Worldwide Financial Planning

Inflation generally occurs when there are too many chasing not enough. Inflation is monitored in consumer prices and also in consumer services and goods. The real inflation has been in assets, and assets that the very wealthy have, and those assets have been much greater than inflation of consumer goods and services.

The Bank of England increased base rate by 0.5% as inflation again proved more resilient. The Monetary Policy Committee was expected to hike rates by 0.25% but opted for a larger hike as the bank said a lack of action now risks making problems worse later on.

The largest drivers of inflation were not as pointed out by the corporation sponsored politicians (strong wage demands, quantitative easing). Primarily you have a simple supply/ demand issue in many key areas that will drive it. Then you have profiteering.

UK government bonds fell and yields rose sharply as positive economic data increased the chances of further rate hikes from the Bank of England. Employment increased in the three months to April. The number of people unemployed increased very slightly but the number of those classed as inactive fell.

Last week’s personal finance column focused on targeted pension strategies, in which Peter McGahan mentioned annuities. So, this week, Peter covers the difference between annuities and pension drawdown.

Most pension funds have a full spread of bonds, property and international equities, and this is ‘managed’ by the fund manager. I say ‘managed’ because many funds are not managed at all, but you are still charged.