Archive for July, 2012
Savers and investors can learn from Spain’s footballing style
It was the performance that other teams now aspire to mimic. The one which raised the bar for others to try and match. The Euro 2012 final between Spain and Italy may not have been the edgiest final in history, but in terms of a footballing display, and the accolades won (including a third consecutive international trophy, retention of the trophy, best player of the tournament award from midfielder Iniesta and tournament Golden Boot for Fernando Torres) it is difficult to find a better example of getting strategy right.
One of the biggest talking points has been the emergence of a new formation in international football. Only Spain would dare to start a major final with a goalkeeper, four defenders, six midfielders and no striker. The fact that it proved to be the undoing of rivals such as Portugal and Italy speaks volumes, but it showed an acute understanding of what they were trying to achieve during the tournament.
Commentators have called the tactics “unconventional”, “boring”, “maverick” and even “negative”, but who can argue with a four nil victory in the final of a major international tournament. Traditional thinking suggests that going “strikerless” is akin to walking into battle without a sword. But it worked for Spain; overturning 30 years of 4-4-2 thinking currently employed by the majority of successful footballing nations. However, in each game, slowly, inevitably, safely and surely, they found wins and avoided conceding goals in a masterful way.
If you apply the Spanish midfield maestros to savings and investing, at a simple level many think that you need the spectacular; a Rooney-type risk and return relationship. However, it can be argued that, just like the Spanish coach Vicente del Bosque, there is value in aspiring to be different. Spain won the tournament through steady, methodical, possession play, where the aim of the game is simply to not lose the ball – which is the absolute essence of football.
The staunch objectors and even some pundits have come forward already; football without strikers is tactical heresy. Ask any neutral when you watch the fluidity of play, even without goals, observing Spain is truly an amazing experience. From a financial perspective the comparison is obvious at the current time with superstar bankers stealing the headlines for the wrong reasons. The culture of superstar fund managers and trading gurus has been found wanting in volatile times.
In boom times the play was all too familiar, the strikers of the financial world dominated a 0-0-10 formation with everyone looking for a fast buck and when they got it they blew it because they didn’t value it, or worse they invested their fast bucks in even faster bucks, only to lose it all. The contrast between the success of the Spanish team and Spain’s domestic economic predicament could hardly be more startling. The goal was rooted in the ‘group think’ of a property boom, where cheap credit flooded the market and sent house prices to levels which were completely unsustainable, see http://en.wikipedia.org/wiki/Spanish_property_bubble for some stats. The insanity was topped off by the ever present sign of a market about to implode.
Ramos, Casillas, Villa and co show us clearly that the studied, methodical and “boring” may not only be successful but eminently more rewarding than a quick buck. When you work hard and build your rewards in time you may appreciate them much, much more.
Likewise, when it comes to your own finances, a Spanish approach could prove to be the method to follow. Perhaps the way to sustained wealth in the future is not a quick buck looking for the next boom and getting out just before the bust, but slowly and surely building your personal wealth patiently over time. It’s not flashy but you will value your effort and take pride in your habit, you may grow in confidence and do even more.
Spain has a lot to teach the world about football and indeed economics, just take your lessons from Vicente del Bosque.
No advice has been provided by Scottish Friendly. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk. Advisers may charge for providing such advice and should confirm any cost beforehand.
Saving and investing for the future
It’s fair to say that many of my female friends are confused about the best way to save for retirement. They know they have to do it but just keep putting it off. After all we’ve all got far more pressing priorities: new decking for the garden, a family holiday, even a savings account for the kids. But I know deep down it’s an absolute essential that my friends and I must take the issue of saving for retirement more seriously if we want to enjoy and embrace worry free finances in old-age.
I read recently that the gap between men and women’s retirement income is narrowing but women still have less to retire on. The typical sum men can expect to retire on in 2012, including company and state pensions is £15,500. Women can expect to retire on £12,2501.
Here‘s some of Scottish Friendly’s top tips to help my financial planning for saving for the future:
1. Do something about it now.
Regardless of age, stage of life or income, it’s really important for women to start taking retirement saving and investment seriously. It’s not a luxury….it’s an essential and, simply put, the earlier you start putting money away, the more you will potentially have to enjoy when you finally come to retire.
Most companies allow you to contribute to a pension scheme and many make reasonable contributions to help boost your pot. If you don’t like the idea of locking your money away, especially when it comes to your own personal savings and investments, then consider an ISA. Get into the regular habit of putting money away every month – soon you won’t even notice it coming from your monthly pay cheque.
2. Exploit the flexibility of an ISA.
ISAs are accessible; pensions generally aren’t. You can contribute as much or as little as you like to an ISA, subject to the annual ISA allowance, currently £11,280, and change the amount to suit your income at the time. For example if you take maternity leave, you can reduce your payments to the bare minimum (or even stop them) but can still contribute to your pot.
What’s more you can calculate how much you are going to save and invest over the plan period, which makes planning for the future a whole lot easier.
But one of the biggest benefits of an ISA is that they are completely tax free (other than taxes on dividends from UK companies) which means much more money for you and less for the taxman.
The two most common ISAs are a Cash ISA or a Stocks & Shares ISA. A Cash ISA is quite simply a savings account which holds your cash and earns interest. A Stocks & Shares ISA is an investment ISA which means your money can be invested in the stock market, property investments and company and Government bonds. Importantly using a Stocks & Shares ISA effectively doubles your ISA allowance when compared to just using your Cash ISA. So why pay more tax than you need to?
3. Decide how much you can afford to save and invest – then get started!
For many women, especially those with young families, it’s very difficult to put any money aside from their monthly income. With that in mind it’s important to sit down and really work out how much you can realistically afford to save and invest. But remember putting aside something for retirement should be a priority and not just something you do when you’ve got extra cash.
Think about what you waste money on every month. Can you cut down your daily Starbucks coffee to three a week or shave £10 from your weekly food shop? This might just allow you to put away an extra £50 a month to your ISA.
The benefit of using an ISA becomes clear even when you are only putting a small amount away. Unlike a pension, you are completely in control and your money isn’t locked away forever. That means getting started can be much easier with an ISA. Once you start a regular savings and investment habit you’ll soon realise how easy and painless it can actually be. Before you know it you’ll be setting aside monthly sums of money that right now you just never thought possible.
4. Share in your partner’s dreams
Retirement should be about enjoying life, and doing the things you didn’t get to do when you were working. For many, that means sharing exciting experiences with a partner so talk to your other half about their retirement plans. Do they match yours?
Are you both saving and investing enough to do what you really want to do together? Make sure between the two of you, you are saving enough to enjoy your well-deserved time together.
So now I know the importance of saving for my future and I’ve got some really good ideas on how to do it…..the challenge now is to get on and do it!
For more information on Scottish Friendly’s range of tax free savings plans or further information on saving for retirement log onto www.scottishfriendly.co.uk. But remember Scottish Friendly does not provide financial advice and can only give information on its own products. If you are in doubt of any aspect of financial planning, you should contact an independent financial adviser.
1Source: Sky News, 8 June, from a report by Prudential Insurance.