Inflation and Your Money - What Is Its Real Value?

We held a Retirement Seminar for dentists at our office recently. This being part of an ongoing series of educational talks and workshops to several groups of scholars in the north, and which also takes us to North Wales next year.

It was good to see familiar faces in attendance, as well as new, with specialist dental accountant Alan Suggett also chipping in with a slot on the value of Practices and the complexity of Incorporation.

Part of what we covered was how volatile the markets have been this year, and also how inflation can play havoc with your wealth over time.

It is sometimes not appreciated how, over time, inflation can really damage wealth creation and preservation, and with inflation very high at present it is worth looking at this in more detail.

Of course, the context here is the real value of money. When we talk about the 'real return' on your money, it means the return that you get (or do not get) over inflation.

So if inflation is, say, 5% pa, and you are getting a return in the bank of 3% pa ​​before tax, and 2.4% pa after basic rate tax, then you are not getting anywhere near a real return on your money.

If this were to happen over many years, then the real value of your money would reduce markedly. In fact, with present rates at around the 5% mark and with many experiencing a salary freeze, some people will be seeing a fall in their standard of living.

Let's take a look at the impact of inflation on some consumer items, as well as salaries, pensions and debt over a recent 10 year period.

PRICE COMPARISON 1999 - 2009

Price in 1999 Price in 2009% change Source

Milk (pint) 34p 45p 32.30% ONS

White Loaf 51p 1.26 147% ONS

Sugar (kg) 61p 88p 44.20% ONS

Pint lager 1.93 2.79 44.50% ONS

20 Cigs 3.37 5.39 60% ONS

Petrol / l 63.6p 90.4p 42% Petrol Prices

Ave salary 18,396 20,900 13.60% ONS

Weekly state pension 66.75 95.25 42.70% PAS

Level of UK consumer debt 565.4 1457.4 158% BOES

billions

Price of oil per barrel 8.80 28.70 226% WTRG

Bottle of wine 3.55 4.18 18% W & STA

Ford Focus 15,500 16,095 4% Ford

McDonald's Big Mac 1.90 1.99 4.70% McDonald's

Source: This is Money

So those of you who like a pint and a fag while munching on a white bread sandwich will have reasons to moan!

Whilst the wine loving burger fans may well have a smile on their face!

For a bit of fun (answers below), have a guess at the price of these items in 1960 compared to the 2009 prices below:

1. Fish N Chips - 4.50

2. A Mini - 12,345

3. Petrol - 86p (was it ?!)

So we can see that just 10 years can seriously erode the value of money, never mind 20, 30 or 50 years!

So what is the best way to combat inflation with your savings and investments?

The first thing to say is that there is no magic answer, and that there are 3 rules to investment return:

1. Risk and return are related

2. Risk and return are related

and yes

3. Risk and return are related

Other factors are accessibility, tax and the time period you have to invest.

Of course, in our opinion, the only reliable way in which you can find out what rate of return you NEED longer term so that you can be on track to achieve your goals in life is to devise a proper strategy, and have your own financial map called a cash flow forecast.

This will be able to calculate what returns (and there before risk) you need to take, with the aim to minimize any risk due to a possible option. What such a plan will give you is how much to invest in the various asset classes, with each having their own expected rate of return & risk (standard deviation). So getting the right mix is ​​vital.

We covered some of this at the seminar, and using figures from a Scottish Widows UK Financial History graph (Barclays Index data), we could see that returns from some major asset classes made interesting reading.

What one pound invested in 1950 to 2010 would be worth:

Building Society (Cash) - 1,560

Gilts (Government loans) - 6,146

Equities (Stocks & Shares) - 117,500 (dividends reinvested)

Retail Prices Index - 2,680

Other methods would be to utilize products that give a return over a period that is guaranteed to be above inflation. Even Tesco had launched such a bond a little while ago - but as is the case with ANY investments / savings accounts, watch out for the small print.

Of course, the past is no guarantee of the future, but what do these figures tell us?

Well, the most important one we feel is that in the longer term, say 10 years plus, it is important that any investments you have show a real return. That is a return that is higher than inflation.

To give you the best chance of this, having a relevant risk assessed investment portfolio that has the right 'blend' of asset classes that lets you sleep at night on the one hand, and yet give you the return you need on the other, is a tried and proven route.

Talking about inflation, we came across a couple of quotes to share with you:

By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.

- John Maynard Keynes

And on a less serious note:

"Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair."

- Sam Ewing

Mini Quiz answers:

1. 6p - a 7,400% rise

2. 496 - a 2389% rise

3. 5p - a 1620% rise

Source: National Statistics.

The first one really is a surprise. The chip shop owners must have been salting their profit away for years! (sorry)

The Financial Tips Bottom Line

Really think about what you want in life and by when. Then measure the cost of this, and compare it to what assets you have.

If you do not know where you are going, how do you know when you'll get there ?!

Use cash flow forecasts - how does it look for you?

ACTION POINT

If you have an advisor, ask them to create you own cash flow forecast. If they do not know how to do this, then maybe it's time to find a financial planner that does!

How to Maintain a Hybrid Car

There are nearly two million registered hybrid vehicles within the US today, and more than 50 percent of respondents to a recent online survey said they're considering a hybrid purchase within the next five years. Searching out and finding the right car loan for one of these can also be a daunting task.

As popular as the vehicles are, some buyers worry that hybrids can be more expensive and more difficult to maintain than a non-hybrid vehicle. In fact, routine maintenance is actually that of a non-hybrid vehicle-and may even be cheaper in some cases. Following are a few general guidelines on maintaining a hybrid vehicle. Always consult your vehicle manual for information and maintenance schedules specific to your car.

Oil changes : For non-hybrid cars, a 3,000-mile interval between oil changes has long been the standard. (Even though experts are convinced that new oil blends permit a longer interval between changes.) For hybrid cars, a less frequent interval of 5,000-10,000 miles between oil changes is considered standard. Auto experts may point to oil and oil filters for hybrids that are different from manufacturer recommendations. These filters can cost a bit more, but it's for you to decide which recommendations you choose to follow.

Brakes : Brake pads in a hybrid may get less wear (due to the vehicle's regenerative braking capacities). So you'll likely end up in a position to replace them less frequently. Inspect brakes every 15,000 to 20,000 miles.

Batteries : Replace the air filter on the hybrid high voltage battery system every 20,000 to 40,000 miles. If the high voltage battery is not maintaining 60 to 70 percent of their charge, it's time for you to replace it-and that's about $ 3,000. (The good news? The warranties on a hybrid's high voltage propulsion motor battery are up to 8 years / 100,000 miles and achieving 150,000 miles from an original battery is not unusual.)

Drive Train : The internal combustion engine, electric motor and transmission are interconnected in a hybrid and may have different maintenance requirements than vehicles you might have previously owned. Only qualified technicians should check or make an effort to service components of the high voltage hybrid drive system and battery.

Financing : Many of the manufacturers are offering special auto financing plans aimed at the hybrid buyer. However, many consumers are looking online for all of their auto loan needs. By researching and gaining your financing before stepping foot in the dealership, you are more in control of the car buying process. What most consumers are starting to realize is the finance department is one if not the largest profit center in most dealerships. Having that financing taken care of up front eliminates the dealer from being able to profit from that portion of the sale.

Look online with the goal of finding the best overall finance option for you.

The Best Ways to Make Money Online For Beginners

Are you poking around the internet looking for the best ways to make money online? Are you slowly coming to the conclusion that only other people make money online? Not to worry. You are not the only person to think so! There are thousands of perfectly capable people like you who want to make money online but have no idea how to go about it. You need no experience or skill. All you need is a reliable internet connection and a few hours a day to make a tidy profit at the end of each month. Wondering how? Read on to find out best ways of making money online.

Selling products: This is a great way of making easy money. First you need to get a wholesaler who has products to sell. Next you start your own website where you sell the products. Once your website starts expanding and more and more people start visiting and buying from it, you can get more wholesalers who would be willing to sell their products and share the profit.

Selling domain names: This is also a very easy way of making money online. All you need to do is to buy attractive domain names which will cost you about $ 10 and selling them to other people. If you create a website under an attractive domain name, the better it will be. A few years ago when the internet was still terribly unknown, a few clever people bought all the single-word domain names. Selling them a few years later saw them becoming quite rich.

Creating websites: This is a fun way of making money online. If you are creative and love tinkering around the internet, why not create a website? Once the website becomes popular and traffic starts poring in, you will find quite a few people lining up to buy it. This is called website flipping and you can actually earn hundreds of thousands of dollars doing this. The fun thing is that you can do it over and over again.

Forex trading: If the workings of the global economic markets fascinate you, you can go for Forex trading. This is a highly profitable place where you can earn a lot of money online. But it is not easy. Making money through trading requires a lot of study of the market, ability to deal with risks and foresight.

Writing: If writing is your hobby, you could make a living online being a freelancer. You can start your own blog, write an e-book or write for websites. A lot of people do it and they are making a tidy income through it. The only thing you need to have is good writing ability and patience.

Participate in websites: There are some websites that pay people who are active members. They even share their ad revenue if you help in the promotion of their website. It is a great way of making money online as all you have to do is spread the word about their website.

Go ahead and find out the best way you can make money online. Who knows, you may start liking it enough to quit your regular job and start doing it full-time!

Heated Motorcycle Clothing - Not Just for Riders

Heated motorcycle clothing is not just for riders. Whether it's riding, winter hunting, snowmobiling, snowboarding, boating or outdoor spectator sports, heated motorcycle clothing can add comfort and pleasure to your activities and extend both the time and enjoyment of cold-weather recreation. Motorcyclists have known the benefits of heated gear for many years. Advances in technology, materials and design have allowed the production of heated motorcycle clothing that's not just for motorcycals anymore, but is sufficient for use in many situations where the elements have the upper hand - even if it's just your cold den.

Advances in technology have allowed for an ever-increasing number of ways to keep the cold at bay. Heated clothing now comes in many shapes - gloves and glove liners, socks and boot liners, pants and pants liners, jackets and jacket liners, scarves, heated grips and heated vests.

The heated vest has been one of the most popular articles of heated motorcycle clothing. The heated vest heats your core, which keeps the rest of the body warmer. With the introduction of lightweight, flexible fabrics and the advances in electrical circuitry, you can count on safe, windproof, waterproof, lightweight, stretchable garments without the downside of hot spots. One of the advantages of wearing a heated vest under a motorcycle jacket (or ski parka), is the elimination of layers of clothing and the additional flexibility of movement this allows. A warmer body and more flexibility add up to a safer riding (or skiing or snowmobiling or hunting) experience.

Heated clothing can be powered by a rechargeable battery pack, usually 7.4 volt, or the bike's motor, 12 volt. The various manufacturers offer lines of compatible battery packs, cables, connections and adapters. And many of these are interchangeable with the different different brands of heated clothing available. All heated motorcycle clothing will work with a temperature control module. One of the best known temperature control devices is the Heat-Troller, which works with most brands of clothing. In addition, there are many cable configurations which allow for the use of one piece of heated clothing - or several connected pieces - for total body comfort. Some dealers will offer a complete package for one price.

As heated clothing technology has advanced, more manufacturers have come online with heated gear. This has served to enhance and expand the range of heated gear available, while keeping the price affordable. For the most part, heated motorcycle clothing is priced between $ 60 for a pair of heated socks to $ 300 for a heated jacket with built-in heat controller. Considering the benefits provided by heated clothing - warmth, comfort, extended riding season, safety - heated motorcycle clothing is definitely a bargain. If you still need to be sold on heated clothing, for about $ 150- $ 200 you can purchase a top quality, very versatile heated motorcycle vest. See how this improves your life - and move on from there.

Money From Survey Sites - How to Look For It?

All people who are interested to make money online can take an online paid survey job. In this case, few people are only given the opportunity to locate the top paying sites. This happens because many are using the wrong method in locating them. If you want to make survey a money making business then you should find a better way to locate a high paying sites.

The survey pictures out that out of 20 persons only one percent of them can locate the proper website. This always happened because they always rely on the results given by search engines. This search engine will not bring out the sites for top paying companies.

The present reality states that there are more "low paying" websites rather than the "high paying" ones. Yes you can earn something from a low paying websites, but it is enough because you work hard just for a few earners. It is not worth and it is unfair to everyone. Those top paying companies can not be found in a basic search.

There different choices you can do, first is to search an engine and you can start signing up to the 1000's results that came up. This will take long for sure. Sometimes you might end up in a scam sites, and that is not so good. We also have the other choices, and that is by using forums. Forums are places wherein people express their feelings and experiences. With it you can trace the proper websites that offers goof money.

Focus on the topics that people are talking about on the forums. You can try to look for the things that they discuss, sometimes this will be the good ones. It is so easy, just focus and be patient to read along. With people sharing their experiences, you can reap a good benefit from them; you can also determine which one you will avoid to waste time.

Because of it you will be able to make money by filling out surveys but you can finally be paid the cash that you are worth.

An Easy Fuel Conversion to Reduce Your Fuel Costs

Motorists are really facing the squeeze of their pocket books with the large increase in gas prices. This price increase will not go away in the long term. In fact, there will continue to be more people wanting a shrinking supply of gas. However, there is an easy fuel conversion to reduce your fuel costs. Who would not want that?

The simple fuel conversion actually sounds too good to be true. I know I thought it was ridiculous when I first heard of it. But, the conversion uses water to help supplement the regular gasoline that your vehicle uses. You heard me right, I said water. Now let me give a basic explanation of how this works. It turns out, that it is basic chemistry.

Water is made of hydrogen, which burns really well, and oxygen which is needed for something to burn. Right there in simple everyday water are the two things that are needed for a great fuel. However, when hydrogen and oxygen are in the form of water, it does not burn as we all know. What is needed is a simple process to convert the hydrogen and oxygen into a burnable format. This is where the increasingly popular "hydrogen on demand" systems come in. You may have seen these systems on the TV news or in the newspaper, as they are all the rage right now. There are many sites offering their services to help add this simple conversion to your vehicle. These systems convert simple everyday water to what is being called HHO.

Car Body Types Explained

Most of us do not buy new cars all that often, so it's no surprise that some people get confused over the descriptions of the various types of cars that are available on the market. Most of the terms used to describe a type of car refer to its body shape, rather than its performance, or other features. If you are thinking of buying a new car, then arm yourself with the facts before you hit the showrooms with this simple and easy to follow guide to the various types of cars and their body shapes.

Sedan

A sedan, which is sometimes called a saloon, is the standard passenger car that has a bonnet at the front, a boot for luggage in the back, and usually four doors. This is one of the most popular types of car and they are ideal for families, as they usually seat four or five people comfortably.

Hatch-back

Hatch-backs are the types of cars that have no rear boot, but they have a rear compartment that can be accessed via a door that swings open at the back. The other feature of this type of car is that rear luggage compartment is not sealed off from the passenger compartment. Hatch-backs are usually smaller cars and they often have only three doors, including the swing door at the back.

Estate

Estate cars, or wagons, are like a larger version of a hatchback with an extended rear compartment for storing luggage. Like a hatchback, this type of cars luggage area is not separated from the passenger compartment and, typically, the rear seats can be folded down to accommodate a greater amount of luggage when it is required. Due to the extended rear compartment, estate cars are normally quite long.

Coupe

A coupe will be quite a small, two door car, and they are usually quite sporty in style too. They will normally only seat two people comfortably, but they might have two very small seats in the rear, but with very limited leg room.

Convertible

Convertibles, sometimes called cabrioles, are the types of cars where the roof can be removed so that it can be driven with the roof open in the summer. They are usually a similar sized car to a coupe style car and they too generally have limited room inside and are not suitable for any more than two people. The roof is often made of soft fabric; hence the term soft top, but more expensive convertibles might have hard tops that are folded back by hydraulics.

MPV

The term MPV, or multi-purpose vehicle, is usually applied to vehicles that have large bodies, like a van, but it still has both rear and side doors. Examples of MPV's are people carriers, minivans, and multi utility vehicles (MUV's). They can often seat as many as seven people and they are also characterized by being higher off the ground than a saloon type of car.

Pickup

Pickup trucks are the type of vehicle that has a flat-bed open space at the rear of the vehicle for carrying luggage and equipment. They are usually large vehicles, often 4x4, and they are designed to carry heavy loads, as well as people.

Off-Road

An off-road vehicle, such as a Land Rover, or a Jeep, will have been designed to be driven on the roads as well as off them. Typically, they will have a 4x4 drive, and the ability to be driven in very low gears, so that they can cope with muddy and difficult terrain.