December saw the death of North Korea's 'dear leader' Kim Jong-il, with command of the country seemingly passing to his youngest son - the 'great successor' - Kim Jong-un. But with sundry generals peering over the younger Kim's shoulder tensions are likely to remain high, especially around the border with South Korea.

4,000 miles away in Moscow, hundreds of thousands took to the streets to protest against the supposedly-corrupt elections won by Vladimir Putin's United Russia party. Putin dismissed the protests out of hand, but the uncertainty will continue until the presidential elections on March 4th - and possibly beyond.

In all of this it was easy to forget the ongoing turmoil with the euro; but unfortunately, life went on as normal in the conference rooms and banqueting halls of Brussels. The pivotal moment came on December 9th when David Cameron used the UK's veto to protect the City of London. Initial support from Hungary and the Czech Republic soon melted away and Britain found itself in a club of one. As the famous - perhaps apocryphal - newspaper headline had it, "Fog in channel: Europe isolated."

Bickering inevitably followed. The UK and France had a brief war of words, and the Deputy Prime Minister (supported by most of the Liberal Democrats) didn't appear to be entirely happy with Mr Cameron's actions. Dear leader possibly wasn't the phrase on Nick Clegg's lips...

UK

For most of the month it was easy to be gloomy about prospects for the UK. Business in general didn't react well to David Cameron's use of the veto: Sir Martin Sorrell, boss of multinational WPP summed up the mood when he said, Intuitively, it can't be helpful. I'd rather be inside the tent.

Unemployment was the highest for 17 years: the public sector lost 65,000 jobs - thirteen times as many as the private sector gained. Youth unemployment showed no sign of falling; the retail trade in Scotland was hit by the bad weather and West End shops reported disappointing takings on their first traffic free weekend as consumer confidence reached an all-time low.

Boxing Day, however, proved a revelation, with record numbers flocking to the high streets and credit analysts Experian reporting a 21.5% year-on-year increase in the number of shoppers. This echoed the picture in the US over Thanksgiving weekend, with shoppers being attracted by unprecedented levels of discounting. Whether it will be enough to save some of the weaker retailers remains to be seen.

The UK stock market finished the year down 5.5% at 5,572: not the performance that investors were looking for at the start of the year, but significantly better than many major markets. In another sign that the UK is performing less badly than some of its major competitors, growth in the third quarter of 2011 was 0.6% compared to 0.2% in Europe.

UK interest rates are forecast to remain at 0.5% throughout 2012, which is at least good news for homeowners. The pound is expected to do relatively well in 2012 - although one commentator did describe it as the best looking horse in the glue factory.

Europe

At the end of the month the euro hit an 11 month low against the dollar, and a ten year low against the yen. There are worrying signs that the European banks are starting to hoard cash: if the trend continues that means liquidity could once again become an issue if banks refuse to lend to each other.

The major European stock markets were largely unchanged during December. Italy and Germany fell slightly, while France moved ahead - but the figures were not significant compared to the 12 month falls detailed below.

Worryingly, the new Spanish government of Mariano Rajoy revealed that the budget deficit will be 8% of GDP, not 6% as forecast. A new round of austerity measures will be introduced, including a pay freeze for public sector workers and increased taxes on top earners.

The economic forecasters IHS Global Insight revealed their predictions for Europe in the coming year, expecting GDP to fall by 0.7% overall. The ECB is expected to respond to this with further cuts in interest rates. This was echoed by a BBC survey of 27 of the UK's leading economists. 25 of them forecast a recession for Europe in 2012 and the majority put the possibility of a eurozone break-up at 30-40%.

Finally, the UK may agonize about youth unemployment exceeding one million but spare a thought for Spain: 48% of 16-24 year olds there are without a job - a truly depressing statistic to welcome the New Year.

US

The US was one of the few countries in the world where the stock market rose during the year, the Dow Jones index finishing 2011 at 12,170 to post a rise of just over 5%.

The year ended with three pieces of good news for the US economy: growth in the third quarter of 2011 was 1.8% and inflation fell in November to 3.4%. Perhaps even more encouragingly, the US trade deficit fell in both September and October: although total US debt now stands at $14 trillion (with China the biggest single holder of debt) there are some indications that the US consumer is starting to buy more home-produced goods.

2012 will see President Obama going up for re-election and you would assume the improved economic news will favour him. At the moment Obama's most likely challenger appears to be Mitt Romney, if he can hold off 76 year old Ron Paul and a revitalised Newt Gingrich. With the primaries starting this month the picture will rapidly become clearer.

Global

Stock markets in China, Japan, Hong Kong and Russia all fell during the month; again, this was just a part of the wider falls seen around the world in 2011.

The Chinese trade gap narrowed in November, although largely as a result of the continuing crisis in Europe meaning that fewer goods were imported from China. Speaking in early December on the 10th anniversary of China's entry into the World Trade Organisation, President Hu Jintao promised to increase imports in a bid to boost world trade, saying that they may exceed $8 trillion over the next five years. Last year China bought $1.39tn from overseas so whether the promise carries much weight remains to be seen.

Japan's annual inflation rate fell to 0.5% in November: unemployment remained steady at 4.5% and interest rates were unchanged at - virtually zero.

As had been anticipated, China and Japan unveiled plans to promote the direct exchange of their currencies in a bid to cut costs for companies and encourage more trade. Bloomberg reported Ren Xianfang of IHS Global Insight as saying, this agreement is much more significant than any other pacts China has signed with other nations.

Previously, trade between the two countries had meant converting the currencies into dollars. Whilst the move might mean the dollar weakening in the region it is likely to be quietly welcomed by the US, as it could see the yuan - which the US has long held to be undervalued - moving closer to its true value.

World Stock markets - a look back at 2011

For the majority of the world's stock markets it is impossible to file 2011 anywhere other than in the 'bad years' column. Only seven of the 50 markets covered by Trading Economics managed a gain, and only one of these was in double figures. That market was Venezuela, up a hugely impressive 80% - although it would take a brave adviser to recommend investing in the country, and an even braver client to go along with it. To no-one's surprise the worst performing stock market of the year was Greece, losing more than 50% of its value in 2011.

Most markets saw falls of around 15-20%. Germany was down by just under 15% on the year: France by 17%. Japan fell by 17% and Hong Kong by 20%. Even the supposed growth economies of the BRIC countries saw their stock markets hit: in Brazil, Russia, India and China the markets fell by 18%, 20%, 15% and 22% respectively - all of which puts the performance of the UK market (down by 5.5% on the year) into a more favourable light.

For those wanting the numbers, the UK finished the year at 5,572; Germany's DAX index closed at 5,898 while in the Far East, Japan ended 2011 at 8,455; Hong Kong at 18,434 and China at 2,186. The rise in the US saw the Dow Jones index close at 12,170.

All stock markets fluctuated significantly during the year - for example, the FTSE touched 6,015 in February and saw a low of 4,791 in August. Other markets moved even more in percentage terms; Germany's DAX index reached 7,527 in May and hit a low of 5,072 in September.

These movements and all the attendant unpredictability made 2011 very difficult for both investors and their advisers - and what 2012 will bring is hard to say. Clearly the year is going to be dominated by the continuing efforts to sort out the euro and quite possibly by the problems of bank liquidity.

In many ways it would be tempting to end 2011 by thinking that 't can't get any worse and at least all the bad news is out in the open.'Whilst this might be a little naïve, there were signs of optimism around the world in the final quarter of the year; the strong performance of the US stock market; China's apparent increased willingness to trade and - hopefully - a new resolve to solve the problems of the euro. Inevitably, there will be difficult times in the coming year, but for investors, there are some lights at the end of the tunnel. We will - as ever - keep you up to date with all the relevant developments in the coming year, and will always be here to answer your questions.

A very happy and prosperous New Year from all of us.

Around 50% of us make New Year's Resolutions and 'sort the finances out' must be one of the most popular: but that's a little vague - it's more a wish than a firm commitment to take action. Looking at the January appointments we've had with new and existing clients, here are the topics that we've discussed most often. If you're determined to sort out your finances, these may give you some food for thought.

1. Sort out the mortgage

The mortgage is the biggest monthly expense for the vast majority of people, and making sure that the rate you're paying is competitive is basic common sense. Many people are paying a higher rate than they need to and half an hour with an IFA or independent mortgage broker can be time very well spent. Yes, there are costs involved in moving your mortgage, but these can often be outweighed by the savings to be made.

2. Sort out our life cover

This is an absolute priority, especially if you have children. Many people don't know the answer to questions like 'how much life cover do I need?' 'How much do I have?' 'Does it include critical illness cover?' No-one likes to think about the possibility of being seriously ill or dying, and therefore we tend to neglect our protection policies. Life cover can be surprisingly inexpensive: and even if you do have cover in place, make sure you have it checked on a regular basis. In many cases the cost of protection is continuing to fall and it may be possible to replace old policies and increase the amount of protection you have, without increasing your premiums.

3. Start saving for the children

However much you've just spent on Christmas presents, your children are going to cost you a lot more in the future. Whether it's university tuition fees, a first car, your daughter's wedding or the deposit on a house, the numbers are only going to go one way. Even if you only save a small amount, doing it on a regular basis over a long period can make a significant difference - and with the ability to save tax efficiently through an ISA, at least the taxman will be on your side.

4. Start saving for ourselves

What's true for the children is equally true for yourself; if there's a specific savings target you have in mind, or whether you simply need to save for the proverbial 'rainy day,' the earlier you start to save the easier it is to achieve your goal.

5. Sort out my pensions from previous employment

Many people have pensions left over from previous jobs, and despite various Government initiatives aimed at simplifying the system they still don't have an accurate idea of how much is in their pension 'pot.' Good pension planning is impossible without knowing the position you're starting from, so it's a sensible idea to talk to an IFA and find out the position with any old pension policies. For example, can they can be brought together and simplified?

6. It's time I understood the company pension scheme

Just as importantly, far too many people don't understand their existing company pension scheme. Is it final salary? Money purchase? Eightieths? Sixtieths? Can I make additional contributions? Buy extra years? Again, half an hour with a knowledgeable independent financial adviser will be time well spent. He'll be able to summarise the main benefits of the scheme for you, tell you the sort of pension you're likely to receive and advise you of the best course of action if you want to improve your pension benefits.

7. Investigate Inheritance Tax and Long Term Care

If it's the case that your parents are elderly, then it may be worth thinking about Long Term Care planning. Similarly if their - or your - estate is likely to be subject to Inheritance Tax, then action taken now could pay significant dividends in the future. Again, an IFA will be able to tell you what's possible, and the steps that could be taken now to prevent an unpleasant surprise in the future.

8. Look at Private Medical insurance

With tales of woe from the NHS continuing - and more economies seemingly still to be made - many people are starting to look at the option of private medical insurance. This may be an investment worth making, particularly if you run your own business and would need treatment at a time to suit you.

9. We need to sort out the partnership insurance

Many businesses are run as a partnership (whether it's a straightforward partnership or through equal shares in a limited company). The death or serious illness of one of the partners could have catastrophic consequences for the business - and serious implications for the other partner. And yet very few businesses have addressed the simple question of partnership assurance. We can explain the basic rules to you and give you an idea of what protection might cost: you may well be pleasantly surprised!

10. We need to make a will

Last - but by no means least - make sure that you have an up to date will. The consequences of dying 'intestate' (that is, without a will) can be severe, and with a simple will being relatively inexpensive its sensible to make sure that this area of your financial planning is kept up to date.

So there's plenty to think about... If you would like to discuss any of the above points - or any other aspect of your financial planning - then as always, please don't hesitate to contact us.

As we have said in other articles many of us will have made a New Year's resolution to sort out our finances in 2012 - but an often overlooked part of putting your finances in order is making sure that your tax planning is effective. Are you claiming all the tax relief you're entitled to? Are your investments arranged in the most tax efficient way?

To give your financial planning a further head start, here are ten strategies for efficient tax planning in the year ahead.

1. First and foremost, be organised. Make sure that you submit your tax returns on time. The rules have changed and the full £100 penalty will now be due if your return is late, even if there is no tax outstanding. Make sure you submit your return by October 31st if it's non-electronic, or by 31st January following the end of the tax year. The deadline is only days away! In addition, make sure you keep good records. This may not seem very exciting, but HMRC are increasingly stressing the importance of accurate record keeping. Everything tax related - interest statements, dividend vouchers, payslips, P60's and so on - needs to be kept. Your accountants will be happy even if you simply hand them a folder with everything in it: that's far better than not having the relevant documentation.

2. Make full use of your personal allowances. The basic personal allowance for 2011/2012 is £7,475 and this can be used effectively if you and your spouse are both involved in running a business. Even if only one of you is involved, the other could be employed in order to use up his or her personal allowance.

3. There's also nothing to stop children being employed in the family business so as to take advantage of their personal allowance. Remember though that payment must be for actual work carried out, and at a reasonable commercial rate. Your children also have their own annual exemption for Capital Gains Tax, so it may make sense to move some assets into their names, especially if the value of the assets is likely to increase.

4. The contributions which an employer makes to a pension scheme are generally tax and NI free for most employees. If you want to boost your pension, it may be worth considering 'salary sacrifice' - giving up some of your salary to increase your pension contributions. You'll need to discuss this with your employer and you may need some specialist advice from an independent financial adviser, but it can be a very effective way of increasing the amount going into your pension.

5. If you are running a business, try and incur expenditure just before the end of your tax year rather than just after as this will speed up the tax relief. Examples of the type of expenditure you might consider bringing forward include repairs to buildings and plant, and advertising and marketing campaigns.

6. In most small companies the directors and the shareholders are one and the same, and so they can choose the most tax efficient way to pay themselves. Using dividends as opposed to salary can result in savings to NIC, but it does require some planning. Any good accountant or independent financial adviser will be able to explain all the options to you.

7. The current threshold for VAT registration is £73,000: it may be worth registering voluntarily if your turnover is below this, although registration obviously brings extra administrative responsibilities. When you first register for VAT you can reclaim input tax on goods purchased up to three years before registration, providing you still have them at the time of registration.

8. Remember that interest paid on bank and building society deposits will have tax deducted at 20%. If you do not pay tax then you can sign a form to have the interest paid without the deduction of tax. Alternatively, you can submit a repayment claim to HMRC.

9. When you're choosing between different investments, it is the overall investment strategy that is the main consideration, not the tax position. You should make investments based on whether they are right for you and your financial planning: an investment strategy based purely on saving tax may do more harm than good.

10. Finally, the best strategy of all - and the best advice - is to work with your professional advisers on a consistent, long-term basis. They will be able to give you all the appropriate advice to make sure that your financial affairs are arranged in a way that is both tax efficient and right for your long-term financial planning. A regular review meeting with your accountant and/or your independent financial adviser is always time well spent.

As ever, if there is any aspect of your tax planning - or your wider financial planning - that you would like to discuss with us then please don't hesitate to contact us.

Any information concerning the taxation treatment of a recommended investment or action is based on our understanding of current Inland Revenue law and practice. Taxation law may be subject to future change.

Source: www.hwca.com/files/taxguides/tax-guide-2011-2012.pdf

Despite the recent strikes against cuts in public sector pensions, Aviva reports that most British people have a head-in-the-sand attitude to pensions. Aviva said that few people start "actively thinking" about pensions until they are 48 years old, and take another four years before they do anything about it.

Behind the failure to start preparing for a pension income is lack of money, which was cited by 47% of people surveyed and existing family commitments (cited by 19%). As a result, more of today's over-55s will have to work for longer. The Aviva research found that 26% said they would keep working if they could find a job when they are 65, 18% would stay on at work if their employer offered part-time opportunities, while 13% would carry on full-time in the same job if asked.

However Aviva also acknowledged in the report that one of the chief barriers to planning for retirement is that most people remain confused by pensions information and the variety of pension arrangements and schemes.

An Aviva researcher, psychologist Dr David Lewis, looked into the reasons why people fail to save. He found that one of the main obstacles to financial planning is the 'My Eyes Glaze Over' or 'MYEGO' factor. He stated that people finding figures tricky to understand, or even to think about, put their pension plans on a mental back-burner until in the mood to deal with them. He added, 'sadly, they never feel in the mood, so nothing gets done.'

If you want to find out more or need advice about pensions and savings, contact one of the team who will be happy to help.

Source: www.aviva.co.uk

When you realise that the ‘Italian 10’ trending on Twitter refers not to Antonio Cassano's goal against Northern Ireland but to the yield on the Italian 10 Year Bond, then you know the European debt crisis – and the consequent turmoil on the world stock markets – remains alive and well.

November was the month when Italy overtook Greece for the number of times it was in the same sentence as the word “crisis.” Silvio Berlusconi stood down as Prime Minister and – as had happened in Greece – the technocrats moved in to implement austerity measures which would hopefully balance the books and help to bring stability to the eurozone.

In the UK the Chancellor delivered his Autumn Statement against a backdrop of gloomy economic forecasts and a public sector strike.

Meanwhile, on the other side of the world President Obama was intent on setting up a Pacific free trade area, whilst at the same time telling China how to manage its currency.
 
For the majority of the month world stock markets performed poorly. Only four markets managed overall gains in November; Pakistan, Ireland, Mexico and Venezuela. As could have been expected, Greece was the biggest loser with the index there down 18% in the month. However, markets staged a spectacular rally on November 30th  (the Dow Jones, for example, had its biggest one day gain since 2009). This was in response to an injection of liquidity from the US and other central banks and meant that overall many markets finished the month little changed.

Chancellor George Osborne delivered his Autumn Statement at lunchtime on Tuesday, November 29th against a backdrop of gloomy economic forecasts.

The previous day, the Organisation for Economic Co-operation and Development (OECD) had predicted that the UK would slip back into a modest recession early in 2012, with unemployment reaching 9%. The OECD blamed this on a weak demand for exports, the Government's austerity measures and the squeeze on consumer spending.

Reporting on Tuesday morning, the Office of Budgetary Responsibility (OBR) was slightly more optimistic, forecasting growth of 0.7% for 2012 and 2.1% in 2013. However their forecast of growth reaching 3% from 2015 was looked on sceptically by most commentators.

The Chancellor began his statement by emphasising that Britain would live within its means - but he still promised a significant investment in education and infrastructure projects, so that the country could pay its way in the future.

Government borrowing is currently predicted to hit £127bn in 2011/2012. However, the problems in Europe mean that total Government borrowing over the next four years is now forecast to be higher than originally anticipated with an extra £112bn being needed.

It was inevitable that figures like this would mean that savings (or 'cuts,' depending on your political standpoint) would have to be made, and the axe quickly fell on the public sector. The Statement contained a serious amount of pain for public sector workers: pay rises will be capped at 1% for two years (after the end of the current freeze in Spring 2012), and the OBR is now forecasting 710,000 public sector job losses by the first quarter of 2017. With many public sector workers due to strike today (November 30th ) presumably the Chancellor thought he might as well get all the bad news out of the way.

George Osborne also announced that the pension age will rise from 66 to 67 from 2026, which is eight years earlier than previously planned. This move will save a further £59bn. Short-term, the value of the state pension will increase by £5.30 per week from April 2012.

One of the key themes of the Autumn Statement was investment in infrastructure - as Deloitte's head of infrastructure, Nick Prior, commented on Twitter, economic growth only comes when shovels get in the ground.

In a new initiative, some of the money for the infrastructure investment will now come from UK pension funds, following a model which has worked well in Canada and Australia. Joanne Segard, Chief Executive of The National Association of Pension Funds (NAPF), described the investment as a real win-win. Currently UK pension funds hold over £1 trillion in assets, but only 2% of that is invested in infrastructure. However, the Government is going to need to offer the pension funds long-term investments with an income that exceeds inflation. So potentially good news if you're invested in a pension - possibly not so good if you suddenly find that you're on a brand new toll road.

There is also a distinct possibility that we'll see the sovereign wealth funds of other countries investing in UK infrastructure projects. Before the Chancellor's speech the FT had already carried a piece by the Chairman of the China Investment Corporation, expressing his desire to team up with fund managers or participate in public-private partnerships in the UK infrastructure sector.

As well as the above, other key points in the Autumn Statement were:

• The Bank Levy will rise to 0.088% from January 1st
• The Government is aiming to collect £2.5bn a year from the Levy
• A credit easing programme is to be introduced to underwrite up to £40bn in low-interest loans to small and medium sized businesses. The business rate tax relief holiday will also be extended to 2013
• The Government will consult on allowing small firms to make staff redundant without them being able to claim unfair dismissal
• The rail fare increases will be less than originally planned
• The 3p fuel duty increase planned for January will be cancelled - so some good news for the hard-pressed motorist
• An extra £1.2bn will be spent on education, with free nursery places being extended
• And British science is to receive an additional £200m of extra funding to support research. (But to put this in perspective, it's 0.2% of the value which was placed on Facebook the same day.)

Reaction to the Autumn Statement was predictably mixed. The Times said that Osborne was 'inflicting pain to fight off [a] debt storm,' while the Guardian concentrated on the job losses in the public sector. Many commentators criticised the Chancellor for 'tinkering' when bolder action was needed.

Reaction to the speech on the stock market could hardly be described as euphoric, but the FTSE did manage a small gain after the Chancellor's speech.

But as if to emphasise that Britain remains vulnerable to the world economy in general and the European debt crisis in particular, Italian bond yields reached new highs while Osborne was speaking and credit ratings agency Fitch downgraded its forecasts for the US economy. By Monday night Fitch was also warning that it is getting harder for Britain to maintain its AAA credit rating which helps the Government to borrow at lower rates of interest. May you live in interesting times, as the Chinese saying goes. Whatever the contents of his Autumn Statement, George Osborne and the British economy will certainly be doing that...

After three months of fairly constant bad news in this bulletin, it would be tempting to report October as the month when world stock markets turned the corner. Every major market rose and if you were lucky - or wise - enough to be invested in Argentina, you'd have seen gains of over 22%.

Unfortunately, the October Market Review is necessarily written at the beginning of November, when markets are once again in turmoil on the suggestion that Greece will hold a referendum on whether or not to accept the latest bail-out package. Inevitably, it was this uncertainty over Europe, and Greece in particular, that dominated October.

Politically, October saw the death of Colonel Gaddafi and, perhaps more significantly, the death of Crown Prince Sultan, the successor to the Saudi throne - which could ultimately lead to political instability in that country.

As to what November will bring, the only certainties are dark nights and foggy mornings. Certainty is the one thing stock markets want above all others: unfortunately, it's the one thing they don't have at the moment.

UK

Having closed September at 5,128, the FTSE finished October at 5,544 - a rise of just over 8%. GDP for the last quarter rose by 0.5% (exceeding City expectations), the trade gap narrowed and Nationwide reported a year-on-year increase in house prices for the first time in six months. So it would be tempting to file October under 'good news' and leave it at that. Unfortunately there were ominous comments from the Chartered Institute of Purchasing & Supply who reported a slump in the manufacturing sector. The Manufacturing PMI fell to a 28 month low and Chief Executive David Noble said, We live in worrying times. He reported that the mood amongst his members was sombre.

Presumably Bank of England Governor Mervyn King was also feeling sombre when he announced an additional £75bn in Quantative Easing, to help us through what he described as the worst crisis ever.

However, there was good news in Wales, where Airbus opened a £400m factory to build aircraft wings - but they did warn that the UK needed to invest in its 'intellectual infrastructure' otherwise it risked jobs going abroad, 'where the talent is.'

Europe

What can you say about Europe? One day the Euro was collapsing, the next day it had been rescued. One day Angela Merkel and Nicolas Sarkozy had fallen out, the next they'd come together to save the Continent. Now the possibility of the Greek referendum has thrown everything back into the melting pot.

Bubbling away in the background - and seemingly temporarily forgotten - are potential debt problems in the Italy and Portugal. Solving the Greek crisis does not mean solving the European crisis.

Despite all this, European stock markets rose in October: the DAX index started the month at 5,502 and finished it at 6,141 - a gain of over 11%. France and Italy also reported double-digit gains. This was despite Spanish and Italian debt being sharply downgraded by Moody's and Carrefour issuing its fifth profits warning of the year.

US

October saw Mitt Romney move ahead of his rivals as the likely challenger to Barack Obama next year - but among the technology and creative communities it will be remembered for the death of Steve Jobs.

The Dow Jones index gained solidly in October, finishing just over 1,000 points up at 11,955. The US economy grew by 2.5% in the third quarter, and the trade deficit held steady, so once again, it would be tempting to say the US had a good month.

When you look more closely at the trade figures however, they make alarming reading. Total US exports for the month were $177.8bn - total imports were $223.2bn to give a trade deficit of $45.4bn. To put it another way, those figures mean that the US is adding a trillion dollars of debt roughly every two years. Suddenly, stimulus packages and smaller-than-expected increases in inflation don't seem like such good news.

Global

Around the world, China saw a slight slowdown, with its trade surplus down to $14.5bn and GDP growth falling to a mere 9.1%. Interestingly, the trade surplus for the month was almost identical to Russia's. Japan also recorded a surplus after some negative months following the tsunami and the Japanese government intervened in the markets to reduce the strength of the Yen, saying that it did not reflect the true state of the economy. They blamed Forex speculators for pushing the currency to unrealistic levels.

Virtually all stock markets around the world rose in October, although China was a notable exception, falling by 1.7%.

And finally...

October was the month in which the word 'haircut' officially took on a new meaning. Having previously been something you tried to squeeze in between meetings, 'taking a haircut' now means accepting less than the face value of an investment; as in 'Banks prepare to take 50% haircut on Greek debt.'

Meanwhile David Cameron joined the rest of us on LinkedIn. Is he adding the Greek Prime Minister as a friend? Somehow I doubt it...

Arch Cru is a sorry tale - and one that still has some way to run. The company was set up in 2006, supposedly to provide a range of low-risk, cautiously managed funds which would be sold through independent financial advisers. The funds were regulated by the FSA, and several leading financial brands leant their names to the funds.

Chief among these was Capita, which - as 'authorised corporate director to the funds' - was theoretically responsible for safeguarding the interests of investors.

Unfortunately, the money which came into Arch Cru was not invested cautiously. Quite the reverse - it went into illiquid and infrequently traded assets, among which were business start- ups, shipping fleets and forestry. When the financial crisis of 2008 broke, many investors in Arch Cru wanted - or needed - to cash in their funds. They were unable to do so because the Arch Cru funds didn't have enough cash to meet the demands and the underlying assets could not be traded.

Dealings in the funds were finally suspended in May 2009 - and subsequent investigations have now revealed that funds were mis-priced and assets were misappropriated (with one estimate putting that figure as high as £1m).

In total it is estimated that 20,000 investors have lost money - quite how much they have lost remains to be seen. At the date of suspension, the Arch Cru funds were valued at £363.3m - this has subsequently fallen to £148.9m. However a partial distribution of £54m has already been made to investors, and just how much more they receive depends on the amount that is finally realised when all the assets are sold.

The £54m has come from Capita and other financial institutions, but many investors feel that the figure should be higher, given that Capita were supposed to be looking after the interests of investors. Criticism has also been levelled at the FSA, with several commentators arguing that the FSA did not subject Arch Cru to enough scrutiny and that warning signs were evident well before action was eventually taken. It now appears likely that the full picture will not be known until December or January, and that investors will end up losing 30-40% of their original investment.

Whatever the eventual outcome, the Arch Cru debacle emphasises the fact that an investor should never have too big a proportion of their overall funds either in one investment or with one fund manager. A good independent adviser will always ensure this, and will conduct regular reviews of a client's portfolio to make sure that funds are widely distributed. Don't put all your eggs in one basket, may have been something your Grandma said, but it remains a fundamental principle of investment planning.

If you're at all worried about any of your investments, or you'd like to discuss the overall balance of your portfolio, then please don't hesitate to get in touch with us.

Retirement has often been described as "the longest holiday of your life." But attractive as that sounds, can you afford to pay for the holiday?

Research by one leading insurance company shows that 69% of people over the age of 50 are concerned about their income in retirement. And with the recent uncertainty surrounding the stock market, plus the planned changes to public sector pension schemes, that figure is likely to increase.

Many people underestimate how much income they will need when they retire. If you've been used to having two cars, going on foreign holidays and eating out then it is unlikely that you'll want to give those up simply because you've stopped work. In fact, many people find that their need for income actually increases when they retire. After all, if you're behind a desk all day, the only money you'll spend will probably be on a sandwich at lunchtime. Contrast this with how much you spend on a day off.

As worries about income in retirement increase many people are opting to keep working after their normal retirement date, with 1 in 10 of those over 65 now being classed as "not fully retired." This figure is likely to increase in the future, and there are undoubted attractions to "cutting back a bit' - especially if you enjoy your job. That's fine if your health stays good, but although people are now living longer, they are not necessarily living longer in good health.

Many people who have their own business argue that "my business is my pension." Again, that works well in theory - but it assumes that you can sell the business for the price you want at exactly the time you want. With technology changing ever more quickly and more and more businesses losing market share to the internet, relying on your business to fund your retirement can be a high risk strategy.

More than any other aspect of financial planning, your retirement demands careful consideration. From checking on your likely state pension to tracking down any previous pensions you might have to making sure you're contributing sufficient to your current pension - retirement planning needs to be done thoroughly and reviewed regularly.

If you are in any way worried about your provision for retirement or you'd like advice on any aspect of pension planning, then please feel free to contact us.

As a starting point, every individual is entitled to a nil rate band, under which no inheritance tax is payable. For the current tax year, the nil rate band is £325,000. Any inheritable assets over that threshold figure can attract a tax of 40%, payable to HM Revenue & Customs.

There are however a number of steps, using exemptions and allowances that you can take to minimise this tax liability. Most of these are about ensuring that the threshold is not ultimately crossed, your wishes are fulfilled and intended beneficiaries do not miss out.

• A first step toward avoiding Inheritance Tax (IHT) could be by making a will, particularly if your partner or spouse is the intended main beneficiary. Put your affairs in order and don't ignore the inevitability of your death!
• Consider making early gifts in the hope and expectation that you will live for seven years after any gift is made. Gifts made more than seven years before the donor dies are free of IHT. Search for ways of helping the younger generation to benefit, for example helping with school or university tuition fees.
• For some gifts to be IHT free, you don't need to survive for seven years. Consider using smaller allowances such as the £3,000 per person annual allowance for gifts to anybody and the ability to give up to £5,000 to your children when they marry. This could be £5,000 from each parent to each adult child.
• Discretionary trusts can be set up and enable assets up to the nil rate band of IHT of £325,000 per person, or £650,000 per married couple or civil partnership, to be sheltered from IHT, so long as the donor survives seven years. Unlike outright gifts, these trusts let donors retain control of the assets.
• A habit of gifting may cut your IHT liability if you can show that such gifts are made out of income, are made on a regular basis and they do not reduce your own standard of living.
• Consider becoming an agricultural landowner. In general, agricultural land which is let out can become IHT-free after seven years and could be IHT-free after two years if you farm it. Complex rules govern business property and agricultural land reliefs, so professional advice should always be taken.
• If you have suffered injuries in the past during military service and this becomes a contributory factor to your death, then your estate may become IHT-free.
• It is not possible to shelter your family home from IHT if you remain living in it, so another solution could be to spend some of the wealth in the asset before it can be taken into account for tax, for example via an equity release scheme.
• Individual Savings Accounts (ISAs), whilst being popular ways of avoiding tax on income and gains from a wide variety of savings and investments, have no protection against IHT. Plans to minimise your IHT liability should include seeking to reduce any ISA component.
• If you have substantial overseas assets, choosing a tax friendly location abroad where you wish to be buried may help you avoid IHT on those overseas assets. A somewhat drastic step to take, but where you intend to be buried can be deemed to be where you are domiciled and if domiciled overseas, only your assets based in the UK are subject to inheritance tax.

The information above has been prepared solely for the purpose of providing a basic introduction to IHT planning. When making an investment decision, you should always seek the advice of a professional financial adviser.

Tax treatment & law

All statements concerning the tax treatment of products and their benefits are based on our understanding of current tax law and Her Majesty's Revenue and Customs (HMRC) practice. Levels and bases of tax relief are subject to change.

The announcement from The Treasury is good news for long term savers who may wish to maximise their longer term growth by including more capital in their ISAs. Up to £10680 per person can now be sheltered within Isas and the range of investment choices have never been greater. Many existing investors are receiving disappointing returns with their existing Isa provider and it is well worth considering all your options.We will be happy to discuss this issue and look forward to your call.

STOP PRESS !!

Allowances will increase to by £600 per year to £11,280 from 6th April 2012

Even in these times of high taxes there are a number of investments that do qualify for personal tax reliefs.

Pension contributions- can still be made with tax allowances given against the highest rate that you pay.Even 50%!  

However,make sure that you take advice as high earners reliefs are complicated.

Venture Capital Schemes(VCTs) & Enterprise Initiative Schemes(EISs)- can qualify for income tax relief and with EIS arrangements you may be able to defer your capital gains.

Risk levels vary considerably so make sure that the scheme is suitable for you.

Property Renovation Schemes-  allow you to offset against the highest rate of tax that you pay,so can be attractive.

These schemes are appealing but make sure that you understand any risks.

So with a variety of schemes you can create a portfolio that is right for you !!

A huge rise in entrepreneurs relief now means that business owners can enjoy generous tax consessions when they sell their business.

The existing limit was raised by a considerable percentage to £10 million pounds.

Well done Chancellor !!

As expected, the Government has announced that it will no longer be necessary for those with sufficient funds in their personal pension plans and other private pensions to purchase an annuity, that is, a guaranteed income for life. 

Whilst, on the surface this may seem a small change, possibly only affecting a few people, in practice this has significantly changed the whole nature of pension planning in the UK. 

We very much welcome these changes and over the months ahead, as we discuss their impact on individual client situations, we believe that their enormity in terms of our whole thinking about pensions will gradually become clear.

Please call us if you would like to discuss the potential implications for you and your family.