It’s been another busy year in the world of personal financial planning.
In this short video, I share my top five money moments from 2017.
#1 – Bitcoin
2017 was the year that everyone seemed to become a Bitcoin millionaire…well, maybe not!
Bitcoin started the year at $999 and has risen to more than $18,000 at the time of recording this video. That’s a rise of more than 1,700% in the space of a year.
Cryptocurrency is a bit like Marmite; you either love it or hate it.
Personally, I’m not a fan for several important reasons.
It barely functions as a currency, has all the hallmarks of a Ponzi scheme, and is just as likely to plummet in value as it is to rise.
On the plus side, the media attention around Bitcoin has got people talking about personal finances this year. And more people know about its underlying technology platform, the blockchain.
Will 2018 be the year in which Bitcoin finally implodes? Watch this space.
#2 – Interest rates
After a decade of ultra-low interest rates, the Bank of England finally started putting them up again. But only to 0.5%.
This is the same low level interest rates were at before the Brexit referendum last summer.
The Bank has signalled this is the start of a number of rate rises, although we expect them to be limited in number and modest in size.
At the same time, price inflation has been ticking up again in 2017.
The Bank of England governor Mark Carney had to write a letter to Chancellor Philip Hammond this month, explaining why price inflation was now more than 1% higher than the Bank’s target – and what they plan to do to bring it back under control.
What does this mean for you and me?
It means we’re getting poorer in real terms; the interest paid on our cash savings isn’t keeping pace with rising prices for goods and services.
It also means we need to get ready now for further interest rate rises.
If you’ve got a variable rate mortgage, now might be a good time to consider fixing the rate.
#3 – Asset manager scrutiny
It was the year the £7trn asset management sector discovered it needed to change.
Investment managers have been living high on the hog for too long. That was the broad conclusion of the Financial Conduct Authority’s market study into the sector.
What happens in the asset management sector matters for all of us because they are looking after our money. This includes more than £1trn for individual investors and a further £3trn for pension funds.
The study, which was launched back in 2015, wanted to make sure this sector worked well for consumers and offered value for money. It doesn’t and it doesn’t!
The report found weak price competition, evidence of price clustering and high levels of profitability in the sector.
I think 2018 will be the year the regulator really clamps down on the sector; good news for investors as prices for investing should start to fall.
#4 – Pension transfers
2017 was the year that transfers out of defined benefit (final salary) pensions made the headlines.
Continued low gilt yield, rising life expectancy and widespread availability of pension freedoms were all factors which created a perfect storm for those individuals with gold-plated final salary pensions.
The transfer values on offer have been very high, leading in some cases to vultures circling, trying to convince people to transfer their pensions and then invest in dodgy esoteric schemes.
It was brought into sharp focus recently by the plight of members of the British Steel Pension Scheme, forced to quickly choose between membership of a new scheme, falling back on the Pension Protection Fund, or transferring out to a private pension pot.
This scheme made it all the way to Westminster for a Select Committee hearing, and a band of financial advisers rode to the rescue to counsel steelworkers free of charge, saving many from doing irreparable damage to their pension savings.
#5 – Dementia tax
Poor Theresa May. She called a snap election in the summer, confident she could grow her majority and walk back into Brexit negotiations like a boss.
And then it all went horribly wrong.
Part of her downfall (which included a refusal to debate the party leaders or appear in public, other than in set-piece environments) was the poisoned chalice of adult social care.
Our hapless PM bodged an election pledge, which the press quickly dubbed a ‘dementia tax’.
Despite a swift u-turn, the damage was already done.
Earlier this month we had confirmation the government has scrapped their plans to introduce a lifetime cap on care fees in 2020.
Instead, it plans to start another consultation. I’m not holding my breath on this being resolved anytime soon.
What was your biggest money moment in 2017?
Please let me know what your biggest money moment was this year? You can comment below or on the YouTube video.
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