She also has an additional voluntary contribution (AVC) fund of pounds 4,378, but is confused as to the options available to her.Joan has around pounds 65,000 in a Halifax Gold Account, pounds 20,000 in Premium Bonds and around pounds 4,000 of “emergency” funds split between a Barclays’ deposit account and The Saffron Walden building society. Her other concern is that she may require residential care at some point in the future.
Joan’s occupational pension scheme income amounts to pounds 2,089 pa, which combined with State pension benefits will provide income of pounds 5,731 pa. Joan would prefer guaranteed income that would rise over time. More tinkering with the taxation of pensions and savings, including firm plans for Individual Savings Accounts, seems certain and there could even be tax cuts on booze plus a long-promised 10p rate of tax.But the fine-tuning of policy will be left to left to the Bank of England and its interest-rate committee.. The problem: Joan, from Norfolk, has recently retired and has purchased a house for cash. She wants to maximise income to bring her as close as possible to her pre-retirement level of pounds 9,500 per annum net, while taking as little risk as possible. Interest rates and tax rates are two blades of the scissors the authorities traditionally use to trim the economy.

Higher taxes and higher interest rates both slow the economy down while tax cuts and interest-rate cuts will speed it up, but tax changes and interest-rate changes work in slightly different ways because higher interest rates reward savers as well as penalising borrowers, while higher taxes reduce spending power across the whole economy and also reduce the government’s budget deficit.
On past experience, tax changes affect spending and investment within a year whereas the Bank of England argues that changing interest rates can take up to two years to work through the system. To order a copy at the specially discounted price of pounds 15 (including P&P) call 01903 736736 and quote the reference number MMJD.. Freshly armed with a five-year mandate as the Inflation-Finder General, Eddie George can now afford to make long-term decisions on interest rates. But he is unlikely to want to change interest rates until he and his colleagues on the monetary committee have seen what the Chancellor does with the tax weapon in the Budget. Putting your money with the genuine superstars, provided you can spot them early enough, is just as good a strategy for long-term success in the stock market as any.`Money Makers’, by The Independent’s Jonathan Davis, a study of Britain’s most successful professional investors, and what ordinary investors can learn from them, is published by Orion Business Books at pounds 20. Yet most investors, many professionals included, persist in doing just that.In principle, there is no reason, most of the experts insist, why private investors cannot do just as well as the average professional investor. Although their information sources are not so good, they have the advantages of having smaller funds to manage.

They can afford to take a genuinely long-term view, a luxury that is in practice denied to most professional investment managers. In Anthony Bolton’s words, there is actually very little original thought in investment. It is putting the wisdom of the ages into practice that is so difficult. That is why many successful investors are essentially loners.The paradox is that there is much less mystique about investment than is often realised. Some of the adages you need to succeed – for example, to run your profits and cut your losses – are almost as old as the hills Yet few of us actually follow the advice.