Stop Start
The day didn’t start well. In fact the cream 1956 Triumph TR2 didn’t start at all. "Completely dead" was the verdict and it was time to get out the jump leads from the more robust 1966 Aston Martin DB6 Vantage. The idea was that I would be driven round in the Aston and interview Chris Routledge a director of Coys car auctions to talk to him about investing in old cars. The PR man would follow us in the Triumph to take pictures and make sure everything went smoothly. I wondered if James Bond had jump leads in his Aston. I doubted it.
Chris makes his living selling old cars and among what he calls the "very positive financial aspects" of buying them are exemption from the annual car tax (worth £175 a year) and the fact that if you do manage it to sell it for more than you paid, any profit is free of Capital Gains Tax. But is it a good investment?
"If you buy the right quality there are more people who want to buy these motor cars than there are vehicles. They’re not making them any more. There is a strong demand not only in the UK but internationally. It is a medium or long-term investment. Our clients look to keep it 3 to 5 years maybe 10 years. But then might see 50% growth in investment plus the joy of ownership, a beautiful hand made British machine like this."
And he gave me some figures about the Aston. "In 1980 or 1985 this car would have cost about £8000. In 1995 about £30-35,000 and now you are looking at £60,000 plus." Chris admitted though that there had been a period in the late 1980s when prices went "went crazy" and many people lost money.
At the auction that evening the DB6 did not sell, the top bid of £52,000 being well short of its £60,000 reserve (though later I was told the failed bidder had been persuaded to pay £63,000 for it). And the Triumph which followed us round until it foolishly stopped and could not be restarted sold at the bottom end of its estimate, just £10,200 despite having had £20,000 spent on it in 1991.
Only 40 out of 75 lots sold at the auction and one dealer told me prices were "frothy", there were too many investors in the market he thought and with the auctioneer’s commission – adding up to 15% onto the hammer price – he had been reluctant to bid.
These are lovely machines, lovingly cared for and some are of historic importance. Like any collectible their value may go up over the years. But investments? Not really.
coys.co.uk
Brits away!
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Briton’s are leaving the country in numbers not seen since the 1960s and 70s. The Institute for Public Policy research estimates it may be running at 100,000 to 200,000 a year. The range is so broad because the Government does not count us all out or count us all in. But IPPR has used data from this country and overseas to estimate that 5.5 million people live abroad, around a fifth of them retired and representing nearly one in ten of the UK population. The biggest bunch are the 1.3 million in Australia and second are the three quarters of a million living in Spain. There are more than half a million in America and Canada. About three quarters live in the top ten countries – see table – but there are thought to be 112 countries with at least 1000 Britons living there. In addition to the permanent residents, IPPR estimates that another half million live abroad for part of the year, normally in a second home they own. That figure is supported by accountants Grant Thornton. But partner Mike Warburton warns that people who have a home abroad are not free of HM Revenue & Customs. "Contrary to popular belief you are still subject to tax on your offshore income if you are UK resident and domiciled (as you would be if it was a holiday home). And you will also have to cope with the local tax system which may be dissimilar to our own." |
Eurozilch
The atmosphere in the Café la Fraternelle in the Belgian town of Mouscron
was ecstatic. Each week the thirty-member lottery syndicate of café staff and
customers bet the same numbers on the EuroMillions Lottery. And now, with a
jackpot of €27 million (about £20 million), those numbers had come up.
Café owner Christine Farvacque told journalists "We were all celebrating, calling family and friends." But when she phoned the lottery organisers she was told there had been no winning entry that week. Enquiries revealed that the person who had placed the bet – the owner of a local bookshop – had not entered the syndicate’s regular numbers but had let the lottery machine choose them for her. Mme Farvacque said her friendship with the bookshop owner would not survive the upset.
Release cash
The best way to release cash from your home is to sell it and buy a cheaper
one. That is the conclusion of a study by actuaries Watson Wyatt for the
Financial Services Consumer Panel. Living in a home worth a fortune but needing
more income is a common dilemma for retired people. There are many products
which will help you release the cash from your home either by mortgaging it or
selling part of it to an insurance company. But this is the first time the
relative costs of the different ways of releasing cash have been calculated.
Watson Wyatt concluded that the most expensive form of equity release is through what is called a home reversion plan. With that you sell all or part of your home to an investment company. You get a lump-sum which you can spend or use to provide income. You live in your house for your lifetime or until you go into a care home. When the house is sold the investment company gets its share of the proceeds – or all of them if you have sold the whole property. Watson Wyatt says home reversions can be twice as expensive as the main alternative – lifetime mortgages. With a lifetime mortgage you borrow money against the value of your home. During your life you pay no interest on it. Instead the interest is rolled up and when you die or go into a care home the house is sold and the debt paid. Nowadays, these plans come with a guarantee that the debt will never be more than the value of the home.
Although lifetime mortgages are cheaper than home reversions schemes, the cheapest way of releasing cash is selling and buying somewhere smaller. Raising £50,000 on a £250,000 house by trading down would cost 4.5% a year on the money raised. But a lifetime mortgage would cost 6.4% a year and a home reversion would cost 9% a year of the money raised.
Saga Magazine has now published its own Guide to Equity Release written by Jennifer Bailey.
Bonfire night II
Most of us have a bonfire on 5 November. But I have another on 1 February.
On the fire go the shredded remains of bank statements, credit card bills,
receipts and all the paraphernalia I need to fill in my self-assessment tax
return. Since self-assessment started in 1996/97 the time you have to keep
documents is fixed by the date the form has to be filed which is the 31 January
after it arrives. If you are self-employed you must keep documents relating to
the tax year for five years from the filing date of the form. If you are not
self-employed but get the form anyway then you have to keep them just one year
from the filing date. So on 1 February 2007 you can burn all documents relating
to tax year 2004/05 if you are not self-employed or those relating to 2000/01 if
you are. However, if you have a tax enquiry into your affairs you cannot destroy
any relevant documents until it is completed. See
hmrc.gov.uk/pdfs/sabk4.htm
Savings bonanza
With interest rates rising in November and possibly rising again this year,
rates on cash savings have been going up. And banks and building societies are
trying to attract older savers with special deals for the over sixties or, as
some of them still call it, the ‘silver’ generation! Best of the bunch is
Coventry Building Society which seems to be offering 5.75% with its instant
access Sixty-Plus Saver Iss 2. But this rate will fall by 0.75% after the first
year and thereafter will match the Bank of England base rate until at least 30
June 2010. Moreover you can only put in £2000 a month, so you can only get 5.75%
on the equivalent £12,000 over the first year. As an alternative Coventry offers
its Sixty-Plus Notice account which allowed you to put in up to £250,000 but you
must give 60 days notice to take it out and it pays 5.6% for just a year. After
that who knows? In many ways older savers are better looking for the best
interest rate deals which currently are with Icesave from Landsbanki and HiSave
from Icici. They both offer 5.45%. Both promise to exceed the Bank of England
base rate by 0.25%, Icesave until 1 October 2009 and HiSave until 31 December
2007.
But if grandparents do not do so well, Child Trust Fund accounts for children born from 1 September 2002 are rather better. Britannia Building Society offers 6.5% on accounts opened before 6 April, though that rate will drop to 5.25% after two years. After that it guarantees to equal the Bank of England base rate until 6 April 2010.
Although good deals can be found on savings, the bonus rates and special offers and guarantees make it very complicated to choose the best. Everyone should check their savings rates at least once a year to make sure they have not been quietly cut.
February 2007
