Let My Free Market Go: Alternate Recession Strategy

"Some Economists Say Best Way to Battle Recession Is a Do-Nothing Stimulus "

The debate on Capitol Hill this week is all about the size of the stimulus: Should it be big? Bigger? A behemoth? But there is another school of thought that's getting less attention.


Call them the do-nothings.

In these free-spending times there's a growing movement among economists who say the best way out of this recession is to do nothing, nothing at all.
"I think there's nothing wrong with doing nothing," David Henderson of the Hoover Institution told "Good Morning America."
Nor do the 250 other economists who signed on this week to an ad in the New York Times and Washington Post.

"Government just doesn't work very well," said Dan Mitchell, a senior fellow at the Cato Institute. "We tried big spending under Bush, it didn't work. We tried big spending under Hoover, it didn't work.

"A lot of bad government policies got us into this mess and we don't have a magic wand to get us out right away," he said.

Laid Off From a Business? Start Your Own

"Would-be Entrepreneurs Are Using Their Severance Pay to Start New Businesses"

America may be in a recession, but that's not stopping thousands of would-be entrepreneurs from using their severance pay or savings to do something they've always hankered to do: be their own boss.


Even as more and more large companies hand out pink slips, budding do-it-yourselfers are starting new businesses – some of them far different from the jobs they used to hold.
A former Wall Street executive now is walking dogs instead of making deals. A laid-off banker is offering soothing massages. Earlier this month, a former marketing executive – and mother – started a business that helps other moms find work.


Small businesses have long been a key part of America's economic makeup, representing the majority of the jobs created in the country.

Foreclosure at the Mall

"The Recession's Latest Victim Might Just Be That Shopping Center Down the Road"



Forget those 50-percent-off signs. This winter you are likely to see a new sign at your local mall: "Going Out of Business." And that means big trouble for mall owners already struggling to survive.


The nation's shopping center owners are facing a recessionary double whammy:consumers who are spending less and real estate investors who are holding back money used to finance their operations.

And some analysts say that, in the next two months, those forces will collide, sending some mall owners into bankruptcy. Don't expect your local mall to necessarily close its doors -- although some of the 3,500 across the country might -- but it could very likely be owned by somebody else by the spring.

"They have significant problems by and large," said George Whalin, president and CEO of Retail Management Consultants.

Who Is Really Printing Money?

A popular mantra among many gold bugs is: “the Fed is printing money.” Any actions by the Fed to support liquidity in the markets are touted as “money creation” and consequently “monetary inflation” which causes gold appreciation. If gold does not rise, they proclaim that there is “manipulation” and “conspiracy”.


It is fair to say that we do not see the picture in such black and white colors.
The main source of new money in the economy is not the Fed but the commercial banks. It is the private banks that increase money supply through debt (new credit) creation.


During a credit crisis which is characterized by a steep slowdown of credit creation, growth of money supply in the financial system slows as well. It is silly to think that the Fed can replace the whole system of commercial banks by creating money itself from thin air. What the Fed can do is influence money supply by adjusting interest rates, creating more or less incentive for the fractional-reserve lending by the commercial banks.


Lately, the Fed has expanded its sphere of influence but these actions still do not directly cause increases in money supply. The Fed began swapping poor performing assets on the banks’ balance sheets for the high quality treasuries on the Fed’s balance sheet in an effort to improve the financial situation of the banking sector and restore liquidity.


Today, the biggest fear that the Fed has is the fear of deflation. The monetary policymakers understand that (a) a sound banking system is a foundation of US economic prosperity and (b) the failure to support the banking system will inevitably cause deflation. We are, therefore, confident that the Fed, headed by Chairman B. Bernanke, will continue to support the banks by creating the best possible environment for the return to a normal cycle of debt/money creation and use everything in its arsenal to prevent deflation.


Going forward, gold will likely resume its up-trend due to one of two reasons:
Another spell of problems in the financial system will cause gold (and the US treasuries) to once again take the place of safe haven investments, as was the case in the second half of 2007.
Fear of deflation and a further slowdown in the US will spread around the world. As a result, a vicious wave of competitive devaluation will cause not only price shocks (oil, food, etc.) but also spiraling monetary inflation, eventually raising long-term bond yields. This will be the beginning of a real gold bull market when gold outperforms all other major classes of assets including most hard assets.


The second outcome, in our opinion, is inevitable but no one knows when it will come and what path it will take.

Borrowing Money is no Longer in Fashion

The economic slowdown has been characterized as “consumers are de-leveraging”, which is an interesting turn of phrase that means that people are not borrowing money to spend.

The importance is dependent on your perspective. Those people who are not borrowing money to spend are thus suffering the pangs of a lowering of their lifestyle, which depended on borrowing money to spend; and then they come around, whining about stupid things like, “Daddy, things have gone up so much in price that I need more money, which you would give me if you loved me. Don’t you love me? I love you! Won’t you please love me, daddy?”
And so I ask, “Can’t you love me if I don’t give you any money?” and they say, “No. You could borrow the money, and then we would love you”, and I reply, “I have been borrowing money and now I can’t pay them back” and so the kids say, “Then borrow some more!”
And, in a terrifying revelation, I realized that it is not only my children, but all the rest of the economy that is totally dependent on everybody else borrowing money to spend, too.
So now you see how Chaos Theory was right, and that all things are connected to all things? If not, then pay attention to how they will now commence to all drag each other down into the Nightmarish Hell Of Inflationary Insolvency (NHOII).


And it doesn’t take a real genius to see why, but the point is not that the American people were stupid enough to think they could get a perpetual free lunch by borrowing money to pay for it, or even that a smaller subset of those who are suffering the pangs of a lowering of their lifestyle is composed of those who also think that they can call me on the phone and either 1.) Ask to borrow some money from me, or 2.) Ask me to pay them back the money I borrowed from them.


My response is the same, in that I give neither one of them any money because I don’t have any money; so to one I laugh in scorn, and to the other I say that I have just put a check in the mail to them, and that they will get their money soon, and if it hasn’t arrived in a few months, call me back and I’ll write you a new check and get it right into the mail.
The point is that a much larger subset of those who are suffering the pangs of a lowering of their lifestyle is composed of those people who think that they can elect government representatives who legislate all problems out of existence, that will tax me and then give the money to them, or the Federal Reserve will create more money to loan to investors with which to buy government debt so that the government can spend, spend, spend us into blessed Utopia. Either way, it’s Bad, Bad News (BBN).


And, alas, one way or the other, they are right. Unfortunately. And that is one reason that I weep, alone, in the Mogambo Bunker Of Bunkers (MBOB), doors locked, radio blaring, machine guns cocked and loaded, mostly drunk or nearly so, soon to be blissfully comatose.
Another reason that I cry so piteously and drink so abusively is that all this new government borrowing will create so much new money that it will destroy the dollar’s buying power, taking my own country down with it.
The only reason that I stop bawling like a little crybaby is the knowledge that the people who own gold, silver and oil will get rich, rich, rich, and since I own gold, then people will want me to loan them a few bucks out of my huge stacks of money because they are starving, and their children are starving, and I will say “No!”, and it will be thin gruel indeed for them to hear my mocking voice again echoing in their heads, “Buy gold, silver and oil, you morons, because your stupid government is letting a private bank (that misleadingly calls itself the Federal Reserve when it is, in fact, neither) to create so damned much fiat money that it will produce catastrophic inflation in consumer prices that will destroy the country, just like it has done to every other stupid country in the last 4,000 years that let its stupid government increase a fiat money supply at its whim! Hahahaha! Now you see why I always said you were freaking doomed! Hahaha!”


But I feel terrible, as this constant infliction of inflationary pain by heedless expansion of the money supply is so unnecessary, and that is why I was pleasantly surprised to read in the Wall Street Journal the headline “Central Banks Consider Gold” in its Commodities Reports column.
The reason is easy to see if you read the article backwards, in that there was a question about central bank buying “last week, when gold saw a record single-day gain”, especially Chinese central bank buying of gold, which is already the ninth-largest holder of gold in the world but which holds only 1% of its foreign-exchange reserves in gold, although it actually said it would like to hold more. And Mark O’Byrne at Gold & Silver Investments says that he would “be surprised if the Chinese hadn’t been nibbling at the gold market,”, which leads to the news that Asian banks “are seen as keen buyers” of gold, which leads to the news that “other central banks are now far more likely to be holders of gold”, which leads us back to the second paragraph that “Turbulence in the financial markets and recent U.S. dollar weakness are helping the precious metal claw back its reputation as the central monetary anchor within the international monetary framework”, which leads to the op ening paragraph of “Central banks may be starting to turn one of the few assets in which they can invest; gold.”


In short, those crafty Chinese, a fifth of the world’s population, may be getting ready to issue a gold-standard money, which will instantly make their currency the strongest in the world, which is just what a country needs if it wants to import a lot of things cheaply so as to respond to demand for internal economic growth without stoking inflation in prices!


And, fortunately for those of us who both love to have large profits handed to us and who also own gold, a Chinese gold-standard may soon make a dream come true as gold would skyrocket when priced in suddenly depreciated dollars.

New Law Governing Currency Changeover - Venezuela

On March 6, 2007, the Presidential Decree with Status of Law governing a Monetary Changeover was published in Official Gazette. This Law changes the Venezuelan official currency to a unit equivalent to Bs. 1,000.00 current Bolivars. According to this regulation, this changeover will be in force as from January 1, 2008. This decree-law states that all Bolivars resulting from this changeover will be represented by the “Bs.” symbol and will be decimalized. However, as from January 1, and as the Venezuelan Central Bank (BCV) states otherwise, payment obligations in national currency must indicate the use of the new currency by including the expression “Bolivares Fuertes”, or the “Bs. F” symbol.

Therefore, charges expressed in national currency before the effective date will be converted into the new currency by dividing it by 1,000 and then rounding the amount off. Payment Obligations In addition, this new regulation provides that, as from January 1, 2007, all payment obligations expressed in national currency must be entered into by using the new Bolivar. Prices, wages, taxes, amounts expressed in national currency and included in financial statements, other accounting documents, credit notes and, in general, any other operation or reference expressed in national currency must be reported in the new currency. Bills and coins issued by the BCV currently in force will be valid even after the effective date of the decree, until the BCV recalls them from circulation.

Checks and other credit notes payable (even issued before January 1, 2007), and those issued after the effective date of the decree will be considered as having a value corresponding to the conversion. Therefore, they will be paid according to the rules of equivalence. New Currency Any amounts expressed in national currency included in regulations, decrees, administrative orders, memos, instructions, or administrative regulations with general and/or particular effects, as well as judicial decrees issued before January 1, 2008 must be converted to the equivalent amount provided by the law. Likewise, official stationery, fiscal stamps, and/or postage stamps must be used until the stock runs out, in the understanding that their value will be converted according to the new regulations. The value of tax units (unidad tributaria) will remain the same until the National Taxation Services (Seniat) decides to order a change regarding this issue.

The new value of tax units will result from the conversion procedures stated above. Likewise, financial statements approved after the effective date of the decree will be expressed by using the new currency.
As from October 1, 2007, and until the BCV orders otherwise, all instruments used to offer goods and services will contain as reference both the amount prior to the conversions, and the amount resulting from the conversion. Obligations by the BCV and Other Relevant AuthoritiesAccording to this decree-law, the BCV will be in charge of taking all the necessary steps to issue and distribute the new bills and coins required further to the conversion.

Likewise, the BCV is authorized to regulate, by means of resolutions, any matters related to the execution of the monetary changeover, as well as to implement all necessary measures intended for the substitution of bills and coins until the new currency can be fully introduced. The BCV is also authorized to implement a spreading campaign regarding the monetary conversion aiming at informing the population in general on the scope of this new system. Based on this decree-law, The People’s Attorney’s Office, the Customer’s Defense Institute (Indecu), the Superintendence of Banks and other Financial Institutions (Sudeban), the Superintendence of Insurance Companies, and the Security National Commission (CNV) are authorized to look after the proper implementation of the conversion. In addition, any other entity with relevant jurisdiction will be also authorized to do so.

Duties and Punishments On the one hand, noncompliance with the monetary conversion contained in the decree-law will be punishable with fines that will range between 10 and 10,000 Tax Units. Fines will be enforced by Indecu pursuant to the Law for the Protection of Customers and Users, except for fines applicable to financial institutions. In those cases, fines will be enforced by a governmental entity with the relevant control and supervision over financial institutions.

On the other hand, people refusing to accept the new currency in force according to the decree-law as from January 1, 2007, will be punished with a fine equivalent to four times the amount involved. Finally, during this conversion, banks and financial institutions must adapt their systems and arrange for any change intended to convert the whole of the balances of their clients’ accounts by the effective date of the conversion.

Google CEO to Congress: Pass Stimulus Now

During our powerhouse economic panel today on "This Week" Google CEO Eric Schmidt argued Congress needs to pass the stimulus package now.


"The business community needs action now," Schmidt said. "There's a sense that things are getting worse, people are saying the March quarter, the June quarter are going to be particularly difficult for business. It's time for government action."
Schmidt argued the stimulus package needs to be a blend of short-term spending and long-term spending.


"There are plenty of cases where directed spending does help things to happen more quickly. The stimulus package -- most of the money actually goes to reasonably short-term things in education, state-relief, and various other things that help people in the short-term. Some combination of all that money's got to get out now to get people going again."

FedEx CEO: 'Buy America' Puts U.S. Jobs At Risk

The so-called 'Buy America' provision in the stimulus package passed by the House this week raised the ire of Canadian and European leaders who say the measure is protectionist.
But with the industrial Midwest running at 45 percent capacity, and 40 percent of the people who are working in steel companies and other manufacturers laid off, the Obama administration appears to be of two minds on the provision.


Vice President Joe Biden said this week: "I think it’s legitimate to have some portions of Buy American in it."

Meanwhile, White House press secretary Robert Gibbs said this week, "The administration is reviewing that provision. It understands all of the concerns that have been heard not only in this room but in newspapers produced both up North and down South."
During our interview on "This Week" FedEx CEO Fred Smith argues the Buy America provision in stimulus will hurt global trade.


"The reason it's not the right thing to do is that the growth of global trade has been enormously beneficial to the United States. The problem with trade is that the benefits are diffuse and the pain is localized. But the benefits of having a global economy have created an export sector in this country that provides our highest-paying jobs," Smith said.


"If the Congress passes this Buy America provision, I can assure you, and we operate in 220 some odd countries around the world and are a huge part of the import and export infrastructure of the United States, we will get retaliation, and it'll be American jobs at risk."
Rep. Barney Frank, D-Mass., chair of the House Financial Services Committee, agreed with Smith, but said what is needed is a better social safety net to help people dislocated from their jobs.


"The fact is that the average American feels that, even when there was growth, he and she wasn't getting a piece of it. And I appreciate you saying, Fred, that we need to take care of the people dislocated, but you have to broaden it," Frank said.


"I will tell you, I believe, until you get a better social safety net, actions that you're not going to like are going to continue," he said. " Until you relieve the localized pain better, the average American will block things like trade, like outsourcing that you think we ought to do."

FedEx CEO Discusses Banker Bonuses

Sen. Claire McCaskill, D-Mo., took to the floor of the Senate this week, angry about the over $18-billion in Wall Street bonuses that were given in 2008. She has argued that no banker be paid more than the president of the United States.


"They don't get it. These people are idiots. You can't use taxpayer money to pay out $18 billion in bonuses. Should these people be making more than the president of the United States? Not really, should they?" McCaskill said this week.


During our interview on "This Week," I asked FedEx CEO Fred Smith -- who himself took a 20 percent pay cut because of his company's performance -- what he thought of Sen. McCaskill's idea.
"The compensation structure on Wall Street is basically built on -- on bonuses, much more so than in the industrial sector," Smith said.


"As I understand it, the average bonus in that $18 billion is about $100,000 a year. The bonuses on Wall Street are down about 44 percent. So certainly up at the very top of the pyramid, people may be getting more than the president of the United States. But I think you have to go into the -- to the detail there."


Smith argued that while Congress has a right to put any kind of restriction on government bailout money, many middle-level bankers depend on their annual bonuses.
"It's a little bit, I think, an exaggeration to say that all the money is going to -- you know, the top few people on Wall Street. There are a lot of middle-level folks that -- that live on -- on those bonuses. And the lack of those bonuses, probably the biggest people are getting hit are the state treasuries of the state of New York and the city of New York."


However, Google CEO Eric Schmidt argued a much better compensation method is stocks.
"We're in this for the long term. And in the businesses that I'm familiar with, people are primarily compensated with stocks. Stocks are down. Stocks will eventually return. People will make money that way. That's a much better way to compensate people," Schmidt said.

Heaven -- Where Is It? How Do We Get There?

Nearly nine out of 10 people in the United States say they believe in heaven, according to a recent ABC News poll. But what exactly do people think of when they think of an afterlife and what do they believe is required to get there?
Barbara Walters travels to India, Israel and throughout the United States, interviewing religious leaders, scientists, believers and non-believers alike to get a range of perspectives on heaven and the afterlife.


From Valhalla to Nirvana

Every culture has wrestled with the question of an afterlife, and most have come to a similar conclusion: The bad end up in Hell, the good go to Heaven.
If you were a Viking who died in battle, fierce goddess warriors known as the Valkyries would carry you to Viking Heaven, Valhalla, where you would join an eternal feast. The Romans thought they became immortal and were spirited off to Paradise on a fiery four-horse chariot.
The early Christians and Jews believed that man was not pure enough to enter the Kingdom of Heaven as flesh and blood. They believed all people were transformed into spiritual beings, filling Heaven with angels.


That belief has changed over the centuries, but angels still have an important connection with heaven. In cities all over the world, angels can be seen in watchful poses. "We believe that they are the ones who take care of us. They are the messengers of God. They are the ones who are God's very special friends and his servants," said Cardinal Theodore McCarrick, archbishop of Washington, D.C., and chancellor of Catholic University.


"I always think of heaven as being a place where we won't have any troubles anymore. Heaven is a place where there will be peace and tranquility," McCarrick said. As a Catholic, McCarrick believes heaven is more than a spiritual place. Catholics, he explained, believe the body is resurrected. "I'm looking forward to meeting my mom and dad and the rest of my family," he added.


The Rev. Dr. Calvin Butts, pastor of New York's famed Abyssinian Baptist Church, tells Walters he has had many visions of heaven over the years. He describes heaven as "no tears, no mourning, no suffering. It's eternal joy and happiness because you are at one with God."
Butts says he's certain of heaven's existence, but says it's in an indescribable dimension.


"Heaven is in another dimension. So you don't necessarily have to look up but you can look out and see heaven. Heaven is a fourth dimension if you will," he tells Walters.
Imam Feisal Abdul Rauf, founder of the American Society for Muslim Advancement, tells Walters he believes heaven is indeed a physical place, but getting there depends on your behavior in this life. "The real life is the next life … and based upon how we live this life, it determines where we shall be in the next. We are told we will be in comfortable homes, reclining on silk couches … so we're given the delights of sex, the delights of wine, the delights of food with all of their positive things without their negative aspects."


The promise of heaven plays a central role in the life of Pastor Ted Haggard, president of the National Association of Evangelicals, and his congregation. As an evangelical, Haggard believes if you are not a born again Christian, you have no assurance of going to heaven. But if you are "born again" in the belief that Jesus Christ is your personal savior, you are assured a place in Heaven. He also believes that this life is a sort of weigh station on the way to an eternal home. "Jesus Christ guarantees eternal life to anybody that'll follow him. … The purpose of life is to glorify God and go to heaven … 'cause heaven is our home."


Rabbi Neil Gillman, a professor of philosophy at New York's Jewish Theological Seminary, expressed Judaism's perspective on the afterlife. "For the past 2,000 years, most Jews believed that at death the body and the soul separate, the body is interred and disintegrates in the Earth, the soul goes off to be with God," he tells Walters. But that's not the end of the story. "At the end of days, God will resurrect bodies, will reunite body and soul, and the individual will come before God to account for his or her life," Gillman said.


Walters also traveled to India where she met with the Dalai Lama, considered by Buddhists to be the reincarnated Buddha. The Dalai Lama says that the purpose of life is to be happy, and that you can accomplish that by "warm-heartedness." He tells Walters heaven "is [the] best place to further develop the spiritual practice … for Buddhist the final goal is not just to reach there, but to become Buddha. [It's] not the end."


As a Buddhist he believes in reincarnation and tells Walters that people can have second lives as animals. "If someone do[es] very bad, badly … kill or steal … [he] could be born in an animal body." Walters also talks to actor Richard Gere, a longtime follower of Buddhism. Gere tells Walters, "I don't think necessarily heaven and hell happen in some other life. I think it's right now."


The Skeptics and Non-Believers

Walters also speaks with scientists, who say they're beginning to understand why so many people believe in heaven. Still, they have yet to come up with the proof that it exists.
For most people, proof of Heaven's existence is not necessary. Faith is all they need. Dr. Dean Hamer, a geneticist at the National Institutes of Health, thinks he has figured out why this faith comes easily to some, but eludes others. "Whether a person is spiritual or not is not necessarily a matter of their will. It may be something innate about their personality," Hamer tells Walters.
Hamer suspects spirituality might be a personality trait encoded in our genes. He began his research by asking more than 1,000 people to answer a series of questions about faith and spirituality. He then tested DNA from the study participants and found that those who scored highest on his survey had a mutation of at least one gene that seemed to affect their level of spirituality. He named it "the God gene."
"It's a gene that's called VMAT2 and we can isolate it, and we can study it in detail. … This particular gene controls certain chemicals in the brain. And those chemicals affect how consciousness works. They affect the way that our feelings react to the events around us," he tells Walters.


Hamer also notes that researchers have been able to detect changes in the brain when people are in the midst of intense prayer or meditation.
Dr. Andrew Newberg, a neuroradiologist at the University of Pennsylvania, is one of those researchers. Newberg says his research shows a marked increase in brain activity in the frontal regions of the brain. "At the same time," he adds, "the parts of the brain that monitor our sense of time and space became less active."
Newberg says this contributes to an individual's feeling of "losing that sense of self." The feeling, he said, is "attributed to God, for example. And then they feel that God is providing them that energy, that feeling."
But for Ellen Johnson, president of the American Atheists, science or no science, heaven is a myth.

"Heaven doesn't exist, hell doesn't exist. We weren't alive before we were born and we're not going to exist after we die. I'm not happy about the fact that that's the end of life, but I can accept that and make my life more fulfilling now, because this is the only chance I have," she tells Walters.


'Death Trips' to Heaven

Walters also talks with people who feel certain of heaven's existence, apart from their faith, because they believe they've had a glimpse of it in near-death experiences.
A U.S. News & World Report from the late 1990s says as many as 18 million Americans believe they have had near-death experiences that gave them a glimpse of the afterlife.
Dianne Morrissey tells Walters she felt the "white light of God" when she was electrocuted. "My near-death experience changed everything about me. … There is not a single experience on Earth that could ever be as good as being dead," she said.


British psychologist Susan Blackmore has spent decades searching for a scientific explanation: "When the oxygen levels fall in the brain … you get massive over-activity in the brain. … I think there is a true transformation, but not because you've been to heaven."
Family, Children and Heaven


Walters talks with California's first lady, Maria Shriver, whose early experiences with loss as a member of the Kennedy family prompted her to write a book about heaven for children. "I had, growing up, a lot of questions about these deaths that occurred in my family with no person to really talk to them about it," she tells Walters.


"My daughter, who was about 6 or 7 at the time, started asking me a lot of the same questions that I had had as a child, really basic questions: 'Why do you put somebody in a coffin? Where does she go now? Is she scared in the box? Can she breathe in the box?' And what was interesting, Barbara, was that she started answering the questions for herself. So I started writing down her answers," she said.


Walters also talks with Mitch Albom, author of "The Five People You Meet in Heaven," to get his personal take on the afterlife.
Albom tells Walters, "There's one thing I would say about heaven. If you believe that there's a heaven, your life here on Earth here is different. You may believe that you're gonna see your loved ones again. So the grief that you had after they're gone isn't as strong. You may believe that you'll have to answer for your actions. So the way you behave here on Earth is changed. So in a certain way, just believing in the idea of heaven is heavenly in and of itself," he said.

The Way To make You Rich

50 ways to make yourself richer Many people don’t give much credence to the saying "see a penny, pick it up and all day long you’ll have good luck". It’s one of many myths that don’t ring true. You could add "money doesn’t grow on trees" or that it burns holes in pockets to the list, too.

Most myths are harmless, but some are potentially dangerous: believe them and you could end up out of pocket. So we have come up with 50 myths about money.



1. I’m too young for a pensionMost of us don’t start taking pensions seriously until we reach our mid-thirties, according to research from HSBC.
Only ten per cent of 16 to 24 year-olds, and just over half of 25 to 34 year-olds are paying into a pension, with the rest believing they are too young to worry about it. But the consequences of delay are serious.
A 21 year-old paying £75 a month into a stakeholder pension could retire at 65 with a fund of £337,000, which could buy a pension of £12,700 a year. If he failed to start contributions until he was 30, his fund would only grow to £171,000, buying a £6,470 pension.


2. I don’t need a pension: I’ve got a houseGiven all the fuss about pension fund deficits, bust company schemes, lousy investment returns and plunging annuity rates, it’s hardly surprising that so many people have lost faith in pension plans.
What is much harder to understand is why so many people believe that investing in their homes can be viewed as a viable substitute. It remains to be seen how many of Britain’s growing army of buy-to-let landlords and small-time developers can generate enough debt-free cash to pay for a comfortable old age.
Some will, some won’t, but at least the underlying strategy makes sense. Hoping to use a home as a pension makes no sense at all. The average property may be worth a small fortune (around £200,000) compared with the average retirement fund (roughly £25,000), but you still have to live somewhere.
Few have big enough homes to fund both a decent income and acceptable accommodation for life, especially in these days of galloping life expectancy.


3. My work pension is guaranteedCompany schemes are better protected than they were a few years ago, and are a lot safer than the days when Robert Maxwell stalked the land. But there are still very few guarantees.
Since April 2005, members of defined benefit (final-salary) schemes have been able turn to the Pensions Protection Fund for help if their employer goes bust.
But, although existing pensioners incomes are paid in full, people who have yet to retire get 90 per cent at most, and extra benefits, such as widows’ pensions, may be reduced, or even scrapped. PPF rules are not set in stone and may change at any time.
The value of a defined contribution (money purchase) pension fund cannot be guaranteed as it is dependent on the investment skills of those managing the fund, and on the state of global investment markets.
The pension itself is not provided by the employer, but by an annuity bought with the individual’s pension pot on retirement. So your income in retirement is dictated by annuity rates at the time you take it out.
Annuity funds are ring-fenced and should, if properly funded, provide a guaranteed income for life. It remains to be seen how well the annuity industry will cope if life expectancy continues to grow at its current rate.


4. I have to buy an annuity when I retire You are not compelled to buy an annuity as soon as you retire If you have a big enough pension pot an unsecured pension (USP) allows investors to leave the bulk of their pension fund invested until any time up to age 75, at which point they must buy an annuity - unless they take the Alternatively Secured Pension route.
The ASP is unlikely to be a suitable route for many as there is a potentially nasty tax charge of 82 per cent.


5. Interest-only mortgages make homes more affordableAn increasing number of homebuyers, especially first-timers, opt to pay only the interest on their mortgages and nothing off the capital.
The big problem with interest-only mortgages is that allow you to fool yourself into believing you are buying a home, when you’re really only buying the difference between the purchase price and current value.
Any increase will reduce the debt, but will do nothing to strengthen you position on the property ladder. But any fall in value could leave you with negative equity, leaving you with even more to repay.
Lenders used only to sell interest-only mortgages alongside investment plans that were supposed to repay the capital on maturity. As we now know, the projected returns were often over-optimistic, but, at worst, the bulk of the debt will still be repaid.
Nowadays, the best plan is to switch to a repayment mortgage as soon as possible. If you can’t afford to do so, you can’t afford the property. It’s as simple as that.


6. Fixing the interest rate for the life of your mortgage is better than a series of short-term fixesGordon Brown is a great fan of long-term fixes, partly because they cushion homebuyers from nasty shocks and partly because they deprive the mortgage industry of a fresh injection of renewal fees every couple of years.
He may also hope that, if they become the norm, the media will be less inclined to come out with headlines like "More misery for homeowners" each time the Bank of England increases its borrowing rate.
Such products already exist, but few homebuyers have so far proved willing to lock themselves into the same rate for five years, let alone 10, 20 or even 25 years.
A report commissioned by the then chancellor a few years back blamed unattractively high rates for this unpopularity, but lack of flexibility is a more likely reason.
Anyone locked into a 20 year fix in 1998, when the base rate stood at 7.5 per cent, would have been in despair five years later, when the rate had more than halved to 3.5 per cent.
It has since risen to 5.75 per cent, but there’s now talk of a further fall. Meanwhile, our hapless homebuyer’s hands are still tied by a hefty early repayment penalty.


7. Flexible mortgages cut the cost of buying a home Flexible mortgages allow you to make extra repayments on your mortgage as and when you want.
Each extra payment reduces the debt, with a commensurate reduction in interest charges. If you pay enough off for long enough, you could lop years off the total repayment time, and thus save thousands of pounds in interest.
It’s a particularly good idea for people with an irregular income and a more rewarding alternative to a regular savings plan. Unfortunately, a lot of people never actually get round to making overpayments. And even many of those that do are inclined to borrow the money back at a later date for holidays, cars etc.
This gives them access to cheap credit, but does nothing to cut the cost of home buying, Some lenders set limits on the amount that can be re-borrowed, but others stipulate only that the loan must be repaid in full by a certain date – a temptation for the undisciplined to saddle themselves with a debt they can’t repay.


8. A shortage of housing supply means property prices cannot fall The UK has a massive housing shortage. More than 223,000 new households are expected to be formed this year, but we are only building 185,000 new homes a year.
But property prices will only remain high so long as supply is outstripped by demand. If something happened to dampen that demand – for example interest rates shooting up to unaffordable levels, or unemployment levels increasing dramatically – the situation could change.
And if mortgage repayments rose to the extent that large numbers of homeowners were forced to sell up or see their home repossessed, that sudden increase of housing supply could only exacerbate the situation.
But while property prices could fall, experts do not believe it is likely as long as employment levels remain high.



9. Active funds outperform tracker funds When stockmarkets are falling, an efficient tracker fund follows them down, while an active manager can in theory buck the market.
When markets are rising, that job is harder, but a good active fund manager can add value. That’s the theory. The reality, as even world-famous investor Warren Buffett admitted recently, is that a cheap index tracker will beat most fund managers over the long term.
Active funds tend to charge annual management charges of 1.25 per cent and up, while trackers typically charge 0.5 per cent or less. Yet thousands of active funds fail to beat their benchmark indices over the long term.
Worse, some are even "closet trackers", following an index while charging active management prices.There are fund managers who have consistently outperformed the market, but they are a minority.


10. A tracker fund tracks the index It’s fair to assume a tracker fund will always under-perform its index, by roughly the level of its charges. But tracker funds are not as straightforward as they seem, and their "tracking error" can vary quite dramatically.
Some are full replication funds, where the manager holds every stock in the index and buys and sells to match its weighting in the index.
This method, often used for FTSE 100 trackers, is let down by the high dealing costs involved in all that trading.
For bigger indices, fund managers use "sampling", buying the biggest shares and then replicating the rest by buying shares typical of their sector.
If they get it wrong the "tracking error" can be substantial.


11. You can’t lose money with premium bonds Everyone loves premium bonds. Not only do you get 24 chances a year to become a millionaire, plus thousands more to win lower amounts,but – unlike other forms of gambling - you also get to keep your stake, which you can cash in at any time.
In practice, most people hang on to the money for fear of missing out on £1m in the next prize draw. When the money is finally withdrawn, often not until the bondholder has died, will almost inevitably have been ravaged by inflation.
Worse, says Martin Lewis of moneysavingexpert.com, four in five of those with the £30,000 maximum holding can expect below-inflation returns in any one year.
Annual earnings are said to average 4 per cent. But, as Lewis says, if 1m people pay £1 for the chance of winning £1m, you could say the average prize is £1 – even though 999,999 people get nothing. Premium bonds are for gamblers.
If you care about decent annual returns, stick to the best-paying savings accounts


12. You can time the market Research from Fidelity shows that the longer you leave your money invested, the less likely you are to lose money.
If you invested £1,000 in the FTSE Allshare in 1992, it would have grown to £4,612 by the end of June 2007. If you’d missed the best 20 trading days, you would have just £2,212.
Trying to time the market runs the risk of missing those best days, as they often happen during the toughest times. On 12 March 2003, for example, the UK market fell by 4.3 per cent, but the next day it rose by 5.2 per cent.
Either invest your money for at least ten years and try not to worry about it, or drip-feed it in via regular savings, reducing the impact of market volatility.


13. Corporate bond funds are low-risk investments Corporate bonds are effectively IOUs issued by companies to raise money. They pay a fixed rate of interest over a fixed term, which is why they are commonly sold as "low-risk" investments. But, the term can be misleading.
For instance, while the income may be fixed, the price is not. A holding bought two years ago, for instance, is likely to be worth a lot less now as bond prices have plunged over the past 18 months.
That’s fine if you can afford to hang on for recovery, but not if you need the money now – or indeed are likely to do so in the next few years. In addition, corporate bonds are only as safe as the company that issues them.
This is reflected in the interest rate: the greater the perceived financial strength of the issuing company, the lower the income you receive, and vice versa.
Again, this isn’t a problem if you know what you’re doing, but it can be a massive problem if you are attracted by an unusually high rate of interest without understanding the underlying reasons.
Most ordinary people invest in corporate bond funds, which obviously helps to spread the risk. But different funds still follow different risk/reward strategies and it’s important to pick one that meets your needs.


14. Blue chip shares are low risk. No. The value of blue chip shares can fall sharply – you only have to look at Northern Rock fall from grace.


15. I’ll start saving when I have enough money It’s never too early to get the savings habit, and the sooner you start, the longer your money has to grow.
High-paying savings accounts are available with minimum investments of £1, while unit trusts and Oeics offer savings plans from as little as £20 a month.
But despite grand resolutions at the start of each year, Alliance & Leicester says half of those planning to save say they will put money aside when they can afford it, rather than committing to a regular payment into a savings account or investment fund.
Nearly one in three British adults saved nothing in 2006, according to the bank.


16. I have a savings account so I’m earning money Not necessarily. If you have debts at a higher rate of interest than you earn on your savings account, you could actually be wasting money.
You may well need a rainy day fund to pay for emergencies, such as car repairs, or a new boiler. But beyond that, the money would be better spent paying off any credit cards, store cards or loans.
If you’re a higher-rate taxpayer earning 6 per cent gross savings interest, you will be earning £360 a year interest after tax for every £10,000 of savings you have.
If you used that £10,000 to pay down a 15.9 per cent credit card debt instead, you’d save £1,590 interest, making you £1,230 better off.


17. Buying in the sales saves you money We all like to congratulate ourselves on getting a bargain. But whether it’s a new TV or trolley loads of cheapo clobber, it’s only a bargain if you really need it, or if you would have bought at full price anyway.
Buying something you don’t need, and have only been tempted into by a 50 per cent off sticker, doesn’t save you money, it costs you money. Doh!


18. Shares are the best hedge against inflationFinancial advisers are wont to guide clients into equity-based products on the basis that share prices have always outperformed all other types of investments over the longer term.


19. Fixed-rate savings bonds are a good hedge against falling base rates If you fix the rate paid on your savings and the prevailing savings rate falls, you are obviously quids in. Unfortunately, the opposite is much more likely.
This is because banks and building societies tend to issue fixed-rate bonds when the money markets are predicting further rate rises.
This is primarily because the underlying cost of providing the guarantee is lower at such times than if rates are expected to fall. Of course, the markets aren’t always right and you could still end up on the winning side. But you’re normally better advised to keep things fluid.


20. Buying funds direct from the fund management company is the cheapest option. No. It is the most expensive option and could cost you up to 5 per cent.
The cheapest way to buy a fund is via an online fund supermarket or a broker. They often offer discounts - sometimes there is no charge to pay.


21. Guaranteed equity bonds offer all of the benefits of stockmarket investment with none of the risksGEBs are savings plans whose returns are linked to the performance of one or more stockmarket indexes over a set period.
They are sold as risk-free because you are guaranteed to get back at least as much as you put in. Some plans are more generous than others, but all have certain restrictions. restrict returns in various ways.
Some set limits on the amount you receive if the relevant stockmarkets rises strongly over the period. And, although the initial capital is always returned, few plans add a bit extra for inflation (although some pay more).
If shares soar at the outset and then fall back again, you get none of the upside and all of the downside. People who invest directly in shares can lock in profits by selling after a strong rise, but GEB investors have to wait for the end of the term.
The biggest drawback of all is that GEBs never include dividend income, which might be as much as 40 per cent of the total gain enjoyed by direct investors.



22. My bank is best because it pays the highest rate on current accounts Current accounts should be treated as temporary holding accounts for money you are planning to spend during any one month.
Anything left over should be transferred to a savings account, thus minimising the temptation to spend more than you have to.
It therefore makes a lot more sense to judge banks by other criteria, such as charges, extra services and the way you are treated by staff.


23. I can’t use my Natwest card at a Barclays ATM Oh yes you can! In the old days, the banks limited ATM access to their own customers and those of certain other banks.
For instance, Barclays customers could also use ATMs operated by Lloyds TSB and Royal Bank of Scotland but not by NatWest or HSBC.
This was particularly annoying for people whose bank or building society provided only a small number of cash machines. Nowadays there are no such restrictions. You can use any ATM you choose.
You won’t be charged for using ATMs operated by members of the LINK organisation – which means pretty well any bank or building society. But you will have to pay for using one of the non-LINK machines, Charges must be displayed on-screen before you begin the transaction.


24. Paying my bills my direct debit is cheaper It is with utility bills but drivers paying their car insurance by direct debit risk paying over the odds for the convenience.
According to MoneyExpert. com, the price comparison website, 11 out of 12 motor insurance policies charge consumers interest if they choose to pay their premium by monthly direct debit and the average APR is 22.7 per cent.
On an average annual comprehensive policy costing £806 this will mean an extra £182 on top of the premium quoted.


25. Withdrawing cash from an ATM abroad is free Most credit and debit cards typically incur a 2.75 per cent loading fee outside the UK.
However, Nationwide and the Post Office charge no fees.


26. I can’t switch my bank account to another bank because I am overdrawn Banks love people who are consistently in the red as they are likely to be a lot more profitable than people who never borrow money.
The only reason why the bank may refuse to accept you as a customer is if it has very good reason to believe you will never be able to repay the money.


27. If my bank or building society goes bust, 90 per cent of my savings are protectedIf a building society or bank collapses, the first £2,000 will be returned in full, plus 90 per cent of the next £33,000. These limits apply across the board, not to individual savings accounts.
If the bank is part of a group – for instance, Halifax, Bank of Scotland and Intelligent Finance are all part of the HBOS – you may also find that the compensation limits apply to all accounts held with any members of the group.
The limits have remained the same for a number of years and are hopelessly inadequate. Attempts by the financial ombudsman to get them raised to more more sensible levels have so far failed.
If you have a substantial amount with this particular building society, you should consider moving some of your savings to at least one other institution.


28. Student loan repayments are crippling A recent survey of sixth-formers by the University of Greenwich found that on average they expect a graduate earning £16,000 will have to repay their student loan at a rate of £70.75 a week – out of a take-home pay of £244.41.
In fact, on that salary your student loan repayments would be just £1.73 a week. Student loans are, in real terms, interest free, as they only accumulate interest at the same rate as inflation.
You start paying back the money the April after you finish your course, but only if are earning over £15,000, and repay 9 per cent of your income over that level, until the balance is paid off.


29. I’ve solved all my debt problems by consolidating them all into one loanDebt consolidation agencies are the scourge of the heavily indebted. It may sound like a good idea to take out a single loan rather than having to pay a host of different creditors, but it’s not.
To start with, by consolidating your debts, you have repaid all your creditors at the same time and now owe the whole lot to one company.
This means you are no longer able to prioritise your debts, which would have allowed you to concentrate on the most important, such as the mortgage or council tax.
If you had consulted an independent, fee-free debt adviser (such as you local Citizens’ Advice Bureau) before doing anything, you would have received help with drawing up a repayment plan and negotiating deals with individual creditors.
You should still do this, but it will be that much harder for them to help. Second, while many of your previous loans will have been unsecured, your new one is likely to be secured on your other assets, most importantly your home.
This means that, if you are unable to make payments, you could lose everything, including the roof over your head.
Third, although your monthly payments may be lower, the term of the loan is likely to be a lot longer, which means you will end up paying a lot more interest than you would previously.


30. A bad credit rating stays with you for life There are three credit reference agencies, Callcredit, Equifax, and Experian, which store information on county court judgements (CCJs), bankruptcies, repossessions, and applications for credit.
Missed credit repayments stay on your credit report for 36 months, while CCJs are held on file for six years. If you have paid the debt within one month of the CCJ, you can ask the court to remove the details from your record.
Discharged bankruptcies also stay on your record for six years, unless you have a bankruptcy restriction order made against you, which lasts for 15 years.Beware of companies offering to repair your credit record for a fee.
You can do the same yourself for nothing – the credit reference agencies can tell you how.


31. The more credit cards you apply for, the better your credit rating Having no credit – no cards, overdraft facility or loans – can make it hard to get credit, as lenders will find it hard to assess your credit-worthiness.
However, applying for multiple credit cards can actually damage your credit rating. Each time you make an application for credit, it leaves a footprint on your credit report.
An unusually high number of applications might suggest that you are trying to take on too much debt, or make a lender think you are a victim of identity fraud.
So, when you are shopping around for credit, make sure you ask lenders for a "quotation search", rather than making full applications.


32. An IVA won’t affect your credit rating An Individual Voluntary Arrangement (IVA) is a binding agreement between you and your creditors, over how you will repay outstanding debts, and is often seen as an alternative to bankruptcy.
But just like bankruptcy, an IVA appears on your credit file for at least six years, marking you as a high-risk customer, and making it more difficult for you to get credit.
If your agreement with your creditors lasts for more than six years, then the IVA will stay on your credit report for as long as the arrangement lasts.


33. Cashback credit cards save you money This is true – if you pay your bill off every month, in full. If you don’t, and you’re incurring interest and penalty charges, then that 0.5 or 1 per cent cashback is just a sad little sop to stop you finding what you really need – a 0 per cent credit card.
Another way to waste money, while still feeling like you’re saving, is to increase your spending in order to pass the limit at which your credit card starts paying a higher-rate of cashback.


34. Consolidating your credit cards and loans onto your mortgage saves moneyIt can certainly cut your monthly outgoings, and mean that you only have one creditor to deal with, rather than several smaller ones. The interest rate charged on the new combined loan may well be lower than you would have been paying on your previous debts. However, as many consolidation loans tend to be long term, you can end up paying more interest in the long run. Another problem is that the loan will be secured on your property, meaning that you now face the extra risk of losing your home if you can’t keep up with repayments.
Insurance

35. I have free travel insurance through my credit card The free travel cover provided on most credit cards is actually "travel accident insurance", which will usually pay out only if you suffer an accident while travelling to or from your holiday destination, in very limited circumstances.
Proper travel insurance policies should cover medical expenses, repatriation costs, personal liability and cancellations.
Such comprehensive cover is available free on some premium credit cards, but as they charge annual fees of up to £300, you will be paying for it one way or another.
Barclaycard and Co-operative Bank do offer proper travel insurance free to ordinary card customers, but only if they buy a holiday through the card company’s travel service, and use their credit card to pay for it.


36. The best insurance policy is the cheapestAs witnessed by the recent explosion in rate-comparison websites, most people pick insurance policies by price alone.
Few give the policy terms more than a cursory glance before signing up; some don’t even both to do that. You may believe that one policy is pretty much the same as another.
Not so. They can vary quite considerably, and you normally get what you pay for. A low price can mean you have to pay a large chunk of the claim yourself, either because of a massive excess or because the maximum payout is totally inadequate for your needs.
You may have to do without a courtesy car, or alternative accommodation if your home is flooded. You may end up with nothing at all because you have failed to spot the long list of unreasonable exclusions, or have missed an arbitrary deadline.
And policy details are only part of the story. Some insurers reclaim the costs of cheap premiums by cutting back on staff numbers or training, or by fighting every claim, or delaying payment for months.
Of course, the low premium may simply be a loss leader to drum up business, in which case you’ve probably secured yourself a bargain.
The best way to choose a policy is through personal recommendation or, failing that, by consulting an insurance broker who knows his stuff.


37. Red cars cost more to insure This probably started as an urban legend, possibly in the US, but is complete nonsense.
Although Churchill Insurance put together a "Colour Crash Index" in 2004 which did reveal a direct correlation between car colour and accident frequency, red cars were well down the list of most accident prone, after black, silver, green, yellow, blue and grey.
In any case, neither Churchill nor any other insurer takes car colour into account when deciding your premium.
Interestingly though, red auto paint is more expensive than other colours, making bodywork repairs pricier.


38. I can get good value insurance from my travel agent Unlikely. Travel agents have long been lambasted for offering expensive travel insurance and you are better off surfing the internet for a better deal.
Since 2005 the sale of travel insurance policies has been regulated by the Financial Services Authority, but policies sold as part of a package holiday by a travel agent or tour operator do not fall under the FSA regime.
The rules mean that anyone selling insurance has to ask certain questions to check the suitability of a policy.
Last year Which?, the consumer champion, accused some travel agents and tour operators of mis-selling travel insurance.


39. I’m too young for life insurance You may be young, but you’re probably not immortal.
As soon as there is someone who depends on you financially, you need life insurance. That may be a partner who you share a mortgage with, a spouse, or children – anyone who would struggle for money as a result of your death.
Yet according to Virgin Money research, 27 per cent of parents think they are too young too have life insurance, despite being old enough to have children. A 35-year-old non-smoking male can get £100,000 of life insurance cover from as little as £7 a month.


40. Life insurance is more important than critical illness cover You are actually five times more likely to suffer a critical illness than you are to die before age 65, as heart attacks and cancer are more survivable than ever before.
Most people who contract multiple sclerosis are aged between 20 and 40, and half of all testicular cancer cases show up in men under 35.
Contracting a serious illness like this can mean you need expensive nursing care, drugs, or equipment, and may also limit your future earning potential.
Critical illness insurance can help with these costs, paying out if you are diagnosed with one of a list of specified illnesses. It can be very expensive, however.


41. Suicide isn’t covered on life insurance policies Most life insurance policies do have suicide clauses, designed to stop people who already plan to take their lives from taking out huge amount of cover, and then killing themselves in order to extract their families from financial problems.
However, these generally only exclude claims for suicide within the first 12 months of a policyholder taking out the cover, and insurers will usually pay up on suicides after that point.
In addition there is often an exception in the first year if the insurance has been taken out to cover a mortgage and can be paid directly to the lender.


42. Only the rich suffer higher rates of tax In 1997, 2.1 million people paid higher-rate tax at 40 per cent.
Ten years later the number had risen to 3.7 million, thanks to Gordon Brown’s love of "fiscal drag". This is the phenomenon where tax thresholds, which have gone up in line with inflation, fail to keep pace with average earnings.
Many of the workers who now fall into the top-rate tax brackets include senior nurses and senior ambulance and fire service officers, as well as university lecturers.
In 2007-08, anyone earning more than £39,825 could be liable for higher-rate tax. The threshold is to rise to £43,000 from April 2009, but the
Treasury will claw back the money by widening the band at which 11 per cent National Insurance is paid.


43. I don’t need to make a will because I’m leaving everything to my husbandOn the contrary. If you die without making a will, your husband is quite likely to end up having to share your estate with other family members.
If you leave more than £125,000, and have children, he is entitled to £125,000, plus interest on half of the balance – but not the capital itself.
The children inherit half the remaining capital immediately, and the other half when your husband dies.
If you don’t have children, your husband gets the first £200,000, but only half of any remaining capital.
The other half goes to various relatives in the following order: your parents; siblings; grandparents; aunts and uncles.


44. My wife will get my pension when I die Your wife may be automatically entitled to your pension fund if you die before converting it into a pension.
However, scheme rules differ and it is always advisable to make your wishes clear to the trustees – especially if you want the money to go to someone else.
When it comes to the pension itself, if it is linked to your final salary, your wife is likely to be entitled to a proportion of your pension, but not the full amount.
If your pension is provided by an annuity, and you want your wife to continue receiving an income after your death, you will have to pay for it at the outset – normally by sacrificing part of your pension fund.


45. I don’t need to worry about inheritance tax, because I am leaving everything to my spouseIt is true that there is no IHT to pay on assets transferred between spouses, or those in a civil partnership. But this doesn’t mean you should ignore IHT completely if you have assets exceeding £300,000.
If you want as much as possible to end up in the hands of your children and grandchildren, you need to ensure both spouses make the most of their individual nil-rate bands.
This will ensure that up to £600,000 is passed on to heirs tax-free, rather than just the £300,000 that will be utilised on the death of the second spouse.
Remember too that this exemption only applies to married couples, or those in a civil partnership.
Co-habitees enjoy no such exemption, regardless of how long they have lived together or how many children they have.


46. If I give away my home and survive for seven years I don’t have an IHT problem Theoretically this can work, but only if you pay a market rent on your home while you continue to live there. If you live there rent-free, then this is considered a "gift with reservation’’ by HM Revenue & Customs, which will not make it exempt from IHT.
In practice, even if you pay the correct rent, this is seldom a tax-saving move. Many older people are asset-rich but cash poor; so paying rent on their own home would seriously impact their standard of living.
What is more, the beneficiaries who receive this rent will have to pay income tax on this money. They are also likely to be subject to capital gains tax if they sell this home after your death, as it is not their primary residence.
This means they have to pay CGT at 40 per cent on any gains in the property’s value from the day it was given them, to the day it was sold.
So the potential tax saving for your heirs may be negligible, but the cost will be significant.


47. If I give money away, the taxman can’t find out about it Oh yes, he can. And HM Revenue & Customs has the power to prosecute and fine executors - and potentially beneficiaries - who fail to declare lifetime gifts on the appropriate IHT form.
Julie Hutchison of Standard Life says recent statements have made it clear that the Revenue intends to step up investigations, and clamp down firmly on any incidents of tax evasion.
Under current rules, you can give away money or assets, and provided you live for more than seven years after making the gifts, they are not included within your estate for IHT purposes.
It is advisable to make a note of any such gifts and pass them on to the executors of your will. You can appoint a beneficiary, such as a spouse or child to be an executor as well as a professional such as a family solicitor or accountant.
If you die within the seven-year period, and the total gifts are less than £300,000, these will merely "mop up’’ part of your tax-free allowance, so the beneficiaries have no further IHT to pay.


48. I don’t have to worry about my pension, as this isn’t subject to IHT Well, strictly speaking there may be no immediate IHT problems, because pension funds are not subject to IHT. But this does not mean that you should ignore pensions altogether.
Most people nominate their spouse to pick up their pension should they die. While there is no IHT to pay at this point the funds will be taxable when your spouse dies and leaves the remainder to the next generation.
One solution is to ensure the pension is paid into a trust on your death, with the spouse being the main beneficiary.
The trustees can forward funds to the surviving spouse and also ensure that other beneficiaries, such as children can also benefit from these funds without paying IHT.


49. There is nothing I can do to reduce the IHT liability on my property Simply handing the deeds of your house over to your son or daughter is not an effective means of escaping IHT. But there are steps you can take if it is simply the value of your family home that is pushing you into the IHT bracket but ensure you get independent legal and financial advice before proceeding with either options outlined below.
The easiest way to reduce the value of your home is to take out a debt secured against the property. For most people, this means some type of equity release scheme.
This can be a valuable tool in IHT planning, allowing you to reduce the value of your estate while at the same time releasing capital to supplement your pension.
This money can also be used to make lifetime gifts that will potentially be exempt of IHT. But it is worth remembering the debts will continue to accrue interest until you die.
As a result, it is possible your beneficiaries will receive less from the sale of the home, once the debt and interest are repaid, than they would have done had they simply paid the IHT bill.
The other option is to change the ownership of the property from "joint tenants’’ to "tenants-in-common’’.
This enables the spouse who dies first to leave their share of the property (up to the prevailing nil-rate band) into a trust, in which the children are likely to be the main beneficiaries. This enables the nil-rate band to be used twice.



50. An independent financial adviser will always pick the best deals on the marketIn theory, IFAs are supposed to treat their clients like favourite aunts, selflessly choosing the very best investment strategy, regardless of how little they may earn for themselves.
In practice, all but the saintly few tend to bear their own financial interests very much in mind.
The regulations require IFAs to be able to prove that suggested solutions make sense for the individual in question, but they are not penalised for ignoring products like savings accounts or exchange traded funds (ETFs), that may be better for the client, but pay no commission.
Providers are allowed to pay pretty well as much commission as they choose, and it is no coincidence that the more they pay, the more products they are likely to sell.
Clients who pay fees to avoid commission bias, may find they are charged for a whole lot of extra services they neither want nor need.

History of money

The use of barter like methods may date back to at least 100,000 years ago. Trading in red ochre is attested in Swaziland, shell jewellery in the form of strung beads also dates back to this period, and had the basic attributes needed of commodity money. To organize production and to distribute goods and services among their populations, before market economies existed, people relied on tradition, top-down command, or community cooperation.

The Shekel referred to an ancient unit of weight and currency. The first usage of the term came from Mesopotamia circa 3000 BC. and referred to a specific mass of barley which related other values in a metric such as silver, bronze, copper etc. A barley/shekel was originally both a unit of currency and a unit of weight.

A 640 BCE one-third stater electrum coin from Lydia, shown larger.According to Herodotus, and most modern scholars, the Lydians were the first people to introduce the use of gold and silver coin.[17] It is thought that these first stamped coins were minted around 650-600 BC A stater coin was made in the stater (trite) denomination. To complement the stater, fractions were made: the trite (third), the hekte (sixth), and so forth in lower denominations.

The name of Croesus of Lydia became synonymous with wealth in antiquity. Sardis was renowned as a beautiful city. Around 550 BC, Croesus contributed money for the construction of the temple of Artemis at Ephesus, one of the Seven Wonders of the ancient world.
The first banknotes were used in China in the 7th century, and the first in Europe issued by Stockholms Banco in 1661.

In the Western world, a prevalent term for coin-money has been specie, stemming from Latin in specie "in kind"

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Where you can get briliant idea when you watch panorama aroun the lake, generous people who live there feel so friendly with you will make you feel like at home.

I am not an expert or Guru in internet as many people told about them, we are here just a same person who try a luck to search money.

yes , money! I must be honest to you as I have decided first time before doing this blog. I come here just about moneynot much. I think you also come here may be just about oney.

But let me first quess who you are, some people come here need some info about other world from other side ,like culture,religion,place,idea, or may be to get some information around the world.

but at least you will learn how to browsing all the internet and may be some day or later you will find many site offer you great thing you never realize, you feel very welcome by other people when you come to visit.

But belive it or not, they are all just work for money and they do it to you, to make you happy.make you feel like in your home that is their business.

Oke, just ou, but let countinue talk about my self.

I am a man ,24 years old may be just older or youngest than you but here we are the same, as a human being that need some extra treatment like you.

I am still single, but looking for a girl who understand me,we can stand to gather,talk much to gather,share some story,fun,joke,travel,shopping, But at least she love me, not more, if you can tell me may be you are not in wrong place to know about me more.

I was graduated from high school in my city, Medan. I was not school in my hme town because it is very long to reach high school from my family own house, so I decided to leave my village for school.

this moment is the first thing in my life that I must cry to leave my village, cry..! it is look like I am as a weak man in your brain, but let me tell you, I love very much with my village, I have many sweet memory here, I feel I never forget my village a long my life, my blood stream there, my breath blow, I cry just about love. but acually a man always hide their sadness in their eyes,cry in the darkness and smile in the face. but as I say to you first in above ,I have decided to tell you much about me honestly.

But after two month away from my village, I try to live the city and began to love it. beutiful city that is all.

After graduated from high school<>

But as we always know, no one is perfect, we never know what happen to us tomorrow, even one minute in our front.

no body can forecast anything right 100% , it just a calculated about the posible what happen. but the true thing no body know.

as me here I never expect we will meet here, I just come to this town to seek a job but no one can give me a life, very hard live in this town. that why I try to do this stuff. but some time this is very annoying.