- It's never too late (Non-Habitual Residence (NHR)) - Published Oct 2018 by Raoul Ruiz Martinez
- Are You on Top of GDPR? - Published May 2018 by Raoul Ruiz Martinez
- Financial Fitness - Published Jan 2018 by Raoul Ruiz Martinez
- Six Tough Questions You Need to Ask - Published in Nov 2017 by Raoul Ruiz Martinez
- Plan for a Successful Retirement - Published Oct 2017 by Raoul Ruiz Martinez
- 5-year Plan, 10-year Plan, 30-Year Plan. Do you have yours? - Published August 2017 by Raoul Ruiz Martinez
- The Will Bank Opportunity by John L Douglas - Published in The Journal of the Law Society of Scotland 17th July 2017
- August 2017 - HMRC & Offshore Accounts for UK Residents
- A New Year, A New Start…. January 2017
- Inheritance Tax (IHT) Planning (Part 3) - Published November 2016
- Planning for a Better Future? Forget Trusts. Think Family Investment Companies! - Published Nov 16
- Inheritance Tax Planning (Part 2) - Published August 2016
- BREXIT: What do we know as investors and what are the unknowns? Published in July 2016
- Inheritance Tax Planning (Part 1) - Published in June 2016
- Why is tidy a key word in financial planning? Published May 2016
- The Future of International Financial Planning - Published in March 2016
- Volatility: Global Financial Markets and Tax - Published Feburary 2016
- Financial Information Sharing for 2016 - Published December 2015
Summary of the 2015 Pension Flexibility - Published 5th May 2015
Offshore bonds get £5k tax free savings boost - Published 29th April 2015
How your peers invest clients’ money: Finesco Financial Services Ltd - Published in Professional Advisor 25th March 2015
- TRUSTS : Good Reasons to Never Make a Change - Published March 2015
- Saving....for Ourselves - Today's children will need A £2.4m pension pot.
- Cash is King - Article Published 25th July 2013
- Saving – Don’t Put Off Till Tomorrow What You Can Do Today - Article Published 23rd May 2013
HMRC Statutory Residence Test - 6th April 2013
- QNUPS Article Published 23rd March 2013
- Old New Year - Article Published 24th January 2013
- Retirement and Savings – The Facts on Inflation published November 2012
- Finesco Prsentation on New Pension Rules - A New Generation Begins
HMRC Pension Tax Relief Changes
- Emergency Budget:
- Budget Day: 22 June 2010
- Capital Gains Tax Angles
- Long Term Care
- QROPS: Transferring UK Pensions Overseas
- The State of Pensions
- ISA Changes Affecting You



Retirement and Savings – The Facts on Inflation published November 2012
With all of the usual contradictory measures and quotes coming out of the financial press, one in particular reminds us of the peculiar circumstances that face retirees and savers who are forced to endure negative real interest rates.
News from the UK quotes that the official inflation measure, the consumer prices index (CPI), increased to 2.7 per cent in October and possibly yet to return to the dizzy heights of 5.2 per cent a year ago in 2011.
So, does higher inflation mean worse rates for savers?
The truth is “yes”. Higher inflation with low interest rates is an interpretation of a loss in real terms for savers. Against a CPI rate of almost 3 per cent, those with increased savings rates would need a savings account paying over 5 per cent to earn a real, after-tax return. With the base rate still at 0.5 per cent, such savings rates are virtually non-existent. Unless you can make use of tax-efficient savings allowances or can even be classed as a non-tax payer, there are now no regular savings accounts beat inflation in the current market.
There are cash-starved banks in Europe offering rates of around 4 per cent gross for a year or in the UK one can lock their money away for five years to earn a gross rate of return for a similar amount.
If you look even closer, some inflation-linked cash-based or low risk savings products are available in the market. Although inflation-linked payments will be welcome to many savers, some are structured products (offering opportunities of over 10 per cent) and may not appeal to risk-averse savers. Many of these structured products will guarantee the capital invested only if the underlying index does not fall below a certain level. Those interested in alternative index-linked investments can access these through government or corporate index-linked funds.
Remember to look closely at all types of inflation-linked investment opportunities, in particular the structured products. Most advisers should already have a well-rounded understanding of what to consider or what to stay well away from.
Sustained high inflation would have previously prompted a central bank to raise interest rates sooner rather than later, this is unlikely to change any monetary policy to focus on keeping interest rates low in order to boost the economic recovery. As we all know in light of the ongoing financial hardship, these are not normal conditions and its unlikely there will be a rush to change the current historically low base rates.
One challenge that cautious investors such as pensioners and savers face is how they can hedge against the causes of inflation. These types of investors should consider equities or high yield bonds, some of which are paying dividends that beat inflation at well over 4%.
A report out recently by Capita Registrars found that UK companies paid out more than £23 billion to their shareholders in the third quarter of this year – the largest ever quarterly dividends. Their prediction is that total UK dividend pay-outs will continue to average 4.4% gross over the next 12 months.
Again, advice must be sought in using an equity-based strategy as these are normally considered to be of a higher risk for the cautious investor.
Its also common knowledge that inflation is causing problems for millions of pensioners living on fixed incomes who are seeing bigger drops in their real spending power compared to those who are in employment and yet to take retirement.
Saga, a financial services provider for the over-50s, stated "inflation is the bane of older people’s lives, particularly those living on fixed incomes." Even with inflation indicated by the CPI to be down by 50% from last year, you would expect to hear a large sigh of relief. Unfortunately, living in Algarve with increased prices and austerity tax hikes affects us all, although many older people are exposed to higher levels of inflation as they are more reliant on heating and electricity as well as service-driven needs where prices tend to rise much faster than other goods.
This article is intended to provide a general review of certain topics and its purpose is to inform but NOT to recommend or support any specific investments or course of action. Past performance is not necessarily a guide to future performance. On encashment you may not get back the full amount invested.
Raoul has a weekly radio feature (Raoul's Rant) on the Owen Gee Solid Gold Sunday morning show on KissFM Algarve.