news round upDeclining inheritances, care fees, renting vs buying, pocket money disparity, saving money on holiday spending…and should women be bolder when it comes to investing?

It’s all here – and more – in this month’s news round-up, Logic Bites.

Families consume retirees’ capital
The proportion of people retiring in 2016 who say they expect to leave an inheritance has halved since 2010, says the Mail. Back then, just over half of retirees said they would leave capital to their families, but this year just 28% expect to leave anything. Of today’s retirees, 35% are already helping other family members financially, with 81% supporting children, 30% supporting grandchildren and 15% helping their own parents. Since people have to plan for a longer retirement, and may also need to fund long-term care, the likelihood of leaving capital will continue to decline.

The affordability gap
According to the Mail, there is a huge gap between the amount different lenders say someone can borrow. It took a typical couple and put their figures through 11 different major lenders’ online affordability calculators. The couple had joint earnings of £75,000 and a £25,000 deposit. The calculators came out with maximum loan figures ranging from £225,000 to £410,000, or from 3 to 5.5 times income, though the Mail does point out that the actual figures offered by lenders would almost certainly be different. Still, it emphasised the need for first time buyers to shop around to get the best deal.

Would equity release pay the care bills?
Could an equity release loan pay for long-term care?, a reader asked the Telegraph. Yes, it said, but warned that cash obtained in this way could restrict someone’s entitlement to local authority support and, for couples, it might not make sense because so long as one of a married couple lived in the home its value could not be used towards care home fees. It also warned that taking equity release to make lifetime gifts to children could be risky if you knew you would need care, and in any case any such loan should be carefully documented to avoid the risk of retrospective claims by a local authority.

Care-at-home to beat care home fee rises
More people are paying for care in their homes as an alternative to staying in care homes where fee increases have been substantial, says the Telegraph. Moreover, those who stay in their homes are entitled to support they don’t get once they move into a care home, because the value of the home itself is not taken into account in determining eligibility.

Buying is now 20% more costly than renting
Buying a home is now a fifth more expensive than renting one, says the Financial Times. Unlike some analyses, this takes into account the cost of the capital being repaid on the typical 25-year mortgage. And for ownership to be cheaper on a monthly payments basis, a buyer would need to put down a 39% deposit. Variations in regional prices are huge, though: in London, it is 44% more expensive to buy than rent while in Leeds the gap is only 10%. The FT agrees that paying off the mortgage means you own a steadily increasing share of the property, so your net wealth increases, but says affordabilty – the percentage of income being spent on housing – is the real constraint.

Boys in pocket money heist
Boys’ persistence in asking for more pocket money paid off, says the Financial Times. In 2016 they got an average of £6.93 per week in pocket money, 12% more than the £6.16 average for girls. At least part of the difference arises because boys are more inclined to complain and ask for more, says the FT – anticipating exactly the same behaviour, and a similar pay gap, in the grown-up world of work.  Though pocket money payments have risen steadily in recent years, the average remains well below the £8.37 per week recorded in 2007 before the financial crash and recession.

Film tax scheme fraudsters convicted
Four men were convicted at Birmingham Crown Court of leading a fraudulent tax avoidance scheme, says the Financial Times. They claimed £275 million was being invested in film financing, but simply recycled the same money many times through a series of offshore accounts in order to inflate claims for tax deductions. 275 investors including footballers and pop stars put £76 million into the scheme, and HMRC will now begin claiming back the £100 million in tax refunds they had wrongfully claimed.

Lisa will benefit the wealthy
The new Lifetime ISA launched by George Osborne in his March 2016 Budget, and which opens to investment next April, will primarily benefit the wealthy, says the Financial Times, citing research by insurers Royal London. It points out that no typical worker in their twenties, earning £20,000 a year, will be able to save the maximum £4,000 a year into the Lisa since this would represent half their disposable income after housing costs. Instead, it reckons that the 300,000 high earners who have had pension contributions restricted under new rules will pay their children’s’ contributions to Lisas and collect over half the £170 million the Government expects to stump up in bonuses for Lisa savers.

Don’t panic out of commercial property
Fears about BREXIT have led to outflows from commercial property funds investing in shops, offices and warehouses and this has caused them to lower the exit price for investors, says the Times. Investors have been adding to property fund holdings for the past three years at a steady rates, but the early months of this year saw outflows as some investors took their profits. Fund managers responded to this with price cuts of up to 5% even though they say the valuation of properties has not changed. Experts said commercial property should be seen as a long-term investment and urged investors not to sell, since (barring a BREXIT-caused recession) the outlook for property is still good.

How to save money on holiday spending
Get your cards in shape before you go on holiday, says the Herald. It points out that most UK credit cards and debit cards impose heavy charges of up to 6% for usage abroad. It says pre-loaded spending cards have lower usage charges and offer much better exchange rates. Among the cards cited are Centrip, Cash Passport, MyTravel Cash, FairFX, Revolut, AceFx and Moneycorp’s White Explorer. All can be preloaded with euros or dollars and then used to make purchases or draw cash from ATMs.

Women must get braver, says the FT
In a major feature on female savers and investors, the FT says women are too timid when it comes to investing and have too much of their money squirrelled away in cash deposits. Just 10% of women have a stocks-and-shares ISA compared with 17% of men. Women need to get bolder and start investing in the stock market, says the FT, something men are much more inclined to do. Women are suspicious of the male-dominated financial services industry, put off by the jargon and confused – and think the providers of savings products and services simply don’t talk to them in terms they understand. It looks as if the FT, whose personal finance editor is a woman, is on a mission.

For more on any of these news items, or if you are looking for a bit of help with your financial plans, get in touch with us (click on this link