Blog – Severn Valley Business Group
 

Inheritance Now

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Inheritance now, not later:

Many people these days are using the Equity that they have spent many years paying for in their home, to allow their children their inheritance when they actually need it.

Years ago life expectancy was the 3 score years and 10, meaning that the children would have been mid 40’s and perhaps just setting children up in university, etc. These days when we die, our children may be in their 60’s, not really needing an inheritance, so have we missed the boat?

By taking Equity Release, a high percentage of applicants have the reason for helping children or grandchildren get on the property ladder, as they can provide the much needed deposit (on average 10-15% of the house value needed) to be able to get a home of their own. So why can’t they wait and save, I hear you ask? By getting them on the housing ladder earlier, the house prices are more likely to be lower than in 3-4 years’ time, the rates are low on mortgages at the moment and they have a longer time to make their mortgage payments, making a mortgage more affordable.

Equity Release can have the interest paid, by either the Equity Release applicant, or we have had the children/grandchildren pay this, so that in effect they have a 100% mortgage. Times are changing and these days Equity Release has all the protection applied to make sure you keep full ownership for the rest of both lives and that the family will never owe a penny themselves. Advice is paramount in making a decision whether this is not for you or not, but as long as you are over 55, own your home of value of over £75k, you can at least research this possibility.

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Equity Insight

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Not only are we having to contend with the ever present and seemingly endless Brexit negotiations but we are now having to suffer lurid press headlines in regard to vast hordes of politicians who can’t seem to keep their hands under control.  No doubt we shall hear more about the do’s and don’ts from Clive and Caroline and possibly what are the consequences from Chris!

We have today received notification from the Monetary Policy Committee of the Bank of England that interest rates have risen by 0.25% to 0.5%.  For some this is historic as not only will it be the first time that rate have risen in over 10 years but also possibly the first time ever that they have doubled in a single day!

Given all these changes I thought that you should have a read of the latest Equity Insight – Issue 660.  There are some views on what is happening to the markets but also some thoughts on how business is reacting and positioning itself for a number of potential outcomes.

Feel free to contact me if there is anything of interest in the Equity Insight that you might like to discuss on either my mobile 07711 710 628 or my email address Rupert.harvey@redmayne.co.uk.

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3 business lessons from the movie Hidden Figures

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Inspiration in business can come from the strangest places. The other evening I was watching the film Hidden Figures. It tells the true story of a group of African-American women who played a crucial role in the space race for NASA during the 1960s. It’s an inspiring and moving story of their fight against prejudice and discrimination in an America that still had segregation. 

It’s a great film, well worth watching, but next day I realised it had a lot of messages about building successful businesses.

One of the three main characters is Dorothy Vaughan. Dorothy headed a 30-strong segregated team of ‘human computers’, women who made the complex mathematical calculations needed for space flight by hand. The film tells how she realised that the new IBM computer would soon replace her job, so she took matters into her own hands, taught herself the programming language Fortran then trained her entire team in it too.

There are three key things all of us can learn from Dorothy Vaughan’s story.

1.      She had her eyes open

Dorothy identified and understood the threat to her livelihood – she was alert to the changes going on around her. Are you looking to see trends and developments in your particular marketplace? Are you awake to changes? What are the threats to your business right now? These may not be technical, as in Dorothy’s case, but may pose just as big a threat.

Too many business owners have their heads in the sand, focusing purely on what they are doing – and the way they have always done it. Develop a strategy for making yourself aware of the changing business environment.

2.      She embraced the change

Dorothy Vaughan refused to be left behind. She didn’t moan or complain about her bad luck, being a ‘human computer’ just when a machine that could do 24,000 calculations per second was being launched. She equipped herself with the knowledge to take advantage of the brave new world of machine computers.

And it wasn’t easy – in the film, the book she needs to teach herself programming is in the ‘white only’ section of the library where she is not allowed to go. So she ‘borrows’ it as she is thrown out by police, telling her son ‘I have paid my taxes, you can’t steal something that you have already paid for’!

As an African-American woman in the segregated south of the USA, Dorothy faced just about every level of opposition she could. Her determination and effort made the difference; through her struggle she positioned herself as the go-to expert.

As Charles Darwin said, ‘it is not the strongest species that survive, nor the most intelligent, but the most responsive to change’. Dorothy took a threat and turned it into an opportunity.

3.      She took her team with her

Throughout her career Dorothy Vaughan was an advocate of women of all colours. Having learned Fortran, she taught her team, so that when NASA realised it needed more programmers, she could meet that need with her team, thus keeping them all in a job.

Investing in your team, keeping their skill set up to date, is crucial for any business to grow. If you find yourself unable to trust your workforce with tasks, ask yourself if you have equipped them with the skills necessary. A chain is only as strong as its weakest link!

In a rapidly changing business environment, we all need to be looking at what’s coming down the line. We’ll need to adapt, to develop our skills, and ensure our team is ready too.

Now, the big question is who to cast in the lead role of ‘Altus – The Movie’?

 

 

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Should we fear October

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Should we fear October?

11 October 2017

October is considered by many to be the scariest month. This year, not only do we have Friday the 13th to contend with, in addition to the traditional Halloween mischief night and trick or treating, but seasoned investors may know that October is historically one of the most volatile months for stocks.

Additionally, for those of you who are superstitious, 2017 may bring extra dread if you believe the ‘curse of the number 7’. This relates to the theory that the month of October suffers especially significant drops, in particular, in years ending in the number 7.

The most well-known cases of this phenomenon were in 2007, 1997 and, of course the largest of drops, known as ‘Black Monday’, in 1987.

On 19th October it will be 30 years exactly since ‘Black Monday’, when the FTSE 100 index dropped by 12.2 per cent and the Dow Jones plummeted by almost 22 per cent in just one day, falling by 508 points. This still stands on record as the biggest single-day percentage decline.

However, despite the dramatic falls, the crash of 1987 was relatively short lived. During the next two trading days, the Dow gained nearly 300 points and the market actually finished the year above where it started.

The stock market is resilient and has recovered from difficult times. When considering the month it is worth remembering that past performance is not an indicator of future results. October is actually one of only 3 months in the year when the FTSE 100 tends to outperform the mid-cap FTSE 250. This could be due to the fact that October signals the end of the weak trading period, starting at the beginning of May, caused by the ‘Sell in May’ effect.

Additionally, on average, markets in October tend to rise in the first fortnight of the month before falling back. The last few days of the month tend to see a rise and the last trading day of the month usually has the best record of any month’s final trading day.

This year could be a positive one for October, as gains in the market have successfully navigated August and September, the worst two-month stretch of the year, based upon historical performance. If this trend continues in October we could see even stronger gains in the market going into 2018.

However, with the threat of a potential rise in interest rates, tightening monetary policy in the US and the conflict between the US and North Korea and other geopolitical factors it may be worth keeping a look out for signs of potential volatility.

Be prepared to react but keep a level head, don’t panic and think about the longer term. Having confidence in your portfolio and holding well-thought-out investments with long-term strategies should help you to stay calm when others may not.

Additionally, if stocks do fall in October, as history suggests, then this could actually present buying opportunities, especially if stocks become attractively valued.

Of course, if you find that you lack the time or opportunity to monitor your portfolio then you may wish to entrust the running of your portfolio to a qualified Investment Manager, obviously I would be only to happy to help out.  Please contact me on 07711 710 628 or Rupert.harvey@redmayne.co.uk.

Please note that investments can fall as well as rise in value and past performance is not an indicator of future results.

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Home and remote workers

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There is a lot of discussion in the media about “Home Working” as though this concept is new! Agreed the government has extended the rights of employees to work flexibly, but I have been either working from home on a casual trust basis to being officially being based from home, getting on for 25 years ago. The main objection to home based working is the lack of strength and imagination of management. Managers need to measure by “output” not “input”. Just because a manager can see an employee at a desk working at a PC doesn’t mean they are doing anything constructive! How many of us have seen games of Solitaire or a holiday web site across the office at an inattentive employee? Measure by output and it doesn’t matter where or when a team member actually performs the task in hand.

Clearly home working is not suitable for all occupations, or all employees, or all the time. There are huge benefits to be gained by employers and employees alike. Most of us know what they are, and there are too many to go into here. However I did hear on BBC Radio 4 a comment that in winter you have to heat the house, therefore cancelling out the advantage of not using road fuel! What rubbish! When I am in the house by myself in winter I don’t heat the whole house, I just heat my study! Come on everyone think positively, millions of people work from home for some or all of the working week, and have done so for years. To be honest the main problem with home-working is having the discipline NOT to go back to your desk all the time to “just check this or that” or “just finish that …….” at the end of the working day.

We have the broadband service in the vast majority of the country, ensuring that this is just not an issue. If you checked the capability previously and thought the technology made it impractical, look again, and contact a professional for advice.

 

 

Food for thought

It’s unwise to pay too much, but it’s also unwise to pay too little. When you pay too much you lose a little money; that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing you bought it to do.

The common law of business balance prohibits paying a little and getting a lot. It can’t be done. If you deal with the lowest bidder, it’s well to add something for the risk you run. And if you do that, you will have enough money to pay for something better

John Ruskin February 1819 – January 1900

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