How Breitling watches might represent an alternative investment
The humble wristwatch is perhaps not the first item many people think of when it comes to alternative forms of investment. Some classic timepieces – like Breitling watches – however, are no humble wristwatches, but can potentially represent a thoroughly sound and sensible form of investment.
A wristwatch to treasure
Ever since the company’s foundation in 1884, the Breitling family and its successors in Switzerland have been working for more than a hundred years to transform the wristwatch into one of the most sought-after timepieces on the market. From the very beginning, its quality and accuracy marked it out as even more than a timepiece, but a split-second accurate chronograph. Indeed, the Breitling company is credited with developing the world’s first wrist-worn chronograph.
Thanks to their quality, accuracy and reliability, Breitling watches soon became popular with the pioneers of the new aviation industry that was growing in Europe at about the same time.
In the same way that omega watches became the favourites of Olympic sportsmen from the late 1920s onwards, Breitling became the favoured marque of all aviators. Even today, Breitling watches are worn by pilots of the Royal Air Force, the Italian airforce, the Red Arrows and pilots of such iconic craft as Harriers and Tornados.
The case for investment
With a pedigree such as this and a status second to none in aviation circles, it is hardly surprising that Breitling watches have become very collectable timepieces. They are also immediately recognisable by the eye-catching logo of a pair of wings spreading out from a stylised “B”.
As collectors’ pieces, therefore, these timepieces command a handsome trading value. But doesn’t that price make it difficult to enter the market as an alternative route to investment, you might ask. In fact, entry-level investment is made all the more accessible by the existence of reputable dealers in pre-owned models of the Breitling range (as well as Omega watches and a whole range of other classic timepieces, of course). Such second hand examples are, of course, typically more affordable than new.
Pre-owned and preloved classic watches like this are cheaper because they have inevitably been subject to depreciation. Indeed, in many instances any remaining rate of depreciation is cancelled out by their increasing desirability among collectors and others who want to own such iconic timepieces.
The result, therefore, is that a carefully chosen, preloved luxury watch such as this has the potential for being re-sold at the price you paid for it, or even for appreciating in value and returning a profit – thus making Breitling watches a potentially sound and sensible form of investment.
When Your Kids Go to Uni – Nightmare or Godsend?
With thousands of students heading off to university for the first time many parents will be finding home somewhat quieter than it was, but what are the advantages for you.
The emotional turmoil of your kids heading off to lead their own lives can be quite extreme for many people, but you’ll want to share their excitement and encourage them to go even though you’ll no doubt look forward to their visits home. So how can you prepare yourself and your child for their departure?
Talking Money
Importantly, you will want to discuss with them finances. Make sure they know the reality of how to budget money and that they take all the basics with them to give them a good start.
Insurance
Some policies will cover your child’s belongings while they’re at university, others won’t. Check yours and make sure they and you know if they’re covered and what to do to claim if necessary. Ipads, phones, laptops etc. are all quite expensive to replace and fairly essential to modern student life.
What about you?
If your role has primarily been to look after the kids, then you may find yourself feeling rather flat when everyone’s left. Consider options for yourself – look at maybe starting your own business, or going back out to work. There are lots of things you can do which can be just as rewarding if in a different way.
What about your home?
This could be the perfect opportunity to take a really fresh look at your home and redefine the spaces within it. You might decide to have a hobby room or a study. You don’t need to clear out all your kids clutter immediately, but it’s better to store it in boxes rather than leave the room as a shrine to them, they’re not dead, just moving on.
You could look at selling and downsizing, but there’s always the chance of one of the kids coming home again so don’t look at this too soon, and think too about the space you’ll lose. Many people are happy with less bedrooms, but forget that in most houses, less bedrooms also means less living area downstairs too. Moving can also be expensive when you take into account all the legal fees, stamp duty, estate agents fees and of course making the new house your own and decorating it.
What is a cash ISA?
Cash ISAs are things that you may hear being talked about without being sure what they are. But ISAs are simply savings accounts (Individual Savings Accounts) that offer protection from tax, up to a certain yearly contribution limit that the government set each budget.
What different types are available?
There are a number of different types of ISA available, including cash ISAs and stocks and shares ISAs. ISA stands for Individual Savings Account. They were introduced to encourage people to save.
A stocks and shares ISA offers investors a chance to invest in securities which may grow in value. Generally speaking, if you are able to leave your investment for a long time, stocks and shares investments may be worth a look. However, independent financial advice may be appropriate.
Cash accounts are simply regular savings accounts that attract interest. They may be viewed as more “safe” than shares, although may typically not offer such a high return.
Depending on how the government deals with the rules and regulations each year, investors may be able to split their tax free savings between the two types of ISA, although this is always worth checking out before you place your savings.
Distinguishing between cash ISAs
So how do you distinguish between cash ISAs? You may wish to take into account the:
- interest rates payable;
- periods of notice required to withdraw your money;
- minimum levels of investment required for each type of account;
- whether a minimum balance applies to get a good rate of interest; and
- how you can pay money into the account.
If you assumed that savings accounts were only for the rich, think again. Some ISAs are available to those with opening balances as little as £1.
How ISAs work
When you are choosing which ISA to open, you may wish to check how long the interest rate that has been quoted will continue. For example, some ISAs offer bonus rates, but these only last for a bonus period, after which a more modest interest rate may be paid.
Perhaps the most important thing about cash ISAs is not so much setting one up, but paying money into it. After all, what is the point of having a savings account that remains empty?
Online savings account
Saving for a rainy day is something that may appeal to many people but with busy lives finding the time to pop down to the bank to open the account may be something that you just can’t seem to find the time to do. Access to an online savings account may change all that.
You will typically be able to open such an account yourself online, often with as little as £1 required as an initial deposit with some financial institution.
An online savings account may differ from a traditional account in a number of important respects.
Features may include:
- you will not have a passbook;
- an optional ATM card may be available;
- you are not constrained by normal banking hours - you have access to your account 24 hours per day;
- you manage all of your transactions online including transfer of money to and from other accounts.
Saving options
If you are interested in opening this sort of savings account online, then a couple of minutes spent thinking about what you actually need may be beneficial.
Not all online savings offer the same facilities and rates of return. Which one you choose will depend upon what sort of saver you are.
Savings accounts will typically offer more attractive rates of interest if you can leave the money in the account for longer periods of time.
So, for example, one type of online account may offer a particular interest rate and provide you with unlimited withdrawal facilities.
Another type may limit the number of withdrawals you can make in a 12-month period but may pay a higher rate of interest as an incentive.
If you are a determined saver with a lump sum to invest and don’t necessarily need access to your money, you may wish to consider some sort of savings bond rather than an account with withdrawal facilities.
That type of online savings account offers guaranteed rates of return and can be managed online although withdrawals are not permitted and if you chose to close the bond before the maturity date, charges may apply.
What are savings rates?
Today there are now so many different saving accounts around that this may lead to intimidation and confusion – particularly with respect to the savings rates offered.
That’s a pity because the basic position is relatively simple.
Although no brief article can explain all the options in-depth, let’s look at these basics.
The current account
This is the most familiar form of bank account and relates to our day-to-day banking and bill paying etc.
Any interest payable on the positive balance in such an account is typically minimal.
That’s because the bank typically can’t predict how the money is going to move and the balance on many such accounts goes up-and-down very quickly as people want instant access to their money.
The conventional savings account
This form of account may not have a chequebook or debit card.
It is typically an account where you deposit money, perhaps regularly, with the intention of not touching it and allowing your savings to grow.
As this makes the position a little more stable and predictable for the banks, they typically reward this by offering higher savings rates (interest rates are often referred to as the APR or AER).
Typically a regular savings plan (e.g. fixed monthly deposits) as opposed to random deposits may also attract a slightly better rate.
These accounts may offer instant unrestricted access to your savings.
The notice account
Some savings accounts (often called notice accounts) don’t allow instant access to your savings.
You can only withdraw your money by giving the bank a pre-agreed notice period of perhaps 30, 60 or 90 days. The longer notice period you agree, the greater the predictability for the bank so the higher the interest rate will typically be.
Accessing your funds outside of the agreed notice period may incur charges or a penalty (such as no interest being paid for a set period of time).
Some types of notice account allow some free withdrawals per annum up to specified levels.
The ISA (Individual Savings Account)
This is a savings scheme that allows you to save up to a specified amount per annum and all interest paid is entirely free of tax (unlike in standard savings accounts where the interest may be taxable depending on your own circumstances).
Summary
The savings rates payable on your funds will vary depending upon the savings product you choose and the provider.
Top 5 tips for getting the most out of an online saving account
Are you thinking about getting an online savings account? Read these top 5 tips to help you.
1. Make the most of its online nature. Why not transfer a little bit of cash from your current account every time you check your balance online? If you are doing your banking online anyway, you may wish to get into a regular habit of putting some money aside each month – or just whenever you feel like it.
2. Keep checking the interest rates that you are getting. Unless the interest rate on your online savings account is a guaranteed or bonus rate for a certain length of time, you may wish to consider switching to a different product to get a more attractive rate.
Bonus interest rates do not last forever. When the bonus period has expired and the rate that you are getting has reverted back to the bank or building society’s normal rate, now may be the time to look around for something better.
3. Look at ISAs. Individual Savings Accounts are investment vehicles that offer tax free savings up to a certain limit per year. These accounts are the government’s way of encouraging people to save and prepare financially for the future.
4. Watch your balance. No doubt you are interested in keeping as much as possible in your online savings account so that you can save up for that rainy day. However, another reason to keep an eye on how much is in your savings account is that your interest rate may depend on the amount that you have saved. If your balance dips below the provider’s minimum, you may need to top it up to get the preferential rate that you were expecting.
5. Think about when you need to get to your money. Can you manage without tapping into your savings for a few years, or do you need them as a stand-by just in case you need to get access to some emergency cash? Whilst the highest rates may be available to the accounts that lock away your money for longer periods, you may wish to consider an instant access deal if that means that you borrow less on your credit card to get you by.
Why you should save now for your retirement
There is plenty of advice out there about saving for your retirement according to your age. However, the basis of all of that information is that you should be saving. While all of that information tells you how, without fully understanding the importance of why, it can be hard to commit to a retirement savings plan, especially if you are in your 20s or 30s. Therefore, consider all of these important reasons to start saving for your retirement now, no matter how old you are:
1 – You want choice
While the welfare system is there to help you out if you need it in retirement, consider whether you really want to rely on government contributions. Of course you pay taxes all your working life so that welfare is there for you if you need it, but by saving for your retirement now you open up a world of choice, not available to you if you lived on benefits. With retirement savings of your own you don’t have to be limited to living on a small government pension each week, instead you can live out your retirement your way.
This means you will have choices which seem simple now, like planning your weekly menu, but can be stressful in retirement if you don’t have enough money – did you really work hard all your life to eat noodles every night, or do you want to be able to treat yourself to a special dinner and a meal out in retirement?
2 – You want your own space
If you save now for your retirement then you will not only have choices about what you do in your retirement, but also where you do it. That means you won’t have to worry about needing to move in with your children and their families when you retire because you can’t afford to stay in your own home. Instead, you can maintain your independence, and let your children maintain theirs, when you have enough money to cover your living expenses in retirement.
3 – Retirement saving reduces income tax
If you make deductible contributions to a traditional IRA you reduce your income because these contributions are coming from your savings. However, if you make salary deferral contributions to a 401K account on a pre-tax basis then you are reducing the amount of your take home pay and reducing the tax bracket you fall into. Plus, of course you are not only saving now, but saving for the future you want in retirement.
4 – We are living longer
In our parents’ and grandparents’ generations you weren’t expected to live long into retirement, if you made it there at all. However, if you are healthy and continue to look after yourself then you could live 25 to 30 years or more after retirement and you don’t want to be living day to day and year to year wondering if your money will run out before you die – that is no way to relax after a life time of hard work. Therefore, you need to save for your retirement now, so that you can enjoy all of the things you want to do, without ever having to worry that your savings will run out before you’ve done everything you planned.
5 – Health care costs
No matter how healthy you are now and in retirement, there will still be ongoing health care costs to consider to keep you healthy. Plus, the cost of health care, doctors’ visits and medication are not going down either, but if you save for your retirement now, you will be able to afford to pay all of the health care expenses which will help keep you happy and healthy and enable you to enjoy an active and comfortable retirement.
6 – You want to actually retire
If you save for your retirement now, you can make sure that you are able to fully retire when you want to, and you don’t have to keep up part time work to help pay the bills. If you do keep working into retirement, you want it to be your choice, not something you do because you have to, and you have to take any part time work available and end up working at a supermarket.
7 – You are in control of your future
Remember that it is your retirement you are looking at, which means that it is no one else’s responsibility but your own, so you’re the one who should be saving for it. Don’t be tempted to put off saving, thinking that someone will come along to help you out, that the retirement benefits from your employer, or the government will help you out because more and more companies are reducing their retirement benefits, and governments around the world are phasing out their pension schemes. That leaves just you responsible for saving for your future, so start saving now.
8 – Employer benefits
If you start saving for your retirement now, your employer may match your contributions. Many companies offer employee benefits which include retirement contributions, up to a certain amount each year, and to a certain percent of your salary. For example, if you earn $10,000 a month and your company matches your contributions up to 5% of your salary, when you put $500 a month – which is 5% of your monthly income – towards your retirement fund, your employer will match it, so you double your savings for retirement. This additional contribution then compounds over the years, meaning a larger savings balance on retirement.
9 – Compound interest
Compound interest is when you earn interest on your interest, and it is what helps your savings grow so quickly. If you start saving for your retirement now, you have compound interest on your side, because the longer you have your retirement savings in your retirement account, the more interest and in turn the more compound interest they can earn.
Alban has contributed to many international personal finance blogs. Alban is also a regular writer at Personal Loan Finder, a loan comparison site.
Top six tips on getting online savings rates
Are you looking for an online saving account? If so, you may wish to look at the following tips to help you choose the most suitable for your individual needs.
1. Think about how much you have to save. Some online savings rates are only applicable to accounts that have a minimum balance, which may mean that the highest rates may not be available to people who have less than that amount. Likewise, if you withdraw a sum and your balance dips below that amount, you may find that your rate goes down.
Some accounts may also offer certain rates only when the saver deposits a specified amount per month.
2. Consider what you are saving for and when you may need to withdraw your money. Some online saving schemes (such as savings bonds) may require you to lock away your cash for a number of years – others may permit instant access. If your finances are quite precarious, you may wish to choose an online savings account which lets you get your money back when you need it.
3. Be realistic about bonus interest rates. It may be tempting to go for the highest interest rates that your money can earn. However, with bonus rates, alluring as the initial high returns may be, you may wish to asses what the rate will be once the bonus period has expired.
4. Consider an ISA. It can be disheartening to lose the benefit of your savings by having to pay tax on them. Individual Savings Accounts may offer tax free savings solutions up to a certain maximum amount. Ask your provider for details.
5. Think about how you will make deposits. If you are a regular computer user, you may be happy about getting an online saving account that you can only put money into electronically. However, for some people going into a branch and having contact with a “real person” may be important.
6. Finally, after all these other considerations, do not forget that what you are looking for is a return on your money. Accordingly, you may wish to compare the interest rates that are offered by a number of different providers. Not only might you want to compare the annual interest rates that may be offered, but you may also wish to consider how often the bank or building society will pay your interest. Some providers may pay interest annually, others may leave shorter gaps between payments.
What can an ISA savings account do for me?
The ISA savings account may play an important part in your overall savings and investment plans.
Remember though that savings and investments is a complicated area and obtaining expert advice is typically advisable.
What is an ISA savings account?
The ISA (Individual Savings Account) is a method of putting cash savings or shares/bonds into a facility that makes them free of tax in terms of any interest and growth obtained.
This can be done to a financial level each year that is set by the government. Your total ISA investments can accumulate year-by-year until potentially you have a substantial sum involved.
It’s attractive for some because it helps ring fence some of your money from the HMRC (Her Majesty’s Revenue & Customs – aka, the taxman).
What growth does it give me?
The ISA doesn’t tell you anything about how your savings/investments may grow. It only states that the position will be free of tax.
For example, if you have a cash ISA that pays a poor rate of interest, you’ll see only small growth of your funds but the growth will be tax free.
However, paying zero tax on virtually zero growth may not sound that attractive, so looking for an ISA provider that offers a good return may be advisable.
Similarly, if you have variable investments such as shares, then even though they’re in an ISA, their value may go down as well as up. The ISA does nothing to guarantee what will happen – apart from the fact any growth will be tax-free.
So, having an ISA savings account doesn’t remove from you the responsibility for finding an account that offers you benefit.
How easily can I get my money out?
Once again, that is a question for your ISA provider because it’s not, in itself, related to the nature of an ISA.
Some ISA savings accounts may offer instant unrestricted access to your money. Some, typically paying slightly higher interest rates, may have a 30 or 60 day notice period.
Is my money safe in an ISA?
Under the government’s current revised compensation scheme, your funds in any one bank are guaranteed up to £50,000 (correct at time of writing, July 2010).
Which is the best ISA?
It’s impossible to say, because that depends on your personal circumstances and what ISAs are available at the precise time you’re looking.
The good news is that there are plenty of providers offering the ISA savings account so you should be able to look around and choose at your leisure!
The cash ISA – how it works
The cash ISA (ISA stands for Individual Savings Account) is basically a way to save money that’s potentially tax advantageous.
How did it come about?
Governments, Tax and Savings
Governments, irrespective of their political views, often get stuck in a complete mess between the conflicting needs to tax people while at the same time trying to encourage responsible saving.
Clearly, some people will be less inclined to save if the taxman is siphoning off some of the interest they earn.
Some years ago the government became concerned that things were getting a little out-of-balance and people needed to be given an additional incentive to save.
The ISA was born!
The basics
There are two main types of ISA – the cash ISA and the stocks and shares ISA.
As this article concentrates on the cash product, we’ll say no more about stocks and shares ISAs other than they too offer potential tax advantages.
The cash product works very simply:
- you deposit money into an ISA;
- the maximum amount you can deposit per annum is specified by government legislation – as that changes periodically, it’s necessary to check the current amounts;
- any interest you earn on your ISA is tax-free, unlike standard savings accounts where the interest paid is taxable;
- if you do not use the maximum amount allowable in a given year, you can’t carry forward any unused amounts to the following year;
- as your savings accumulate, they all remain tax-free.
It’s a simple as that – and potentially a great way to keep the taxman’s hands off at least some of your money.
ISA myths
- the government decides how much interest you’ll earn – no, that is done by the company offering the ISA and it’s possible to get some ISAs that offer far better interest rates than others
- you can’t get your money out – false, some providers offer instant-access ISAs and others may have notice period requirements before money can be withdrawn, typically notice period accounts offer slightly better interest rates;
- ISAs are for rich people – wrong, the ISA limits for maximum amounts deposited are relatively low and in general, the ISA was constructed to let people of normal income levels save money;
- the ISA is a complicated product – incorrect, the basic process behind the ISA is extraordinarily simple and easy to use.
Cash ISA providers
There is a wide range of options now available in terms of sourcing an ISA.
Providers typically offer a wide variety of interest rates and access methods and it may pay to shop around until you find one that’s suitable for you.
Remember, if you do put your money into a restricted access account, you may get a preferential rate of interest but if you need to take money out urgently you may find delays and possibly high penalty charges. These are typically clearly outlined as part of the ISA opening process.
So, if you’re thinking about a cash ISA – have a good look around!