1-FBI cover-10.qxp_A4 Temp 06/07/2015 15:55 Page 1
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3-CB Comment.qxp_A4 Temp 06/07/2015 17:24 Page 3
Challenging times ahead
15 years ago, since the Finance, Banking, Insurance (FBI) began its journey, the scenario has changed enormously. The Labour government at that time was capable of managing the British economy and the then Chancellor Gordon Brown maintained his Scottish traits. With substantial improvement in the business environment, the Labour government under Gordon Brown changed their course, to put it most mildly. Huge funding was provided for infrastructure projects, and in no time the national exchequer had to depend on more and more borrowings. Change with continuity is a universal phenomena. With the incoming Coalition government, the deficit deduction received the top priority. With hindsight and especially in the view of the saga of Greece, George Osborne was right. One may have one's own opinion about the hardships of British people, especially of â€œhavenotsâ€?, but no action was not the option. Now that the British government is solely in the hands of the Conservatives, the budget on 8 July will have its own thrust and priority. Prime Minister David Cameron as well as the Chancellor may have their own political perspectives but, one need not come to a quick conclusion about dogma v/s pragmatism. Internationally UK, overall, performing reasonably well. Very well if you consider the turmoil for the Europe's future in the aftermath of the Greek referendum. Chancellor Merkel, and other leaders of the Eurozone have their hands tied up. How to help a fellow eurozone country without a domino effect? It's too early to predict but German economy has both a responsibility and in a way capacity to prove to be the real engine for the European growth and well beings of its member nations. Selection of contents in this volume of FBI is focussed on the pre 7th May election and the scenario after its results in equity, property and other aspects of UK economy. There are several informative and inspiring articles in this modest magazine. ABPL is grateful to all the contributors who have their own expertise. British Asians, especially the Indians have done reasonably well during the ups and downs of this challenging periods. British Indians are more diversified, the entrepreneurship have evolved from the 'internal' retail activity to newer pastures. In the City of London, Canary Wharf and even in Edinburgh, more and more British Asians, especially of Indian origin are acquiring positions of power and potentials. There is one area where the powers that may be have to do some serious thinking. The Mayor of London has reportedly said that 25% of mini cab drivers in Greater London are of Pakistani origin. There are two ways of looking at it: First, the spirit of entrepreneurship is there to be seen. Secondly, because they do not have other options or rather qualifications or skills, they have no other alternative but mini-cabing. One hopes the situations will change for better and dependence on one occupation is not out of compulsion of circumstances. When I look back 15 years or even 50 years, one observation makes me very proud of being British. The British knack of forward looking and ability to take appropriate steps, even self corrective steps have augured well for our nation. I sincerely believe that this inbuilt ability will continue to serve successful generations. I consider my privilege and pleasure to submit this modest but thought provocations publication in the service of our readers and recognising the grateful assistance from the contributors for all the contents, vast readership and generous supporters. CB Patel
Asian Voice & Gujarat Samachar
4-5-Roger Aitken x 2.qxp_A4 Temp 06/07/2015 14:41 Page 4
UK Equity Market
FTSE 100 and FTSE 250 Performance Post UK General Election: Where Next?
redicting where the UK equity market might be heading is always a tricky task and especially with so much geopolitical uncertainty of late and the the minds of traders and asset managers. One thing is for sure we are living in volatile times and stock markets always take flight in such extreme periods. But then again it does present opportunities for investors. Since the UK’s general election on 7 May 2015, which was won convincingly by the Conservative Party, the FTSE 100 bluechip index has declined 256.5 points - or around 3.72% - from 6,887 to close at 6,630.50 on 2 July. The day after the election the UK’s leading index had in fact shot up quite sharply to 7,046.80, which was almost back to this year’s peak achieved on 29 April. The well-known trading adage ‘Sell in May and Go Away’, which warns investors to sell their shareholdings in the month to avoid a seasonal decline in equity markets, didn’t quite hold this year if one glances at the stock charts. The trading range for the FTSE 100 was between 6,986 at the start of the month to 6,984 by the end (29 May). The action in terms of a real decline came from this June onward and by the end of last month it was down at 6,521, which was as low as it had been in mid January. So, all the gains from the start of 2015 had virtually been wiped out. But this could offer a good buying opportunity for risk takers. Now while I don’t have a crystal ball, given that the ‘Sell in May and Go Away’ strategy suggests getting back into the equity
Asian Voice & Gujarat Samachar
Roger Aitken Financial Journalist
market in November - so as to avoid the typically volatile MayOctober period - investors might want to consider how they position themselves going forward. A prudent strategy could be to drip feed capital into some UK blue-chips as Greek saga carries on. Markets will likely be volatile for a while yet. Nigel Green, CEO and founder of deVere Group, one of the world’s largest independent financial advisory organisations, this backdrop warned late this June that investors need to accept the dawning of a new investment era and in this environment “investors should expect lower returns from property, bonds and the stock market”. While Green referred to many factors contributing to the creation and development of this new investment era, the most common link is that Quantitative Easing (QE) has pushed down borrowing costs and driven cash savings into more rewarding investments. The combined effect has been to inflate asset prices - from housing to shares to government bonds. But the $64m question is will these assets preserve their value Nigel Green if/when the Bank of England and the U.S. Federal Reserve eventually normalise monetary policy and raise interest rates? Or will their values fall? It seems that the U.S.
4-5-Roger Aitken x 2.qxp_A4 Temp 06/07/2015 14:42 Page 5
is likely to find out soon with analysts pointing to a rate hike later this year - and quite possibly this September. Among other issues meriting consideration is slowing Chinese economic growth, volatility in Eurozone bond markets (partly on fears of a ‘Grexit’) and low levels of corporate reinvestment of profits in much of the developed world. It’s all adding to “our sense of caution” according to Green. On the Chinese front, the Shanghai Composite (index) suffered through another miserable session on 3 July - closing down by 5.77% - and had declined by a little over over 12% in a 5-day period to that point. That said, this index is still around 14% higher since the start of 2015. That again reinforces the point that profits can be made if investors have the appetite for risk. Highlighting just how quickly equity markets can change, it was not so long ago that I wrote a piece on Forbes about China (‘Can China’s Positive Equity Market Rally And Momentum Really Be Sustained?’, 21 April 2015). The turnaround since then has been interesting to say the least. Noting at the time that the Hang Seng Index, a market capitalisation-weighted stock market index in Hong Kong, had touched 28,000 points and risen by some 14% over eight consecutive days early April and c.30% over the past year, fast forward to 3 July and it had retreated 2,000 points (c.7%) to 26,064.11. My concluding paragraph in that piece read: “As we know from history what’s hot this year could well turn out bottom of pile the next.”
At the otherTop end of5the FTSE 100 spectrum, (YTD among 2015) the FTSE 100: Risers & Fallers
Taylor Wimpey Plc Ord 1p
% Yr Change 34.83
Mondi Plc Ord EUR 0.20
ITV Plc Ord 10p
Barratt Developments Plc Bottom
Royal Bank of Scotland Group
Johnson Matthey Plc Ord
Meggitt Plc Ord 5p
% Yr Change -9.43
National Grid Ord
AstraZeneca Plc Ord
bottom stocks were Bank Scotland (YTD Group (-9.43%), FTSE ten 250: Top 5 Royal Risers &ofFallers 2015)
% Yr Change
NMC Health Plc Ord 10p
Greggs Plc Ord 2p
Indivior Plc Ord USD0.10
Virgin Money Holdings (UK) Plc Ord
Betfair Group Bottom
Home Retail Group Plc Ord 10p
KAZ Minerals Plc Ord 20p
% Yr Change -19.04
Evraz Plc Ord USD 1.00
BTG Plc Ord 10p
Ophir Energy Plc Ord 0.25p
Source: Proquote, part of London Stock Exchange Group (30 June 2015)
Looking further ahead and to issues of concern, Alan Wilde, Head of Fixed Income at Baring Asset Management in London, commenting in the wake of the UK general election stated: “Longer term, the next worry for investors will be an ‘In-Out’ referendum on continued membership of the European Union, which Prime Minister David Cameron has vowed to hold in 2017.” For now the markets are embroiled in the fallout from the Greek situation, which is rapidly spiralling out of control with factories in the country shutting down due to a lack of fuel and blocked import-export access. Although the impact of Greece will be limited on the UK markets here are not entirely immune. Looking specifically at the year to date performance of the FTSE 100 to the end of June 2015, the blue-chip index was a mere 0.24% higher than at the start of the year. By contrast the FTSE 250 index, which comprises the 101st to 350th biggest companies by market capitalisation on the London Stock Exchange Group, was 8.7% higher over the same period. Among the best performing FTSE 100 stocks over this halfyear period were a number of house builders and construction groups - including Taylor Wimpey (1st with +34.83%), Persimmon Plc (2nd with +31.49%) and Barratt Developments (4th on +29.83%). The big question for this clutch of stocks can they surge further.
National Grid Ordinary (-9.90%) and AstraZeneca (-10.54%), as well some energy giants (Royal Dutch Shell ‘A’ and ‘B’ shares on -16.44% and -18.50% - respectively) and miners (Rio Tinto (11.2%), Glencore (-13.05%) and Anglo American (-22.36%)). While past performance is no guarantee to future returns, as sectors go the Basic Material sector (31 companies in the FTSE Actuaries Share Indices) was on a Price/Earnings (P/E) ratio of 8.42 as of 26 June. This compares with a P/E of 14.90 for the FTSE100 as a whole and 18.75 for the FTSE 250. A P/E figure below 10 is widely viewing as offering good value. Among FTSE 250 stocks, NMC Health Plc Ord 10p shares proved to be the top riser year to date with a stunning +71.20% performance, followed in second spot by Greggs, the bakers, with +62.70%, Indivior Plc USD0.10 on +54.16%, Virgin Money Holdings (UK) with +53.33% and gambling group Betfair with +52.49%. The second worst performing FTSE 250 stock proved to be Lonmin on -36.95% As ever in times of flux and uncertainty, there will be significant opportunities as well as challenges. One needs to exercise flexibility and spread investments around - not just in single equities (i.e. FTSE 100 and FTSE 250 stocks) - but also in exchanged traded funds (ETFs) and other classes. But keep in mind that the opportunities will be actively sought with a fresh different approach and outlook. Roger is a freelance journalist and a former writer at the FT covering exchanges, IT and trading. He currently contributes to Forbes (www.forbes.com/sites/rogeraitken). Asian Voice & Gujarat Samachar
6-7-Alpesh Patel x 2.qxp_A4 Temp 06/07/2015 14:44 Page 6
10 Strategies for Getting Rich From Tax-Free Trading
By Alpesh. Patel founding Principal Praefinium Partners (Private Equity)
pread trading is tax free. But being tax free won’t make you rich. You first need to know how to make profits. As the person behind the award winning http://inter.tradermind.com and author of How to Win At Spreadbetting which analyses 10 years’ worth of individual traders’ trades to see the characteristics of the winners and losers – I know a thing or two about how to turn private investors into profitable ones. Indeed from initial introduction to spread trading to profits of £100,000 has for some of my students taken only a couple of months. Of course it also helps I run my own asset management company and have been trading since age 12. So building on years of research, including from my time lecturing at Oxford University on how financial education can make you a better trader, these are the most important characteristics of private investors, like you, who become rich profitable traders: Before we begin, some basics. Spread trading is easy. You go to a website, like the one above, you open an account (takes about 5 minutes), you fund it (with as little as £1,000), you then buy something, say Apple, Vodafone, Lloyds, USD against GBP, for a certain profit for every point the price moves eg £1 for every penny Vodafone goes up. You can also just as easily bet £1 for every penny it falls. Of course the risk is you can lose more than your initial capital – so we need to know which traders get rich doing this and how do they do it?
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1. They Pick Brokers Which Give Them Free Money
Trading is hard. The best traders pick brokers which are easy to navigate and give them free money, some as much as £10,000, to open and fund an account. This is why I for instance in setting up brokers http://etx.tradermind.com andhttp://inter.tradermind.com – made sure people got money from the broker for funding their account.
2. They make sure their profitable trades do not turn into losing trades
The best most profitable traders do not let profitable trades become losing ones. Once they have a profit of 1% of their total trading risk capital, they say, ‘I will exit one a worst case at the price I initially go into this trades, so now, I cannot lose money’.
3. They Add to Winning Positions
The richest traders will add to a winning trade. They say ‘every time each trade I have makes profit of 1% of my risk capital (eg £100) I will open a new trade to add to my existing winning position’.
4. They Have No Big Losing Positions
Rich traders make sure they never have big losing trades. What is the definition of ‘big’? They never lose more than 1% of their total risk capital. If they think they are right, and the trade will return to profit, then they still exit, but re-enter when the price
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moves back above their original entry price. They would rather have some small losses, then their big profit, than have the risk of a big loss.
5. They reduce stress by having only 2 or 3 strategies To make money trading you must know these things: 1. When to buy 2. When to sell 3. When to exit at a profit
6. When to exit at a loss
The rich traders only followed a couple of strategies regularly and didn’t complicate matters with hundreds of strategies. For instance ‘momentum’, ‘breakout’ and ‘pullback’ strategies were the most popular for their simplicity and profitability.
7. They Only Place a Trade Where Their Reward is Likely to Be Large
The richest traders would enter a trade only where they saw the likely reward is likely to be larger than the loss they could suffer if wrong. They may know this because of the trend in the price they see online, or positive news about the company.
8. They Know When They Will Be Wrong and So Exit At a Quick Small Loss
The richest traders like small losses, because they hate big losses. They do this by looking at each trade and deciding ‘when will I know I am wrong, given I want to keep my losses small, I must know this quickly; is there some area the price could quickly hit which tells me my strategy has not worked?’
9. They Never Bet Too Large
Rich traders do not make big bets. You may be shocked to read this. But our research was clear and in line with the best hedge funds, including my own. They work out how much to bet by making sure they never lose more than 1% of their total risk capital. So if their total risk capital for all their trading is £10,000, then 1% is £100. They would place a bet of say £1 per point if they think that ‘I will know I am wrong and my strategy is not working if the price drops 100 points, since I must only lose £100, then my bet size should be £1 per point.’ The reason for this is that they know to be rich, you cannot suffer big losses along the way. In other words they were very well aware of risk.
10. Have a Business Plan for Profit
When I left practice as a Barrister to trade full-time one of the first calculations was to work out a plan of profit. For example: Let’s say your maximum loss on any trade will be 1% of your total capital. Let’s assume your total risk capital is £10,000. Therefore your maximum loss per trade is £100. Now assume your win/loss ratio (how often you win to how often you lose) is 70:30 (you win 7 times out of 10) because you have a good strategy – more on that later) Now assume your average loss on a losing trade is the full £100
Assume, because you always set your potential reward target for a trade as part of your strategy as greater than your potential loss, let’s say you win £150 each time you win. That’s conservative, given your loss is £100 for a losing trade, so we are not assuming big profits. Now assume you place 100 trades. Therefore 70 will make profits of £150 each, which is £10,500; and 30 will make losses of £100 ie £3,000. Therefore over 100 trades, your net profit is £7,500. Now you need to find strategies to make 100 trades. If these are done over a week you are a day-trader, because you likely would be in front of your screen and not at work. But if you are a day-jobber (someone with a day job) then you probably only do 100 trades in a year. Let’s take the person who does 100 trades in a week. Over a year assume therefore 5,000 trades. Making a net £7,500 per 100 trades, that means £375,000 per annum – tax free. That is a plan to aim for.
11. How to Get Rich Trading – Training Is Key
But can reading this article make you rich? Of course not, you need to be trained. I did an experiment with 25 traders over 100 trades before and after training (I’ll explain what kind of training shortly). All the traders after training increased their average profits they made in winning trades. All the traders also reduced the size of the average losses. All the traders, after my training, also increased their biggest winning trades too. We found that after training they also cut the number of big losing trades drastically. After training they also said that their confidence in having a good strategy increased, their stress levels dropped, their clarity on when to enter a trade and when to exit improved and they new when to take profits and place a stop loss more clearly. Finding this research led me to establish a comprehensive trader training programme. We did this because the feedback from the richest traders was clear – video training showing winning trades was the best way for them to learn to trade profitably. My training can be found here: www.tradingchampions.com.
Alpesh B. Patel is a barrister who now trades and invests for a living. Today he concentrates on futures, options, and stock trading, making extensive use of the internet for research and combining this with his own technical analysis systems. Alpesh is a non-executive director and founder of several internet start-ups. Alpesh has written several books on trading, regularly comments on numerous TV channels and Radio. Asian Voice & Gujarat Samachar
8-Ben Kumar.qxp_A4 Temp 06/07/2015 14:48 Page 8
Bonds and the Election
Ben Kumar Research Analyst, 7IM
mmediately following the election, the Conservative Party gained a month head-start on its term in power. Prior to the election, a coalition of some kind seemed all but certain and so the whole month of May was blocked out in political calendars for wrangling about the future government - yet come the morning of May 8th, David Cameron found himself with an entire month more than planned to think about the future policy. In all fairness, this time has not been spent idly celebrating – the Queen’s Speech has been given, EU membership discussions are taking place, both in the UK and abroad (although are too early stage to discuss here), and Chancellor George Osborne has begun to lay out his plans for the UK economy over the next five years.
Robert Chote It is clear (and unsurprising) that the Conservative economic plan follows directly from that of the Coalition period. Spending cuts will continue, and emphasis will remain on cutting debt levels and avoiding “spending beyond our means” as a country. The aim is still to eliminate further borrowing by 2018 – although the £1.5 trillion debt pile will take a lot longer to erode. This point was reinforced in Mr Osborne’s Mansion House speech where he announced a law that running a budget surplus in “normal times” would be mandatory for governments. While such a statement is admirable in theory, in practice it is much more difficult. There are three main problems. The first is answering the question of what is “normal” merely writing something into law does not make it definable. Such a definition is something that the financial world is struggling with at the moment – are we in a recovery, are we back to normal, are we in a boom phase? It will be an almost impossible job for the Office for Budget Responsibility (OBR) appointed as the independent monitor to actually monitor whether the economy is normal, or not, at any given point in time. Even if the OBR manages to tie down normality, making a government stop spending is more easily said than done. Think of it in terms of household budgets. If you unexpectedly lose your job, you have to cut expenses, yet your expenses are
Asian Voice & Gujarat Samachar
unlikely to be flexible enough to adjust that quickly; you may be able cut back on fine dining, but moving your whole family to a house with a smaller mortgage takes much longer. Now apply that thinking at a national level – big cuts are rarely easy. The final issue with the law is that it will only be binding until a future government changes it. Laws do not apply to governments in the same way they apply to individuals – as it is the governments making the laws in the first place! So what does this mean for UK assets – particularly those most directly related to the UK economy, government-issued Gilts? The Chancellor’s plan for the UK should bring stability and predictability to government economic policy. This is something that may prove to be rare in the coming year or so, with Greek worries in Europe, US election season coming shortly and the rise of China potentially provoking disruptions in Asia. So the UK Gilt market could turn out to be the most attractive safe haven to flee to in times of trouble – and as we are continually reminded, global events have a habit of delivering nasty market surprises. However we also have to consider a world where nothing upsets the apple cart. In such an environment, speculation will begin about the Bank of England’s monetary policy; in particular, whether they will raise interest rates or not. The bank rate has been at 0.5% for over six years while the global economy faltered, but as confidence returns to the UK, the BoE will be trying to judge when the time is right to begin increasing the rate – if for no other reason than to have some ammunition in the locker to tackle future crises. In such an environment, bonds will come under pressure as investors will seek income elsewhere, and the capital value may well fall. However, the thing with a bond is that as long as you hold it to maturity, you get the money back. If you aren’t looking for a huge return, but for safety and security, bonds can still play an important part in a portfolio.
9-Ragu Raguraj.qxp_A4 Temp 06/07/2015 14:49 Page 9
SILVER - “The most undervalued asset on earth” ? Introduction:
The price of silver has fallen from the all time high of $50 per Ounce in April 2011 to the recent low of $15, some 70% drop in four years. Whilst there may be no substitute for gold, silver is often considered the next best thing as a monetary asset or for jewellery and adornment. In this article we will look at the future price predictions based on technical and fundamental factors
Demand for silver is rising year by year and supply is falling thereby reducing the inventories (stock levels) at a rapid pace. According to recent CPM silver year book “silver inventories will run out within 10 years). Please see attached graph, where you can see inventory levels at year 2023 will be zero. This inventory factor alone will push the silver prices to much higher levels. Silver’s increasing usage: Aside from its monetary and investment uses, silver is finding more and more practical, industrial applications. The more electrical, computer and mobile phone use grows, the more silver consumption increases. New discoveries are being made all the time about its ability to combat infection, fungi, bacteria, so demand is increasing from medicine and biotech. Many may have read that in 2012 Apple delayed the launch of the iMac due to silver supply shortages. If the future is depending on smart phones, and laptops you can imagine what this will do to the demand of Silver? We should not forget about the impact India has on Silver prices. In 2013 Indians bought 22 million ounces of gold and an impressive 90 million ounces of Silver a ratio of more than 4. India is the 3rd largest consumer of Silver, and with the rising population and increasing income, India is set to start purchasing a greater percentage of the world’s Silver in coming years. Uncertainties in future supply of silver may also push the prices higher. The majority of the world’s silver comes from nations marked with political turmoil, labour unrest, and undeveloped economies. Mexico and Peru account for the
Ragu Dharmaratnam ACMA CGMA largest share of production, both of which have fragile political systems and poor infrastructures to accommodate significant improvements in production. Inflation adjusted price has a long way to go for silver: The peak of $50 in April 2011 was less than half the inflation adjusted price of January 1980, and based on inflation adjusted price, Silver should be trading above $100. Silver is also cheap compared to other commodities such as Gold, Palladium, Copper, Platinum, and Zinc. Please also note that during the past few years silver dropped most out of all the commodities nearly 70%. One booming sector in particular that could rapidly speed up the exhaustion of silver’s remaining supply. “Solar power” is the fastest growing industry in America. Solar panels contain a lots of silver and therefore as the industry rapidly grows so does the need for more and more silver.
Technical factors mean predicting future price movements by looking at trend analysis, support and resistance levels, with the help of graphs. As you can see from the attached seven year old graph, Silver was trading at $9 in the later part of 2008, and then peaked at $50 in April 2011, and since then it is just one way traffic going south. To me it has found a support around the $14 mark, and if the price can break through the important downtrend line (shown in green) at $20, there is every chance that it can re-test its previous high of $50.
Silver offers the opportunity to move into true money, an actual store of value, with the potential for substantial gains in the future. Protect yourself and your family by acquiring silver with intrinsic value and insulate yourself from the wealth destructive policies of central bankers. Unlike gold, silver has hundreds of industrial and medical applications and its usage is on the rise. Asian Voice & Gujarat Samachar
10-11-Oliver Gold.qxp_A4 Temp 06/07/2015 14:51 Page 10
Will India’s Love Of Gold Ever Diminish?
till a key part for many of their spiritual heritage, gold continues to remain popular in India. With the country’s rapid development and influences from the West in recent years, how long will India’s love affair - with all its traditions - last for the precious metal? Over the past few decades, many large Western corporations have developed a strong presence in India. Visitors arriving in cities such as Mumbai, for instance, will notice new highways, and buildings that dominate the skyline such as the residential twin Imperial Towers.
India has become high-flying and tech-savvy. Yet parts of the country still remain extremely poor and this has a direct bearing on how gold performs. For instance in 2015 for the festival of Akshaya Tritiya, demand for gold was slow but did increase later. The reason may have been in part due to the unseasonable weather conditions which badly hit rural communities. Festivals such as Akshaya Tritiya, Diwali and Dhanteras are key times for buying gold. An influence for many is Lakshmi – the Hindu goddess of love, prosperity, wealth, fortune, and the embodiment of beauty. She is depicted as wearing clothes embroidered in gold and her four hands suggest that those who worship her will gain. Particularly in Hindu and Jain cultures, gold is considered to be auspicious. Gold, however, is popular in India not only for spiritual reasons but also for practical reasons too as an investment. Its
Mr Mike Temple
Mr Oliver Temple
portability means that gold can be stored anywhere. Reputable dealers - such as Gold Investments Ltd - offer investors the option of keeping gold in secure bank vaults if they wish.
For many, the precious metal’s appeal is that it is not dictated to by economic factors which can often have a knock-on effect across different global regions. Gold Investments Ltd, for instance, saw demand for gold increase during the last financial downturn as savvy investors moved some of their portfolio assets into gold. Gold became a safe-haven. This is the same pattern the family business has seen since it began trading in 1981 whenever economies have been slow. Despite its pricing fluctuations, gold has always performed well historically. Investors such as - Jim Cramer (worth around $100 million) advises that gold should be part of any investment portfolio. He believes portfolios should have no more than 10 to 15 stocks and consist of high-yielding stocks, healthy geographical stock, speculative stocks, and gold. "I think that 10 percent is the upper limit because I consider gold as an insurance policy and no worthwhile insurance policy should be 20 percent of the money you have invested," Cramer says. Oliver Temple - from Gold Investments Ltd - believes buying gold is appealing particularly for those living in the UK looking to
Trusted to buy and sell gold for over 30 years. Gold Investments is a family-owned business, which has been trading gold since 1981. Headed up by Mike Temple, who has over 50 years’ experience and knowledge in the investment markets, the business prides itself in offering a personal service to all its clients, both private and institutional. Moving forward with the Internet era, Gold Investments is the only bullion house who now offer the ability to buy and sell gold online with live prices via their website, backed up with the same professional service. You can have your gold delivered to you worldwide or collected from our City office. We also offer storage services in our bank vault.
For a no obligation chat or for more information, please contact our dealing team on:
Tel: 020 7283 7752 Fax: 020 7283 7754 Email: firstname.lastname@example.org
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www.goldinvestments.co.uk Connect with us online:
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10-11-Oliver Gold.qxp_A4 Temp 06/07/2015 14:53 Page 11
add to their pension portfolios. “ The UK’s Self-Invested Personal Pension (SIPP) has been around since the early 1990s. The scheme allows individuals to make their own investment decisions from the full range of investments approved by HM Revenue and Customs (HMRC). Gold is one option that is often considered for those wanting to add to their pension pots. “Britannia gold coins and Sovereigns are also exempt from capital gains tax which can also be attractive to investors,” says Temple.
Will Gold Still Shine?
As India develops further will gold still shine? Will it still be as relevant as it always has been? The answer lies in the next generation. For many families in India gold is still very personal. Often the precious metal is saved for as soon as there is a birth of a girl as part of ‘Stridhan’ - to give financial security in life - as per Hindu Law. Gold jewellery – like the country itself – mixes both contemporary and traditional designs. Young affluent consumers in India now want pieces that are not only modern but also reflect their culture and heritage. This desire is reflected by top Indian jewellery designers such as Amrita Singh. Her inspired traditional designs have been liked by Hollywood celebrities such as Jessica Simpson, Blake Lively and Jennifer Lopez. India’s Suhani Pittie is one of the top 10 jewellery designers in the country as enlisted by the World Gold Council.
Weddings in the country – the driver for many gold purchases – remains popular. Every year the country hosts 10 million marriage ceremonies. It is a growing sector - worth over $25 billion to India’s economy. There is no sign that the popularity for weddings will diminish. In fact the industry has been growing annually by around 30% for a number of years. There are likely to be 15 million weddings per year in India over the next 10 years. India is changing and so too is how gold is seen by the country. India is one of the largest markets for gold jewellery and while designs may evolve, there is still a sense of – like the country itself – wanting to merge new and traditional cultures together. The country’s appetite for gold, therefore, remains unlikely to be diminished. Indeed, The Federation of Indian Chambers of Commerce and Industry (FICCI) is looking into ways of helping India’s households monetise their gold assets. This includes the possibility of establishing an Indian Gold Exchange, a Gold Board, and developing accredited refineries. Gold, therefore, promises to offer even greater investment opportunities for India, and in a more transparent way. Perhaps, however, the precious metal’s main appeal for consumers in the country is that gold simply links past traditions with their spiritual heritage. Whilst designers, such as Amrita Singh and Suhani Pittie are providing gold with a contemporary twist - together with the FICCI’s plans - this precious metal will continue to appeal to all generations in India for many years to come. How many other commodities could do the same?
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12-Bank of Baroda.qxp_A4 Temp 06/07/2015 15:48 Page 12
Role of Indian Banks in the UK and challenges they face
he first Indian bank to set its foot in the UK was the Imperial Bank of India, founded in 1921, which after being brought under the government ownership was renamed as State Bank of India, in 1955. Indian banks started moving international to enter foreign exchange business. Due to limited competence in the sector, the first challenge was to develop skilled manpower and they did focus on that by deputing talented executives to selected English institutions as apprentices. Over a long period of time, Indian banks focused on Forex business and their primary activity was to facilitate remittances to India. Once getting the required skilled manpower, Indian banks focused on foreign exchange sector and started following Indian Diaspora globally to attain a sizeable market. Bank of Baroda entered UK in 1957. Other banks from India include Bank of India, Canara Bank, ICICI bank, Axis Bank, Syndicated bank. For a long time, Indian banks in the UK primarily focused on Forex business and supported cross country business. Relation between India and the UK is more than 400 years old and International trade has increased substantially after liberalisation. Today, India and the UK are both significant investor in each other's country. Two way trade rose to about USD 16.15 billion in 2012 from USD 12.56 billion in 2010-11. During April 2000 and November 2012, India received FDI worth USD 17 billion from the UK and it has been growing every year. Trade between India and the UK is flourishing and India is one of the largest investors in the UK. Indian banks play a significant role in this segment of development of economies of both the countries. On one end of the spectrum, constant increase in the size of the Indian-origin population in the UK and exponential growth in trade between both the countries increased after liberalisation (as stated above), created a demand of other banking services from retail as well as business segment of both the countries. On the other end, Indian banking was adopting state of the art technologies for better customer service and efficiency enhancement after liberalisation. Hence, demand for services was analysed properly in depth and Indian banks forayed into new segments, such as retail banking, corporate and business banking, trade financing, wholesale banking, syndication and treasury operations supported with leverage of technology adopted in India. Indian Banks pro-active approach has made their standing strong in the retail and business segment in the UK, having cumulative business of more than ÂŁ38 billion in the UK which itself speaks of their strength. London is one of the world's largest financial hub, having the potential of getting connected internationally all the time. This opportunity has also been well conceived and comprehended by Indian banks and they have set up global syndication centres and treasury operations to support their wide international presence across the globe.
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Mr D P Trivedi Chief Executive, Bank of Baroda (UK & Europe) Other than business approach, Indian banks have also acknowledged the emotional needs of people of Indian-origins to do banking with Indian Banks in the UK and get associated with India in banking also. Major economies in the world are still reeling from recession. Only the USA is coming out of it at a faster pace and other economies are yet to complete the recovery phase and start showing a sign of recovery. In Europe, UK economy is showing sign of growth, but on one hand Greece is still looking for extension of Bail out, and other economies are yet to start growing. Such a economic scenario in Europe and across the globe is the first and foremost challenge for the banking sector and Indian banks are not an exception, as growth of banking sector goes hand in hand with growth of economies. Cost of compliance has been a new concern for the entire banking sector, with new regulations at regular frequency which inter-alia has directed to ring fence retail operations of foreign bank branches through subsidiary mode. Hence, Indian banks have to strike out a balance between business growth, forming subsidiary (deploying more capital) and meeting every increasing compliance requirements. Competition is moving to the next level every day due to the rapidly changing customer needs, introduction of new products & services by existing market players and new players entering the fray. Indian banks are targeting the ethnic Indian community in the UK, but are having direct competition with high street banks as product offered and service delivered are directly compared against high street banks by the customer. State Bank of India and Bank of Baroda both have 10 branches in the UK, maximum by any Indian bank in the UK, vis a vis high street banks are present in every part of the country. Indian banks are having limited narrow products portfolio in comparison with high street banks. Hence Indian banks need to expand both product portfolio and branch network gradually and constantly. Traditionally, the primary target group of customers for Indian banks has been the ethnic Indian Diaspora, having a total size of 1.5 million in the UK. It is imperative for Indian banks to start targeting other ethnicities to expand and strengthen the base. Indian banks have started targeting other group of customers as well with introduction of new products and creation of branding but they need to enhance product portfolio in line with other banks. It is one of the major challenge for Indian banks as it involves understanding cultural, as well as banking needs and behaviour of targeted groups. Indian banks have evolved over the period from targeting Forex business to a full-fledged bank in the UK and with forward looking approach and large global presence, its future is bright. I am confident that they will succeed in their endeavours and will set themselves up as a bank preferred by the masses in the years to come.
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The UK Regions: Back on the Global Property Map?
he tables have certainly turned for property up North. Renewed consumer confidence is for good reason – the economy is growing, interest rates and inflation remain low and the majority government is committed to devolving power to the UK’s regions.
Meanwhile pricing in London, which went through the roof a few years ago, is now somewhere near Mars! So what does this mean for commercial property investors, and how and where can we seek to take advantage? The South East or should I say greater Greater London has been enjoying an overflow of investment from London for years. But in 2015 we have seen the smart money, managed by institutions, pension funds & propcos, venture further out into the regions in a big way – commercial property investment in the West Midlands doubled year-on-year in Q1, in the South West it rose by 65% and by 91% in the North West. Each UK region has its own unique economy & infrastructure, so it’s difficult to write so generally about everything not London. But in today’s market we ask investors to keep an open mind & apply a common framework when evaluating regional opportunities. Firstly remember why you invest – for a secure, long-term return on your money, with a capital gain to hopefully follow but not guaranteed. And secondly understand that with demand for commercial property nationwide as high as it’s ever been, the good quality, blue-chip stuff, the likes of which can be passed down the generations, is very difficult to come by in the South East (at least at a sensible price anyway!). The beautiful South West of England has probably been the biggest beneficiary of rising prices in the South East; for a while now we have been taking instructions to source ‘anything down South’. Just over a year ago we advised a new client to purchase an Iceland on Devon’s ‘English Riviera’. Let for 14 more years (without breaks) for £63k pa, the gross yield was ca. 7.5%. Just last week I was offered a property in Plymouth that’s 80% let to Sainsbury’s Local with a break in 7 years for just over 6% gross. A straight line calculation would put my client’s property at about a £200k capital gain. Not bad!
Nilesh Raj Patel Consultant at The Prideview Group But what many UK towns and cities in the Midlands and upwards can now offer is something we investors like: rental growth. Properties with new leases or recently renewed ones have had their rents rebased to sustainable levels, meaning that if even the tenant vacates on expiry, re-letting should not be problematic. In the last two months we have acquired two stellar properties for foreign buyers no longer satisfied with London’s sub-5% yields: HSBC in Gloucester and Lloyds bank in Norwich. Both are located in the town centres of these regional capitals, where the top banks can’t afford not to be. One lease was shorter the other longer, explaining why the price for these two prime, blue-chip investments ranged from 5.5% – 6% gross. Going further North, with devolution of power at the forefront of the agenda, the dream of a ‘Northern Powerhouse’ is fast becoming a reality. Infrastructure plans such as the HS2 railway, town centre regeneration schemes and ‘northshoring’ (the trend of relocating call centres to northern towns) all give the region something to shout about. Many often forget that in northern towns where employment is high, workers’ disposable incomes are even higher given that living costs pale into insignificance compared to London. Which means well-located convenience stores, betting shops, pubs & restaurants, for example, will succeed. Last year we acquired a McColls near Derby for ca. 7% gross and last month bought one near Birmingham for ca. 6%. Both had 20 year leases and are in residential areas, the only difference is the timing. A more high-yielding play was a KFC drive-through located on a main road leading into Liverpool let until 2027 for ca 8% gross. KFC has a break in 2017 but having extensively refurbished the property we felt the risk of the break being exercised was outweighed by the rewards. It may all sound rosy but it certainly is not - there are plenty of caveats when investing outside of one’s comfort zone, and the mantra has to be quality. You must satisfy yourself that the property & tenant are quality & that there are realistic options should the tenant vacate. Investing in the regions is not about getting crazy returns, it’s about getting a better return for an equally secure investment. We currently have a Co-op Food under construction in an attractive residential area on the North Wales coast, to let on a 15 year lease. We will soon be offering this for around 6.5% gross - an excellent, blue-chip convenience store investment for under £1m. If you want more information about this or regional property investment in general do get in touch. To see more property deals, register your interest and discuss more visit www.preideviewproperties.co.uk and call 020 8863 8680 Asian Voice & Gujarat Samachar
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15-Bridge Financing.qxp_A4 Temp 06/07/2015 15:10 Page 15
Investing in an Alternate Asset Class: Bridge Financing
ith the mainstream financial intermediaries’ process for accessing liquidity remaining stringent and lengthy on application timelines, Bridge Financing is continuing to fill this gap, allowing borrowers to capitalise on time sensitive opportunities. Last year the Bridge financing market was very busy, with record making completed deals, but experts claim this year it will perhaps be even busier. We interviewed Paresh Raja from Market Financial Solutions, one of UK's fastest growing independent lenders & commercial brokers, and Zaheed Nizar from Creative Market finance, to talk about bridge financing – what it means for borrowers and lenders.
What is Bridge Financing?
Bridge Financing is an interim loan for an individual or business until permanent financing or the next stage of financing is obtained. Funds from the new financing will generally be used to ‘take out’ (i.e. pay back) the Bridge Financing.
Why is Bridge Financing more expensive?
Typically, Bridge Financing is more expensive than conventional financing. This is to compensate for the speed and availability of funds, which can be deployed within seven days, and hence accrues a higher rate of interest. Often, Bridge Financing will be used for commercial real estate purchases to quickly close on a property, or take advantage of short term opportunities in order to secure long term financing. Bridge Financing on property is generally paid back when the property is sold, refinanced with a traditional lender, or the property is improved or completed.
What does Bridge Financing mean for the borrower?
Bridge Financing is used by private individuals and commercial businesses of all different sizes. Generally, financing ranges
from £250,000 all the way up to £10m. The term of the loan can range from a minimum of 3 months to a maximum of 12 months, and should be viewed strictly as a short term facility. Since no two Bridge Financing deals are ever the same, tailor made lending solutions can be provided to private individuals and commercial businesses that identify the terms and solutions that fit the individual or the business. Since Bridge Financing has a different lending criteria to that of a traditional loan or conventional mortgage. Bridge Financing can therefore help individuals and businesses across a wide spectrum, allowing them to reach their goals and objectives with relative ease.
What does investing in Bridge Financing mean?
For the investor, this is a relatively straight forward instrument to add to any existing investment portfolio. Investors are able to invest a capital sum in Bridge Financing, solely for the purposes of Bridge Funding on a deal by deal basis. In return, the Bridge Financing company will lend these funds out to a private individual or business, to be used in respect of their residential investment, semicommercial and commercial real estate. The investor will benefit from two vital components, which make Bridge Financing more lucrative than other current commercial real estate investments. Firstly, investors are assured that their investment is secure by way of a first charge (if there is no existing debt on the property) or a second charge (if there is a senior lender) in the investor’s name, over the property, where the interest will registered at the Land Registry. Secondly, investors will benefit from a very attractive monthly rate of return for their investment. The investment period is usually 6 to 12 months. Bridge Financing usually works on a seven day turnaround period, whereby your investment can start working for you pretty much straight away
Is Bridge Financing here to stay?
In short, yes. But bridge Financing will certainly not suit every borrower, and the borrower should have an exit strategy in place for when the time comes to repay the facility. All Bridge Financing Lenders should be accredited members of the Association of Bridging Professionals, the Association of Short Term Lenders, and the National Association of Commercial Finance Brokers, like us. For more information, see http://www.mfsuk.com. Asian Voice & Gujarat Samachar
16-17-Bhanu Choudhire x 1.5.qxp_A4 Temp 06/07/2015 15:55 Page 16
Challengers can transform the UK’s banking landscape
AST month’s disappearance of 600,000 RBS customer payments and direct debits, with all the chaos that entailed, was a wake-up call not just for the taxpayerowned bank, but for the entire industry. In the twenty-first century, customers do not expect to be told their money has gone missing because of an IT meltdown and that it might take three days to fix the problem.Yet the UK’s banking sector is dominated by legacy institutions with creaking infrastructure designed for a pre-electronic age. Archaic technology systems mean this won’t be the last IT disaster to inflict the industry. But the shortcomings of the traditional banks are an opportunity for the new generation of challenger banks. The “Big Four” - Barclays, Lloyds Banking Group, HSBC and Royal Bank of Scotland – have long dominated the High Street, controlling 77 per cent of the current account market and 85 per cent of small business banking. In recent years the likes of Metro Bank, Aldermore and One Savings Bank have tried to make inroads into the market, but with limited success. Metro Bank has been the most successful, but its customer base of 360,000 pales in comparison with Barclays’ 16.7 million. As someone who lives in London, but sits on the board of an
By Bhanu Choudhrie founder of C & C Alpha Group American challenger, Customers Bank, it has always surprised me that the UK market has been so resistant to change. Customers has enjoyed six years of stellar growth; back in 2009, it had assets of $250m; four years later, it was welcomed on to the NASDAQ stock market; today, it’s quoted on the New York Stock Exchange and has assets of $7.1bn. Why has the new generation of banks in the UK found it so difficult to replicate our journey and loosen the stranglehold of legacy institutions? How do they disrupt the market? Technology is the answer. At Customers, after ten months of testing we launched an entirely new brand this year, Bank Mobile, a virtual bank targeted at millenials. It takes just five minutes to open an account – you simply photograph your ID - there are no fees and the Bank Mobile app, powered by Malauzai software, contains a number of innovations designed to make customers’ lives easier. To pay a bill, you can just photograph it; you can turn your debit card on and off for security reasons, and when you make a direct deposit you get free access to our financial advisors. We have already created an app for the Apple Watch. We encourage our customers to drive innovation. “Build your own bank”, we call it. Our aim is to rewrite the banking business model by simplifying the mobile experience; we think of
Customers Bancorp, Inc team at NYSE on the day of being listed Asian Voice & Gujarat Samachar
16-17-Bhanu Choudhire x 1.5.qxp_A4 Temp 06/07/2015 15:14 Page 17
ourselves not as a bank but as a tech company with a banking charter. We want to be the Uber of banking. “We are getting back to be a bank people can love,” is the way our CEO Jay Sidhu puts it. We are targeting recent college graduates, a generation which expects a straightforward, convenient customer experience. We aim to sign up 250,000 in five years. Challenger banks are more nimble than their longestablished competitors and they don’t have the problem of trying to bolt new technology on to old systems. They don’t have the same issues of trust. In the US, the banking landscape is more varied, partly because of the plethora of smaller banks in the different states and partly because they are encouraged to commit to small businesses, which are the backbone of the US economy – more than 50% of Americans either own or work for a small company. That may be why American-backed challengers have enjoyed the most success in the UK market. American Vernon Hill’s Metro Bank has 34 branches across London and aims to have 150 by 2020 – I have met Vernon and discussed his dreams and aspirations for the bank; One Savings Bank came about after the US private equity firm JC Flowers bailed out the building society, Kent Reliance, in 2011. America shows there is a market for newcomers. Yet customers in the UK remain staunchly conservative; even after the introduction of new rules in 2013, allowing customers to change banks within seven days, take-up has been slow, with 1.2m customers using the service last year. Twenty new banks have applied for licences in the UK this year. It will be interesting to see how many of these make it to the starting line, given the regulatory hurdles any newcomer faces here. But the figures tell their own story. Customers will use mobile
Bhanu Choudhrie at the NYSE
devices to check their current accounts in 895 million times in 2015 while there will be just 705 million interactions with their bank branches. They will move £32.9 billion a week using banking apps. The future of banking is mobile and challenger banks, which are daring, disruptive and digital, are best placed to transform our banking landscape if they put innovation at the heart of their story.
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18-Paresh Davdra.qxp_A4 Temp 06/07/2015 15:15 Page 18
Pound Sterling surge after election
eading up the General election there was a large amount of unrest in the currency markets. The strength of the Pound was perceived to be underpinned by the continuation of a conservative lead government. With the polls leading up to the election being so close, uncertainty in the markets was rife, with GBP surrendering a lot of ground that had previously been gained against its peer currencies. GBP/USD fell below the 1.50 level and GBP/EUR fell from the highs of 1.40, back to 1.35. The weakness in Sterling was a perfect example of how the political situation within a country can impact it’s currency. Investors and businesses alike are looking for the safest place to park their money and the uncertainty surrounding the future political landscape of a nation proved enough to weaken GBP. The Conservatives did however manage to establish a majority government, which was not expected by anyone, not least by the media. The immediate reaction to this result was a surge in Pound Sterling. Sterling clawed back the losses that uncertainty had brought, posting gains against the USD to reach highs of 1.59 and major gains against EUR to push up through the key 1.40 levels. However, this rally was short lived and many of the gains were relinquished over the following weeks. Much of the focus since the election has been on the future of the UK within the EU. A major pledge and focus point of the Conservatives when they came to power was to hold an in/out referendum over the UK’s continuing membership of the EU. The British public has long questioned the benefit that being part the EU brings to the UK, with many calling for the right to vote on whether the UK remains part of it. The major focus points around the potential of what has been dubbed a “Brexit” are the Broad Economic Impact, Jobs impact, Trade impact, Immigration rights and most importantly how leaving the EU will affect the UK’s status in the world. The potential of a “Brexit” has divided opinion within the UK, not just in the general public but also within politics. Eurosceptics argue that withdrawal would reverse immigration, save the taxpayer billions and free Britain from an economic burden. Those pro staying in the EU counter that it would lead to deep economic uncertainty and cost thousands, possibly even millions, of jobs. The potential referendum has created a real split within the post-election political landscape. The 2015 election saw the rise of the SNP, with the SNP winning 56 of the 59 seats available North of the border. The EU referendum is proving to be a contentious issue between the Conservative majority lead government and the SNP. Scotland is pro-EU membership. Nicola Sturgeon has voiced her concerns and even gone as far to suggest that if the UK votes in favour of a “Brexit”, this could lead to a re-run of the Scottish in/out referendum which was seen in September 2014. Should we see another Scottish in/out referendum we can expect a weakening of GBP, as we saw in the months leading up to the key vote. David Cameron is acutely aware of the potential impact that leaving the EU could have on the UK, he has acknowledged there are both potential benefits that leaving could deliver, but he
Asian Voice & Gujarat Samachar
Paresh Davdra Dealing Director of RationalFX, Currency Specialists. has also stated that the ideal situation would result in the UK remaining part of the EU, but with a renegotiated role. Since the UK general election the EU has also seen the first potential default from one of its member nations, Greece. For months the EU members states and the IMF have been in negotiations with the newly elected Syriza party. The new party came to power with promises to end of austerity and to renegotiate the repayments that Greece owed its creditors. The current debts that Greece is sitting on are estimated to be in excess €260bn. The ECB and IMF are calling for Greece to implement reforms and cuts to their public spending. Much of the focus has been around the welfare and benefits that individuals within Greece enjoy. Greece has refused to accept cuts to pension payments or public sector wages, saying two-thirds of pensioners are either below or near the poverty line. However reports suggest the government's latest proposals include curbs on early retirement, and increases in pensioners' contributions to social and health care. Another key point of friction is a special benefit paid to some low-income pensioners, which creditors want scrapped. EU officials say Greece has agreed to budget surplus targets of 1% of GDP this year, followed by 2% in 2016 and 3.5% by 2018. Greece says nothing is agreed until everything is agreed. Creditors also want a wider VAT base; Greece says it will not allow extra VAT on medicines or electricity bills, and has also resisted calls for VAT hikes on hotels and restaurants. Greece complains creditors focus on increasing taxes instead of cracking down on tax evasion; IMF is concerned Athens is not offering credible reforms. The potential of a “Grexit” has also lead Russia to raise its head. Greece has started to negotiate trade deals with Russia who currently face severe sanctions from the EU due to its continued hostile occupation of Ukraine, an EU member state. The Greek stance is that they are in discussions regarding a pipeline from Russia to supply gas to Greece. However, many worry that the discussions are based around the privatisation of assets. These could include Sea ports, Air Ports and the highly valued shipping lanes. The EU will be keen to avoid losing a member nation, especially to a debt default, as this will call into consideration the continued value of the EU. Should Greece leave and prosper this would only heighten the pressure and focus upon the future value of a Euro-zone. With the current unsettled nature to the EU, Britain may hope that as the zones third largest nation and financial contributor the other member states are will to negotiate and make concessions in order to avoid a Brexit. David Cameron will be hoping for fast moving and constructive discussions to avoid the situation dragging out and becoming a saga. Prolonged uncertainty over Britain’s r ole within the Euro-zone will lead to uncertainty in the markets, which may result in the weakening on GBP and a loss in value of British assets. The markets will be hoping for a re-negotiated role for Britain within the EU, which will avoid another damaging in/out Scottish referendum and in turn the potential for a fruitful future within the EU.
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20-Rakesh Shah.qxp_A4 Temp 06/07/2015 15:21 Page 20
Asset Management for Working Professionals and Families
s individuals and families increase their wealth, opportunities arise for investment into different areas, good asset management practices become increasingly important for a successful and stress free (as best as possible) experience in managing finances. This brings up a number of issues, especially in deciding on a good method to allocate your capital between different projects. Before doing this, it is important to establish your goals (preferably with a qualified investment professional) and learn how to measure the risk and rewards of each investment. After making investments, ideally your portfolio should be reviewed monthly for a medium term ones and quarterly for long term investments (ones lasting more than 1 year). Let us begin by discussing some important topics in ‘asset management’. Firstly, we can define asset management as realising value from both investments and opportunities. Don’t let your money sit in cash in the bank earning close to zero percent interest. If you have never done this exercise before, get started today by writing down your current portfolio of all your current investments and put them into a spreadsheet or notebook with today’s date and the date of each of your review periods. Next, let me dispel the first myth about investments and using your own home as an investment. If we agree on a basic assumption that we all need to live in a house or a flat as a basic requirement, then your home should not be regarded as an investment, as you will always need to live somewhere. In fact if you are renting, you are really at a ‘negative 1’, in property investment, as you will be forced to rent and pay whatever the rental market demands, so future financial planning becomes very difficult. If you own your home but no other properties, you are ‘neutral’ (neither a positive or negative status) on the property ladder. If you have a home and one rental property, you are the ‘positive one’ on the ladder. Some will argue that you can of course downsize into a smaller property and release some or all the equity in your home, if the need arises and this can be used as a last resort for those that do not have any other means of pension provision. I would describe this as a safety net, it should not be your first option in managing your assets unless you are forced to do this or specifically plan this as your retirement strategy. What is the correct split between income and growth assets? These are complex questions and need time to answer and you should build up a network of professionals that can help and advise you in this area. What do you put into your portfolio? This is one of the key questions in managing your assets. I would list all of your assets and the current opportunities available to you in a column. Next answer the following 10 questions about each one. 1. What is the income potential? 2. What is the capital gain potential? 3. How much time is needed to manage the asset?
Asian Voice & Gujarat Samachar
4. 5. 6. 7.
Rakesh Shah Advisory Fund Manager at Kingly Capital
What is the risk of losing capital? How easily can you invest more? How difficult will it be to sell? What is the tax rate for the asset? (Use all of your tax free ISA allowances first). 8. What has been the historical gain for this assets over the last 5, 10 and 20 years. 9. Are there any future risks that can impact the value of the asset? (E.g. new regulations.) 10. What have you done this year to increase the value of this asset? Number 10 is probably the most important question to answer. Being able to allocate small amounts (2pct to 5pct of a portfolio) into high growth or accelerated investment opportunities is of the most successful characteristics of great asset managers. To manage assets well, one must always be searching for new and dynamic business propositions. For example, in the food and beverage sector, Mexican food became a big hit in the USA in the 80's in the same way fast food pizza restaurants expanded in the UK. Coffee shops were next. There are always trends and knowing the history of a sector will help to build a picture of the current trend potential. How long did the last trend last? What made them so great. Are any experienced managers starting up new ventures? After establishing this, you can invest on local (Coinvest in a local store), national (invest in shares of a local company on the London Stock exchange) or international level (international stock exchanges). How do you go about finding opportunities? Switch off the TV, make some time and create an environment where you can have a good and steady flow of opportunities to assess. Whether this means joining your local business or investment club, reading a selection of investment periodicals, or calling a variety of investment professionals on a regular basis to ask about the latest opportunities they are looking at; it all starts with a plan of action from your side. The first step is the hardest, but also the most fruitful. The reality is that once you set yourself up and get organised for yourself or your family, this activity takes less than an few hours every month. Get started, measure, monitor and improve. If it is all to much delegate the task to an investment professional and be very specific with your needs, expectations and desired outcomes. Some key points do state again, don't put all your eggs in one basket! Different asset classes offer diversification. If you are struggling or simply are not the financial type, work within a small team of friends or family, by having regular financial health checks where you collectively answer the 10 questions above. What we can achieve together is far greater than what we can do alone. As a last point, I will leave you with a maxim my father always told me that served me well, "You don't need to know how to do it, you just need to know how to get it done! " Rakesh Shah is an Investor and an Asset Manager at Kingly Capital, with a team working with HNWI’s and families for the investment of assets. For more information email. firstname.lastname@example.org
Life Polify Reclaim.qxp_A4 Temp 06/07/2015 13:59 Page 1
22-John Cumming.qxp_A4 Temp 06/07/2015 14:11 Page 22
Big brother is watching HMRC’s information gathering resources
s we all know the current and previous Government has made it a top priority for H M Revenue & Customs (HMRC) to tackle perceived tax evasion and artificial tax avoidance schemes, which they seem to believe, flourishes within the UK. With the support being provided by the Government, HMRC has been finding new and ingenious methods of digging for information about individual’s tax affairs. The most successful initiative currently is HMRC’s state of the art computer software system called Connect. Connect was created by BAE Systems in collaboration with HMRC’s Risk and Intelligence Service and was initially introduced in 2009 and proved to be extremely successful even with the limited amount of information that was held at that point in time. Since 2009 the tentacle by which the Connect system gathers information has spread far and wide. Information nowadays is received from the Land Registry, DVLA, Benefit Agency, Companies House, estate agents, banks and building societies, local authorities, online sales and purchase records and even social media. In fact there are over 28 organisations feeding information into the system and there are more which are regularly been added (there is discussion of airline passenger data also being brought into the net). Therefore those who have been renting properties without disclosing the income or those with a social media presence with images of expensive cars or exotic holiday’s which don’t tally to their disclosed income will if not now then later under a Discovery enquiry, have some pertinent questions to answer. In fact over 77% of enquiries raised in 2012/13 arose from the
Hirji Patel Tax Director at John Cumming Ross Ltd
Connect system and with over 3,000 investigators now having access to the system, the number of enquires will only go one way and that is up. In the past before an enquiry could be implemented, there would be many months of preliminary work to gather information and to manually analysis it. Now with a tap of a computer button the inspector is able to see a spider’s web of information about a person’s financial affairs and to an extent their social life, with any anomaly being highlighted for further enquiry or a Code of Practice (COP9) enquiry with a potential of criminal prosecution and maybe even a spell in jail. HMRC has had further help recently from the US tax law called the Foreign Account Tax Compliance Act (FATCA) in respect of accounts and investments held offshore by UK based individuals. UK financial organisations as well those in Crown Dependencies and Overseas Territories (e.g. BVI, Jersey, Guernsey, Isle of Man, etc) which want to invest in the US or have a presence there are required to register with the UK tax authorities, failure to do so results in a 30% withholding tax on the income arising from US investments. The financial institutions are eager to comply both in terms of avoiding penalties for non-disclosure and to enhance their reputation and as such a large volume of information is flowing into HMRC and then into the Connect system, with understandable consequences. Therefore in a nutshell the days when one could say that if I keep my head down and not disclose my taxable income without any major risk are well and truly over.
JOHN CUMMING ROSS LIMITED CHARTERED CERTIFIED ACCOUNTANTS
to 1st Floor, Kirkland House, 11-15 Peterborough Road Harrow, Middlesex HA1 2AX
Telephone: 020 8864 6689 Fax: 020 8423 6956 Email: email@example.com www.jcp.uk.com
Asian Voice & Gujarat Samachar
23-Suresh Vagjiani.qxp_A4 Temp 06/07/2015 15:23 Page 23
London property back on track
ith the election now history, and the Conservatives with a clear win, the London property market is already on a roll. There was no time for the dust to settle, already there are reports in the market of deals being transacted. Estate agents were reporting calls from buyers at the top end of the property market, as the Conservatives’ shock election win lifted fears of a mansion tax on £2m-plus homes. At the top end, stalled transactions will now start to creep back into the market. One agent reported calls coming in for properties just after midnight when the Conservative victory looked assured; half of which came from UK purchasers and the other half from overseas buyers. This included an offer from a middle eastern family on a £2.5m apartment in St John’s Wood which had been on the market stagnating for the last eight months. There was even a fear in the market from buyers, worried deals which were in the pipeline where the prices had been agreed pre election would now be pushed up in price. Buyers were frantically trying to get them over the line, and it can now be seen there is a difference in property prices pre and post election. Last week on Friday morning another agent had already done over £25m worth of exchanges which were in the pipeline, with another £5m expected during the rest of the day. Another office had received three offers as a result of the election, two of which were on properties costing over £2m. The threat of mansion tax had stalled the market since the beginning of the year. The census is the election has been a very bullish outcome for the London property market at all price levels. Some predict residential property above £2m to increase by up to 20% in a year, and that over the next five years capital values in prime London could even double, now that the brakes have come off. This upbeat euphoria was not restricted to only bricks and mortar, for example shares in Foxtons, the London estate agent known for its green mini’s, soared by nearly 12 per cent on Friday morning following the victory, owing as much to the demolition of the “mansion tax” as to the defeat of Labour’s pledge to slash letting agents’ fees and introduce three-year tenancies. Labour had plans to heavily regulate the rental sector. Warning that these proposals could have destabilised the buy-to-let sector, Richard Lambert, chief executive of the National Landlords Association, said the Tory majority “should give confidence to landlords to invest their own money in providing homes and allow the rental market to develop to meet the needs of a rapidly changing tenant demographic”. Regardless of the election result, the fundamentals of property still haven’t changed, there is a chronic lack of housing stock and the
Suresh Vagjiani Sow & Reap A Property Investment Company
demand for housing is increasing due to factors such as net inward migration, the break down of the family nucleus etc. and the need for housing stock doesn’t look like it will be satiated in the near future. The proportion of 25 to 34 year olds owning their own home has fallen from 59% to 36% in a only decade. Home ownership is decreasing. Not surprising given house prices rose by just over 7% last year and almost 18% in London, correspondingly wages rose by only 2.1%. We’re in a situation where house prices are increasing more than a person can earn, let alone save, in short you’re probably better of buying another property than working! Our view of investing pre election was based on taking a pessimistic view and looking at the worst case scenario. Even if Labour had won and the mansion tax was implemented, after the market understood what the policy was and how it would be implemented the prices would after a short time start rising again. It was the fear of the unknown which was scaring investors. Taking into account this scenario London property prices would still carry on going upwards, I mean where else are investors going to put their money? There aren’t many cities in the world with their doors as wide open as London regarding property. Both in the amount one can invest and the ease of money flow in and out. There was a herd mentality created by this uncertainty. Properties which were not even affected by the mansion tax were being sold cheaply in our opinion, with sellers in a rush to get out now. With this in mind we closed a few deals which were cheap mostly due to the election. I believe the discount rate was around 50% of the normal market price. Two of which have exchanged and are yet to complete and another has already completed. They have no doubt risen in price overnight. We have come up with two investment deals both in Central London one via a fund route and the other directly in a property; the principle being it is better to own a smaller piece of a quality asset than a whole piece of mediocre one. On that subject I was speaking to a property dealer/investor ealrlier who was telling me about an investment he had made in Birmingham City Centre, eleven years ago. He had bought the property for £140,000, since that time the property had always been rented, but hadn’t gone up in value in fact it had gone down to £120,000. This made me feel quite smug about myself, as I too had invested in a property for £140,000 in Birmingham City Centre, apparently for a discount, about the same time and mine is worth £135,000 currently. This drives home the first property mantra: Location, Location and Location. Keep chanting this when investing and you will probably do quite well! Asian Voice & Gujarat Samachar
24-Sreadbetting.qxp_A4 Temp 06/07/2015 15:24 Page 24
Spread betting: A way of investing
pread betting is a way of investing in the movement of a particular market – like forex, shares or indices – without actually owning the asset.
Spread betting enables you to speculate on the movement of a particular asset – like a currency pair, company stock or even an entire index – without actually owning the asset. With spread betting, you predict an outcome, and the degree to which you are right or wrong determines the size of your profit (or loss). Spread betting differs from alternatives such as fixedodds betting, where you have a simple win/lose outcome and a pre-defined payout or loss. When financial spread betting, the outcome you're speculating on is the direction in which the price of a financial instrument will move. If it moves the way you predict, your profit will grow the further it goes. However, if the market moves against you, your loss will also increase as the price movement becomes greater. Betting on the price increasing is referred to as going long, while betting that it will decrease is called going short (or ‘shorting’).
Spread betting gets its name from the spread that all providers wrap around the underlying market price. The costs of the trade are factored into the two prices, so you will always buy slightly higher than the market price, and sell slightly below it. The difference between these prices is known as the spread. If you think a market is set to rise you ‘buy’ at the offer (higher) price, and if you think the market is set to fall you ‘sell’ at the bid (lower) price. When you want to close a bet, you take the opposite action to when you opened it: buying if you sold, and selling if you bought. For that reason, the market price of your asset will have to move beyond the spread before any profit is made.
Benefits of spread betting
The main benefit of spread betting as opposed to conventional forms of trading is that you can trade on both rising and falling markets, giving you the potential to make a profit regardless of whether the markets go up or down. But, there's plenty more to consider. l
All profits made in spread betting are exempt from UK Capital Gains Tax*. This automatically saves you from losing a large percentage of your profits. As spread betting is a derivatives product, it’s also exempt from UK stamp duty. *(Tax laws are subject to change and depend on individual circumstances.) l l
All spread bets have a fixed timescale, expiring from within a day to several months away. You are, however, free to close them at any point before their designated expiry time, assuming the spread bet is open for trading.
There are two types of spread bet:
l Daily funded bets run for as long as you choose to keep them open. l Quarterly bets are futures bets that expire at the end of a quarterly period. These bets have funding costs built into the spread.
Asian Voice & Gujarat Samachar
You can trade 24 hours a day Use leverage to maximise your profits
As a leveraged product, when you spread bet you only need to deposit a small percentage of the full value of your position - this is known as margin. This means that the potential for profits, or losses, from your initial capital outlay is significantly higher than with traditional trading.
The bet size
The bet size is the amount you bet per unit of movement of the underlying market. You can choose your bet size, as long as it meets the minimum. Your profit or loss is the difference between the opening price and the closing price of the market, multiplied by the value of your bet.
Any profit you make is tax-free
Ability to go long or short
Spread betting is one of the few forms of financial trading that enables you to profit from falling market prices. So you can gain exposure to market movements regardless of the direction in which the markets are moving. For example, if you think the markets are going to rise, you go long on the price (buy). Your profits will rise in line with any increase in that price (and your losses will increase in line with any fall in price). If, on the other hand, you think the markets will fall you go short on the price (sell). Your profits will rise in line with any fall on that price (and your losses will increase with any rise in price). l
Trade on a huge range of markets
With spread betting, you can not only take a position on thousands of individual shares, indices and currencies around the world, but also place trades on sectors, commodities, bonds and interest rates.
25-Travel Insurance.qxp_A4 Temp 06/07/2015 15:26 Page 25
Travel insurance; protects you against the unforeseen
illions of people who believe they have been sensible by taking out travel insurance before jetting off on holiday will find that their insurer ultimately rejects their claim when things go wrong. The problem is likely to be particularly acute, when many policies will not have adequate cover to deal with major issues. For instance those with cheaper policies may not be covered if strikes in Greece make it impossible to travel, or if they have to come home after a terrorist threat. Many travellers with cheaper policies, particularly those who have arranged their holidays independently, will be unaware that they aren’t covered for suppliers such as hotels going bust due to issues in Greece. Cheaper policies don’t cover everything instead, get good, well-priced middle-of-the-road or above cover, and ensure you read it before you travel so you can cancel and re-buy if it’s not suitable. Anyone who is travelling to Greece should look for a policy that covers supplier failure and provides cover for civil unrest, and curtailment and abandonment of a trip. Often, these elements are only written in as standard on more expensive policies but can be added on, at an extra cost, to cheaper policies. You can cancel any policy for free within a 14-day period after purchase, so it is particularly critical to read the details within this window. Experts also warn that different policies may have wildly varying stances on issues such as alcohol consumption, what constitutes a hazardous sport, and what medical conditions policyholders need to disclose. The most common reasons for insurers to reject a claim include the failure to disclose a pre-existing medical condition. Those who become ill with conditions that could have been prevented by routine inoculations may also find their claims rejected. Travel insurance is designed to protect you against the unforeseen, not known events, or careless, reckless behaviour. As a result, insurers expect you to take reasonable care of yourself to guard against injury and illness, and to safeguard your belongings from loss or damage. Customers who take part in hazardous sports or who drink alcohol while on holiday have also fallen foul of the small print in their policies. The ombudsman says it has seen a “steady increase” in complaints about the way that drinking is tackled by various insurance companies. While it is not uncommon for policies to include an exclusion for alcohol -related accidents and incidents, the ombudsman would take a dim view of insurers who, through restrictive use of exclusions, implied that people were expected to refrain from drinking on holiday if they wished to remain insured.
Know your limits Cancellation cover
You should always buy your travel insurance as soon as you make your holiday arrangements. If you then have to cancel the trip you know you are covered. You first need to check that your insurance covers your chosen destination.
Annual or single trip?
You can buy an annual travel policy that covers all your holidays for a year, or you can buy cover each time you take a break.Generally speaking, if you are making two or more trips abroad in the year, and one of those trips is long haul, an annual policy is probably better value.Annual cover also gives you the flexibility to arrange last-minute holidays.
Buying travel insurance means choosing limits of cover for various elements of the policy. You should declare any pre-existing medical conditions when you apply for insurance. If you don't you could invalidate a claim.
Attitudes to pre-existing conditions vary. But your insurer is most likely either to: l refuse cover completely l refuse to cover any claims arising from the condition, or l cover the condition, but charge a higher premium.
Luggage and belongings
Travel insurance covers your baggage and belongings in case they are lost, damaged or stolen.
Personal liability is often overlooked but covers any costs if you injure someone, or damage their property. Travellers can choose a policy for a single person, a couple or a family. It can often work out cheaper to buy a family policy than to arrange separate cover for several people.
The excess is the amount that the policyholder pays towards any claim - and you need to check the excess terms on the policy before you buy.
Check the small print
The small print of your policy will give details of the sorts of activities that are excluded, and could include some common holiday pursuits such as water skiing or paragliding. If you are going skiing, you will need winter sports cover. But again you should read the small print because some insurers routinely exclude off-piste skiing or snowboarding. Asian Voice & Gujarat Samachar
26-27-Indian Realestate x2.qxp_A4 Temp 06/07/2015 15:27 Page 26
Continued growth in the Indian Property Sector
he real estate sector has been the backbone of the Indian economy and has been a major contributor in the economic growth. It is evident from the very fact that the Real Estate Sector contributes 8.53% of the total GDP and also witnessed growth rate to the tune of 30%. Nowadays with the changing attitude of people from living on rent towards owning their property the real estate sector has witnessed huge demand for the residential segment. The demand for commercial development is also growing at a fast pace due to a paradigm shift from unorganized retail towards organized retail coupled with MNCâ€™s interest in establishing offices here in India. For the second largest populous country, job creation is of utmost importance for it to return to its high GDP growth levels. Job creation primarily depends on the labour intensive comfort level and the Indian financial system is caught amidst liquidity trap.
Delhiâ€™s Central Business District (CBD) of Connaught Place has been ranked as the sixth most expensive prime office market in the world with occupancy costs at US$ 160 per sq ft per annum, according to a survey by CBRE. According to the National Housing Bank (NHB) Residex Index, residential property prices show an upward trend in the second half of 2014. First half had seen property prices dip, as the weak rupee and high inflation had a negative impact on spending. Needless to mention that 2015 will largely be about recovery. The Ministry of Statistics Program and Implementation and PwC Analysis predict a growth of 8 to 9 per cent. Added to this, the introduction of REITs, improved market sentiment and more efforts by the government to reduce project loopholes and bottlenecks in transactions will go a long way in clearing the way for positive trends in 2015. In India, real estate plays an important role, from affordable housing to infrastructure and generating employment. Here are some of the reasons why: l The Economic Survey of 2012-13 revealed housing to be the second largest industry that generates employment, after agriculture. l With more than 300 linked industries like steel, transport, construction, cement and brick, real estate contributes significantly to the country's GDP share and capital formation.
l NHB's report places real estate as the third most impactful industry in India in terms of its effect on other industries and fourth in terms of employment generation.
The Indian real estate market size is expected to touch US$ 180 billion by 2020. Also, in the period FY08-20, the market size of this sector is expected to increase at a compound annual growth rate (CAGR) of 11.2 per cent. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for India's growing needs. Real estate has emerged as the second most active sector, raising US$ 1.2 billion from private equity (PE) investors in the last 10 months. Foreign investors have bought tenanted office space worth over US$ 2 billion in India in 2014, a four-fold rise compared to the previous year, in order to increase their rent-yielding commercial assets in Asia's third largest economy. According to a study by Knight Frank, Mumbai is the best city in India for commercial real estate investment, with returns of 12-19 per cent likely in the next five years, followed by Bengaluru and Delhi-National Capital Region (NCR). Also, Delhi-NCR was the biggest office market in India with 110 million sq ft, out of which 88 million sq ft were occupied. Sectors such as IT and ITeS, retail, consulting and e-commerce have registered high demand for office space in recent times.
Asian Voice & Gujarat Samachar
l The residential segment, comprising residential buildings, townships, schools, colleges and hospitals and other projects, makes the maximum overall contribution in the real estate industry and commands the largest part of its market share.
l The real estate sector employs more than 35 million people, especially low and medium skilled labour
Directly impacts manufacturing
l Attracts a lot of money in foreign direct investment (FDI) Recap of 2014, its main events and economic drivers
l According to Colliers Research, Bangalore and Chennai witnessed maximum demand and growth, while Kolkata, Mumbai and Gurgaon were unchanged. Despite this, many developers launched new projects during the end of 2014.
l There is a backlog of unsold property. 2014 has seen delays in approvals, project clearances and targets, apart from debt commitment on property and government spending less in this area and a huge delay in finishing projects l Construction industry has grown 2 per cent from 2014 to 2015.
26-27-Indian Realestate x2.qxp_A4 Temp 06/07/2015 15:28 Page 27
l Both large and specialised players stand to benefit and gain equally.
Trends in 2015
l The Planning Commission estimates that by 2030, about 600 million people will live in cities. Affordable housing therefore is a huge demand and the industry has a large gap to meet, with shortage seen among the low income groups.
l International agencies like IMF and World Bank predict an increase in GDP. l
Real estate market is driven largely by sentiment.
l First half of 2015 will be largely recovery with property markets.
l ProjectVendor.com projects a 10 to 15 per cent increase in growth from FY14 to FY17 and 11 per cent growth in FY15. Residential and commercial projects, organised retail will contribute to this growth significantly.
l Real estate construction market is poised to grow by 20 per cent between now and 2017.
l Real Estate Investment Trusts (REITs) and commercial real estate will make significant impact. REITs will have a huge impact in 2015. It is an internationally tried and tested strategy, especially in the USA, Taiwan, South Korea, Singapore and Australia. An REIT is a trust that buys, sells, develops and manages incomegenerating real estate property such as malls, commercial office spaces and more, with the main intention of attracting investors who can manage an interesting array of properties. Corporate investors benefit from tax exemptions. It largely impacts small investors and encourages proper investment channels in large real estate accounts, and is a better alternative to investing in stock, due to its higher returns and a diversified portfolio of investments. Blackstone, Xander, Brookfield and more real estate funds intend to launch REITs in the country and DLF, Phoenix and Prestige are expecting to make use of this huge opportunity. l The residential real estate space in India is divided into affordable housing, mid-level priced houses and the luxury segment. The onus on low cost housing is expected to put pressure on the luxury segment, but this is not significant. 2015 will focus more on recovery and clearing inventory, construction deadlines and backlogs. l Pricing is very important. Affordable price points will lead to higher absorption levels.
l Easing pressure on the rupee will also impact the industry positively. Thus it is a belief that with the continued growth driven strategies and activities coupled with due attention and support from allgovernment, banks, bureaucrats and media the Indian property will be able to withstand any type of market conditions and would be playing key role in taking Indian economy to next level.
Asian Voice & Gujarat Samachar
28-Understanding ISA.qxp_A4 Temp 06/07/2015 15:30 Page 28
here are plenty of ways we can think of putting our money to good use; so the fact that we end up handing over an enormous chunk of it to the taxman every year tends to rankle. However, if we thought a little bit more about how we save and invest, we could save an incredible amount. And this isn't through complex and controversial taxavoidance schemes, it's through the government-approved ISAs. ISA is just a wrapper which gets put around things you already know well - like bank accounts. The product inside is exactly the same - all the wrapper does is save you tax. There are two types of ISA.
The first is the most straightforward - the cash ISA. These are exactly the same as savings accounts. However, instead of having to pay your highest rate of tax on the interest, there's no tax at all on the interest.
ensure it suits you, and invest. If you're more of an expert, you can set up a stocks and shares ISA through a platform, and then use it to invest in a huge range of things, from shares in specific companies, to a whole range of funds and investment trusts. These aren't entirely tax-free, but there are some tax advantages. There's no tax on profits. If you invest in shares outside an ISA, you can only make a certain amount of profit in any year before you have to pay tax (£10,900 this year). If you make more than this, basic rate taxpayers pay 18% and higher rate taxpayers 28% in capital gains tax. Inside an ISA there's never any tax on gains, no matter how much you make. There's also no tax on the interest earned on bonds, and there's a 10% tax on dividends. Basic rate taxpayers only pay 10% on dividends outside an ISA anyway, but higher-rate taxpayers pay 22.5% and additional-rate taxpayers pay 32.5%.
Every year, starting 6th April, you get an allowance to invest in ISAs. This year the overall limit is £11,520. If you don't invest during the year your allowance disappears. The annual limit is worth taking some time to understand. You can invest all of your annual allowance in stocks and shares. Alternatively you can invest up to £5,760 in cash, and the remainder in stocks and shares. If you use your cash ISA allowance you don't have to use the stocks and shares one too, and you don't have to invest the full £5,760 to take advantage either.
Moving your money
Just as with normal savings account, there are a number of varieties to choose from. There is the simple instant-access savings account, there are ones which have fixed rates and you have to save into them for a set period of time, and there are ones where you have to give notice of any withdrawal. All you need to do is pick the type of account that suits you, search for the best rate, and open an account.
ISAs are not fixed term products, so they will roll on until you take the cash out. As soon as you withdraw anything at all from your ISA, that part of your allowance will disappear. If you decide to move between savings accounts or funds,
Stocks and Shares ISA
The second type of ISA is known as a stocks and shares ISA which is for more long-term investments, and invests in the kind of things which can go up in value - but can also go down. Instead of investing in cash, these go into a number of things such as shares and bonds. The simplest way is through a fund: you pay money into the fund, where it is mixed with money from thousands of other investors, and then an expert fund manager will decide the companies they want to invest in. This has the advantage that you don't have to know which are the best companies to invest in, you just need to decide on the type of fund you want. You can then research the most recommended funds in this sector, read the prospectus to
Asian Voice & Gujarat Samachar
it's important not to cash in your existing investment - or your allowance will disappear. Once you get your head around ISAs they are nowhere near as complex as they first seem. They're just a great way to save or invest exactly as you would do anyway - but save a fortune in tax while you're at it.
29-Mortgage.qxp_A4 Temp 06/07/2015 15:31 Page 29
Mortgage lending on the rise
ith the election outcome having upset the forecasts of almost all of the major pollsters, several political parties will be re-thinking which polling companies they should look to engage next time as they attempt to gauge the public mood when we do it all again in five years’ time – assuming this government make it to 2020. From the housing market perspective, the potential threats that a potential Labour government would have looked to impose around rent controls and the imposition of longer term tenancies would appear to have been removed. Buy-to-Let has been one of the growth aspects of the housing market since the recovery began two to three years ago and the threat that these relatively radical policies posed may have had a significant dampening on investor appetite, and could have even lead to existing investor landlords exiting the market placing further pressure on an already under-supplied housing market.
Property prices increased by 16.7% on an annual basis driven by renewed demand, as there were 20 prospective buyers chasing every property. In comparison for the whole of the UK there were 11 potential buyers per home. With such demand property sales in the capital increased by 5.8% in May, the biggest monthly increase since August 2014. With reports of consumer confidence on the rise, spending on the up and zero inflation, it's full-steam ahead this spring for the UK's, and the capital's, property market – which are benefiting from the positive glow of the general economic recovery. Mortgage lending has increased since May, banking industry figures show, adding more fuel to the housing market. In a recent report in the telegraph, Just over £10bn was given out in mortgages in the May, up from £9.7m in April and back to levels last seen in November 2014. The net level of mortgage debt, once repayments in the month of May was taken into account, grew by £1.1bn to £793.6bn, according to the British Bankers’ Association (BBA) data. Total (Swiss: FP.SW - news) mortgage debt increased by £7.2bn compared to May last year. The housing market cooled before the general election amid concerns that some Labour policies, such as the mansion tax, would hit property prices. However, the market has picked sharply since the Conservative victory .
Economists expect sustained demand will keep on pushing house prices higher. It is expected that the house prices will rise by 6pc in 2015 and there is has an upside risk to this forecast coming from the current lack of properties coming on to the market. The housing market activity is expected to continue to improve amid generally supportive fundamentals and reduced uncertainty following the general election. Unsecured lending also increased in May, as £1.6bn worth of personal loans were given out just in May alone. Overall, consumer debt - which includes credit cards, overdrafts and personal loans - has increased by £4.5bn yearon-year, indicating that consumers are growing increasingly confident in the economic recovery . Initiatives such as Help to Buy have also been hugely successful in enabling first-time buyers and home-movers with relatively modest deposits from, once again, accessing home ownership. The Help to Buy Mortgage Guarantee initiative, backed by government, is due to end in December 2016 so unless mortgage lenders take the initiative and use the private insurance market to replace those guarantees, we may see a reduction in the number of high loan-to-value, low deposit mortgages available, and therefore, at present, it looks as though we will need government to continue to provide those guarantees for high LTV (95% ) lending beyond its current end date. The Help to Buy Shared Equity scheme has been extended to 2020 which should provide some assurance to developers, but again, a five-year time-frame is not really a strategic period and we need to be thinking further ahead.
The Housing Minister post should be Cabinet position, working closely with and in alignment with other stakeholders including the DCLG, Treasury, DOE, Local Authorities, Developers and the Council of Mortgage lenders to develop a cohesive Housing Strategy for the next 10, 15 and even 20 years. We need to be thinking longer term, generational planning, not parliamentary term. Our demographics are changing and are forecast to change further. We are all living longer and, in general, people are moving far less frequently. We have an above average divorce and/or separation rate compared with our European neighbours and, as a consequence, that often means the formation of another household when our housing stock is growing only marginally. Asian Voice & Gujarat Samachar
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Topics ............................................Author ......................................Page No. UK Equity Market ..........................by Roger Aitken ..................................4-5
Spread betting: A way of investing ..............................................................24 10 Startegies for getting rich
from tax-free trading ......................by Alpesh Patel ..................................6-7
Bonds and the election ..................by Ben Kumar ........................................8
Silver “ The most undervalued
asset on earth”? ............................by Ragu Dharmaratnam ......................9 Will India’s love of Gold
ever Diminish? ..................................by Mike Temple & Oliver Temple ......10-11
Understanding ISA’s Indian Banks Role in the
UK and challenges it faces ............by D P Trivedi ......................................12 The UK regions: Back on the
Global property map? ....................by Nilesh Raj Patel ..............................13 Mortgage lending on the rise Investing in an alternate
asset class: Bridge Financing ........by Paresh Raja & Zaheed Nizar ........15 Challengers can transform the
UK’s banking landscape ................by Bhanu Choudhrie ......................16-17
Pound Sterling surge after
elections - ......................................by Paresh Davdra ..............................18
Asset Management for working
professionals and families ..............by Rakesh Shah ..................................20 Big Brother is watching HMRC’s
information gathering resources ....by Hirji Patel ........................................22 London Property back on track ......by Suresh Vagjiyani ............................23
Travel Insurance; protects you against the unforeseen ..............................25 Continued growth in the Indian Property Sector ..................................26 - 27
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