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By  David Craig, on September 24th, 2012 We should be grateful to our foul-mouthed superior Andrew ‘I’m a multimillionaire’ Mitchell. He’s the first Tory to be honest about how our government of arrogant, self-important, self-serving, lying, expenses-thieving multimillionaires views the people who are stupid enough to vote for them and pay taxes to support their luxury lifestyles. We really are just a bunch of ‘f–king morons’ and ‘plebs’.
Twenty years ago you needed just £50m to join the Sunday Times richest 200. At the start of the recession this had shot up to £430m. Since the recession, this has risen again to over £450m. The rich really have had a very good boom and an even better bust. As for our MPs, while bleating that they only earn £65,000 a year, most of them (like Andrew Mitchell) are really pocketing hundreds of thousands of pounds a year from second, third and fourth jobs, plus they are now claiming around £40,000 a year each more in expenses than before the expenses scandal broke. Below is a graph showing how our multimillionaire rulers are making fools of us f–king moronic plebs.
By David Craig, on September 23rd, 2012 The people that banks and financial advisers seem to find most attractive are what some in the financial services industry call the ‘banana skin and grave brigade’ – elderly people who have one foot on a financial banana skin as they don’t know much about finance, savings and investments and the other in the grave as they’ll soon be going on to a better place where they won’t be needing their money any more so there’s no real harm done relieving them of their cash before they depart. As many of the banana skin and grave brigade will have worked all their lives and saved by buying homes, pensions, life insurance, unit trusts and other assets, they tend to control a large proportion of national wealth.
The two things the elderly usually fear most are outliving their savings and becoming so unwell that they have to sell their homes to pay for nursing-home care. This makes them easy targets for advisers with both products like annuities promising guaranteed income and thus peace of mind and with all sorts of more complex investments advertising (but not guaranteeing) high returns. Some sellers use what they call ‘FAG selling’ (‘Fear and Greed) – they exploit older people’s fear of lasting longer than their money and their greed when offered opportunities to increase their savings.
Many financial advisers specialise in the lucrative market of selling to retirees and those planning their retirement. They can have titles like ‘senior wealth advisers’, ‘retirement planning advisers’, ‘elder planning specialists’ or even the rather scientific-sounding ‘financial gerontologist’. One set of dubious products typically sold and mis-sold to the banana-skin-and-gravers were longer-term (five or more years) stock-market investments with punitive penalties for early withdrawal. These were recommended to both men and women in their late seventies and mid eighties when the average life expectancy for men and women was around eighty six. Naturally, quite a few customers with the longer-term stock-market products died before their investments matured and their heirs found that, after deduction of early-withdrawal penalties, the investment companies returned considerably less than had been invested.
If the elderly don’t have much ready cash available, that hasn’t deterred eager financial sellers. Although some over-65s may have limited pensions and savings, many own their own homes making them what’s called ‘asset-rich but cash-poor’. Seeing the potential of the asset-rich cash-poor market, financial firms have devised various schemes, often called ‘equity release’, which promise to free up some or all of the value in their customers’ homes allowing them to live more comfortably till they die in return for the firms taking part or whole ownership of their customers’ properties.
Interest rates on these loans tend to be significantly higher than on a mortgage, so thanks to the wonders of compound interest, even sums that appear quite modest when originally borrowed can turn into massive debts. For example, someone aged sixty five borrowing the average equity release loan of £50,000 against a home worth £200,000 would find their debt had shot up to about £100,000 after ten years and £200,000 – the total value of their home – by the time they hit eighty five.
In Britain we feel uncomfortable talking about money with our parents and elderly relatives. We feel it might look like we’re on a fishing expedition trying to find our how much money we might get. But if you want to prevent those you know becoming part of the ‘banana skin and grave brigade’ we need to overcome our reticence, ask our elderly friends and relatives about their money, find out who is chasing them to get hold of their cash and warn them about the dangers of handing over their savings.
By David Craig, on September 23rd, 2012 In a sickeningly sycophantic article in the Sunday Torygraph, a supposed journalist (probably one of Andrew Mitchell’s mates) claims that Andrew Mitchell is a ‘decent man’ who would never use the word ‘plebs’ or swear at the police. Unfortunately, in another article the ghastly (in my opinion) Mitchell admits he did swear at the police. As far as I can see, the repulsive (in my opinion) Mitchell is an arrogant, overbearing, self-important, self-serving, bullying thug – just like most MPs.
So, dear Torygraph sycophants, please spare us your lickspittle, grovelling apologia for your friends in high places
By David Craig, on September 22nd, 2012 First Cameron gives in to Clegg by bringing LibDem liar and thief David Laws back into government. Then gutless Cameron doesn’t have the balls to sack the repulsive Andrew Mitchell. Tells us all we really need to know about our spineless, lying, hypocritical, incompetent prime minister. The sooner PR spiv Cameron resigns to spend more time with his money, the better for all of us.
By David Craig, on September 22nd, 2012 The main high-street banks (HSBC, Barclays, NatWest, Lloyds etc) love to run our current accounts. They don’t make too much money from this. But it gives them the chance to do what they call ‘cross-selling’ – using their contacts with us and information about us to flog us all kinds of other financial products. These include deposit accounts, mortgages, insurance, pensions, investments and so on. But, apart from some very rare exceptions, you’d be a fool to buy any of these products from your high-street bank.
For deposit accounts you’ll usually get much better rates from the former building societies. Mortgages – it’s normally better to go to a specialist mortgage broker. Insurance – why pay a large commission to your bank, when you can buy more cheaply direct (on-line) from an insurance company? Pensions – anyone saving with a high-street bank is going to pay so much in charges that they’re going to end up awfully poor. Investments – time after time it has been shown that banks (especially Barclays and HSBC) have cobbled together and mis-sold appalling investment schemes which have made billions for the banks and lost billions for their gullible customers.
At the moment, many banks are enthusiastically flogging what are often called ‘Growth Bonds’ or ‘Guaranteed Bonds’. These promise to pay around 120% of stock-market index growth for a five- or six-year period and guarantee to return all a saver’s capital even if the index falls. About £58bn of our money has gone into these awful products. What too many savers don’t understand is that almost all the benefits of stock-market investing come from the dividends paid by the companies whose shares are bought and not from any movements in the overall market. Yet these products only pay out on increases in the market index. Most savers will get back less than they would have earned just leaving their money in an ordinary bank account, but the banks have pocketed £1.5bn of our money selling these products and a further £580m a year in ‘trailing’ commission.
So the lesson is – ‘only bank with your bank’. Only let your high-street bank run your current account. If you do any other business with the likes of HSBC, Barclays, RBS, Lloyds, NatWest then the chances are that you are a fool and are paying for over-priced, poorly-performing products.
By David Craig, on September 21st, 2012 As Libdem leader Nick Clegg becomes a figure of even greater ridicule and contempt following his ‘I’m sorry’ video, people might not be laughing quite so much if they realised how much this lying buffoon is going to cost us.
Let’s assume that Clegg spends 30 years siphoning our money into his own pockets – first as an MEP, then MP, then Deputy Prime Minister, then no doubt he’ll find some sinecure in Brussels or else runnng some pointless quango. If he costs us £300,000 a year in salary, expenses, staffing and office costs, that’s £9 million we’ll be paying. Then, when he retires he’ll probably be picking up a pension of say £100,000 a year for another 30 years – another £3 million of our taxes.
Then we must add the tens of millions Clegg will have wasted. His pathetic AV referendum cost us about £80 million. Clegg blocked Cameron’s plan to reduce the number of MPs from 650 to 600, so that’s 50 completely unnecessary MPs we’ll be paying for – £15 million a year for say thirty more years – £450 million.
All in all, the lying, incompetent, self-serving Clegg will cost us taxpayers at least £542 million. That’s an awful lot of money. Is Clegg really worth it?
By David Craig, on September 20th, 2012 If you’re looking for somewhere for your savings, you’ll find a queue of people – banks, financial advisers and many others – all eager for you to put your cash into unit trusts. Why? Because they care about your wellbeing? Or because they make massive commissions from flogging unit trusts? In Britain we have over £500bn in unit trusts and we pay an astonishing £59m every working day to unit trust managers and to the people who sold us those unit trusts. That’s £59m a day – £15bn a year – being taken from our savings and pocketed by other people. Unit trusts will make you very rich – but only if you’re a unit trust manager or salesperson. If you’re an ordinary saver, they’ll only make you poorer.
With savings interest rates at almost zero and likely to stay there for several years, many savers are being tempted to put their money into unit trusts in the hope of better returns. But when you buy into a unit trust, you can quickly lose a lot of money
Say you put in £10,000. You immediately lose about 5% (£500) just for investing. Most of that goes in commission to salespeople. (You can avoid losing this 5% by using a funds supermarket, but most advisers and salespeople don’t mention this as they’d lose their commission). Then you lose about 3% (£300) a year in management and dealing costs. And when you withdraw your money, you lose another 5% (£500) because the price you sell your units is usually about 5% lower than the price you buy them. So, if you hold your units for five years, you generously give 25% (£2,500) of your money to multimillionaire managers and salespeople. (If you had £100,000, you’d be giving away £25,000 – £5,000 a year!)
Of course, you hope the fund managers will make your money grow. But ninety per cent of unit trust managers fail to beat the overall performance of the markets where they put your money. And almost no unit trust managers ever beat the returns on cash. If you put your £10,000 into a fixed-interest deposit account, you’d get about 3.5% a year – over five years compounded that’s 18.8%. Due to their high charges, a unit trust would have to grow by 43.8% (about 7.7% a year) over five years to beat a safe, no-risk cash deposit. That is just not going to happen.
But if you really want to put money into shares, this is what you should do. 1. Find some unit trusts you like. 2. Look on their websites and see which are the main shares they hold. 3. Buy those shares directly yourself. 4. Hold on to those shares for a few years, reinvesting your dividends in more shares of those companies. In this way, you get the benefit of the unit trust managers’ experience without having to pay them a penny. At the end of 5 years you’ll have 20% to 25% more than if you’d used a unit trust and at the end of 10 years you’ll have 35% to 40% more. As a meerkat would say ‘Simples!’
By David Craig, on September 19th, 2012 Yesterday was a good day for media outrage. In Britain, Labour MP Paul Flynn apparently accused government ministers of lying about the situation in Afghanistan. Result – he was expelled from the Commons. After all, we can’t have our politicians telling the truth.
Meanwhile, over in the US, the ghastly mad Mitt ‘foot in the mouth’ Romney dared suggest that there was no point a US president even trying to solve the Middle East problem as the Palestinians have never been, are not and never will be interested in living in peace with Israel. We all know it’s true – but it’s politically incorrect to say it.
I think we can largely blame the press for politicians being afraid to speak the truth. Over the last 20 years, journalists have gone from reporting the news to making it up to advance their own lousy careers. So they have to find stories to be outraged about. Whatever a politician says or does nowadays, hyper-ambitious journalists quickly find a ‘victim’ – someone who has apparently been ‘insulted’ or ‘treated unfairly’. And that gives journalists their ‘big story’.
Yesterday we also saw the result of politicians’ terror of journalists. Spineless creature David Cameron abandoned the only good policy the Tories had – giving all pensioners a flat rate £140 a week state pension. He dropped this because he knew that journalists would start howling about how ‘unfair’ this would be to existing pensioners.
At some point, we need leaders with the courage to face down our dishonest, conceited, self-important, over-ambitious journalists and do what is right for the country. But looking at today’s worthless, self-serving, lying, expenses-thieving, pointless political pygmies, that day may be long in coming.
By David Craig, on September 18th, 2012 If it were the case that cash (money held in a bank) usually outperformed shares (either shares held directly by savers or held by unit trusts and pension funds) then most of us would be much better off leaving our savings in a bank rather than investing in stock markets, unit trusts, bonds, ETFs or whatever. But this would also mean that most of Britain’s 28,000 supposedly “independent” financial advisers (IFAs) and many tens of thousands of bank ‘financial advisers’ (salespeople) would be out of a job. Those who want us to hand our money over to them are constantly repeating the mantra that ‘over the longer term, shares outperform cash’. There is only one small problem – it’s not true!
I have always believed the ‘shares outperform cash’ story till I read the excellent free book Monkey with a Pin. The data used to justify claiming ‘shares outperform cash’ is usually the Barclays Equity Gilt Study. We have now learnt that anything with the Barclays name attached should be treated with the utmost caution. When comparing the returns on shares and cash, Barclays don’t look at the interest we would get from 2- and 3-year higher interest bank and building society accounts. Instead Barclays use UK Government Treasury Bills as what they call ‘cash’. These Treasury Bills are not available to ordinary savers like you and me, so to use them as a proxy for ‘cash’ is ridiculous. Moreover, the interest paid by 2-and 3-year higher interest deposit accounts is almost always much higher than Government Treasury Bills. At the moment, a higher interest bank account will pay around 3.5%, seven times more than the 0.5% from Government Treasury Bills. In the past, the gap has not been so huge, but returns from 2- to 3-year deposit accounts have always been higher than Treasury Bills.
If Barclays used the average interest paid by 2-and 3-year higher interest bank accounts, then for 80 of the last 100 years, cash would have easily outperformed shares. There was just a brief period of 20 years (the 1980s and 1990s) when shares outperformed cash. This was because of a flood of baby-boomer savings into unit trusts and pension funds. As the baby-boomers retire and their money gets taken out of shares and pension funds, we can expect falls in share prices. And, of course, Barclays don’t take account of the £150m a day we savers pay in fees, commissions and many other charges to IFAs, unit trust bosses and pension fund managers.
One of Barclays’ most profitable units is Barclays Wealth which invests money for clients with six- or seven-figure amounts. If these people were to discover that cash outperforms shares, then all the highly-paid, highly-bonused staff at Barclays Wealth would be toast, so Barclays continues with its ‘shares outperform cash’ lie.
By David Craig, on September 17th, 2012 The most common money mistake many people make, which makes them poorer while enriching the fortunate people in the finance industry, is probably the easiest to avoid. If we look at the various ways we can borrow or save money, it becomes obvious that we pay much more interest on money that we borrow on store cards, credit cards, overdrafts and home loans than we get in interest or growth on money we save in bank accounts, pensions, shares or unit trusts.
Millions of people are borrowing money at usurious rates – possibly over twenty per cent on store cards and at least sixteen per cent on credit cards while holding money in bank accounts earning probably less than one per cent. Some of these people may even be investing in a pension or the stock market where they will be lucky if they get three per cent a year after charges, yet they are paying four times that much on unpaid balances on store cards and credit cards. This is clearly complete madness.
The mistake of saving in bank accounts, pensions and shares at paltry rates of interest and growth while paying extraordinary rates on store and credit cards may only be made by a few people. A much more common error is where people paying off mortgages are also investing in shares, unit trusts and personal pensions. If you take out a twenty to twenty-five year mortgage for say £150,000, you’re going to end up paying somewhere around £300,000. If you have £10,000 in savings you might get £200 to £300 a year in a long-term bank deposit account, a pension or a unit trust. But you could save over £600 a year using this money to pay off your mortgage faster and earlier. For example, if you pay off an extra £2,000 a year in the first five years of your mortgage, you’d probably be able to reduce your payment time by about tour years and cut your repayment costs by about £20,000. That’s a much better return than you’ll get from most savings or investments, whatever your bank, financial adviser or unit trust salesperson claims about the often wildly exaggerated potential growth of whatever they’re keen to flog you.
As with any comments about where people should put their money, each individual should do their own calculations. But for hundreds of millions of people around the world, the strange lunacy of borrowing expensively while saving for paltry returns could easily be cured by the application of some elementary arithmetic and just a little common sense.
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