Worldwide Financial Planning

What has to be understood, is that the ‘Kick Out option’ is there to protect the market maker, i.e. the product designer, not you. By creating exotic options, you will never comprehend inside the product’s design, the product designer is protected from large market rises and caps your return. Also, these ‘Kick Out options’ are cheaper for the product designer than standard call options, so more background profit for them.

Markets expect to see only minimal tightening from here as banks wait for the impact of rate hikes already announced. This week’s meetings still had an effect on markets. The dollar continued to rise strongly against pretty much every other currency and US Treasuries have declined again

I try to write like we are sat having a beer, wine or coffee together, but this ‘simple’ product is highly complicated. Please stay with me. My biggest concern is that they are generally made appealing to risk averse investors with nice round numbers offering ‘capital protection’. Central to all of this is the line in the product brochure that states whether or not you should take out such a plan: “You understand how the Deposit Plan works”, or “You have read the brochure and understand how this investment works”.

The European Central Bank hiked rates for what most analysts believe is the last time, while poor growth data and rising unemployment suggest the Bank of England’s drive to slow the economy and address the tightness in the labour market – bank speak for put people out of a job – is having the desired effect. In the USA the picture was more mixed. Headline inflation picked up due to rising petrol prices, but underlying measures of inflation used by policy makers looked promising.

Borrowers have been worried about the new interest rate they will pay on the amount they have borrowed from the government. Around 380,000 people have used the scheme which was introduced in 2013 to help people get on the ‘ladder’. You can borrow up to 20 per cent from the government to get onto the scheme (40 per cent in London).

Bank of England Governor Andrew Bailey gave a strong indication that the UK is approaching the end of interest rate hikes. Bailey has said the UK has moved past the situation where rates clearly needed to rise and the question was just by how much and over what time period.