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By  David Craig, on February 26th, 2012 Hundreds of thousands of savers have realised that traditional pensions are a waste of time. For a start, you pay management and dealing costs of 2% to 3% for thirty or more years. That’s a lot of money and over five times what you would pay if you lived in Denmark or Holland. Moreover, the projected growth rates (Low 5%, Medium 7% and High 9%) which the worthless FSA allows pension companies to use are complete fantasy. They have never been achieved and never will be achieved. You’ll be lucky to get 2% a year. So, many people have turned to supposedly ‘low cost’ SIPPs (Self-Invested Personal Pensions).
At first sight SIPPs look wonderful. They usually charge less than 1% (0.5% is normal) and you can choose where to put your money. Great? Well actually, no. The problem is that many SIPPs savers (pushed by commission-hungry financial advisers or using companies like Hargreaves Lansdown or Fidelity) then put their SIPPs money into things like unit trusts. So not only are they paying say 0.5% for their SIPP, but they are also paying another 2% to 3% a year in fund management fees. Even worse, some SIPPs savers are going into ‘funds of funds’ – unit trusts which invest in other unit trusts. So they are paying at least three sets of management fees for 20 to 30 years – very generous, but not the way to build up a sizeable pension pot, at least not for themselves.
So what should a SIPPer do? The key is to keep your total management charges BELOW 1%. You can do this by finding some unit trusts you fancy, looking at their sales bumf on-line, seeing which are the main shares they hold and then buying those shares directly yourself with all dividends to be reinvested in your SIPP. ‘Simples’, as a meerkat might say
By David Craig, on February 25th, 2012 Every minute of every working day, financial services insiders pocket around £1m of our savings and pensions.* That’s over £400m a day – about £105bn a year. Whether our savings go up or down or stagnate, these people still take their £1m a minute (£400m a day). But we don’t get much for our £1m a minute. Our bank accounts pay little to no interest, our pension funds hardly grow and investments like unit trusts seldom deliver the mouthwatering returns trumpeted by newspaper ads, greedy financial advisers and others who are so keen to get hold of our money. But thanks to the massive amounts of our money they skim off, most financial services insiders are rich way beyond ordinary savers’ wildest dreams.
If we want to get any return on our money, we must learn all the tricks financial services insiders use to make themselves wealthy at our expense. That’s why I wrote Pillaged – to try to warn people how they are being fleeced by the financial services industry and to give some ideas as to how we can ensure that more of our money stays with us rather than disappearing into the extremely deep pockets of greedy and dishonest financial services insiders.
*We have about £4trn in savings and pensions. About £500bn is in higher interest bank accounts. On the remaining £3.5bn we can pay anything from 1% to 6% a year to the people who manage our money. Overall, we pay about 3% – £105bn a year – £413m each working day – about £1m a minute.
By David Craig, on February 24th, 2012 The stupidest mistake anyone, with even just a few pounds in a bank or building society account, can make is not to pay off all their credit card and store card bills in full every month. After all, why earn 1% (or 2% if you’re lucky) on your savings and then pay 15% to 20% or more on your credit card debts?
A second common mistake is a bit more subtle, but a lot more expensive – it is to put money into a pension scheme while still paying off a mortgage. As a rule of thumb, because of the interest on your mortgage, with a 25-year mortgage you’ll end up paying back about twice what you borrow. So, borrow £150,000 and you’ll pay back £300,000. Say you could pay back £2,000 extra a year for the first ten years of your mortgage – then for a payment of just £20,000 you’d be saving yourself almost £40,000 in repayments. You’d be doubling your money, with no risk.
Now say you were in your thirties and instead of repaying your mortgage early, you put this £2,000 a year into your pension. Of course, you’d get about 20% added on from your contribution being tax-free. But for the next thirty or so years, your pension fund manager would be lopping off about 2% to 3% a year in all kinds of charges and dealing costs and penalties for this and that. Hopefully there would be some growth. But as millions who have recently reached retirement have found out, after fund managers have pocketed their share, there’s not too much left for pension savers.
So check your own situation. But if you’re paying off a mortgage, you can often double your money by paying it off early. There are not many pension schemes which will give you anything like that kind of growth in spite of the usually exaggerated claims of their salespeople
By David Craig, on February 23rd, 2012 Legend has it that when asked by a journalist why he robbed banks, prolific bank robber Willie Sutton gave the famous reply, “because that’s where the money is”. Then when asked why he used a gun, he reportedly said, “because charm and personality are not enough to get them to hand over the money”.
If he was alive today, Willie Sutton would probably be working for a bank robbing customers rather than trying to rob banks. So today’s interview might go something like this. Journalist, “Willie, why do you work at HSBC (Barclays, Lloyds)?” Answer from Mr Sutton, “because that’s where the money is”. Journalist, “Willie’ why don’t you use a gun when robbing customers?” Answer from today’s Willie Sutton, “because customers know so little about savings and investments that I can get huge bonuses by robbing them blind selling them all sorts of garbage and junk. But best of all,” Willie Sutton laughs, “customers are so gullible that they don’t even realise they’re being robbed. Ha, ha, ha.”
So if you have a financial adviser or relationship manager or someone of that ilk at your high street bank, they’re probably just a kind of modern-day Willie Sutton, robbing you blind to inflate their bonuses and advance their lousy careers.
My thanks to David Lumsley at HSBC for helping me understand this.
By David Craig, on February 22nd, 2012 Why do high street banks want to run your current account for you? Because they make lots of money doing it? Not really. Handling our current accounts means a lot of work for not too much profit. The real reason is the opportunity to do what the banks call ‘cross-selling’ – using their contacts with us to sell us all kinds of other stuff like savings accounts, insurance, mortgages, pensions and (usually very dodgy) investments. But if you need any of these services, you’re crazy to get them from your high street bank. For savings, you’ll get much better rates from the former building societies. With insurance, not only are you paying for the insurers’ profits but you’re also giving a chunk of your money in commission to your bank. So save money and buy insurance direct from insurers. You’ll generally get much better mortgage deals by avoiding high street banks and only a madman or fool would save for a pension with the likes of Barclays, Lloyds, RBS or HSBC.
As for investments – either your bank will have cobbled together some dreadful scheme like ‘guaranteed bonds’ which are only guaranteed to make money for the bank. Or else, like Barclays did so successfully, it will take some appallingly managed, risky funds produced by crooks at somewhere like Aviva and then sell these to customers as being ‘safe’ and ‘low risk’. I was in a Barclays branch once when I overheard two of its salesmen laughing and joking about what they were going to say to a pensioner who had just lost half his life savings by investing in Aviva through Barclays.
So, use your high street bank to run your current account for you. That’s ok. But in 99% of cases, if you buy any other service from Barclays, Lloyds, HSBC, RBS or NatWest, then you’re either a fool or mad and your bank will be having a laugh at your expense.
By David Craig, on February 21st, 2012 With bank and building society (BS) rates at record lows and likely to stay there for many years, one group of people is striking it rich. These are the bank and BS ‘financial advisers’ or ‘relationship managers’ or whatever they call themselves. In fact they are just greedy and dishonest salespeople ordered to sell a few lucrative (for the banks and BS) products to gullible customers. One group of products they are pushing hard are usually called ‘Growth Bonds’ or ‘Guaranteed Bonds’ or something like that. These promise 110% or 120% of stockmarket growth over a period of 3 or 5 years, but also guarantee to return all a saver’s money if stock markets fall. Sounds great doesn’t it?
The problem is that most people tricked into these bonds don’t know that 90% of the gains made from buying shares comes from the dividends paid by the companies whose shares you have bought, NOT from any rise in the overall market. Yet with these bonds, you don’t get the dividends – the banks and BS keep those for themselves. And over the last 100 or so years most stock markets have only gone up about 1% a year as dud companies go bust and new ones enter the market. So with these bonds, you’ll be lucky to get more than just over 1% a year. Not much! The banks (hello HSBC) and BS (hello Yorkshire BS) know this – that’s why they’re so eagerly flogging these dreadful products to customers who don’t know they’re being lied to and cheated.
By David Craig, on February 20th, 2012 We all know that our ‘caring’, ‘customer-friendly’ banks will do or say anything to get hold of our money. But HSBC seem to have taken greed, lying and mis-selling to a whole new level. For almost 20 years, HSBC eagerly sold longer-term (5 years or more) stockmarket bonds to elderly customers (average age 83) in the full knowledge that many would not live long enough to see their bonds mature. Some even had terminal cancers. But the HSBC salespeople and senior managers couldn’t give a toss. When many customers died, their heirs had to pay huge penalties to HSBC for cashing in their bonds ‘early’. But each time an HSBC salesperson sold one of these bonds they pocketed 10,000 pounds in commission.
Banks like HSBC often refer to the vulnerable elderly as the “banana skin and grave brigade”, because they have one foot on a financial banana skin (they don’t know much about savings and investments) and one foot in the grave. But the banana skin and grave brigade often have large savings and so are wonderful targets for hungry HSBC bankers. Hence HSBC’s enthusiastic attempts to cheat many thousands out of much of their life savings. An HSBC speciality was trawling old-age homes for victims to cheat. The elderly may have lost a lot of money, but HSBC’s profits were very healthy.
So, if you have any elderly relatives – don’t be embarrassed, talk to them about where they have put their savings, find out who is trying to get hold of their money by offering supposed “financial advice” and protect them against the greedy, lying, predatory staff at banks like HSBC
By David Craig, on February 18th, 2012 Cabinet Office minister Francis Maude recently boasted that the number of civil servants was just 444,000 – the lowest since the Second World War high of 1.2million. He said: ‘We are creating a much leaner, more effective Whitehall machine that manages its finances like the best-run businesses and demands the best return for public money.’ But is he telling the truth? It might be true that the number of people classed as government employees has gone down slightly. But there are thousands of civil servants who got pay-offs of hundreds of thousands each to supposedly take early retirement and then came back the next day as “consultants”, so they are not counted as government employees. There are thousands more who have been shifted into quangos. Again we taxpayers still pay their salaries, but they too are not counted as government employees. Remember, one of Osborne’s first actions was to set up yet another new quango – the pointless, laughable Office for Budget Responsibility (OBR) to do the job the hundreds of civil servants at the Treasury should be doing. The OBR has managed to help Osborne increase public spending virtually every month he has been in charge.
And there are many thousands more who have been outsourced to companies like Cap Gemini (the useless company behind most of the many cock-ups at the Inland Revenue). We pay a fortune for these people, but they too no longer count as government employees. So is Francis Maude an honest man reporting on his success or a liar trying to fool us nto believing he’s not just another incompetent fool? I suppose it depends on how you define the word “liar”, but I know what I think.
By David Craig, on February 17th, 2012 Those, who make a very good living from promoting the scare that Global Warming is man-made, link two “facts”. One – the amount of carbon dioxide in the atmosphere is increasing. Two – the earth is (probably) getting a bit warmer. From this they have built the elegant theory that carbon dioxide is creating a greenhouse effect causing irreversible warming. But there is another equally valid way of linking these two facts which is seldom discussed. This alternative theory proposes that the earth goes through cycles of warming and cooling due to solar activity. Currently we are in a warming phase and the increasing temperatures cause the oceans to release more carbon dioxide into the atmosphere. So the increase in carbon dioxide could be the result of natural warming rather than the cause of man-made warming. Soon we’ll enter a cooling phase and we’ll find we’ve wasted hundreds of billions on fighting a disaster that didn’t exist. Remember, in the 1970s the same climate research centres which are talking up man-made Global Warming told us that we were moving into a new Ice Age – well they got that one wrong too!
If this is the case, then there’s no big scare to be foisted on the public; there’s no need for the warming fantasists to get huge research grants and lots of publicity and there’s absolutely no need for supposedly “green” taxes and wind-farm subsidies and all the other rubbish that’s being foisted on us. The “man-made warming” fanatics have (probably knowingly) mixed up cause and effect. What they’ve done is a bit like visiting a supermarket, noticing that many people buying paper tissues have got colds and then concluding that colds are caused by paper tissues – confusing cause and effect. When will any of our leaders have the courage to expose the man-made Global Warming for the scam that it actually is?
By David Craig, on February 16th, 2012 Transparency International regularly rates Pakistan as one of the most corrupt countries in the world. If there were an Olympics in corruption, Pakistan would be winning lots of medals. This means that almost all Pakistani politicians, bureaucrats, judges, police bosses, military leaders and businesspeople are thoroughly venal through and through. But this rotten excuse for a country is giving the rest of the world an entertaining corruption comedy. Pakistan’s corrupt judges are pursuing the prime minister for corruptly refusing to reopen a corruption investigation into the financial activities of Pakistan’s president, affectionately known to his people as “Mr Ten Percent”. It makes one think of pots and kettles. We can expect much more amusement in the months to come as this farce rumbles on.
Meanwhile our lying PM David Cameron claims Pakistan is our friend. Pakistan hid Bin Laden in the safest place they could think of – just beside a major military base. Pakistan was behind the Mumbai terror attacks. Pakistan supplies and trains Afghan fighters to kill and maim British soldiers. Mr Cameron, you are not only a liar but also a fool. Pakistan is our enemy. We should cut all contacts with Pakistan, stop all direct flights and stop all immigration. There are already enough people in Britain who hate us, why allow hundreds of thousands more in?
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