12024 Money in retirement

There has been a few comments about the exchange rate and how it is affecting those of you who live in Italy. I was therefore wondering - obviously state pensions are hit and presumably private ones too if they are invested in UK. But what about investments? If you move permanently would it have been wise to move them to Italy or is that not a good idea. Is there any protection with the banks like in the UK ie if you have more than £35, then you split it so you are covered (think that went up recently). What are interest rates like in Italy?
Just thought this could be of interest to people retiring shortly. :eerr:

Category

General chat about Italy

For an individual depositor the 'guarantee' is for €100,000 in a bank in Italy.
Whether to move investments into a country using the Euro is a difficult question to resolve - if certainty in forward planning is essential, then holding assets in the currency in which you are spending money is a no-brainer to avoid embarrassing currency movements: but then at what price are you willing to buy Euros? You have to take a view on how the Sterling/Euro rate is going to move, and then over what length period. It isn't ever going to be a straightforward decision....
You also have to take a view on how the deposit rates are going to move - anybody's guess these days - if you are investing in cash: or if you want to dip a toe into the Milan borsa - well, how accurately can you analyse Italian stocks?

[quote=Charles Phillips;114831]For an individual depositor the 'guarantee' is for €100,000 in a bank in Italy.
Whether to move investments into a country using the Euro is a difficult question to resolve - if certainty in forward planning is essential, then holding assets in the currency in which you are spending money is a no-brainer to avoid embarrassing currency movements: but then at what price are you willing to buy Euros? You have to take a view on how the Sterling/Euro rate is going to move, and then over what length period. It isn't ever going to be a straightforward decision....
You also have to take a view on how the deposit rates are going to move - anybody's guess these days - if you are investing in cash: [SIZE="4"]or if you want to dip a toe into the Milan borsa - well, how accurately can you analyse Italian stocks[/SIZE]?[/quote]

If transferring pounds to euro you need to do it in stages to reduce losses due to currency movement. It's not going to be possible to second-guess what the pound/euro rate will be at any given time. (I cursed when I had to transfer a sizeable sum at €1.33 - happy days). It may be 75p to the euro in a year's time, who knows?

For equity or fixed interest investments, the conventional way to invest in Euro would be to use a unit trust or OEIC denominated in euro from one of the UK (or other) fund management groups. No doubt the cynics will tell you how crap the fund managers are (yawn, heard it all before) but you can ignore them as they are usually people who have no need of investment services.

There are lots of funds, many from the top houses, usually administered from IRL so they don't deduct tax at source. IRL is the modern "offshore", but is under the full scrutiny of the EU (you may or may not see that as an advantage :bigergrin:).

Whatever else, please promise you won't try to dabble in individual shares on any of the world's markets ...........

Terry

You should be able to find UK investment funds in Euros. Ask your bank. Also, take into account that Bank fees in Italy mainly because of high taxation applied by government.

You also need to be aware that if you need to repatriate funds at any time then the exchange rates will be at work again, but not necessarily advantageously!!

The guaranteed amount is certainly very good! I hope the info is of help to someone. Thank you for replies.

I seem to recall that SAGA advertised a cash transmission service, either way, which showed savings against other groups. I think that the site was saga.co.uk/travelmoney, they were showing examples of transferring 100,000 GBP. I have to say that I have never needed to use them.

[quote=SirTK;114839] No doubt the cynics will tell you how crap the fund
managers are (yawn, heard it all before) but you can ignore them as they are
usually people who have no need of investment services.

Terry[/quote]

That's an interesting view Terry. In the interests of disclosure, just so
that we know where your advice is coming from, would you mind saying if you
are or have ever been involved in any sector of the investment industry?

Although this is not the forum for a debate about this issue but I was concerned enough about Terry’s post to want to comment again.

I personally feel that the investment industry has been misleading people for many many years. Very seldom do fund managers add value to investment funds. In fact many studies have shown that most funds fail to even outperform the FTSE. (WM Company 2001 - A comparison of active and passive management of unit trusts. Is just one example).

In reality fund managers actually reduce investment returns due to the high level of fees (sometimes up to 3% per annum) over and above their poor investment decisions.

If you want to invest in equities you would be much better off buying a tracking stock (an Exchange Traded Fund) for example the SPY which tracks the SP500 or the QQQQ which tracks the Nasdaq 100. You will only pay commission on the trades you make and there will be no annual management fee.

Any rational examination of fund managers performance will show that your chances of picking the fund manager (who will probably only be around for 3 years) that out performs the indexes is not good.

Perhaps now people will really start questioning the fallacy that the investment industry is rather than just buying into the old con job that says “Over time the FTSE hase outperformed savings by 200078666% (pick a number) and therefore if you invest for the long term you will be better off”.

Great post but...what is SPY ?

I probably shouldn’t have got started on this hobby horse as it makes me so angry to see good people following terrible advice and losing so much money through incompetence.

SPY is the stock symbol for the SPDR S&P 500 exchange traded fund. It is essentially a basket of stocks that replicates the movement of the S&P500 stock index (probably the most representative of the US Stock markets which influence all other stocks markets in the world). It is traded on the New York stock exchange so you can buy it through any stock broker that allows you to trade US shares.

It is hugely liquid (trades about 250 million a day) and has a very small spread meaning the difference between the buying price and the selling price is 1 American cent as opposed to 10p to 50p for some unit trusts. If you are computer literate you can signup with a direct access broker (something like Interactive Brokers) and pay as little as 0.005c per share that you trade. So if you bought 1000 SPY shares ($84000) you would pay commission in the princely amount of $5 when you bought them and $5 when you sell them. Compare that to a unit trust example of investing $84000 and paying a 2% commission of $1680 which the investment has to make back even before you start! (I just picked a random example here BlackRock Continental European Fund - Class A Initial Charge 5%!!!!! Annual management charge 1.5%. So with this example Initial costs $4260 and an annual cost of $1260. So you are down 6.5 % for the first year BEFORE you even start!!!!
[url=http://www.blackrock.co.uk/IndividualInvestors/FundCentre/Prices/UnitTrusts/FC_3607?mpid=FC_3602]BlackRock - CompliancePage[/url]

So if you believe the US stock market will go up you can buy the SPY and if you believe it will go down you can sell the SPY short (also something that very few funds attempt to make money when the market goes down). If you are right you make money if you are wrong you lose money. And there you are acting like a fund manager without having to pay them 6.5% plus all hidden costs for churning (buying and selling stocks that make up the fund).

[url=http://en.wikipedia.org/wiki/Standard_%26_Poor%27s_Depositary_Receipts]Standard & Poor's Depositary Receipts - Wikipedia, the free encyclopedia[/url]

The QQQQ is the same type of product except it tracks the Nasdaq 100 index which is obviously heavily technology related. There are hundreds of exchange traded funds that mirror from the biotech industry gold (GLD) oil (USO) the Russian stock market etc etc etc but very few of them are as liquid as the SPY and QQQQ.

These products are the best hidden secret that the investment industry doesn’t want you to know about and your investment advisor will probably do all he can to talk you out of using these type of products usually because he doesn’t make a commission out of them.

But hey, rather trust and “investment professional” to “invest” your money with their voodoo of superior research and talking to the companies’ management blah blah blah. After all, they are highly qualified !!! NOT!

What nobody wants to talk about it that even with all their “added value” most funds managed to lose more than the FTSE last year and the few that did lose less than the FTSE brag that they only lost x% this year! Unbelievable.

Having blabbed on like that I suppose I have to add that none of the above is investment advice. I am merely explaining the mechanics of the process so do not take any action based on what I have said, investigate it all yourself.

I also have to add that I personally believe that the stock, commodity, bond etc markets are designed to take money away from the many and give it to the few so be very careful in any decision that you make. You are up against people who are very good at what they do which is taking money away from you.

Sorry to borini for hijacking his thread.

Thank you caveman. The idea of any thread is to get people 'talking' - makes things interesting! :smile:

I foolishly thought the purpose of the thread was to discuss how to get "Money in Retirement".

Having now discovered that I probably need to decide whether to buy or short sell the US stock indices from account period to account period worries me not a little. You're not just stuck with the US indices though - you could buy (or short-sell) gold bullion in a similar way. Who's up for that then - show of hands?

ETF's seem like quite a good idea because they are low cost. What has been the take-up in UK? Not a lot. Barclays show a limited range but that's about it. Maybe the UK is too conservative when it comes to taking up American financial contrivances? Or maybe not.

Back on topic, just because it is cheap to run doesn't mean it's automatically a good way to invest your retirement money. (Anyone remember Adam Faith and his pibs?).

Most investment funds underperform the FTSE because the FTSE is merely an index. It pays no stockbroker commission to buy and sell, no overheads (rent, rates, salaries etc) and no tax. For a FTSE tracker even to equal the FTSE, its managers would have to be doing something wrong.

And the FTSE is too risky for many funds so they tend to hedge it. So what connection do most funds have with a direct comparison with FTSE? No connection. This odious type of comparison is usually dredged up simply to fill column inches (particularly by a certain consumer magazine who, quite frankly, haven't a clue). Any retired individual who does wish to track the FTSE exactly would find it expensive and time-consuming – and would have to accept the “non-ethical” stocks that are included there too. As with the US indices.

I have no axe to grind - if you think you can do things as well or better, and cheaper than someone else, then do it yourself. If you want someone else to do it for you, expect to have to pay him. I can decorate better and cheaper than my decorator, but I choose not to. I could do the garden cheaper than my gardener, but choose not to. Any comments I make come solely from what I do with my own money - I hope our troglodyte friend is working from the same principle?

A final point on costs and charges. Keeping your money in the Building Society is free of charge, right?

Terry

I foolishly thought the purpose of the thread was to discuss how to get "Money in Retirement".

[B]Yes, that is exactly what we are discussing and many people have in the past followed your original advice of trusting fund managers. Surprisingly enough, a lot of these people don’t need fund managers now, not because they have “no need of investment services “ but because the fund managers have managed to loose substantial amounts of the money which these people invested with them.
[/B]

[B]How is the uptake of ETf’s possibly relevant? Most investment advisors will advise against them because they do not make commission selling them therefore uptake amongst the man in the street will be low but professional uptake is high. [/B]

Back on topic, just because it is cheap to run doesn't mean it's automatically a good way to invest your retirement money. (Anyone remember Adam Faith and his pibs?).
[B]
Obviously not but any costs that you pay to make an investment have to be recouped before you make a profit so the less you pay the more you make.[/B]

[B]As you say most investment funds underperform the FTSE therefore if I buy a FTSE ETF I will be more profitable than the most investment funds, WITHOUT having used a fund manager!! End of argument.

The FTSE is merely used as a yardstick and should be easily beatable if the fund managers have the skill and care they promise in their advertisements. The fact that they can’t even beat a basket of 100 stocks is laughable.
[/B]
I have no axe to grind - if you think you can do things as well or better, and cheaper than someone else, then do it yourself. If you want someone else to do it for you, expect to have to pay him. I can decorate better and cheaper than my decorator, but I choose not to. I could do the garden cheaper than my gardener, but choose not to. Any comments I make come solely from what I do with my own money - I hope our troglodyte friend is working from the same principle?

[B]Yes, it is what I do with my own money. My point is that people are using your advice in that they are paying “professionals” for their skill and then finding out when it comes to retirement that the professionals have not preformed what was expected of them.
[/B]

A final point on costs and charges. Keeping your money in the Building Society is free of charge, right?

Terry

[B]Yes and if you had done this over the last 12 years you would be ahead of most equity investments now.

Again Terry, what yardstick do you use to measure your investments? 5% 10% CPI You must surely have some yardstick?

My message is :
The investment industry does not deliver what it promises. The last thing it is interested in doing is looking after your interests as a small investor. You MUST look deeper at the mechanics of the industry and not be sucked in by the hype and conventional wisdom. At the very least consult a financial advisor you pay by the hour not on commission. However, I still believe that you will be entering a lions den and most people will be eaten.

If you think I am too cynical look at this random column (Robert Cole) in Saturday’s Times plugging Jupiter Income.

“The expert’s view – Ben Yearsley , of Hargreaves Landsdown, says: Mr Nutt is a very experienced manager who avoids fads and produces solid, consistent performance. I would never bet against him”.

(See the attached chart for this funds performance.)

So consistent is Jupiter’s performance that the only people who would have made money on their investment are those that had invested before the market took off in 2003 – under the red line (not even taking inflation into account). This is the “EXPERT” management you are paying for.

I know that this subject is deeply uncomfortable for a lot of people and also that it is very very difficult to go against the conventional wisdom but you have to ask the question “Am I getting what I paid my investment people for?” Most people pay in anticipation of making a profit on their investments and for most people the answer to the question is NO!

If you understand and admit that you are just taking a gamble on investments, that there is no science or comprehensive system behind the business it would all be a lot easier.
[/B]