Baskets and nest eggs
For fifty years investment has meant one thing – shares. But why? Despite a rise in share prices last year, they are currently lower than they were at the start of 2004 and could be heading for the fourth fall in five years. A growing number of investment managers are now saying there are other places we should put our money. Justin Urquhart-Stewart is a Director of Seven Investment Management

"There are five major investment types – what we call ‘asset classes’. Apart from shares, there is fixed interest, that is gilts or Government stock; commodities, things like gold, oil, iron ore; property, both residential and commercial; and of course good old cash. In the past five and six years four of those went up, one went down. Guess which? Shares. The first thing you learn in investing is diversifying. So why are most of our pensions and so on in shares?"

As the graph shows, the two consistent growers over the six years from mid 1998 are commercial property and cash. Gilts (government stock) have also consistently headed upwards, though on a wobblier course. But shares have been on a roller coaster which is still not back to where it was six years ago. And commodities, although higher now, have also been a wild ride.

Taking just the last twelve months commercial property is still king, though shares have produced the second best return. But the important thing is not trying to guess which of these asset classes will do well in future, but making sure your money is spread among them. So if one asset does badly, others will do better and leave you with a positive return. In other words, not putting all your nest-egg in one basket.

There are now investment companies which allocate your money across all classes of asset, using funds that track those particular markets. But it is important to get good advice and check the total charges, which sometimes can be high and hidden.

Snap up a bargain
Collecting cameras is a fairly new hobby dating back only to the 1970s. Old cameras do not have to be made of mahogany and brass to be valuable. In fact you can pick those up for £150 or so. Michael Pritchard is the photographic specialist at London auctioneer Christie’s says the valuable ones are top brand cameras such Leica, Zeiss, or Voigtlander made after World War II which can still be used to take photographs. "Prices of all cameras grew quickly in the 1980s and 1990s. peaking around 1998. A Leica M3 would fetch £800-£1200 then. Now it is around £500-£700, but prices are climbing again. It is a good time to be collecting because that interest will come back." As with any collectable, quality is the key to a sound investment.

If using an old Leica does not appeal, then novelty or disguised cameras can be fun and a good investment. A Victorian camera disguised as a gun recently fetched £60,000. And Christie’s is selling one in the shape of a ladies handbag with an estimate of £4000-£6000. John Wade is a collector who is currently writing a book on disguised cameras. "They weren’t used for spying but were really novelty items. I’ve seen them disguised behind waistcoats, in walking sticks, inside a top hat, as a pocket watch. And in the last 30 years or so you get smaller cameras disguised as drink cans, jumbo jets, clowns, Mickey Mouse even as a bag of McDonald’s fries. They are all collected. And in my experience this kind of item will always hold its value. Unusual things retain their price."

You can find out more from the Photographic Collectors’ Club of Great Britain at www.lightwave.demon.co.uk/pccgb/pccgb.htm or call 01920 821 611. Christie’s will value old cameras by phone 020 7752 3279 or email mpritchard@christies.com and its next camera sale is 16 November.

Son of son of son of ERNIE
A new ERNIE is now picking Premium Bond numbers every month. It is the fourth incarnation of the famous machine first invented by Post Office engineers in 1956. No-one had made a machine before which could pick numbers at random, record them, and translate them into bond numbers. The people who worked on it had already invented the world’s first electronic computer Colossus, used to crack the toughest codes in World War II. So they met their deadline and the world beating machine – Electronic Random Number Indicator Equipment or ERNIE – picked its first numbers in June 1957.

This first Ernie is now owned by the Science Museum and made its first public appearance in August at the launch of its great grandson, Ernie 4. Ernie 2 (1973-1988) and Ernie 3 (1988-2004) were also there, the first time all four generations had met.

Jack Armitage worked on ERNIE in 1957. "A set of neon diodes produced random electronic noise and every sixth of a second it was counted and that was used to generate the numbers. We had to change the valves at set intervals. But the section on the left that counted those pulses used transistors. It was leading edge technology then."

The top prize in 1957 was £1000 and nearly £100 million was invested in Premium Bonds in the first year. Today we trust £25 billion of our savings to ERNIE. The top prize is £1 million and every month more than a million smaller prizes are given out. Because there are now so many bonds, the ten digit serial numbers will run out next summer. ERNIE 4 will be able to cope with the new eleven digit numbers that will start then and will generate a million random numbers an hour. But it will still use the same principle devised for its 1957 ancestor to generate those numbers. Because it works. Each month the Government Actuary’s Department tests the whole draw for randomness before the prizes are sent out. In 567 draws no set of numbers has ever been found to contain non-random elements. Every number really does have the same chance as every other.

Car Tell
Many older drivers resent the high cost of motor insurance. Especially if they have never had an accident and do not use their car very much. They feel their premiums include the cost of other motorists who use their car every day or drive recklessly. Now, Norwich Union is piloting a scheme that could lead to cheaper insurance for drivers who just tootle down to the shops twice a week and occasionally zoom up the M6 for a weekend with relatives. A small black box in the boot records where and when the car is driven. That information is used to work out the real risk of the times and places the car has been used. Off peak travel, motorways (where accidents are fewer), and a low mileage will all cut the bill. Norwich Union says the new product could be on sale as an alternative for those who want it in 2007.

Scam Canaria
British holidaymakers to Spain and the Canaries are being targeted by a fake fine fraud.

On their return, many visitors find a letter demanding money for a traffic offence. It does not specify the time or nature of the infringement but demands €129 (£86) plus court costs and threatens action in the UK courts unless the money is sent to a Madrid PO Box.

The Office of Fair Trading says that many people have been fooled by the scam. It believes the company is obtaining names and UK addresses of visitors to Spain and Gran Canaria from timeshare or car hire records. And it is in touch with the Spanish authorities to try to get the firms concerned closed down or prosecuted.

So if you have been to Spain or the Canaries and get a letter from a company with the initials DRAYES, MCCREE or WHITE ignore it. If you do think you may have committed a traffic offence in your own car abroad then contact the Embassy here for the correct address to check with. If you hired a car, then the foreign authorities would not contact you here. The car hire company would normally take the money from your credit card or contact you itself.