This is Money Blog

Let's face it, I'm working until I die

Once again we've had one humdinger of month for depressing news on pensions.

But then again it’s not like pension news is ever meant to be viewed with a smile and good light-hearted humour, after all, the topic is unlikely ever to be the subject matter of a Richard Curtis movie,

So dismal is the melancholy engulfing the UK’s pension landscape, that if the subject was ever committed to celluloid, it would be the equivalent of Angela’s Ashes, maybe Requiem for a Dream - or pretty much, anything by Mike Leigh.

So what have we learnt? Well according to union giant TUC, some two-thirds of us in the private sector are - ‘unpensioned’, while further research claims today’s retirees will be surviving on half the average wage.

Of course, there are all the usual suspects too; we’re not saving enough, that we’re sleepwalking into an impoverished retirement, and so on.

According to the experts, in order to have a decent pension in retirement you need to be putting away a fair bit of cash.

The top 10 movies about money

Hollywood is gearing up for revenge on uber swindler Bernard Madoff, surely it is. After all, many Tinsel Town alumni - Steven Spielberg, John Malkovich and Kevin Bacon, are reportedly among those who were taken for a ride by the man behind the planet’s biggest ever pyramid selling scheme.

But retribution aside, there is a story to be told, and indeed money to be made. Given the length (20 years plus) and breadth ($64bn and counting) of the scandal, celluloid treatment must be a given.

At the end of the day, Hollywood has lavishly covered furores that don’t hold a candle to the former Nasdaq chairman’s crimes.

But while we wait with baited breath for the inevitable flick, I conducted a brief and largely unscientific survey across This is Money towers on the best movies about money, business and finance.

We ejected gangster flicks, bank robberies et al, the main stipulation was that money itself, had to be essential to the film’s plot. And that means money was almost, if not completely, a character in itself, or at least played a pivotal role in the plot and/or the environment of the story.

So, in no particular order, here’s This is Money's top 10 films about wonga:   

1. Wall Street (1987)

The quintessential cash flick. Wanting all the toys and fun that the 1980s yuppie-life had on offer, a tenacious young stockbroker Bud Fox, (Charlie Sheen) is taken under the wing of scruples-free financier Gordon Gekko (Michael Douglas) and as a result gets involved in such goings on as shadowy business deals, insider trading and generally the type of naughtiness that’s frowned upon by the authorities. Oliver Stone’s classic is also noteworthy for the depiction of brick-sized mobile phones. And a sequel is on its way.

Key quote

Gordon Gekko: ‘The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works.’

*Buy it here

2. Trading Places (1983)

Set-upon but over-privileged broker Louis Winthorpe III (Dan Aykroyd) and street hustler Billy Ray Valentine (Eddie Murphy) take on spiteful millionaire commodity traders Mortimer and Randolph Duke in a bid to make a fortune and send the pair into poverty, all by dabbling in the glamorous world of orange futures. Yes really.

Key quote

Louis Winthorpe III: ‘You make no friends in the pits and you take no prisoners. One minute you're up half a million in soybeans and the next, boom, your kids don't go to college and they've repossessed your Bentley. Are you with me?’

*Buy it here

3. Glengarry Glen Ross (1992)

No doubt put millions off a life in the seemingly lucrative business of real estate. This anti-American dream allegory depicts the hell of working for the titular US firm, where backstabbing, ritual humiliation and failure are all in a days work, as a ruthless boss, Blake (Alec Baldwin), piles on the pressure and then some.

Key quote

Blake: ‘A-B-C. A-Always, B-Be, C-Closing. Always be closing, always be closing!’

*Buy it here

4. Boiler room (2000)

Seduced by the promise of enormous wealth by young millionaire Jim Young, (Ben Affleck) college dropout Seth Davis (Giovanni Ribisi) naively joins a firm of crooked stockbrokers, J.T. Marlin, whereby he leaves his morals at the door and is fast-tracked to super-salesman status, until the FBI come knocking, that is.

Key quote

Jim Young: ‘Anybody who tells you money is the root of all evil doesn't f**king have any.’

*Buy it here

5. Rogue Trader (1999)

Former ‘trainspotter’ Ewan McGregor, swapped smack for cash in this biopic of the notorious Barings Bank trader Nick Leeson. While his employers believe he is one of their hotshots in Jakarta, Leeson is in fact losing money hand over fist and covering it all up. Leeson’s creative accounting eventually brought the bank to its knees and put the ‘wide-boy’ trader behind bars.

Key quote:

Nick Leeson: ‘I, Nicholas Leeson, have just lost 50 million quid, in one day’

*Buy it here

6. Risky Business (1983)

Squeaky-clean US teenager Joel Goodson (Tom Cruise) is left the keys of the kingdom while his parents go on holiday. But during his few days of blessed freedom, following a dalliance with call-girl Lana, he manages to drown his father’s beloved Porsche in Lake Michigan. In a bid to drum up the cash to repair the car, he goes ‘pimp’ and turns his parental home into a den of iniquity for the weekend.

Key quote

Joel Goodsen (regarding Lana): ‘It was great the way her mind worked. No guilt, no doubts, no fear. None of my specialities, just the shameless pursuit of immediate gratification. What a capitalist.’

*Buy it here

7. Hudsucker Proxy (1994)

Back in the mid-nineties, the Coen ‘No Country for Old Men’ Brothers dipped their zany toes into the murky world of business. Following the suicide of the Hudsucker Corporation boss, gormless post-room worker Norville Barnes, (Tim Robbins), is rocketed to the status of company President by scheming director Sidney J. Mussburger (Paul Newman), who believes the feeble Barnes will drive the cost of the stock down so he and his greedy cohorts can scoop it up at a bargain basement price and take over the company. Unfortunately Barnes invents the hula-hoop and the group’s shares rise quicker and louder than a 10-year-old on Christmas morning.

Key quote

Sidney J. Mussburger: ‘One month; to make the blue chip investment of the century look like a round trip ticket on the Titanic…What we need now is a new president who will inspire panic in the stockholder.’

8. American Psycho (2000)

The film adaptation of Brett Easton Ellis’ classic piece of 1980s fiction, is anchored by anti-hero, investment banker, Patrick (‘I’m in murders and executions’) Bateman (Christian Bale), who has a lively penchant for slicing, dicing and even chain-sawing all who cross his path. The film easily sits as the ‘darker’ cousin of Wall Street, (same period – same place) and effortlessly depicts the shallow, soulless vacuum of 1980s high-flyers in New York’s financial district, where image and the bulge of your bank balance are everything.

Key quote

Patrick Bateman: ‘I have all the characteristics of a human being: blood, flesh, skin, hair; but not a single, clear, identifiable emotion, except for greed and disgust.’

*Buy it here

9. Slumdog Millionaire (2008)

The multi-award winning Mumbai based fairytale finds 18 year-old orphan and ‘slumdog’ Jamal as a contestant on the Indian version of Who Wants to Be a Millionaire, with his lessons and experiences of life guiding him through the answers. But is he interested in the millions of rupees potentially heading his way? Apparently no. It’s merely a ploy to reach out and rescue, Latika, the girl whom he loves but has lost. However, despite being questioned, interrogated and then tortured, for suspicion of cheating, it all comes good in the end as Jamal goes the distance, after which, his lost love comes a running. No doubt the same would have happened had he run out of lifelines and washed out after question four. 

Key quote

Who Wants to Be a Millionaire presenter, Prem Kumar: ‘A few hours ago, you were giving chai for the phone walahs. And now you're richer than they will ever be. What a player!’

*Buy it here

10. Brewster's Millions (1985)

Montgomery Brewster (Richard Pryor) is a small-time baseball player, set a task which in this day and age, the Paris Hilton’s of the world could do in a single morning – he has to squander $30m in just 30 days, because if he does, he’ll inherit $300m from his eccentric relative.

Key quote

Montgomery Brewster: ‘Gentlemen, do you think I'm a lowlife?’ Tailor: 'Oh no, Mr. Brewster. Not with these clothes.'

*Buy it here

- Philip Scott, (resident film buff),This is Money

Ask a simple question...and Bank of Ireland

It started so easy - all I wanted to know was how much, if anything, would I be charged, for withdrawing cash abroad – specifically in the former residence of the Celtic Tiger, Ireland.

Sure, when one uses a cash machine in another country, one does usually get hit with a charge for the convenience.

But I had hoped, that given my destination, and the bank involved, that I might get lucky. A long shot, granted.

But why? Well, after moving to the UK from Dublin, a decade ago, given that I already had a bank account with Bank of Ireland back home, I concluded that the easiest thing would be to stick to the devil I know and open a new account with the group here in the UK. Yes us personal finance journalists, can be victims too of the customer apathy we so often go on about.

So I am going back to Dublin for a few days and I was wondering what charges I would incur as a Bank of Ireland customer, using a Bank of Ireland ATM…in Ireland.

After all, bank charges, for even the most trivial of services, (in an ATM’s case, self-service) are big business.

And admittedly, until now, I have never checked out what the bank fees I usually endure when I am back in Dublin  actually are.

I rang Bank of Ireland’s one-stop customer service shop - Banking 365 - and put the question to them.

It mustn’t be a common query, as the service agent, although pretty sure I would be charged something, when prompted on exactly how much, was left, well, dumbfounded and didn’t seem too concerned to find out – she just recommended I use ATMs as little as possible and that when I do, take out large amounts. Hmm…

I explained that I would prefer a more specific answer and the by then flustered agent put me onto someone else, and they then passed the buck onto another colleague, eventually someone decided that the best course of action would be to put me through to the bank’s global markets division.

I seemed perplexed by this gesture, surprised even. Why would this division of the bank, which deals, in Forex trading, structured products and corporate deposits be the font of all knowledge, in cash machine charging?

Of course, it wasn’t. But they did get someone to call me back, with an answer. Methinks, in the end, it was in the region of five people I spoke to.

But anyway, what should a Bank of Ireland customer using a Bank of Ireland ATM in Ireland, expect to pay for the privilege? Well, a decent amount it would seem.

The basic charge is £1.50 for a withdrawal, on top of a 2.75% usage fee for the amount withdrawn. So if, I withdraw say 100 euros (£86.90) that will, all in all set me back, circa £3.91 or 4.49 euros, possibly a little less than it would have cost me on my mobile, if I had used it, to call Bank of Ireland to find out.

Just as well, sterling is so strong right now…oh hang on.

- Philip Scott, journalist, Thisismoney.co.uk

Are shares dead?

The market when it has managed to lunge forward during the past 18 months has just as swiftly fallen straight back - its lumbering behaviour, akin to that of flesh-devouring zombie in a George A. Romero horror-flick, has served only to give investors the jitters.

The Guardian’s Rupert Jones earlier this month described how he had patiently saved in a FTSE tracker fund for nearly 10 years’ – only to now find it is worth less than he has paid in – after it had plummeted by 22% over a mere six months.

In the past 18 months alone, the portfolios of loyal stock market investors have been all but savaged - the cash really would have been better off glued to the underside of a bed.

Understandably Jones, alongside many This is Money readers has raised the obvious question and debate? Is saving via shares an utter waste of money, and indeed time?

After all he followed, as did many, the standard instructions doled out by experts - he drip fed his cash into the market as opposed to dumping in one lump sum in a bid to avoid steep losses. At least, he thought that’s what he was doing it for. 

The Barclays Equity Gilt Study, which examines the long-term returns on a variety of assets, describes the past 10 years as a 'lost decade' for shares, where ‘equities have been the worst performing asset class since 1997, sharply underperforming all other asset classes’.

It says: ‘In nominal terms, the -0.3% annualised return from US equities since 1998 is the fourth-worst 10-year return of the past 83 years. Only those 10-year periods ending in 1937, 1938 and 1939 have delivered lower returns. Similarly, over the past 109 years, only the decade ending in 1974 saw a weaker 10-year nominal return from UK equities. For the sake of record, the 1964-74 UK equity return was 1.02%, while the 1998-2008 return was 1.05%.’

Barclays research points out that during the past 110 years, there have been some 16, 10-year periods that bear resemblance to the decade just past and like in the past decade in which investors who prudently re-invested their dividends lost money after inflation - each time, they made money in the next ten years, by an average of almost 11% a year even after factoring in rising prices.

But overall, up until the end of 2007, the equity party raged on. Since then the ‘hangover’ has kicked in. Looking at the discrete performance of a variety asset classes over the past 10 years (to the end of 2008 according to research from HSBC) UK equities have only been the very worst performer in 2008 and second worst in 2000. Topping the pile on no less than three occasions have been commodities, in 2000, 2002, and 2007 but then resources fell off a cliff in 2008. In 2000-2002 inclusive global equities were the second best performers but the best in 2004 and 2006. UK equities were second best in 2003, 2004 and 2007.

It is only really since late 2007 that the good returns have been wiped away. Of course, some argue that, by drip feeding your cash into the stock market in small bite-sized chunks, to avoid swift and large losses, all you are effectively doing is diluting potential returns.

Jones’s colleague Ruth Sunderland at sister paper The Observer, however, gingerly makes a case for equities, she acknowledges that that current climate represents, ‘difficult times for those of us who still, just about, believe in stock market investment’.

A cursory glance over the performance of Britain’s major indices – the FTSE 100 and the FTSE All-Share – does not make for happy reading.

The FTSE 100 index of the UK’s top firms has collapsed by 29% over one year, 40% over two and by 35% over three. Meanwhile the overall market, as represented by the FTSE All-Share has echoed the falls of the top 100 firms, with the index down by practically identical amounts over each period.

Meanwhile, the bank rate, after continually dropping since October last year to just 0.5% today, has done little favours for those savers who have sought some refuge in cash.

But some of the best known stock market gurus have pushed their heads above the parapet. Warren ‘Sage of Omaha’ Buffett, the world’s most famous investor back in October was making ‘buy’ calls, although the market has continued on a downward trajectory since. The likes of the Madoff scandal have hardly helped boost confidence in the US, mind. 

But the UK’s best-known investor, Anthony Bolton of Fidelity, has also been calling the bottom of the market – he did in the autumn 2008 too though. While they have gotten their calls wrong before, more importantly, given their individual track records (not to mention personal wealth) they tend to get it right far more frequently. And Mark Mobius of Templeton joins the two luminaries who have faith in a rally. 

However, professional trader and chartest Bill Adlard told This is Money at the start of the year that he believes that over the coming five years the FTSE 100 could fall by around 90% - from its all time high in 1999 of 6930. ‘It could easily be below 1000 in five years time,’ he said. Extreme? No doubt but Adlard said 12 months earlier that the Footsie would drop by 40% during 2008 – many rubbished that claim but he still turned out to be right.

What is certain is that investors will require nerves of steel to get through the vagaries of the next four to five months but as David Buik, of stockbrokers, BGC Partners points out: ‘Faint heart never won fair lady.’

He adds: ‘Also given a choice, perhaps emerging markets, particularly those associated with Asia and the Far East offer superior appeal.  Needless to say the UK and the Eurozone provide the least appetising arenas.

Confidence plays such a dramatic role in any recovery mode. Many also suspect that there may be another pull-back or shake out before equities put their best foot forward. However it will surely be better to have some involvement rather than remain on the sidelines argues Buick. And defensive shares with a decent dividend can start to look attractive.

He says: ‘Well done to those who bought banks and insurers 10 days ago. Your resolution and stoicism deserves those just rewards.  Will financials crack on? It may be a painful process. Though sticking with mining, oil and gas, utilities, tobacco and selective retail stocks may prove sensible to those who require a reasonable sleep pattern.  For those ‘gung-ho fixed bayonet and over the top’ approach enjoy the banks autos and insurers.’

Shares, whether you consider them dead or alive, do still exist (as the undead?) and they represent a playground exclusively for the very brave.

Why the commodities super-cycle means my book was worth writing, I hope

This is Money's investing correspondent Philip Scott has written a soon-to-be-released book on commodities. He explains why the commodities super-cyle means the time spent slaving away rather than down the pub will pay off, at least he hopes it will

Writing a book, when you have to do it, in your own time, betwixt all the hours spent here at This is Money, is not a whole lot of fun.

The working week balloons closer to circa 80 hours and, well the less said about what’s left of weekends, the better. Such working hours spent researching and drumming away on a computer keyboard can cause repetitive strain injury, and did. 

I guess the idea of writing a book, being a ‘published author’, must have appealed, at least on some level.  I previously did have my own idea for a book, when I was younger, it involved a boy finding out that he was a wizard and was thrown into a world, where he would eventually lead the battle for good against evil, while simultaneously trying to pass his exams, in all things wizardry. Unfortunately I left the original manuscript in a coffee shop somewhere in Scotland while on a family holiday. Ahem.

The book I have written, entitled; The Commodities Investor - A practical guide to making money from the commodities supercycle, is an entirely different beast altogether.

It is due out in February next year, provided that is, that I can get the final finishing touches, necessary tweaks and what-not, completed and triple-checked in time. As a journalist, I had written a good few articles on the subject matter over recent years.

When I was approached to write the book, I thought to myself, that this will ‘be good for me, a project, a challenge even and it’ll also keep me out of the pub’, which it did, at least around 90% of the time, OK 80%.

The funny thing is that when I started writing in earnest, around late March, the commodities boom was in fifth gear. As 2008 kicked off, both gold and oil reached record highs of $1,000 an ounce and $100 a barrel respectively, and in addition commodities were the best performing asset class of 2007.

From my point of view, this was great, the commodities story was everywhere – front pages were awash with headlines outlining the soaring cost of food as a result of the rocketing cost of agricultural commodities and the price of oil.

But in the back of my mind I felt the boom was reaching bubble proportions and the crunch was really starting to hurt spending. Every asset class has its downturn and commodities are high on the volatility scale.

Oil may have halved in cost since its mid-year high when it was pushing $150 dollars a barrel and gold pulled back significantly too. Other commodities, have also fallen back in value, in some cases significantly, such as in the case of metals. But, as with any investment, commodities must be viewed in the long-term. There is a ‘super cycle’ in the commodities sector, it is being largely driven by the economies of the BRIC nations – Brazil, Russia, India and China, and their respective thirst for the world’s natural resources.

China has been growing about 10% a year for some time now. It’s a big country, with a massive and rising population. If you think China will grind to a standstill, then investing there and in commodities is not for you. However, the consensus is that China and the other emerging economies of the world will continue to storm ahead, even if they do slow down periodically.

Some experts describe the current state of the commodities super-cycle as suffering from a ‘flat tyre’ and that it will ‘re-emerge to race again.

Chinese growth is slowing but only just, forecasts still anticipate an 8% to 9% GDP rise over the coming two years. In the short-term price fallbacks may be bigger than the market is forecasting but in the medium term the sector could witness a recovery in prices that would make the 2003-2008 commodity boom pale by comparison.

To quote commodity expert Ian Henderson, of JP Morgan Asset Management: ‘Steel is needed to build the new railways, more coking coal is needed to smelt the steel and more energy, whether it be coal, oil or uranium to name a few, is needed to power the railways and the new homes. And all of this has little to do with the relatively short-term effects of credit crunches, recessions and belt tightening around the world as they are largely government mandated projects.’

I agree (but I would say that). I believe that the commodities argument still stands. If you want to know how to invest sensibly in the area, there is a book I can recommend, but it won’t be out until next year - in fact to reserve a copy go to the This is Money Book Shop

-Philip Scott, Investing Correspondent, This is Money

My blog of shame

It’s been a while since I last scribed a blog, early January to be exact, whereupon I wrote candidly about my addiction to fags and my New Year’s attempt to banish them from my life altogether.

But here I am, five months on since I quit the filthy cigs. A day at the Allen Carr clinic and all my fag related problems were solved – and here’s the bit where I am meant to wax lyrical about how proud and relieved I am that not a single cigarette has passed my lips since.

But alas the shameful reality of the situation is that, although I quit five months ago, I re-united with the tabs some four months ago, sorry, four and a half months ago. (See there’s a reason I haven’t blogged in a while, namely shame. Admission of failure is never easy, just ask the Government.) I managed a paltry two weeks – yep, a mere 14 days.

I know for those out there (the sensible lucky ones) who have never smoked at all, this could seem pathetic, and yes it is, but smokers, past and present, will hopefully have some sympathy…maybe. Okay, that may be asking a lot from the ex-smokers.

Notably, following my rapid return to a life of fag-ash my esteemed colleague Richard Browning prompted a call for my dismissal in light of my failure - a little harsh methinks. 

Of course, I am far from proud of my failure, anything but - and with the price of fags rising at a velocity similar to that of oil, I feel rather foolish and devoid of all willpower. Even though the Allen Carr method of dropping fags in theory doesn’t involve the stuff, but I have my doubts.

I believe I recently paid circa £6.40 for a packet of menthol dipped ciggies - madness. But I just cannot seem to divorce myself from them.

I have tried willpower – failed. I have read Allen Carr’s Easyway to Stop Smoking book, three, if not four times, it worked once, on the first occasion for four months – I can’t even remember what inspired my fall from the wagon.

And of course, I have had a trip to the Allen Carr day clinic in South-West London, which inspired me for a mere two weeks. And I am still infatuated with my filter-tipped ‘friends’.

One ex-smoker chum has recommended hypnosis, it worked for her, but then again Allen Carr has apparently worked for millions. This is the last time I will bring up the fag debate, at least for now, or until I can actually write something along the lines of ‘yep, I am actually off the fags for five months,’ but that feels like a long way off, so I’ll have to occupy myself with other topics in the meantime.

But have I given up, giving up? Well no I haven’t and one day I really do hope to be fag-free but as Mark Twain once quipped: ‘Quitting is easy, I've done it a thousand times.’

Phil Scott, This is Money

My Smoking Ban

New Year resolutions are boring - and quitting smoking may be the most hackneyed of them but it is still not quite as bad as the whole giving up drink for the month of January tomfoolery.

Ergo I am happy to say that in 2008 it is the former cliché I have opted for - yes I have decided to kick the filthy weed, once and for all…once again.

I have pretty much been a committed smoker since the age of 17, or 23 if my parents are reading, sure there have been moments of madness before and I have tried to jettison the filter tipped buddies from my life but for the most part my junkie ways have meant me sucking on at least 20 a day, or 30, okay 40 if a night out is thrown into the mix for as long as I can remember.

Now while that’s doing my health (skin, clothes, general aura etc) no good, it’s the dent in my wallet that causes me the most discomfort – let’s face it if the shock tactics and health scares actually had any impact at all, no one would ever spark up. But over the past year I have set alight more than £3,200 worth of Marlboro Menthols, according to the This is Money smoking calculator, yes that was menthols.

But let’s face it - it’s not exactly perceived as a glamorous pastime these days, is it? Cool? Definitely not. In fact lighting up, either indoors or out, doesn’t exactly inspire rounds of applause, in fact in some cases it could make you feel about as welcome as Boy George at a KKK rally.

So last week I decided enough was enough and shelved out another £220 in the name of cigarettes or rather in a bid to knock them on the head to the Allen Carr ‘Easyway’ to quit smoking clinic.

For the uninitiated, Carr’s world-famous ‘Easyway’ asserts that the ‘relief’ smokers feel on lighting a cigarette, the feeling of being ‘back to normal’, is the feeling experienced by non-smokers all the time.

Using a combination of psychotherapy and hypnotherapy (as well as the ‘I’ve just spent £220 so it had better work’ motivation factor), the method works in the opposite way to the ‘willpower method’. It does not concentrate on the reasons the smoker should not smoke: the money, the slavery, the health risks - all that jazz we already know. But instead it focuses on why smokers continue to smoke in spite of the obvious disadvantages.

Sir Richard Branson and Sir Anthony Hopkins are just two of the clinic’s alumni. Sir Anthony gushes: ‘I found it not only easy but unbelievably enjoyable.’

Now did I feel an utter revelation following my five plus hours of rehab on a Saturday afternoon in south west London? Well, no…not exactly but by the same token I haven’t smoked since then (and that’s very good for me) and although I wouldn’t mind a coffee and cheeky Marlboro right now, I am just not going to indulge that ‘little monster’ which I created when I lit up that first cigarette – it would just seem pointless. I think. Maybe.

My friend and co-rehabilitee Francesca, is going through a ‘thank god I never have to smoke again’ phase ever since we left the clinic but then again she can exaggerate…but am I just being sceptical or was I just not listening properly?

I can’t say at this point whether I will never smoke again, but I know I won’t today…does that count? Bets please as to when you think this quitter will cave...

Phil Scott, This is Money