Property falls out of favour with savers

After years of seeing property prices rocket, people are finally becoming weary of putting their hard-earned cash into homes and may begin to stash money away in savings accounts instead, an expert has indicated.

Donna Bradshaw, an IFA and financial planning strategist, has said that following a period when people became used to spending, there may now be “a turn around back to saving again”.

She said that in the past, the country’s “obsession with property” has meant that many people have used their houses as “a high street bank“.

However, with the credit crunch hitting hard, Ms Bradshaw said: “I think we’re going to see a shift back to saving.”

Some people already appear to be stashing their cash away in a safe pace to earn interest, as the Building Societies Association recently reported the highest ever monthly inflow to building society cash ISAs in April, bringing the total put in societies’ savings accounts to £1.8 billion.

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More Brits may face bankruptcy in 2008, warns Addidi

More people in the UK may face bankruptcy or be forced to arrange an IVA (Individual Voluntary Arrangement) this year, Addidi Wealth has said.

The financial planning and wealth management service warns that the global credit crunch may severely affect consumers if credit is not made more easily available.

Research conducted by debt-management company TDX Group and published in April revealed that an estimated one million people are struggling to cope with an average unsecured debt of £25,000, with total UK consumer debt standing at £1.4 trillion.

It was also found that the credit crunch could double the number of people falling into to debt this year.

With the cost of living increasing, as well as the rising cost of mortgages, food bills and fuel, the research shows that the number of people taking out IVAs could double this year.

Anna Sofat, founder of Addidi Wealth, says: “Last year there were already more people declaring themselves bankrupt or having voluntary arrangements with their debtors and I think that will increase this year.”

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Unusual investments are not helpful during tough economic times

Consumers need to make a difference between liquid portfolios and investments such as wine and antiques during tough economic times, claims a financial planning expert.

Bloomsbury Financial Planning has countered claims that unusual investments are a good way of putting diversification into an investor’s portfolio.

Jason Butler, partner at Bloomsbury Financial Planning, said: “I’ve got a fine wine cellar I’ve been building up over the last couple of years, [but] I’m not buying it as an investment, I’m buying it because I want to drink it! If it happens to go up [in value], that’s great.”

He warned that consumers should beware of confusing enjoying assets which may or may not go up in value with investments which are liquid traded.

In December 2007 Decanter magazine reported that during that year, fine wine increased more than any other investment except oil.

According to the Liv-Ex index, the measure of fine wine values, wine increased by 39 per cent across 2007.

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Taxation benefits for married couples

Married couples receive financial benefits when both partners have savings in place, claim financial experts.

MDM Associates has said there are possible higher tax allowances on pensions and potential inheritance tax advantages from joint savings.

Lisanne Mealing, director for MDM Associates, said: “With investing in pensions, you’re losing out on some pretty good tax allowances if you only fund on one [partner's] side and not the other.”

She added that in terms of income payments, “it’s easier to have the income split in retirement; because, again, you’re going to pay less tax… You’re taking full advantage”.

Ms Mealing also said that women’s income is usually spent on household items, incidentals and holidays whereas the husband’s earnings will be used for financial planning.

However, a recent report from the Fawcett Society warned that women are likely to struggle financially for a longer period following a divorce than a man, as women are less likely to have savings in place.

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