The new National Pensions Framework

The aim of the new pensions framework is to deliver lasting security, equity, clarity and choice to the individual. To a degree we are taking on a system the Australians have used in which providing for your retirement is mandatory.

The aim is also to increase pension coverage, particularly among those who have traditionally had a lower level of uptake, as well as encouraging provision for retirement that is not reliant upon the state alone.

Read More

Toxic traders, capitalising on volumes

Joe Saluzzi of Themis Trading (I mistakenly read the link initially as ‘the mistrading’!) have recently published a paper which accuses traders of intentionally trading huge volumes where they buy and sell for the same price and in the process make a half a cent per share. The volume of trading is fictitious ‘high frequency traders’, what they do is buy and sell and collect liquidity rebates from the exchange (note: 50 milliseconds is a huge amount of time) in this game. Do it 8 billion times and it really starts to add up.

This is just depressing, actual investors don’t get to join in because the firms engaged in this are doing it within the actual exchanges using the fastest computer technology available. They also have an unfair advantage in how they trade because they use rules intended to match buyers and sellers to their advantage, they find hidden liquidity and in essence remove it from the market as profit.

The most powerful deterrent would be to make a rule …

Read More

Retire young! Retire poor….

The age of retirement is going to rise, within the next five years it has to. There are several reasons, the most immediate being that the state doesn’t have the money to fund retirement at present, other factors are that people are living longer and the combined increase in health care costs to the elderly with the weight of funding pensions means one or the other has to give in eventually.

In October of 2005 Seamus Brennan gave a talk at the Merrion Hotel on the subject of the ‘Issues facing an ageing population’. The statistics are particularly relevant as they have not changed much since then.

(Excerpt) ‘The facts speak for themselves, in 2002 almost half a million people were aged 65 or over. The latest population projections suggest this may increase to 1.1 million people aged 65 and over by 2036. Right now we have almost 5 people working for every pensioner, when the demographic challenges are at their height this will decline to two workers for every pensioner. This fact has …

Read More

What affects your investment planning

Did you ever wonder why some people seem to be doing better in the investment arena than you? Or why certain people seem to always lose or consistently win? The truth is that there are very few ‘superstar’ fund managers, like in any industry there are those that are the best and they totally outshine the millions of others who do the same job but never to the same degree.

If we were to look at some of the factors that may have an effect on your investments you can quickly identify that there are those which you cannot control, and therefore can only hedge against, and those that are within your control for which you are responsible and must consider, these will now be considered:

1. Being too conservative: If you stayed only in the safest areas of the market you would actually lose money over time as the effect of inflation grinds down your investments. This would be because the deposit interest rates would likely not give positive returns when you …

Read More

The best monetary decision will be that which is taken

I have looked back at market crashes, the Dutch Tulip Bulb crash, the Railway crash in the USA, the Great Depression, the Oil Crisis in the 70’s, The 1987 Stock crash, the S&L crisis, the dotcom bust and our most recent and several things have become clear.

The ‘solution’ is whatever was done at the time thus meaning we try to find the answers of tomorrow by looking back at what worked in the past and applying it to the new situation, it is one of the most basic human methods of learning. Children will get a burn from a fireplace once and it is then engraved in their minds that fires are hot and can burn you. Thus we see the same happening with monetary policy and with businesses.

The question though is this: What if what we did in the past was wrong? Does it make a solution that appeared to work relevant? If for instance I was the sole solution provider for the Great Depression …

Read More

Less tax and simple bankruptcy could be the best solution

As we await what is being described as a ‘savage’ budget, it is important to remember some of the ideas being thrown about may appeal prima facie. One disappointing suggestion I heard today was a call for tax bands of 50% (this came from an economics professor too!). In this blog we have said for some time that there are only two solutions to the deficit, firstly taxes must go up, secondly we have to stop spending. However, there is a point at which higher taxation actually reduces the tax take (more on this later in the article)

One thing that we need, in light of what will likely be testing times is to consider the impact of tax changes and also the need for a simplified bankruptcy system. There are currently (so we hear) thousands of well to do ‘non-dom’s’ in the UK who are planning to leave because of changes to the tax system. Ireland is a small …

Read More

Debt reduction & personal finance weekly blog Aug 25th 2008

Today I will give you a tip about the single best way to reduce and avoid debt, it is perhaps the most effective method known to man. Here it is…

“Don’t borrow any more money”

Simple enough to almost make you feel conned I bet? The fact is that debt begets debt and if you enter into a lifelong debt cycle it is something that is virtually impossible to free yourself from. The very first step towards financial freedom and a life out of debt is to realise this fact and to come up with a solution.

Some people think that if they consolidate loans that they will then have more money, but what do most of them do with this ‘extra money’? Save it? Or do they then get more debt and the extra money thus goes into the debt vortex as well?

All good ideas have an exit plan [one of the very reasons Iraq was such a terrible idea to begin with], and you can make yours. To do this you have to decide how you will …

Read More

Debt reduction & personal finance weekly blog Aug 25th 2008

Today I will give you a tip about the single best way to reduce and avoid debt, it is perhaps the most effective method known to man. Here it is…

“Don’t borrow any more money”

Simple enough to almost make you feel conned I bet? The fact is that debt begets debt and if you enter into a lifelong debt cycle it is something that is virtually impossible to free yourself from. The very first step towards financial freedom and a life out of debt is to realise this fact and to come up with a solution.

Some people think that if they consolidate loans that they will then have more money, but what do most of them do with this ‘extra money’? Save it? Or do they then get more debt and the extra money thus goes into the debt vortex as well?

All good ideas have an exit plan [one of the very reasons Iraq was such a terrible idea to begin with], and you can make yours. To do this you have to decide how you will …

Read More

Euribor, the distant cousin of the ECB base rate

We have written in the past about tracker mortgages becoming an endangered species. It seems that now we are witnessing the demise of them, the interbank rates and the ECB have become so disparate to each other that one is no longer an accurate gauge of the other. What does that mean?

The ECB is the rate set by the European Central Bank, and it is the ‘base rate’ (currently 4.25%), but banks can’t generally borrow at that price and instead they buy on the ‘interbank‘ market, this is the largest market in the world in which over 1.9 Trillion is traded every single day! It is how banks access the ‘Euribor‘ market (European interbank offered rate). This is basically run as an auction and because liquidity is an issue we have seen the prices of the Euribor rise and rise, demand is outstripping supply.

Why is the Euribor rising? Simply put, fractional banking means that banks must have a constant inflow of money …

Read More