I think it is safe to say that it has been a turbulent year! in fact one of the most turbulent years in modern history! there is hardly an industry that hasn’t been affected in one way or another by the stock market and currency fluctuations, inflation, interest rate changes, credit crunch, recession…. and I certainly don’t believe we have seen the end of it.

All I can say is that although it all seems like bad news, (and I cant even remember the last “good news story” I read in the papers, or heard on the evening news), I can assure you that THERE ARE good things still happening.

In fact, can I ask that people email me on shane@kirkellainvestments.co.uk with “good news” stories, or “success stories” from the past year, in particular business related. Any particularly good ones received will be published in the New Year! Let’s spread some good cheer!

Personally I am looking forward to the New Year; there are several exciting opportunities for me and my colleagues, as well as the various companies I am involved in. For example the New Year sees a new member of staff starting at Kirk Ella Investments, her role is to assist me in particular to enable me to spend more time with businesses and business owners, looking at the complicated area of Pensions, Key Person and Shareholder Protection.

So before I finish I would like to wish everyone a Merry Christmas, and a PROSPEROUS New Year…… see you next year!

Shane
Managing Director / Independent Financial Adviser

As highlighted in an earlier post; I mentioned whether or not mortgage borrowers were going to be affected by the “collars” in certain mortgage lenders terms and conditions. Earlier today Nationwide has confirmed it will not enforce their collar, previously set at 2.75%. This is good news as it will mean that borrowers on tracker mortgages will benefit from the full 1% rate drop. This news follows yesterdays decision by the Halifax not to enforce their controversial collar also.

Shane

The Bank of England is working on plans to inject cash into the economy in the hope that it can reverse the slide into recession, the report in the Daily Telegraph came after yesterdays interest rates were slashed to the lowest level in over 50 years.

Source: LONDON (Reuters)

Shane.

The Bank of England has today voted to reduce the Bank Base Rate 1.0 percentage points to 2.0%.

The Council of Mortgage Lenders has welcomed today’s rate cut, and believe “it will help the wider economy, even if it cannot be reflected universally in lower mortgage rates.”

The impact this will have on borrowers, new and existing is yet to be seen, although many lenders have pledged to pass on the full extent of the saving. There is still the issue of collars…. more to follow.

Shane

Following last weeks 1.5% base rate cut by the Bank of England, the cost of inter-bank lending also decreased quite dramatically by falling over 1% to 4.49% on Friday of last week.

The LIBOR, the rate at which the banks lend to each other, is related to the cost of mortgages to customers, and we are hoping that this latest fall may result in cheaper borrowing for customers, especially since the recent reduction in the Bank of England base rate had a lesser impact on borrowing costs as some would have hoped.

Those customers on Base Rate Trackers will be very pleased with the rate reductions, and those customers coming out of 2 and 3 year fixed rate mortgages should also be more relieved that the payment shock they were all expecting “should” have been reduced by this action. Fixed rate mortgages currently in place will of course be unaffected, the main obvious reason for a fixed rate mortgage of course!

The Council of Mortgage Lenders have been quoted as saying that that the “Libor was more important in determining the cost of mortgages than the Bank of England’s rate”, so lets see how these rate changes effect the product ranges of mortgage lenders.

Only time will tell!

Shane Beardsley
Managing Director / Independent Financial Adviser

One question I keep getting asked is “What actually is Key Person Insurance?” otherwise incorrectly (not politically correct of course) referred to as Key Man Insurance.

Key person insurance is a life insurance policy that is taken out by a company on one of their employees, usually one of significant importance, where the death or incapacity of said individual can put the company at financial risk.

Key person insurance in the UK is relatively new, well, not new, it has just become more widespread in recent years. I recently heard that less than 5% of companies in the UK actually have any, but it is more like 25% in the USA.

In its simplest terms a “Life insurance” is contract by which a pre-agreed amount of money is paid to a selected beneficiary in the event that the life assured, or person covered, dies.

The “Key Person” in question depends on the type of company and what exactly they do, for example, in a sales based company, where the top sales person accounts for 50% of the total sales, could be deemed to be KEY to the success of the company. For some businesses, the entire sales team may be considered difficult to replace, especially if it is a specialist product. It may even relate to the contacts and connections associated with a particular employee.

Most lenders, especially in the current economic climate will require a business to effect Key Person cover on people they deem to be important in the decision as to whether they actually loan the company the money, and if that persons death would risk the repayment of that loan.

The proceeds of a “Key Person” Insurance may be used for a multitude of different reasons, they may be used:

i. To buy back shares in the company from a deceased partner / Directors beneficiaries.
ii. Pay back a business loan.
iii. Pay to train and source a replacement.
iv. To cover lost cashflow.

There are many reasons why a company would need or want Key Person / Key Man Insurance, and it is important that they understand the reasons and what their needs are.

If you think your business would benefit from a review, then please do not hesitate to contact us on 01482 658989 for a review on this or any other area.

Shane Beardsley
Managing Director / Independent Financial Adviser

I read an interesting article recently about the improvements to certain providers critical illness definitions, and it started me thinking about critical illnesses in general, I mean, if someone is diagnosed with one of the many terrible illnesses listed on all the documents that arrive in my offices each day it must feel absolutely awful, and I cant belittle it in anyway, but if you actually analyse them, there are many of those illnesses that whilst they will probably render you unable to work, at least for a while, and in some cases render you unable to work again, how many of them will actually kill you? the answer is not many! for example loss of sight or hearing, loss of limbs, third degree burns to mention a few.

Someone once said to me that getting a critical illness was actually worse than dying! I cant say I necessarily agree with that statement, but, how long would an employer actually pay your wages for if you were taken ill with a serious critical illness? and if you have a mortgage protection plan that only pays on your death, but you dont die; what will you do when your savings run out? and with a massive proportion of the country having less than 500 GBP in savings the outlook can be quite bleak.

So for the sake of what can often be a small monthly outlay, why burden yourself and your family with that worry?

If you feel that you would like to review this, please contact us on 01482 658989, or email me on shane@kirkellainvestments.co.uk and I will arrange for an adviser to contact you.

Shane Beardsley
Managing Director / Independent Financial Adviser

Well as the week draws to a close it has seen more slumps and rallies in a single week since 1987, and at close the FTSE 100 had gained 3.3% in the week, while the Dax rose 5.5% and the Cac 40 gained 4.8%.  

The FTSE seems to be toying to and fro with the 4000 mark, but one thing is for certain the last two weeks have seen a number of investors come forward and invest reasonable amounts of money back into equities.

There is no certainty that the volatility will end any time soon, but for those looking to invest over the medium to long term surely buying when the market is at 4000 appeals to certain individuals more than when it is at 6000.

As they say though, past performance isnt a guide to the future, but if you want to arrange a financial review of your existing investments, or want to look at new investments then please give is a call on 01482 658989, or email me on shane@kirkellainvestments.co.uk

Shane Beardsley
Managing Director / Independent Financial Adviser

I will be posting quite a lot on this subject over the coming weeks; as a business we have seen recent examples where the lack of this type of cover has brought companies to the brink of failure, and all due to events completely out of their control.

As business people, we often spend hours and hours in meetings discussing strategies and business progression, but one aspect often overlooked by company directors isnt the insurance on their cars, or public liability, but on the people themselves.

I read an article recently that suggested that less than 5% of companies in this country have any form of Key Person Insurance (previously referred to as Key Man Insurance) versus 25% in the USA.

If this causes you concern, or you think a review of your companies position would be beneficial, then please contact us on 01482 658989.

Shane Beardsley
Managing Director / Independent Financial Adviser

Mortgages? If we were to believe the media then we would probably think that it was impossible to get a mortgage!

But this is simply NOT the case; it is true that for many individuals it is harder to obtain a mortgage than it has been in recent years, but at the end of the day, assuming you have a clean credit history, a reasonable deposit or in the case of a remortgage, equity, and a steady job then getting a mortgage should not be too much of a problem.

Mortgage availability has certainly reduced, in fact we had access to around 25000 products this time last year, and at the last count our mortgage sourcing software had a little over 5000 available.

So the moral of this story is, don’t ASSUME you wont get a mortgage, whether to buy a new home, or to refinance your current property, just give us a call or drop us an email and arrange a meeting to discuss your mortgage needs.

Shane Beardsley
Managing Director / Independent Financial Adviser