One of the reasons why people find investing harder than they should is that human beings are hard-wired to focus on the here and now. We’re much more concerned about immediate threats than longer-term dangers such as failing to save enough money for retirement.

In this video, Professor Arman Eshraghi, an expert in behavioural finance at Cardiff Business School, explains how to develop a more disciplined approach to investing for the future.

You will find plenty of helpful videos like this one in our Video Gallery. Why not have a browse?

Video transcript:

Human beings are hard-wired to focus on the present.

We’re finely attuned to the immediate threats around us. What we’re not quite so good at is dealing with long-term dangers, like not saving enough money for retirement. Professor Arman Eshraghi is an expert in behavioural finance.

He says: “When it comes to events that happen in the long-term, whether it’s going into retirement, etc. we don’t plan for them sufficiently because we don’t see them as sufficiently close.”

Thankfully, help is at hand in the form of financial technology, sometimes called fintech for short. The technology enables us to automate our retirement saving, so we put aside a set amount each and every month without even thinking about it.

Arman Eshraghi says: “Fintech applications basically can allow you to automate your decision to invest in the markets without much thinking, so you really make a decision once, you make a commitment once, and then effectively, the process of investment gets automated — let’s say, every 20th of the month.”

Starting to save early for retirement is very important. But we should also increase the amount we put away each month as our income goes up.

Committing to increasing our pension contributions as time goes by is another very valuable discipline.

Arman Eshraghi says: “Research by some economists in the US shows that there are techniques like “save more tomorrow”, so this is Richard Thaler, for example, who has talked about “saving more tomorrow”, which effectively means that you make the decision to invest a base level and then, effectively, you add to it a little bit every month. And without noticing the pain, let’s say. And then over time, this grows into a significant amount of investment which would then hopefully be a source of income for the long-term and for retirement.”

So, don’t give yourself an excuse to spend money that you should be saving for retirement. If you haven’t done it yet, automate your investing now.

It’s easy to do, and in the years ahead, you’ll be very glad you did it.

Picture: Aaron Burden (via Unsplash)

Suppose that you needed to rent a car for the weekend, but you could not find a rental company able to guarantee the kind of vehicle you were going to get. You could be given anything from a Citroen C1 to a Mercedes A class, and you would not know what it was going to be until you showed up to collect the keys.

While this scenario might be disconcerting, at least choosing which firm to use should be straightforward. All else being equal, you should go with whoever charged you the lowest fee.

This is common sense when none of them can be certain of what they will be able to deliver. There is no point in paying more if you can't be sure that you are going to receive extra value for that money.

Yet, this is how the fund management industry has worked for decades. Active managers have been charging high fees for their products even though there is no way anybody can be sure of the outcomes that they are going to be able to produce.

What are active managers selling?

The rationale for this is that active managers offer the potential to out-perform the market. That is their selling point – you pay more because active management is the only way that your money can grow ahead of the benchmark. This is why so many investors and advisors fret over performance tables and fund ratings.

However, every genuine fund manager in the world is very careful to point out that not only is past performance no indicator of future returns, but that no level of performance is ever guaranteed. Given the vagaries of the market, it is simply impossible for anybody to know how any fund is going to perform into the future.

This hasn't, however, stopped active managers from promoting out-performance as their unique selling point. It was what almost every active manager in the world strives to deliver.

The irony is that this is obviously unobtainable. It is impossible for every active fund to out-perform. Simple mathematics dictates that if the benchmark is the average return from all active managers, then there must always be under-performers.

What does the evidence show?

As an increasing amount of research continues to show, these under-performers are actually the bulk of the market. Far more active managers are on the wrong side of average than the right side of it.

The most recent S&P Indices Versus Active (SPIVA) scorecard shows that over the 10 years to the end of June 2019, only 25.66% of UK equity funds out-performed the S&P United Kingdom BMI. In other words, just under three-quarters did not.

SPIVA scorecards calculated in markets around the world all show similar patterns. So too does Morningstar's Active/Passive Barometer.

Although this is only calculated for the US market, the most recent Morningstar barometer shows that only 23% of all active funds in the US beat the average of passive funds over the past decade. For US Large Blend Equity Funds, the figure is only 8%.

Where is the value for money?

Given this success rate, it should be obvious to active managers that what they are selling is not deliverable. It is much like a car rental company charging you for a Mercedes A class, even though it is likely that you would actually be given one. A company that did that would surely find itself out of business fairly quickly.

Yet, active fund managers continue to sell the idea of out-performance, even though more and more investors and advisors have begun to understand the research – that beating the market is extremely difficult to do, and improbable over the long term.

That is why there is now more money invested in passive funds than in active funds in the US. That milestone was reached in August last year.

Investors and advisors appreciate that the value proposition of index tracking funds is one that actually can be delivered consistently – to produce the return of the market, minus fees. It is understandable, straightforward, and reliable.

It is like the comfort of going to a car rental company and being given the keys of the vehicle that you actually booked. You should, after all, get what you pay for.

Photo by AbsolutVision on Unsplash

Regret has been cited by Nobel laureate Daniel Kahneman as probably the greatest enemy of good decision-making in personal finance. It is often the driving force behind panicky attempts to time the market, buying at the top or selling at the bottom. It can prompt us to place a far greater weight on the possibility of suffering a loss than the prospect of a win.

Landmark research by Kahneman and his partner Amos Tversky in the 1970s found that when confronted with several alternatives, people tend to avoid losses and choose the sure wins because the pain of losing is greater than the joy of an equivalent gain.

We prefer the safe option

In one famous experiment, students were given the choice of winning $1000 with certainty or having a 50% chance of getting $2500. Most people will choose the safe option of money in hand. Conversely, when confronted with the choices of a certain loss of $1000 versus a 50/50 chance of no loss or a $2500 loss, people tend to choose the gamble.

In other words, we tend to switch from opting for risk aversion when it comes to possible gains to risk-seeking behaviour when it comes to avoiding losses.

Asymmetric choices

What’s more, regret, at least in the short term, tends to be stronger when it relates to acts of commission than of omission — in the former case, the things we did do and in the latter case the things we didn’t do.

As an example of omission and commission, imagine Jane has held a particular stock for some time. She thinks about selling it but does not follow through. The stock subsequently slumps in price. In contrast, John sells his stock, only to see it rally.

In the first case, the example of omission, or inaction, leaves Jane feeling less regretful than in the second case, John’s example of commission, or action.

Put another way, there is an asymmetry to our choices when confronted with uncertainty than is assumed by traditional rational choice theory in which human beings are cast as automatons carefully weighing the costs and benefits of their decisions.

We’re less logical than we think

The fact is we are not the logical decision-makers we assume ourselves to be. Instead, we are highly susceptible to behavioural biases that cause us to place a greater weight on the possibility of losses than on the prospect of gains – even when the statistical odds of the competing outcomes are identical.

We would rather secure a guaranteed lesser win than opt for the choice of getting more or possibly ending up empty-handed. And given a choice of two bad outcomes, we’re more likely to roll the dice to avoid the worse one.

This is why many people remain doggedly loyal to a particular bank, for instance, even when they are being ripped off by inferior service and excessive fees. It also explains why many people won’t cut their losses and dump a losing stock (because they’ll regret it if it bounces back afterwards).

Regret risk is frequently seen in bull and bear markets. In the case of the former, with stock averages hitting repeated record highs, there’s a natural tendency to want to hold back for ‘more certainty’. In the case of the latter, we want to wait to see the bottom before we wade in.

We’re not good at probabilities

In all cases, we imagine we are carefully calculating probabilities when, in reality, we are slave to our emotional instincts and resorting to mental short-cuts to justify our decisions ex-post.

Kahneman’s approach to regret risk in wealth management is to seek a balance between minimising regret and maximising wealth. That means planning for the possibility of regret and understanding clearly the range of possible outcomes beforehand.

Why an adviser helps

Of course, there is no one right answer here and that’s because everyone is different. It’s also why it is so important to have a financial adviser who can map out the range of eventualities and test clients’ potential reactions to each one.

Everyone has investment regrets. They’re part of being human. The important thing is to learn to get over them, so they don’t derail your decision-making process.

Picture: Sarah Kilian via Unsplash

There’s a big dose of uncertainty out there as we approach the new year — about Brexit, about the impact of climate change, about what Mr Trump will say or do next.

That’s showing up in consumer sentiment in places like the UK and Australia (though in the US it’s proving resilient). People are reluctant to spend money when they don’t know what lies ahead.

With sometimes confusing signals, how can we find the clarity to make decisions for our personal finances in 2020?

The best advice is to focus on what you can control yourself, and not to worry about things that you can’t do anything about. With that in mind, here’s a list of things to think about as we enter the new year.

1. Don't put off until tomorrow what you can do today

Your first task for the year should be to review your finances. First, understand your current situation. Second, write or review your budget. Third, set some new goals for 2020. Having goals makes budgeting much more fun.

To do: Check out a budget planner on an independent money site, like this one.

2. The sooner you start, the better

When it comes to savings and investments, time is your friend. Compounding is a powerful investment principle that means the earlier you start to save the more your savings will grow. Over time, interest is earned on not only your money but on the interest you’re earning on that money.

To do: If you need a bit of a nudge to save more for your retirement, play around with a retirement savings calculator to see the impact of even a small increase.

3. What goes up might come down

Always bear in mind the worst-case scenario — no matter how unlikely it may seem at the time. It's easy to be an optimist about taking on debt when interest rates are low.

To do: Stress test your finances – how long could you cope if your income was interrupted?

4. A pound saved is a pound earned

By not spending, you not only have that money in your hand but also the potential to turn it into more. Let’s say you have a car lease and it’s ready to be rolled over. When you’re not paying upfront it’s much easier to go for the 2020 model with all the extras. But perhaps you’d be better off, financially, buying a more “sensible” model and putting the money left over to work elsewhere. (Did we mention retirement savings?)

To do: As a first step, divert some of your pay packet – or more of your pay packet – to a high(er) ­interest online savings account.

5. Neither a borrower nor a lender be

You’d be surprised what debt collectors see: people going to the wall not for a £500,000 mortgage but over relatively small credit card debts. People tend to understand what their mortgage commitment is but can be a bit sanguine about smaller debts. Be mindful when you use your credit card – think about whether that purchase, and the associated debt, is something you really need.

To do: Obtain a copy of your credit report and check it not just for blemishes but for accuracy.

6. No pain, no gain

If you do have credit card debt, don't be lulled into a sense of complacency by the minimum repayment on your credit card statement. If you’re paying just 2% or 3% off your card when the interest on the debt is close to 20% (yes, really), it could take years to clear, at the cost of significant interest payments over time.

To do: Work out how long it would take to pay off your credit card paying only the minimum here.

7. You get what you pay for

Insurance should be part of the picture when your review your finances. But whether it's income protection, life, health or even car and travel insurance, don't select a policy just because it's the cheapest. A cheap travel policy may seem a bargain until you find that you can't claim for stolen cash or the full value of your camera, for instance.

To do: Do you need more insurance this year to cover increasing liabilities, or less because you've paid off the mortgage and the kids have left home? Try this life insurance calculator.

8. Be prepared

Why have an emergency fund when you've got a credit card? Because if you use the plastic all you're doing is putting the problem off for a month (and a bit). Financial advisers suggest having at least three months' living expenses set aside – and up to 12 months’ worth if your job is insecure.

To do: Check the terms of your income protection insurance – when does it kick in, and when does it drop out?.

9. If it ain't broke, don't fix it

Lastly, it’s great to review your personal finances at least once a year, or whenever circumstances change. But don’t feel like you have to change something, just for the sake of it.

If everything’s working, there’s nothing wrong with doing more of the same in 2020.

Happy New Year!

Picture: Jude Beck (via Unsplash)

It’s been said that you’re more likely to change your spouse than your bank. But, as you run the ruler over your personal finances, ask yourself whether your bank has been doing the right thing by you.

There’s plenty of research that shows we suffer from “inertia” when it comes to switching financial services, even though this could save us – or earn us – significant sums.

Think about it: When interest rates fall, does your bank pass on the full extent of those rate cuts so your mortgage is cheaper? When interest rates rise, do you get the full benefit with a commensurately higher rate on your savings? Have you been stung by the auto-renewal of a term deposit onto a below-par rate?

I’d be prepared to wager that the rate on your credit card (or cards) hasn’t fallen anywhere near as far as official interest rates in recent years. Some cards are still charging around 18 per cent, even though official interest rates are at rock bottom.

That credit card is probably with the same bank as your mortgage, and your savings account, and your debit card … need I go on? That’s part of the problem: banks and other financial service providers know the more products you have with them, the less likely it is you’ll shop around. 

In Australia, the Productivity Commission has identified “bundling” as an impediment to competition. Another study found that loyal, existing borrowers were paying interest rates on average of 32 basis points higher than those for new borrowers –  a “loyalty tax” worth billions of dollars in additional profits to banks.

It probably wasn’t so much that these borrowers were feeling “loyalty” but more likely that they were worried switching would be costly or difficult, or would just plain mess up their direct debits. Or maybe it was just a case of “better the devil you know”.

So, make a list and check it twice:

What are your top three needs from a bank?

Are you a borrower or a saver? Is a bank’s home loan rate or savings rate more important to you? Think about what really matters to you.

Is physical location important?

If you never go into a bank these days, why do you feel compelled to stick with your bricks-and-mortar institution? Make sure to check out the offerings of online-only banks.

How important is customer service?

I earn a good interest rate on my savings with an online bank, but heaven forbit I need to talk to someone on a weekend…

Compare rates.

Remember that “loyalty tax”? Keep up to date with changing rates and remember that you can haggle with your existing bank – get them to match new offers.

Compare fees.

That includes monthly “service” fees, ATM fees, and charges for overdrawing or declined payments.

Compare your values

I can’t begin to count the number of banking scandals in recent years. At what point would you take your money away from a big bank and put it somewhere like a smaller bank or credit union?

Picture: Steve Smith (via Unsplash)

In most relationships it tends to be the male partner who makes the financial decisions.

Yet in many respects women are better at dealing with issues of personal finance than men. There’s certainly plenty of evidence to suggest that women, on average, are more successful at investing.

Why, then, do so many women shy away from finance and investing?

In this video, Dr Moira Somers, a financial psychologist at the University of Manitoba, gives some interesting pointers.

You will find plenty of helpful videos like this one in our Video Gallery. Why not have a browse?

Video transcript:

Robin Powell: Research into couples and their personal finances consistently shows that it still tends to be men who make the investment decisions.

But women tend to have a different attitude towards investing, and when they are involved, they often make better choices.   

Dr Moira Somers is a financial psychologist at the University of Manitoba.

Moira Somers: My understanding of the current research is that women are much more conservative investors. They often wait far too long to get into investing. When they do start investing though, they tend to have better returns than men, because they are more prudent. They don’t seek the extreme reward end of the spectrum. They are content with more modest returns and they tend to achieve them. 

RP: Surveys repeatedly show that money is one of the main causes of stress. Women are especially prone to worrying about it.

MS: Another gender difference is that women tend to stress more about money. They will acknowledge that they lose sleep more often than men do. And, sometimes, that’s because they do not have sufficient knowledge of their own family finances. They’re not the ones in control. You know how sometimes it’s harder to be a passenger in the car than a driver? You’re glad somebody else is driving but you still have absolutely no control about what’s happening. So, it’s a different kind of stress. 

RP: So, a lack of knowledge about investing is one reason why women aren’t more involved in investment decisions. But Dr Somers says there’s another key factor.

MS: When we survey them, when we work with them to say: “How come this isn’t so easily transferable for you? You have brilliant skills in household management, why is this not translating into the broader financial picture?” And some of it, frankly, has to do with mistakes that advisers make. There are some real big turn off’s, real big mistakes that just leave women feeling stupid and embarrassed and uncomfortable and so they vote with their feet.  

RP: Having the wise counsel of a good financial adviser is extremely valuable. There are signs that the advice profession is starting to serve women better than it has in the past, but there’s plenty of room for improvement.

So, don’t be put off by negative experiences. Find an adviser you trust and feel comfortable with. 

You can find out more about Dr Somers’ work via her website, moneymindandmeaning.com.

Check out more of the latest news from IFAMAX:

Pay less attention to weather forecasts

A little encouragement goes a long way

Weekly round-up: Week 48, 2019

Picture: Alice Donavan via Unsplash

DNA testing used to be something distant and scientific that cropped up in TV crime series like CSI: Crime Scene Investigation or in family dramas where a child’s parentage was in doubt. Today it’s perfectly easy, and relatively cheap, to send away for a kit to check out our own genetic makeup.

You might think about doing this because you want to know more about your family background, having binge watched a programme like Who Do You Think You Are? Or perhaps you're curious to know whether you have the gene for certain diseases or conditions.

Exploring your family history is usually a benign activity, unless it uncovers an unsettling family secret. But digging into the health aspects of your genome just because you’re curious – rather than for clinical reasons, under the advice of a doctor – could be ill advised.

That’s not just because there have been doubts in the past over the reliability of commercially marketed testing, or because the psychological and medical impact of a worrying finding is better handled when the testing is with the knowledge of your doctor. It’s also because such tests can have consequences for you as a consumer of life insurance products such as death, trauma and income protection. 

The question to consider before undertaking a medically focused (but optional) genetics test is whether you’d have to disclose the results in any future life insurance application.

This is especially important if you’re younger and haven’t yet taken out such cover. When you do decide to apply for this sort of insurance, the insurer will ask a range of questions aimed at assessing the degree of likelihood they’ll have to pay out in the future.

One question will be about pre-existing conditions. Another may be the catch-all ‘anything else we should know about’ question that insurers ask as they decide who and what they’ll cover. Your ‘duty of disclosure’ could mean you have to share the results of your genetics test at the time of application, or whenever you change your contract.

If the testing has shown you have the potential to develop a particular disease or condition, the insurer may decide to charge you a higher premium because you’re a higher risk. 

The rules differ depending on where you live, with some countries banning or restricting life insurers’ use of genetic results but others still permitting it. So, ask these questions of your insurer or local consumer agency before you go ahead with a genetic test:

• I may apply for a life insurance product one day. Will I be legally required to disclose all genetic test results to the insurer?

• I already have life insurance. In what circumstances would I be required to disclose new genetic test results – for example, if I wanted to increase my cover?

• I already have life insurance. Is it ‘guaranteed renewable’ – that is, once I’m covered the insurer can’t change the contract just because of new information?

Never be deterred from taking a test your doctor advises is necessary. But if it’s just curiosity getting the better of you, make sure you’re fully informed about the potential financial impact of sending off for a DIY genetics kit. 

Check out more of the latest news from IFAMAX:

Pay less attention to weather forecasts

How women view money and investing differently

A little encouragement goes a long way

There’s a well-known phrase that’s often used when the topic of budgeting comes up: “Watch the pennies and the pounds will take care of themselves.”

It’s true that small expenses — a posh latte here and a takeaway there — do add up. But the outgoings that people really need to focus on are the major ones. In most cases, it’s what they spend on their homes and cars which has the biggest impact on how much money they have left at the end of each month.

In other words, it’s far more important look at the pounds (and the hundreds of pounds) you’re spending before the pennies.

But, as the financial writer Andrew Craig explains to Robin Powell in this video, the first step to taking control of your expenditure is to start a spreadsheet showing all the money you spend each month.

It doesn’t matter how big your income is; if there’s more money going out than you have coming in, you could be heading for trouble.

This is one of many videos you will find on the IFAMAX YouTube channel. They cover a wide range of subjects, from investing to sustainability and personal finance. We’re regularly adding new videos, so why not subscribe to ensure you keep up to date?

Video transcript:

It’s well documented that, all over the world, levels of financial literacy need improving.

The good news is that, by investing a modest amount of time in researching this subject, you can improve your finances substantially.

Andrew Craig runs a financial education website called Plain English Finance. He was inspired to start it while working in the City of London.

Andrew says: “One of the things that really came home to me in doing that was, even people in the city had a really kind of bad nuts-and-bolts understanding of their personal finances. What is an ISA? What is a pension? What are stock markets? What’s inflation? What are interest rates?

“I started Plain English Finance as a sort of angry young man, as a reaction to that. And our guiding principle ever since I did that has really been to improve the financial affairs of as many people as we can.”

What then, according to Andrew, are the most important personal finance rules to follow?

He suggests there are two main ones.

“Rule number one is: don’t spend more than a third of your income on your house — which is something that sounds a bit crazy to people these days because we’re so obsessed with homeownership in Britain — because rule number two is: you should basically always invest ten percent of your income in investment products that aren’t your house. And a lot of people, in spending vastly more of a third of their income on a roof over their head find that they then can’t afford to save and invest ten percent of their money in investments.”

Saving or investing ten percent of what you earn can be a challenge.

The best way to tackle it, says Andrew, is to start a spreadsheet showing all your monthly outgoings.

You should then focus on trying to reduce the biggest numbers.

Andrew says: “Rather than trying to save money on how many cappuccinos you buy everyday... or, you know, going to Lidl instead of Waitrose... which is all very laudable; actually, the single easiest way... there are two things that are very easy to change if you’re willing to live in a less fashionable neighbourhood and perhaps a slightly smaller house or flat, is — number one — the biggest number is invariably the roof over your head.

“And then the second one down the spreadsheet from that tends to be cars. Too many people... dare I be slightly sexist, particularly men, rush to buy a really flash, expensive car prematurely.”

For more tips on keeping your finances in shape, you can always visit Andrew Craig’s website.

You’ll find it at plainenglishfinance.co.uk.

Check out more of the latest news from IFAMAX:

Pay less attention to weather forecasts

How women view money and investing differently

A little encouragement goes a long way

Picture: Pawan Kawan via Unsplash

In step 5 of our financial decluttering drive it’s time for the big reveal. Our volunteer, business coach Nicola Wilkes came to us with several folders packed with paperwork and a shaky grasp of what was in them. Here we'll see what she gets back, discuss her next steps and make sure her financial paperwork stays minimal and manageable.

If you are an existing client we may have worked on decluttering your finances before. All existing clients can take up this service at any point in time.

Receive the whole video series in your inbox click here.

Check out the other steps here on IFAMax:

Step 1 - How we’ll tackle your paperwork

Step 2 -Show us what you’ve got

Step 3 - Keep, scan, can

Step 4 - Lightening the load

Step 5 - A streamlined new start

Step 4 of our financial decluttering process is the part where you get to say goodbye to the unnecessary paperwork that’s been cluttering up your house and life. We’ve digitised the paperwork that can be kept as a soft copy and now it’s time to shred the superfluous.

Receive the whole video series in your inbox click here.

If you are an existing client we may have worked on decluttering your finances before. All existing clients can take up this service at any point in time.

Check out the other steps here on IFAMax:

Step 1 - How we’ll tackle your paperwork

Step 2 -Show us what you’ve got

Step 3 - Keep, scan, can

Step 4 - Lightening the load

Step 5 - A streamlined new start

In Step 3 of our guide to financial decluttering it’s time for us to report back. You’ve delivered your financial paper trail and we’ve worked our magic to divide it into three types – things you need original copies of, things you can keep digitally and things you simply don’t need at all.

Receive the whole video series in your inbox click here.

If you are an existing client we may have worked on decluttering your finances before. All existing clients can take up this service at any point in time.

Check out the other steps here on IFAMax:

Step 1 - How we’ll tackle your paperwork

Step 2 -Show us what you’ve got

Step 3 - Keep, scan, can

Step 4 - Lightening the load

Step 5 - A streamlined new start

If your name doesn’t show up on my phone’s screen when you call, I probably won’t answer. If I don’t recognise your email address, I certainly won’t click on any links or open any attachments you send me.

Paranoid? Maybe. Maybe not. But the fact is that scams reported to consumer and finance authorities now run into billions of pounds a year worldwide. 

These scams range from the faintly ridiculous Nigerian con (“Dearest friend, I am needing your help to distribute an inheritance”) to sophisticated investment scams, not to mention full-scale identity theft.

Think you’d never fall for a scam? Researchers say it’s dangerous to assume victims have specific traits and they’ve identified five psychological reasons why people — of any age, education or socio-economic background — can be caught out. 

Let’s face it, scams are increasingly sophisticated in design and delivery. Scammers invest so much time and money in slick sales pitches, flashy websites, convincing emails and glossy brochures because the returns can be very high — for them.

So in the spirit of an ounce of prevention being worth a pound of cure, here are eight types of scam to look out for — if not for yourself, then for family and friends:

1. Banking scams – Scammers capture your personal account details in a myriad of ways — sometimes by pretending to be your bank. Guard your personal information and keep an eye on transactions via your bank’s app. Call the bank immediately if you spot anything unusual. A suspicious-looking transfer of even just a few pennies could be a scammer testing the link.

2. Unexpected money – This is the territory of those Nigerian scams, so-called because they started in that country many years ago. An email will offer access to an inheritance or some other money once you hand over your banking details, or a fee. The rule is never to send money or give banking details or copies of personal documents to anyone you don’t know.

3. Surprise winnings – This is a ploy to get your personal information or to extract a fee to arrange a payment that will never arrive from a competition you never entered. A request for payment via money order, wire transfer, international funds transfer, pre-loaded card or an electronic currency like Bitcoin is a warning sign.

4. Online shopping scams – Scammers may pretend to sell a product just to get your credit card or bank account details. One scam gave people a second chance to buy an item because the winner had pulled out but asked them to pay outside the auction site’s secure payment facility — and outside the site’s ability to help.

5. Fake charities – These often spring up after a big natural disaster. Scammers impersonate genuine charities, siphoning public donations into their own accounts. The answer here is to donate independently, using a verified website or calling a number you’ve found yourself.

6. Job scams – These offer a ‘guaranteed’ way to make big money fast and with little effort. This may involve paying for a ‘starter’ kit, a business plan or materials like training and software. The only people who make money fast out of these schemes are the scammers themselves.

7. Romance scams – Scammers take advantage of people looking for friendship or romance, then play on people’s emotions to obtain money, gifts or personal details they can use for financial scams.

8. Investment scams – If the offer sounds too good to be true, it probably is. Scammers will offer all sorts of fake opportunities, often targeting current trends such as cryptocurrency. Do your due diligence. Run it past a professional.

Check out more of the latest news from IFAMAX:

Pay less attention to weather forecasts

How women view money and investing differently

A little encouragement goes a long way

In Step 2 of our series on financial decluttering, we’ll look at the most fun part of the process. It’s the part where you hand over everything you’ve got and we go away and make sense of it. It might be in folders, envelopes or a carrier bag. This is where clarity begins, so bring us what you have.

If you are an existing client we may have worked on decluttering your finances before. All existing clients can take up this service at any point in time.

Receive the whole video series in your inbox click here.

Check out the other steps here on IFAMax:

Step 1 - How we’ll tackle your paperwork

Step 2 -Show us what you’ve got

Step 3 - Keep, scan, can

Step 4 - Lightening the load

Step 5 - A streamlined new start

Make sense of your money, reclaim cupboard space and put your mind at ease.

In this, the first episode, we explain our decluttering process and meet our volunteer for financial clarity, business coach Nicola Wilkes. Nicola’s paperwork is getting out of hand, so we’re going to assess it, trim it and make sense of it for her.

If you are an existing client we may have worked on decluttering your finances before. All existing clients can take up this service at any point in time.

Receive the whole video series in your inbox click here.

Check out the other steps here on IFAMax:

Step 1 - How we’ll tackle your paperwork

Step 2 -Show us what you’ve got

Step 3 - Keep, scan, can

Step 4 - Lightening the load

Step 5 - A streamlined new start

Your mobile phone contract is expiring soon, and there’s a new iPhone or Samsung on the way that looks pretty nifty. But along with its sharp camera is a very pointy purchase price. 

Most people will dull the pain by spreading the cost of the handset over a contract. But should you? 

Picking up a new handset as part of a deal with a network provider may mean you avoid a big, one-off hit on your bank balance, but make sure you’re not paying too high a price for that convenience.

And it’s not just about the maths. Bear in mind, too, that you’ll be giving up the opportunity to nab an even better deal over the next one to three years, depending on the length of your contract. It will also be hard to move if you’re unhappy with your provider.

Here are eight things to consider when your phone contract comes up for renewal:

Do the figures stack up? The actual cost of a handset tends not to be spelled out in the contract fee, but it’s possible to make a good estimate. Look for an equivalent plan – in terms of call, SMS and data allowances – being offered to those who already have their own handset. This may be called a SIM-only or BYO plan. Now, take that monthly fee away from the monthly cost of the plan-with-handset you’re considering. Multiply that by the number of months in the contract on offer (say, 24). You’d want the sum to be as close as possible to the price you’d pay outright. If it’s higher, you’ll need to consider what sort of ‘premium’ you’re prepared to pay for dulling the pain of an upfront payment.

Are plans going up or down in price? Just as you don’t want to lock in a high interest rate on your mortgage, nor do you want to be stuck with what will become an increasingly expensive plan over the next few years in comparison to newer, better deals.

Are data allowances going up or down? We can probably safely assume plans will only ever include increasing amounts of data – another reason you may not want to be stuck with an out-of-date plan.

Will the handset last as long as your contract? Small electronic goods tend to have 12-month warranties, but you could be committing to monthly payments for the next two or even three years. What if the phone dies outside its warranty but before your contract is up? Consumer watchdogs have been working on this, but check the warranty fine print.

Is there a new, better handset on the way? You don’t want to be paying top dollar, for two or three years, for a handset that will be out of date in two months’ time. Search for terms like ‘new iPhone’ or ‘Samsung rumours’ to see what may be coming. That said, ‘last year’s model’ can still have great ‘specs’ and become great value when discounted.

What’s not included? Naturally, telecommunications providers trumpet all the great things they’re including in their ‘hot’ offers. But, somewhere, they should also tell you what’s not included – such as calls to certain ‘premium’ numbers and access to certain types of content. Similarly priced plans may be vastly different when one includes Facebook videos in your data count, say, but the other doesn’t.

Are there any caps or limits? These aren’t as common as they once were, but look out for limitations such as only a certain amount of data being available at full speed under the plan, with the rest being slowed.

What’s the cost of ending your contract? If a better deal, or changed circumstances, mean you want or need to break your contract, check the terms and conditions to understand the process and cost of exiting your contract.

Check out more of the latest news from IFAMAX:

Pay less attention to weather forecasts

How women view money and investing differently

A little encouragement goes a long way

Picture: Tinh Khuong via Unsplash

Illness, transport strikes and even natural disasters are just some of the ways a holiday can be ruined. But the disruption can be far less expensive – and not nearly as stressful – if you take sufficient care when organising travel insurance.

Even the pain of relatively minor holiday mishaps like lost luggage, stolen cameras or cancelled flights can be ameliorated when you have appropriate cover.

However, if your coverage is inadequate you face the double blow of a ruined holiday and the wasted expense of a dud insurance policy.

Insurance nightmares usually result from leaving the arrangements until the last moment. Let’s face it, it’s not the most exciting part of planning a trip. But if insurance is an afterthought, arranged with just the click on a button on a website, you may not really understand the policy and what it covers.

Here are the ten things you can do to ensure you protect yourself effectively:

1.   Price isn’t everything – A cheap policy isn’t good for you if it’s so riddled with limits and exclusions and excesses that it’s impossible to claim on.

2.   Watch the excess – This is your share of the loss – the amount you’re prepared to cover yourself when you make a claim. A higher excess will get you a lower premium, but make sure it’s not so high that you’ll never get anything back.

3.   Read the policy – Take the time to study the fine print. A £5,000 allowance for lost luggage may sound OK. But what if it comes with a cap of £500 on any one item?

4.   Declare existing medical conditions – An existing condition, asthma for instance, could invalidate your policy. Better to declare it and wear the added cost if necessary.

5.   Theft cover – Valuables judged by the insurer as left ‘unattended’ usually aren’t covered. Understand their definition of unattended, as it might not be the same as yours.

6.   Don’t double up – Rental car firms offer insurance, with a fee to waive the excess. But check whether you already have cover via the credit card you’ll pay with.

7.   Credit card check – Check the conditions for travel insurance that come with your card, though. You may have to pay for the whole trip on the card to activate the cover.

8.   Check what isn’t covered – Epidemics or acts of terrorism generally aren’t covered. High-adrenalin activities like skiing often aren’t included and will cost you extra.

9.   Cancellation fine print – If you cancel your trip because you have a better offer, or you ignore travel warnings, or the travel provider goes bust, you may not get anything back.

10.   Do your homework – For peace of mind, do some research. Consumer champions like Which can help.

Check out more of the latest news from IFAMAX:

Pay less attention to weather forecasts

How women view money and investing differently

A little encouragement goes a long way