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BenFairfax

My Examiner Finance Column

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Soon I will start a weekly column in the Examiner on the general topic of investments, financial markets and the finance industry. I am completely independent (not affiliated with any institution), and am doing this purely as a public service for the local community. How if anyone has any suggestions on what topic's they would like to see covered then please let me know either here or via email: ben@webcabcompoments.com. To get an idea of the range of topic's I usual write on please check out my blog at http://www.webcab.co.uk

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Something about the current situation regarding local pension funds perhaps?

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Thanks for the suggestion I will add it to my list.

 

On public pensions I understand legislation on a "Manx supplement" (i.e. Manx state pension would be higher than the mainland) may be put forward. With private pensions I would like to say someone on Manx SIPP and Manx SASS, if I can find providers/structures where the kick-backs, set-up fees and running costs do not make the tax savings redundant.

Edited by BenFairfax

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Isle of Man Finance sector and the next 10 years: Current health of the finance sector on the island, SWOT, likely growth, areas of decline etc.

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The IOM finance sector is predominantly deposit taking, fund services (administration, legal advice), and tax planning (pensions, trusts, multi-national corporates etc.). In terms of future growth one could justifiably extrapolate from the FSC statistics at:

 

http://www.gov.im/fsc/stats.xml

 

However, please note that the $41.9B, in funds Under Management & Administration, where as far as I can tell the majority of these monies are Administered here rather than Managed. Please also note that here as in many Offshore centrers much of the monies managed will have a London/NY based "Investment Advisor" who email/phone's in many of the investment decisions. The trades are input in to the trade blotter here but the analysis is done somewhere else.

 

I will try to cover these topics at some point, and as best as I can factor out the various parties trying to push their industry and/or gain political capital. Saying this, the column will most likely over time focus on investments rather than legal, industry and tax issues since this is the topic I know best.

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Best sources of finance and investment advice for business and individuals from a Manx perspective. Many financial instititons speak of UK only residents which disbars IOM.

 

Also I should like you to give more information about the economic viability of green solutions. I notice you have written about windfarms on your website.

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How about buying stocks in the USA? What to look at, and how to buy, etc.

 

The currently weak dollar seems make it a good time to buy. I just bought some this morning, but I don't normally look at the USA markets

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Best sources of finance and investment advice for business and individuals from a Manx perspective. Many financial institutions speak of UK only residents which disbars IOM.

 

To be honest I never found any sources of independent investment information for business and individuals from a Manx perspective which I guess was one of the reasons for wanting to write a column on the subject. With the UK institutions I think they just cannot be bother to go through the regulatory loopholes and incurred costs in order to be able to market products in the IOM. I am sure the FSC has the best intentions with its regulatory environment but the end result can often be to just limit the choices available to the consumer.

 

Saying this, the Manx resident's situation differs sharply from the UK resident's, due to the fact that in the IOM there are no capital taxes. Hence, from a tax point of view at least the IOM investor should orientate themselves towards obtaining capital gains rather than income (i.e. buy stocks).

 

Also I should like you to give more information about the economic viability of green solutions. I notice you have written about windfarms on your website.

 

After trying to recode the resent report by the IOM DTI available at: http://www.gov.im/dti/Energy/, and according to my back of an envelope figures I found the Wind Power was the only viable source of alternative energy for the island where an Off-Shore wind farm would provide an internal rate of return of 5.1756% over 13.73 years, where an inshore wind farm would provide an internal rate of return of 6.26%-7.30% over 13.73 years. However, the report by the DTI just discounts onshore wind-farms from the start without reason. The full details are at Renewable Energy Resources on the Isle of Man

 

In the US, there are some investment banks who are involved within this sector, including Goldman Sachs, and I have heard that wind farms over there life can general a return of around 10%. Anyway, whatever the exact situation firms like Goldman Sachs just do not invest their own monies in the figures do not add up.

Edited by BenFairfax

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How about buying stocks in the USA? What to look at, and how to buy, etc.

 

The currently weak dollar seems make it a good time to buy. I just bought some this morning, but I don't normally look at the USA markets

 

Here all depends on how you are doing the FX deal. If you hold dollars then use any US broker, or someone in the UK like TDWaterhouse which allows you to hold USD and trade directly on USD exchanges (or their side kick Internaxx.com which routes all trades through TD Waterhouse but the assets are held off-shore in Luxembourg). If you wish to buy Global Repository Receipts listed on the LSE in dollars, from a UK brokerage account with sterling it is much better to have direct market access (DMA) because then the FX deal will be done at the market rate (i.e. you only lose a few pips). Whether as if you go via a market maker then you will end up having to do the FX deal at whatever rate the market maker gives you (this may cost you as much as 1% of the deal value). The only cash equity DMA brokerage provider I know of in the UK (for retail customers) is iDealing.com (if you contact them give my regards to Gary Duckworth, who runs this shop and interviews all people who want to be classified as an intermediate customer which is required for DMA).

 

On the dollar/GBP level I agree, the dollar though has structural problems but then again once the UK housing market turns so will the pound. The trade I prefer with currencies is GBP/Asian currencies, that is, Asian stocks pay for with sterling; but there again I have looking at stocks like ConocoPhillips in the US (which is really a play on hard assets vs sterling, principally oil reserves, refinaries and rigs).

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We definitely want recommendations from someone at the sharp end who invests their own cash and makes a good return. It is always easier to give advice. It is harder to take it.

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Opting back in to state pension, ive opted out at the moment but cannot get any good advice on wether or not to opt back in.

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This is "viral marketing", I suspect. I'm certainly not complaining at getting free informed advice

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I will try to cover these topics at some point, and as best as I can factor out the various parties trying to push their industry and/or gain political capital.

 

Sorry you did say it was isle of man newspapers your column is appearing in? That will be interesting. Hope you get past week one.

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On the dollar/GBP level I agree, the dollar though has structural problems but then again once the UK housing market turns so will the pound.

 

Is that a statement of definite fact or an opinion; that the UK housing market will turn and that this will result in structural problems for sterling?

 

What does turn exactly mean in this context and how can I measure it? Ditto structural problems.

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