The magnificent Coronation Egg made in 1897 by Fabergé.
GRANDPARENT POWER
When your grandchild asks for a chocolate bar – just say ‘No!’ That’s the
message from Virgin Money which claims that for the cost of a daily bar of
chocolate you can build up a retirement fund of £100,000 for a child. It works
like this. A choc bar costs 45p. One a day amounts to £164 a year, which Virgin
rounds up to £14 a month. If that is put in a stakeholder pension in the child’s
name, the Government adds on the tax relief – even though the child pays no tax
– boosting it to nearly £18. From birth to 18 that will build up a pension fund
of £6820. And if that is left in the pension fund with no more contributions
until your grandchild is 65 it will be worth £102,000.
Now this arithmetic needs to be taken with three doses of scepticism. Like any prediction about the future – and that is the hardest thing to predict! – it depends on assumptions. First, it assumes the Government will continue to give full tax relief on those contributions for the next 18 years. That is likely but not certain. Second, it assumes that investments will grow on average by 7 per cent a year for 65 years. That has never happened. If growth was 5% not 7% then the final figure would be £42,200 not £102,000. Over the last 65 years the price of shares on the London stock market has grown by about 6 per cent a year. Third, it takes no account of inflation. In 65 years time, if inflation stays at its present rate, the value of £102,000 will only be about £20,000. And the pension it buys will be worth about £20 a week. Not bad for giving up chocolate. But perhaps not as much as you might expect.
Bizarre as it sounds, taking out a stakeholder pension for a baby can be a good idea. Tax relief is added by the Government – even though the baby pays no tax – and the miracle of compound interest guarantees that the money will be worth far more by the time the pension is claimed. On the figures above, you would pay in just under £3000, the Chancellor would add £834, but investment growth – after charges – would amount to £98,000 if money grows by 7 per cent or £38,400 at 5 per cent. And if you look around you will find companies that charge less than Virgin’s 1 per cent a year. Make sure there is no upfront charge, no exit penalties, and that you can pay in as little as £14 a month. If you want a share based investment go for a tracker which follows the whole stockmarket – over 65 years that is the best choice. Perhaps the best thing about saving in this way is that the money is locked up until the baby reaches 55. By then, they should be responsible enough to be allowed access to it!
If you are not a fan of stock market investment then you can pick a pension fund that is what is called ‘capital protected’, and based mainly in cash or government bonds. But do remember that although those investments are safer, over the last century money invested in them has not grown as fast as money invested in shares.
EGGS WORTH MILLIONS
Nine of the most expensive jewels in the world are back in Russia and on
display in the Kremlin. It is a sign of the times that Moscow now has more
billionaires than New York Most have made their money by snapping up controlling
interests in the state enterprises that exploited Russia’s vast natural wealth
in oil, gas, timber and minerals. One of the richest, 44 year old Victor
Vekselberg, is no exception. He and some friends took over Russia’s third
biggest oil group TNK and merged it with BP’s Russian operations. He is now said
to be worth about £3.4 billion. So he could well afford to pay $100mn (£57
million) in February to buy the treasures from one of America’s richest
families, the Forbes who own the magazine that bears the family name.
The nine jewelled Easter eggs are part of a series of 50 made by Peter Carl Fabergé in St Petersburg between 1885 and 1916 for the Russian Royal Family. In the collection is one of the last, made in 1911. It shows Nicholas II, his wife Alexandra and their five children exquisitely painted on the enamel shell. Seven years later they were all pushed into a basement and shot, not far from where the egg has now returned. Most of the Fabergé 50 are in museums and a few are with wealthy collectors – the Queen owns three – but eight are missing. If you have one it could be worth £10 million.
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| The Fifteenth Anniversary egg, 1911, commemorating the anniversary of the coronation of Alexander II in 1897, with portraits of the Czar and his family. |
The magnificent Coronation Egg made in 1897 by Fabergé.
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CHEQUE’S IN THE POST
Pension order books will be scrapped from April 2005. Instead, the
government wants everyone to get their money paid direct into a bank account.
People without a bank account could open a Post Office Card Account. The money
is paid in direct, and people draw it using a card and a PIN at the Post office.
But when these plans were announced more than a year ago many older people said
they could not key in the PIN at the Post Office to get their money out or they
wanted a neighbour or relative to get the money for them, as they do now. So the
government put a team of civil servants onto the problem. After a year’s careful
thought these highly tuned brains have come up with the answer. They will post
you a cheque. These benefit geniuses seem to have forgotten that one first class
letter in 10 does not arrive the next day and even when it does the mail now
arrives at most homes around lunchtime - when it arrives at all. Royal Mail
admits nearly 15 million letters a year go missing – that is seven out of every
10,000. And of course when you are on holiday you will not be there when the
cheque arrives and you will have no money until you return. These uncrossed
cheques can be cashed – by you or a helper – at the Post Office. So a bit like
an order book really. Just less convenient. The first cheques will be sent out
in October. They just might arrive before Christmas.
PETROL BURNS
They are calling it the terror premium. Petrol prices rose sharply following
the murder of 22 foreign oil workers in Khobar, Saudi Arabia at the end of May.
As Saga Magazine went to press new records were being set with the price of
crude oil above $42 a barrel. But political uncertainty in the middle east is
only one reason for the rise in oil – and petrol – prices. The booming economies
of China and India are sucking in more oil. The USA is stockpiling much of its
own production against future difficult times. And as in any market, fear and
panic can drive prices up in the short term.
No wonder the price of petrol is burning a hole in our pockets. With a litre of unleaded at 82p and rising, where does the money go? The price of the petrol itself is quite small – about 16p a litre which is not much more than the cost of the unrefined stuff in those famous 159 litre barrels it is sold in. About 6p is shared between the delivery and the retailer. And the rest of the price we pay at the pump – 60p – goes straight to the Chancellor, who is coming under growing pressure to abandon the 2p a litre rise in duty and tax due to start on 1 September.
Whatever he decides, prices look set to rise further. And finding the cheapest source locally is more important than ever. The AA has a website which gives the cheapest petrol within a certain distance of any postcode. In my area I can save 3p a litre by picking the cheapest over the average price. You have to register but it doesn’t cost anything. And if you do not have internet access at home, remember that you can get it free at most libraries and some community centres and colleges.
Of course, by the time you read this, 82p a litre may seem a distant dream. Let’s hope not.
DIVING INTO HISTORY
For just over £20,000 you can dive 3750 metres in a three-seater submersible
and visit the wreck of RMS Titanic. The ship struck an iceberg and sank off
Newfoundland on her maiden voyage in 1912. More than 1500 people died. At least
one company – Deep Ocean Expeditions – now runs two annual trips to take
tourists down to see the wreck and "pay your respects" to her "mystique and
grandeur". The cost of $35,500 plus flights gets you five hours at the Titanic
wreck in a two week holiday. There are reports that one couple married down
there. But Titanic’s discoverer, Robert Ballard, is dismayed. The number of
trips and the lack of safeguards have led, he claims, to a "circus" of film
crews, tourists, and looters. He says the ship is deteriorating rapidly and he
plans a full scientific survey this summer to compare the state of the wreck of
RMS Titanic now with when she was discovered in 1985. However, DOE, which has
taken 73 tourists to the site over six years, denies it does damage. Operations
Manager Belinda Sawyer told Saga Magazine "We are the only deep diving
submersibles that do not drop ballast on the site. "We make respectful visits to
sites of great scientific interest, triumph and tragedy. DOE primarily operates
to help support science while providing a unique and very rare opportunity for
small groups of the general public."
July 2004
e-mail Paul Lewis on paul@paullewis.co.uk