been a long time coming.  Massive misallocation of capital from central planning on a scale never seen before.  And I think it will come in a big bang as they have the ability to control information and market behaviours for a long time before they can't contain it.  Together with their Zero Covid policy, lots of people are unhappy with the government right now, which is a good excuse for a war to distract them.  There are all sorts of rumours that there's a move to oust Xi before he is confirmed life-time leader in October.

As for the European banking market - that was never cleaned up, unlike here and in the States and so many of their banks are technically insolvent.  The reason it's never been cleaned up is the merry go round with government debt.  Rising interest rates will blow that right open.  The Euro is already struggling to retain parity with the dollar.  That could be very ugly all by itself. 

October is certainly going to be very interesting and could see a huge shift with various policies.

Zero covid seems to come and go and far too much power is given to local officials which just leads to uncertainty and little idea of what’s happening from place to place. 

Almost all of the banking issues seems to be with ‘rural banks’ and giving loans for infrastructure projects is some seriously odd areas. 

As for Taiwan, I honestly can’t see that happening, sanctions would be one final nail in the coffin and the decision makers must be aware of how brutal that would be, much easier just to talk about it as a distraction without ever actually doing anything. 

PragueAddick said:

WishIdStayedinthePub said:

PragueAddick said:

WishIdStayedinthePub said:

kentaddick said:

Siv_in_Norfolk said:

WishIdStayedinthePub said:

Can't believe I'm the fifth most pessimistic of the group.  I sincerely hope (most of) you are right but I'm very worried about China and a Euro crisis.  Hopefully that's just my confirmation bias ****ing with me.

What about China are you concerned about?

the fact they're deploying tanks to stop people going on a bank run, that one of their largest property developers defaulted at the beginning of the year and their property market is stalling. Something really dodgy is going on.

Thanks @kentaddick, this is what I'm concerned about.  They are also using the health app to stop deposit holders travelling to protest that they can't get to their money.  Construction industry suppliers are defaulting on mortgage payments because property companies aren't settling their bills (and not just Evergrande).  

China unravelling has been a long time coming.  Massive misallocation of capital from central planning on a scale never seen before.  And I think it will come in a big bang as they have the ability to control information and market behaviours for a long time before they can't contain it.  Together with their Zero Covid policy, lots of people are unhappy with the government right now, which is a good excuse for a war to distract them.  There are all sorts of rumours that there's a move to oust Xi before he is confirmed life-time leader in October.

As for the European banking market - that was never cleaned up, unlike here and in the States and so many of their banks are technically insolvent.  The reason it's never been cleaned up is the merry go round with government debt.  Rising interest rates will blow that right open.  The Euro is already struggling to retain parity with the dollar.  That could be very ugly all by itself. 

A very well informed post, as always, which i read carefully. However I do respectfully take issue with the anti-Euro stance. 
The Czech Republic where I live, and have to hold cash,  is not in the Eurozone. Its little brother Slovakia, economically similar structure but an undeveloped eastern region, is. Do please compare the inflation rate of the two countries.There is nothing particularly significant about parity with the dollar. The eurozone doesnt collapse if it falls to 99 cents, and the performance against the dollar is mirrored by that of sterling's. Whatever the Czech koruna does against the euro, it does against sterling, and I don't enjoy it right now as I have liquid assets mainly in sterling.

I well remember Uk based "analysts" in 2008 predicting the end of the euro by the end of that year. Well, here we are, 14 years later. And the new generation of "analysts" are at it again it seems. "Avoid Europe" they say. While easing themselves into their Merc or Beemer. Plus ca change...

I did warn there was confirmation bias in there!  Unless it becomes a proper currency I do believe the Euro is (eventually!) doomed.  

You are quite right that parity means nothing in itself, but is the direction of travel saying, 'The FED is doing the right thing, and the BOE and, particularly the ECB, are late to the party.'  Credit spreads on government debt are rising again in the usual suspects, notably Italy.  The ECB will struggle to control this without causing serious damage.  The EU also has bad form - remember it tried to ban sovereign credit default swaps at the height of the Euro crisis, which was a blatant attempt to cover up government debt issues?  Note that there was a brief rally in EURUSD on Thursday after the 50bp rise and then immediately dropped again.  EURGBP looks set to decline ...

I have no idea why Slovakia's inflation is lower than Czech's.  Given the latter controls its own currency, it should be able to control its economy better - local central bank competence and politics, like the UK?

The upshot of all this, is I'm very wary of autumn but am really struggling to think what the best investment strategy is.  A lot of 'stuff' coming to a head in October: energy rises, China politics, a tricky earnings and forecast quarter, more interest rate rises and possible company failures/redundancies.  Good things could happen: eg some sudden resolution in the war, equities show that they can maintain pricing power, supply-induced inflation drops.  

My industry (Private Equity) is seeing this as a sensible valuation correction and looking to deploy again next year.  They're also having no trouble raising new money.  But they are also managing existing 'assets' hard to retain returns, which will mean redundancies.  The small companies I am personally invested/involved in are also having no trouble raising investment, albeit at 'sensible' valuations of 25 times earnings, not the mental 55-65 of last year.  But the two that are involved in lending are seeing rising delinquency and quite a bit of fraud.

My current view is: hold plenty of cash, only invest in companies that have low debt and generate cash and be patient about going into commodities and real assets, as I think there will be a flush to pay off margin calls when the market falls again. But maybe I'm being too pessimistic and will miss out on another ramp!

Hi mate

This won't be of interest to anyone else (and probably not to you either) but at the moment CZ has a bank rate of 7.25%, and Poland is I think not far off it. Both have much higher inflation rates than Slovakia. In the case of CZ the central bank has been very determined to keep a "strong and stable" rate against the Euro. High inflation here (17%) is quite connected to  the labour shortage (which pre-dates even the pandemic, and even the 70,000 Ukrainian refugees who have officially found jobs has not dented it). I don't want to make too much of all that, beyond saying that right now Slovakia is quite smug about being in the eurozone. On the other hand the Baltic states are also in the zone and have much higher inflation rates.

My comment was perhaps more triggered by @golfaddick reporting that the "professionals" advised "Avoid Europe". That's typical City talk which I've heard for the last 30 years. Europe? All 27 EU countries plus Switzerland and Norway? Give me a break. My best performing asset this year is a stock (I started buying a few in search of income). One was Danish pharma Novo Nordisk. I only knew them because they became a client in the final year before I closed my biz. They specialise in diabetes treatments and have a dominant position in the sector. Working with them was much like the positive experience I had with other Scandi companies ; you could see the long-term thinking and lack of hubris. a few weeks ago, though, they announced positive results of a clinical trial for..an anti-obesity drug. Yet in doing so they admitted they were still unsure exactly how it works. You wouldn't get GSK or Pfizer coming out with that. Anyway I am up 20% on my holding which I've built up in the last few months. Yesterday I listened to Thorsten Bell in a podcast explaining that the poorest sector of French society has 20% more income than the equivalent sector in the UK, and that the UK investment levels are rapidly falling behind the rest of the G7. Just titbits, but perhaps some of the City boys just need to up their European stock-picking, rather than trashing the richest continent on the planet.

PragueAddick said:

bobmunro said:

PragueAddick said:

WishIdStayedinthePub said:

PragueAddick said:

WishIdStayedinthePub said:

kentaddick said:

Siv_in_Norfolk said:

WishIdStayedinthePub said:

Can't believe I'm the fifth most pessimistic of the group.  I sincerely hope (most of) you are right but I'm very worried about China and a Euro crisis.  Hopefully that's just my confirmation bias ****ing with me.

What about China are you concerned about?

the fact they're deploying tanks to stop people going on a bank run, that one of their largest property developers defaulted at the beginning of the year and their property market is stalling. Something really dodgy is going on.

Thanks @kentaddick, this is what I'm concerned about.  They are also using the health app to stop deposit holders travelling to protest that they can't get to their money.  Construction industry suppliers are defaulting on mortgage payments because property companies aren't settling their bills (and not just Evergrande).  

China unravelling has been a long time coming.  Massive misallocation of capital from central planning on a scale never seen before.  And I think it will come in a big bang as they have the ability to control information and market behaviours for a long time before they can't contain it.  Together with their Zero Covid policy, lots of people are unhappy with the government right now, which is a good excuse for a war to distract them.  There are all sorts of rumours that there's a move to oust Xi before he is confirmed life-time leader in October.

As for the European banking market - that was never cleaned up, unlike here and in the States and so many of their banks are technically insolvent.  The reason it's never been cleaned up is the merry go round with government debt.  Rising interest rates will blow that right open.  The Euro is already struggling to retain parity with the dollar.  That could be very ugly all by itself. 

A very well informed post, as always, which i read carefully. However I do respectfully take issue with the anti-Euro stance. 
The Czech Republic where I live, and have to hold cash,  is not in the Eurozone. Its little brother Slovakia, economically similar structure but an undeveloped eastern region, is. Do please compare the inflation rate of the two countries.There is nothing particularly significant about parity with the dollar. The eurozone doesnt collapse if it falls to 99 cents, and the performance against the dollar is mirrored by that of sterling's. Whatever the Czech koruna does against the euro, it does against sterling, and I don't enjoy it right now as I have liquid assets mainly in sterling.

I well remember Uk based "analysts" in 2008 predicting the end of the euro by the end of that year. Well, here we are, 14 years later. And the new generation of "analysts" are at it again it seems. "Avoid Europe" they say. While easing themselves into their Merc or Beemer. Plus ca change...

I did warn there was confirmation bias in there!  Unless it becomes a proper currency I do believe the Euro is (eventually!) doomed.  

You are quite right that parity means nothing in itself, but is the direction of travel saying, 'The FED is doing the right thing, and the BOE and, particularly the ECB, are late to the party.'  Credit spreads on government debt are rising again in the usual suspects, notably Italy.  The ECB will struggle to control this without causing serious damage.  The EU also has bad form - remember it tried to ban sovereign credit default swaps at the height of the Euro crisis, which was a blatant attempt to cover up government debt issues?  Note that there was a brief rally in EURUSD on Thursday after the 50bp rise and then immediately dropped again.  EURGBP looks set to decline ...

I have no idea why Slovakia's inflation is lower than Czech's.  Given the latter controls its own currency, it should be able to control its economy better - local central bank competence and politics, like the UK?

The upshot of all this, is I'm very wary of autumn but am really struggling to think what the best investment strategy is.  A lot of 'stuff' coming to a head in October: energy rises, China politics, a tricky earnings and forecast quarter, more interest rate rises and possible company failures/redundancies.  Good things could happen: eg some sudden resolution in the war, equities show that they can maintain pricing power, supply-induced inflation drops.  

My industry (Private Equity) is seeing this as a sensible valuation correction and looking to deploy again next year.  They're also having no trouble raising new money.  But they are also managing existing 'assets' hard to retain returns, which will mean redundancies.  The small companies I am personally invested/involved in are also having no trouble raising investment, albeit at 'sensible' valuations of 25 times earnings, not the mental 55-65 of last year.  But the two that are involved in lending are seeing rising delinquency and quite a bit of fraud.

My current view is: hold plenty of cash, only invest in companies that have low debt and generate cash and be patient about going into commodities and real assets, as I think there will be a flush to pay off margin calls when the market falls again. But maybe I'm being too pessimistic and will miss out on another ramp!

Hi mate

This won't be of interest to anyone else (and probably not to you either) but at the moment CZ has a bank rate of 7.25%, and Poland is I think not far off it. Both have much higher inflation rates than Slovakia. In the case of CZ the central bank has been very determined to keep a "strong and stable" rate against the Euro. High inflation here (17%) is quite connected to  the labour shortage (which pre-dates even the pandemic, and even the 70,000 Ukrainian refugees who have officially found jobs has not dented it). I don't want to make too much of all that, beyond saying that right now Slovakia is quite smug about being in the eurozone. On the other hand the Baltic states are also in the zone and have much higher inflation rates.

My comment was perhaps more triggered by @golfaddick reporting that the "professionals" advised "Avoid Europe". That's typical City talk which I've heard for the last 30 years. Europe? All 27 EU countries plus Switzerland and Norway? Give me a break. My best performing asset this year is a stock (I started buying a few in search of income). One was Danish pharma Novo Nordisk. I only knew them because they became a client in the final year before I closed my biz. They specialise in diabetes treatments and have a dominant position in the sector. Working with them was much like the positive experience I had with other Scandi companies ; you could see the long-term thinking and lack of hubris. a few weeks ago, though, they announced positive results of a clinical trial for..an anti-obesity drug. Yet in doing so they admitted they were still unsure exactly how it works. You wouldn't get GSK or Pfizer coming out with that. Anyway I am up 20% on my holding which I've built up in the last few months. Yesterday I listened to Thorsten Bell in a podcast explaining that the poorest sector of French society has 20% more income than the equivalent sector in the UK, and that the UK investment levels are rapidly falling behind the rest of the G7. Just titbits, but perhaps some of the City boys just need to up their European stock-picking, rather than trashing the richest continent on the planet.

One can always quote particular stocks of European companies doing well or bucking the trend. That doesn't disprove any assertion that Europe as a whole should be avoided. 

That's not a biased opinion as I don't really have one - I'm holding most of my assets as cash at the moment having divested my interests in the markets a couple of years ago, so very little skin in the game now. 

Of course @bobmunro your point in the first  para is correct. I expected someone to make that point. The points made by Thorsten Bell in this BBC4 Analysis podcast are more substantial and backed up by facts which, perhaps unsurprisingly, I haven't heard emanating from mainstream British media. Not that I have much time for the "Sick Man of Europe" tag because that would be to fall into the same lazy rhetoric as Golfie's analysts, many of whom I suspect were in nappies when Germany briefly wore that tag. I'm not particularly pro European markets, either. Of course many of them will head into recession. But so will the UK. I'm mainly in cash too, although I have a portfolio to build, recommended by our resident IFA. It's main goal is income and a solid base for a senior citizen, and I think Golfie has done a very good job with the brief. It does have a European fund in it, possibly in an attempt to shut me up. That went well.