According to the Sunday Express, last Sunday was National Grandparents’ Day – and as the article points out, there is much to be grateful for, especially as grandparents are helping out financially more and more, including through equity release. Gifting money is one way of handing over an inheritance early, which can mean a reduction in Inheritance Tax – but grandparents need to make sure that they have enough to last themselves for the rest of their lives.
Equity release is in the press again – this time it’s with the good news that with more competition in the sector, interest rates are falling, which could tempt more older homeowners into the market. And new providers have helped to boost the choice of plans. But there are many factors that need to be taken into consideration before ploughing ahead and choosing a regulated provider is a key one.
The Daily Telegraph last Saturday reminded us that interest rates have been below inflation for much of the last decade since the financial crisis – at a huge cost to savers, in particular pensioners’ income. The article explains that over the last 10 years inflation has been averaging 2.70%, so over that period, assuming a small amount of interest, savers would have lost £1,920 for every £10,000 deposited. It goes on to explain how much £10,000 would have grown to, had it been invested in other asset classes. Of course, it’s always easy to be clever with the benefit of hindsight, but if you hold cash that you think should be elsewhere and you need advice to decide where to place it, contact us and we’ll point you in the direction of someone who can help - explaining just what other risks you may be taking on.
The Times covered the ongoing confusion about the Help to Buy ISA and when exactly the bonus is available. It appears that, as the bonus is not released until completion, first time buyers are have a problem when putting down their deposit. Yet another reason why the similar Lifetime ISA is a better choice for many. The amount that can be saved is greater, the purchase price of the property is £450,000 regardless of whether it’s in London or outside, the bonus is added to the account the month after each deposit, so that savers can benefit from compound interest on the lot and it is available at the deposit stage. The main problem with the LISA is that you have to hold the account for 12 months before it can be accessed, so no good if you are just about to buy somewhere and there are only two cash LISAs available. Check out our Lifetime ISA or Help to Buy factsheet for more information.
Staying on the subject of ISAs, The Mail on Sunday published an ISA special. It’s been 19 years since the ISA replaced PEPs and TESSAs. There’s not much about the cash ISA as it’s really focused on how to make the most of the stocks and shares version – but there are some interesting tips for those who might not be looking to use their ISA allowance for cash.
Looking to more economic articles, apparently US job figures have shown the lowest jobless rate since 1969 – which would indicate that further interest rate rises could be on the cards. Last month, the Federal Reserve increased short-term interest rates for the eight time since 2015, to a range of 2% to 2.25%
Last weekend I visited the Clarks Village outlet shopping centre in Street, Somerset and did my part for the economy. And it was pretty busy. But apparently the high street is suffering – perhaps because of places like Clarks Village. According to Ipsos Retail Performance, footfall on the high street is down 8.1% for the first nine months of the year. Some of this was caused by the 'Beast of the East' at the beginning of the year, but ongoing economic uncertainly because of Brexit has also had an impact, as well as rising inflation.
However, there were also some positive figures about improved productivity which could lead to a meaningful improvement in living standards and an end to years of meagre real-pay growth. Productivity measures the efficiency of an economy – as the more a country can produce with the same resource, the higher it can raise wages without pushing up prices. The latest figures of 1.4% are still weak compared to the long-term average of 2% but they are better than the estimates by both the Bank of England and the Office for Budget Responsibility.
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