In this article I want to highlight a few newspaper articles that are closely related and affect the amount of money you can save and we get back the savings. The first news item concerns over inflation. Office for National Statistics (ONS) last month announced figures showing that inflation in the consumer price index rose 5.2% in September.
CPI is a basket of goods and services (such as food and utilities) that affect our household expenses. Final index was the highest year on year increase since the index was first measured in 1997.
Consumer Price Index (CPI), which is built slightly different basket of consumer goods, including city taxes and mortgage payments, as expected, was higher by 5.6% – the highest in over 20 years (June 1991).
Behind commented on the figure indicates that the overall inflation persuade the rising cost of transportation, housing and household goods, and food, which together accounted for more than half of all the inflation.
The second news is that despite inflationary pressures above expectations, as the UK economy is expected to slow growth and the impact of the Eurozone crisis continues to play out, the British bank’s Monetary Policy Committee supports economic stimulation (which is why we see the Bank injected a total of 75 billion pounds of quantitative easing in the economy) rather than raising interest rates to combat inflation. This means that the savings rate is likely to increase in the near future.
Now some “good” news. It will be a number of factors behind the rise in inflation – higher taxes, energy bills and food – to work their way equation for next year – the main expectation among commentators that inflation will begin to fall. When the effects of the VAT increase at a rate of 20% this year to leave the system should reduce inflation – even though we know nothing in the economic uncertainty and the many reasons why this view may be wrong.
The second good news is that of the rise in inflation. How is this good news? Just because as a result of the increase in CPI to 5.2%, the amount of money they can invest in a pack increase for FY 2012-2013. The limit is indexed to inflation for the first time in 2010. First RPI and from 2012 the limit will be increased according to the CPI, which is usually, but not always, under the RPI.
However, when inflation surged in September, the month Treasury managed to secure the ISA limit for the fiscal year 2015-2016 annual ISA allowance will increase from £ 600 to £ 10,680 up to £ 11,280.
This means that investors coming year is to put the whole £ 11,280 into stocks and shares ISA, or £ 5.640, half full cash ISA limit and a half in stocks and shares.
To make it easier for investors, the Treasury Department estimates the figure close to £ 12 section 120 is easy to help with the monthly savings plan – what to save £ 940 per month tax-efficient.
While it is useful to save and invest more in a tax efficient wrapper, as mentioned earlier, while inflation is eating purchasing power saver. While interest rates remain low saver hamper the ability to get above the rate of inflation unless they take a risk with your money. For example, only the amount of their capital to survive in real terms, the basic rate tax payers get more than 6.5% compared to the previous year, and of course, there is very little to pay deposits or close to half the value.
One way or another, in the current climate, which can suppress inflation means investment alternative investments as the market share. There is some risk involved in the stock market (or equity) investment, but careful planning and investment in a number of different fields and transport investment – that is what is recommended Lowes – can help reduce the negative impact of individual risks that may occur.
The most commonly used include active management of equity investment funds, where the fund manager aims to outperform the market by careful selection of stocks and shares, passive or tracker funds, where the funds have been in the company and look at the performance of the benchmark index, bond funds corporations investing in corporate debt and funds that invest in government bonds. Equity funds and debt funds are expected to behave in different ways in different market conditions, which may help to spread the risk in an investment portfolio.
Another way to spread risk is to use a different investment vehicle. One of the vehicles that will use structured products Lowes. In short it is an investment contract held by a certain time to tell you what you get back is based on the performance of the stock market when the contract expires. For example, the product can yield 55% after five years, provided that the FTSE 100 is at the same level or higher than the starting time of the investment. This would amount to an annual compound return of over 9% per year – well above the current inflation rate.
There are risks associated with this product – if the FTSE ended a five-year, 50% or more or signing contracts bankrupt banks making losses. However, there are many variations on this and there are several products available that can protect your capital from any decline in the stock market, but lower profits as a result of this protection.
We use a portfolio of structured investment products for our clients to diversify the types of investments and vehicles, and others will provide a balanced portfolio.
Most structured products can be incorporated into or used in accordance with ISA capital gain tax (CGT) that rule. This means that you can use the same (currently) £ 10,680 tax relief and CGT allowance of £ 10,600 Isa.