Lessons from a Secret Multi-Millionaire: How Anne Scheiber Amassed $22 Million From Her Apartment

By Joshua Kennon, About.com Guide

In the mid 1940’s, Anne Scheiber retired from the IRS where she worked as an auditor. Using a $5,000 lump sum she had saved, and a pension of roughly $3,150, over the next 50+ years, she built a fortune from her tiny New York apartment that exceeded $22,000,000 upon her death in 1995 when she left the funds to Yeshiva University for a scholarship designed to help support deserving women. Here are some of the lessons we can learn from this ordinary woman that achieved extraordinary wealth.

1. Do your own research

Sheiber was burnt by brokers during the 1930’s so she resolved to never rely on anyone for her own financial future. Using her experience with the Internal Revenue Service, she analyzed stocks, bonds, and other assets. The result: She owned only companies with which she was comfortable. When markets collapse, one of the best ways to stay the course and maintain your investment program is to know why you own a stock, how much you think it is worth, and if the market is undervaluing it in your opinion.

2. Buy shares of excellent companies

When you’re really in this for the long-haul, you want to own excellent businesses that have durable competitive advantages, generate lots of cash, high returns on capital, have owner-oriented management, and strong balance sheets. Think about everything that has changed in the past one hundred years! We went from horse and buggies to cars to space travel, the Internet, nuclear knowledge, and a whole lot more. Yet, people still drink Coca-Cola. They still shave with Gillette razors. They still chew Wrigley gum. They still buy Johnson & Johnson products.

3. Reinvest your dividends

One of the biggest flaws with both professional and amateur investors is that they focus on changes in market capitalization or share price only. With most mature, stable companies, a substantial part of the profits are returned to shareholders in the form of cash dividends. That means you cannot measure the ultimate wealth created for investors by looking at increases in the stock price.

Famed finance professor Jeremy Siegel called reinvested dividends the “bear market protector” and “return accelerator” as they allow you to buy more shares of the company when markets crash. Over time, this drastically increases the equity you own in the company and the dividends you receive as those shares pay dividends; it’s a virtuous cycle. In most cases, the fees or costs for reinvesting dividends are either free or a nominal few dollars. This means that more of your return goes to compounding and less to frictional expenses.

4. Don’t be afraid of asset allocation

According to some sources, Anne Scheiber died with 60% of her money invested in stocks, 30% in bonds, and 10% in cash. For those of you who are unfamiliar with the concept of asset allocation, the basic idea is that it is wise for non-professional investors to keep their money divided between different types of securities such as stocks, bonds, mutual funds, international, cash, and real estate. The premise is that changes in one market won’t ripple through your entire net worth.

5. Add to your investments regularly

Regular saving and investing is important because it allows you to pick up additional stocks that fit your criteria. In addition to the first investment Scheiber made, she regularly contributed to her portfolio from the small pension she received.

6. Let your money compound uninterrupted for a very long time

Probably the biggest reason Anne Scheiber was able to amass such as substantial fortune was that she allowed the money to compound for of half a century. No, that doesn’t mean you have to live the life of a monk or deny yourself the things you want. What it means is that you learn to let your money work for you instead of constantly striving to scrape by, barely meeting expenses and maintaining your standard of living.




To learn about the power of compounding, read Pay for Retirement with a Cup of Coffee and an Egg McMuffin. With only small amounts, time can turn even the smallest sums into princely treasures.

http://beginnersinvest.about.com/od/investorsmoneymanagers/a/Anne_Scheiber.htm

Given Anne's performance, it is not unreasonable to think that 25-year-olds with $5,000 today who follow her example could amass a multimillion-dollar portfolio by age 65.

HOW SHE TURNED $5,000 INTO $22 MILLION (AND HOW YOU MIGHT TOO...)

By FRANK LALLI

January 1, 1996

(MONEY Magazine) – In the depths of the depression, when she was already 38 years old and earning only a little more than $3,000 a year, Anne Scheiber invested a major portion of her life savings in stocks. She entrusted the money to the youngest of her four brothers, Bernard, who was getting started at 22 as a Wall Street broker. He did well picking issues for her as the market drifted upward in 1933 and '34. But his firm did not. It went bust suddenly, and Anne lost all her money.

"She was bitter with my father for the rest of her life," recalls Bernard's son Laurence, 41, a New York financial services salesman. "In fact, she got more bitter the older and richer she got."

Some of her anger at her broker brother seems understandable. After all, she had accumulated the money penny by penny for years by skipping meals, wearing clothes until they frayed and even walking to work in the rain to save bus fare. You might expect her to have turned against the very idea of investing as well. But not Anne; not for a minute. She rededicated herself to her saving and investing regimen with such a vengeance that it consumed her life--while also rewarding her with astonishing wealth. Although she never married, never even had a sweetheart, she did have one love: investing.

In 1944, 10 years after her big loss, she started fresh with a $5,000 account at Merrill Lynch Pierce Fenner & Beane and slowly built the nest egg up to $20 million by the time she died last January, loveless and alone at 101. It's now worth $22 million.

Few investors, including the best-known professionals of our age, have matched her record. Her return works out to 22.1% a year, above the performance of Vanguard's venerable John Neff (13.9%), better than pioneering securities analyst Benjamin Graham (17.4%), and just below Warren Buffett (22.7%) and Fidelity Magellan's Peter Lynch (29.2%). What's more, Anne's basic time-tested investing style can easily be adopted by any small investor. It relies on dedication more than dazzling financial analysis, faith in major companies more than a flair for prescient stock picking, and patience more than the pursuit of immediate profits.

Given Anne's performance, it is not unreasonable to think that 25-year-olds with $5,000 today who follow her example could amass a multimillion-dollar portfolio by age 65. Then they could live the rest of their lives, just as Anne did, with all the money they would ever need, plus the comfort of knowing they could eventually pass on their millions as they saw fit. In Anne's case, since she was estranged from her family, her 1975 will left only $50,000 to one of her nine relatives, a niece who looked in on her from time to time. Virtually her entire $22 million went to New York City's Yeshiva University, though she never visited the school. She specifically earmarked the money to help educate the bright and needy young women among the co-ed school's 6,200 students--women not unlike herself back around World War I.

"Anne was brilliant but weird about money," says her longtime New York City attorney Ben Clark. Relatives add that her fixation ran in the family. "The Scheibers were all like that," says Laurence. No matter how much they had, they feared they would lose it all, perhaps with some justification; it happened to the family twice.

"Back in Poland around the first World War," recalls Laurence's mother Lillian, "the Scheibers had gold buried in the ground. But they traded it for paper money that became worthless." Then in this country, Anne's father suffered substantial real estate losses before dying young and forcing her mother to go to work managing property to support her nine children.

For Anne at least, the money anxiety that darkened her early years was deepened by the family's European values. Whatever money the family did get went to educate the four sons; the five daughters were on their own. Anne persevered, however. She went to work as a bookkeeper at 15 and used her wages to better herself, eventually putting herself through school at night at the predecessor of George Washington University Law School in Washington, D.C. She joined the Internal Revenue Service as an auditor in 1920 and passed the bar exam in 1926 at age 32.

Years later Anne would often dwell on the two lessons she learned during her 23 years at the IRS. First, she concluded that--back then at least--women, especially Jewish women, had little chance of getting ahead. Attorney Clark, who has reviewed her agency records, says she was consistently one of the top auditors. Although she was barely five feet tall and 100 pounds, her favorite ploy was to march in and announce: "Obviously, these books aren't the correct ones. When I come back tomorrow, show me the real books." Then she would walk out. "She was a terror," says Clark. Nonetheless, she was never promoted. When she retired in 1943, she was making just $3,150.

The second lesson she learned poring over other people's tax returns was that the surest way to get rich in America was to invest in stocks. She ultimately concluded that she couldn't do much to change other people's prejudices, but she could do a lot to take care of herself.

Anne began saving money with a fervor that bordered on the maniacal. "She was saving 80% of her salary, at least," says Clark. "For example, she didn't spend $2 on food a week. In those days you could get a hot dog lunch at Nedick's for 15¢, but I know she found an even cheaper place."

"I don't think she was spending more than $2 on food in 1985 either," says her Merrill Lynch broker of 22 years, William Fay. "She'd wear the same black coat and black hat every day winter and summer. Once one of her nieces bought her a new black coat. But Anne found out it cost $150 and refused to wear it."

Anne plowed every dime into the market. Relying on her own methodical research and Merrill's analyst reports, she steadily nibbled at the leading brand-name companies in a few businesses she felt she understood, including drugs, beverages and entertainment. "She rarely bought more than 100 shares at a time," says Fay, "and only once bought more than 200. That's when she purchased 1,000 shares of Schering-Plough in the early '50s for $10,000." Today, her Schering-Plough alone is worth about $3.8 million.

She also almost never sold anything, even stocks that went underwater for years--partly because she hated paying commissions. "She'd say to me: 'Why should I fatten up the brokers? I'm just going to buy and hold,'" Clark recalls. Her buy-and-hold strategy often produced bonanzas. "Some of her stocks, especially in entertainment, got acquired for premiums three or four times, like Capital Cities Broadcasting, which became Cap Cities--Disney," says Fay.

By the early 1980s, as she approached 90, Anne found herself facing ever-steeper income taxes on her $10 million portfolio of about 100 stocks. That annoyed her no end. At Fay's urging, she decided to shift the $40,000 in dividends she collected each month into tax-exempt bonds and notes, some paying more than 8% completely tax-free. "She never sold a stock to go into bonds," says Fay. Still, within a few years, her cash flow climbed from $500,000 a year to around $750,000, while her tax bill remained in check.

Anne bought her last two stocks in 1985, 100 shares each of Apple and MCI. "She didn't trust technology, because she didn't understand it. So she resisted investing in it," says Fay. "Also, by then she didn't want to be bothered remembering the names of new stocks."

"What she'd say over and over again was: 'Don't ever tell anyone in my family how much money I have. I'm going to leave it all to education,'" recalls Fay. "And, of course, she did."

What are the lessons of Anne Scheiber's story? Here are eight investing tips--plus two concluding thoughts.

1. Invest in leading brands. Anne called them franchise names, by which she meant leading companies that created products she admired. For example, she owned Bristol-Myers, Allied Chemical and Coca-Cola. She also followed her instincts on untested companies. "When Pepsi-Cola came along, she tried it," says Fay, "and then bought PepsiCo when it was the new kid on the block."

2. Favor firms with growing earnings. Anne tended to ignore a stock's price-to-earnings ratio. Instead, she focused on the company's ability to increase profits. She reasoned that stocks are overpriced sometimes and underpriced others but it all works out in the end if the company's income rises year after year.

3. Capitalize on your interests. Anne always enjoyed movies. So she turned that pleasure into one of her investing themes by devouring Variety in search of the best entertainment companies. She scored big with Columbia, Paramount and Loews, as well as Capital Cities Broadcasting.

4. Invest in small bites. In addition to adding diversity to her portfolio, that rule automatically caused her to pick up extra shares when prices were low and avoid going overboard when prices were high.

5. Reinvest your dividends. It's the same principle as playing with the house's money in gambling, with this advantage--it's a sure moneymaker in long-term investing

6. Never sell. Or at least, never sell a stock you believe in. "For a long time in the rotten bear market of the '70s, many of her drug stocks were down, some by as much as 50%" says Fay. "But she hung on because she believed in them. She didn't panic in the crash of '87 either. She thought the general market had gotten overpriced, plus she was convinced her stocks would come back."

7. Keep informed. Anne went to all of her companies' New York City shareholder meetings. Rain, sleet or shine, she would walk over from her rent-stabilized, $450-a-month studio apartment in her trademark black coat and hat, buttonhole the CEO and demand answers, just as she did when she was an auditor. Then she would compare her notes with what the Merrill analysts were saying. Fay adds, however, that she also attended the meetings for the freebies. "Even when she had millions, she'd show up with a bag," confirms a relative. "If there was food served, she'd fill the bag and live on it for days."

8. Save with tax-exempt bonds. They provided more safety than stocks and cut her tax bill. When she died, she had 60% in stocks, 30% in bonds and 10% in cash.

In addition to those investing ideas, Anne's life also illustrates two other lessons worth considering, especially if you hope to end up with more than enough money as she did:

9. Give something back. Her $22 million gift to Yeshiva, plus an extra $100,000 she gave to an Israeli educational group, will help countless young women realize their full potential for years to come. Yeshiva's president Norman Lamm says: "Anne Scheiber lived to be 101 years old, but here at Yeshiva University her vision and legacy will live forever." One of her relatives who wasn't left a cent, New York City bank officer Dolly Acheson, adds that the Yeshiva gift gave her a "feeling of redemption." As she puts it: "At least in the end all that money went to a very good cause."

10. And finally, enjoy your money. As intelligent as Anne Scheiber was, she failed miserably on this one. She died without one real friend; she didn't get even one phone call during her last five years of life. Says her former broker Fay: "At some level, a recluse like her must get some psychic reward to keep going on that way. But to you and me, her life was terrible. A big day for her was walking down to the Merrill Lynch vault near Wall Street to visit her stock certificates. She did that a lot."

http://money.cnn.com/magazines/moneymag/moneymag_archive/1996/01/01/207651/index.htm

Dividend Growth Investing for Beginners

Dividend Growth Investing for Beginners

Written by Tyler

When you, as an investor, are looking at income earning opportunities, you should definitely mull over the option of dividend growth investing. Dividends allow you to enjoy your share in the profit of a company on a quarterly basis. Dividends are the total amount of money that a particular company pays out to its shareholders. The amount of dividend depends upon the performance of the company and dividend growth requires that a company have a sustainable growth model. Remember, however, that dividend payments are not set in stone. It entirely depends upon the prerogative of the company to offer dividends to its shareholders, or not.

Dividend growth investing is an excellent strategy that you can use to maximize your cash income generated from your equity investments. In fact, if you can put in place a smart and consistent dividend growth strategy, you can replace the income from your regular job. Or, if you are in debt, you can utilize the dividend proceeds to become debt free.

However, to design a successful dividend growth investing strategy, you must have good knowledge of the dividend growth companies on the market. To find dividend growth stocks, you can check out the historical dividend performance of various companies on the Dividend Achievers andDividend Aristocrats lists.

Of course, past good performance does not ensure robust future performance. Rather, you have to select stocks which are fundamentally strong and which are undervalued at the current time to frame out a successful dividend investing strategy. Here are few tips so that you can find out successful dividend investing strategy.

Dividends are not rights but privileges

It is to be kept in mind that dividends are not guaranteed, rather they are more like privileges enjoyed by the shareholders. It depends entirely upon the discretion of the board of directors of a company to issue dividends to the shareholders, given the condition that the company has scripted a solid financial performance. Paying dividends to the shareholders shows the financial strength of a company and it also attracts income-minded investors to the company’s fold. Again, when a company cuts back the dividend amount, it shows that the company is not doing well.

Be skeptical about very high dividend yields

Do not expect to earn huge money with super-yield dividends. In fact as a general rule, any dividend yield which is over two and a half times the broader market, should be viewed skeptically. It has been seen time and again that many stocks fared exceedingly well and fetched super returns and dividends to the shareholders during the bull phase but plummeted appreciably during the bear phase, offering no dividends at all to the shareholders. This has been the case with many real estate investment trust (REITs), with their stock prices receiving a serious drubbing during the bear phase.

Analyze the cash flow statement

To find a high-dividend stock, it is important to analyze the cash-flow statement of a company. Check whether the company has the required cash to pay out the dividends or it is resorting to debt or selling stock to finance the dividend payment. If the company is selling stocks or resorting to debt to pay out the dividends to the shareholders, it can’t be a sustainable.

Follow the above mentioned tips to find out successful dividend investing strategy and to earn a lot of money.

This guest post is written by I Davis. She is the Community Member ofhttp://www.creditmagic.org/ and has been contributing her suggestions to the Community. She is quite knowledgeable of various financial matters like tracking down identity theft, money investment tips, credit card debt, credit card fraud and has a unique approach to analyze them. Check out her articles on various financial topics with special emphasis on ‘Credit’ related issues.

http://dividendmoney.com/dividend-growth-investing-for-beginners/

Guinness Anchor Christmas cheer: Remember to Reinvest the Special Dividend

Investing is simple, but not easy.  Here is the rough calculation of the returns from Guinness for those who bought and held for the long term.

20.8.1992  Bought Guinness @ 4.38

13.12.2011  Guinness is trading @ 12.98

Investing period:  19 years

Capital gains:  8.60

Capital gains CAGR:  5.88%

Dividends paid in 1992:  36.4 sen  DY based on cost:  8.31%

Dividends paid in 2011:  54 sen  DY based on cost:  12.33%

Average DY over the last 19 years:  10.3%

Total average yearly return from Guinness = 5.88% (capital gain) + 10.3% (dividend) = 16.2%.

This is yet another stock that has returned 15% per year to its shareholders over many years consistently.

The total average return per year from Guinness = 16.2%.  
Let us translate this into CAG returns over the 19 year period.

Assuming the dividends were not reinvested into Guinness:
The total returns from this investment are as follow:
At end of 19 years, the 4.38 initial investment would have grown to 12.96.
The amount of dividend collected over the 19 years was 8.94.
Therefore, the initial 4.38 has become 12.96+8.94 = 21.90 over 19 years.
This gives a CAGR of 8.84%.

The DY of Guinness over many years range from 5.4% to 7.0% (average 6%).  

Assuming the dividends were reinvested at the end of each financial period back into Guinness and that theaverage DY was 6% for each investing year.
At the end of 19 years, the 4.38 initial investment would have grown to 41.60.
This gives a CAGR of 12.58%.

Assuming the dividends were reinvested at the end of each financial period back into Guinness and the DY for each period was the lowest of 4% for the 19 years.
At the end of 19 years, the 4.38 initial investment would have grown to 28.42.
This gives a CAGR of 10.34%.

.. and if you have bought GAB in Jun 2008 ...

Counter   Purchase Date   Price      Current Price       
GAB      04-Jun-08           5.35           13.14

Total % gain (excluding dividends)  145.6%.
This is a CAGR of 25.19% over 4 year period or 35% over 3 year period in its share price, excluding dividends.   


There are times when you can buy these great stocks cheap.  You will get fantastic returns over the initial few years of your "good timing pricing" in your investing.  Over the long period, the returns will attenuate to those of what the stock delivers over its long term.

(The above calculations of returns exclude special dividends.)

A surprisingly large part of the overall growth in most portfolios comes from reinvested dividends rather than in appreciation of the stock prices. A yield of 3% may appear small but over a period it makes a big difference. Choose some investments with a solid history of dividends and use them as the ballast in your ship.

--------------------

Wednesday December 14, 2011

Guinness Anchor Christmas cheer

Special dividend higher than last year’s full dividend

GUINNESS Anchor Bhd's (GAB) shareholders are getting some Christmas cheer when it came to light on Monday that the brewery will be disbursing a special single-tier dividend of 60 sen per 50 sen share for the financial year ending June 30, 2012 (FY12), which, notably, is even higher than its full-year FY11 dividend per share (DPS) of 54 sen.

If you were paying attention though, this would not have been a total surprise. StarBiz had previously reported in October that GAB's management was looking at ways to reward shareholders, a move not uncommon among cash-rich brewers.

A report by OSK Research analyst Jeremy Goh on Nov 29 had highlighted the possibility of a higher dividend, either through a higher payout ratio or special dividend. “In fact, we do not discount the possibility of a special dividend,” he said at the time, adding that GAB has a cash pile of RM164mil, or 54 sen per share.

In a follow-up report, Goh said that with the just-announced dividend, the DPS for FY12 would almost double from 61 sen to RM1.21, based on a 90% payout rate. This, he said, translated to a “very attractive yield” of 9.9%.

But in Malaysia's relatively small beer market where two players dominate GAB's latest move inevitably prompts the question: will its closest rival,Carlsberg Brewery Malaysia Bhd, soon do the same?

Carlsberg's shareholders might seem to think so. While both shares were on the top gainers list yesterday, with GAB adding 70 sen to RM12.98 and Carlsberg 31 sen to RM8.46, the latter's stock traded more than twice as heavily. As many as 469,700 Carlsberg shares changed hands versus GAB's 221,600 shares.

Analysts, however, are not counting on a bumper dividend from Carlsberg. As at Sept 30, it had RM82.7mil in cash and RM94.2mil in loans and borrowings as opposed to GAB, which had zero debt and RM164mil in cash and cash equivalents.

An analyst said that based on historical performance, Carlsberg's dividend payout averaged 50% to 70% against GAB, which paid out 90% of its earnings in FY11.

Nonetheless, Carlsberg did reward shareholders with a 58 sen dividend last year after it acquired Carlsberg Singapore Pte Ltd for RM370mil in the fourth quarter 2009.

Another analyst pointed out that while Carlsberg and GAB were fierce competitors, they had not been known to compete on the dividend front.

On the rationale for GAB's distribution of a special dividend, analysts said it was to optimise the brewery's capital structure. An analyst explained that GAB had to choose between making an acquisition or capital management, and since the choice of acquisition targets in Malaysia was limited, it opted to distribute cash to shareholders.

“Even when Carlsberg made an acquisition last time, it was in Singapore,” she noted.

GAB also recently proposed to issue RM500mil in debt notes for capital expenditure (capex) and working capital. Of the RM80mil-RM100mil capex to be spent in FY12, RM40mil has been apportioned to a new packaging line and RM30mil to upgrade its information technology infrastructure. The debt papers were given an AAA rating by RAM Ratings.

OSK's Goh, in his Nov 29 report, had also said that GAB was debt-free prior to the debt issuance, which raised its weighted average cost of capital (WACC) to 7.1%. The new debt notes, he said, would bring its WACC down to a more efficient 5.4%, assuming an effective tax rate of 25%, and the company's debt to equity ratio to 47:53.

On whether another extraordinary dividend was in the offing from GAB, its finance director Mahendran Kapuppial told StarBiz: “We do not have any plans for further special dividends.

“Historically, we have paid between 85% and 90% of our profit after tax as normal dividends to our shareholders and we do expect this to continue in the future. Looking at our current debt to equity ratio, the board felt that a one-off special cash dividend is appropriate.”

http://biz.thestar.com.my/news/story.asp?file=/2011/12/14/business/10091275&sec=business

----------------------------------

Why Buy and Hold Will Always Be a Sound Investing Strategy

It seems like the debate regarding the merits of the "buy-and-hold" investing strategy is alive and well. We always find these discussions amusing, because we believe that it is such a pointless discussion. There is no general argument or case that can be made to support the buy-and-hold strategy or to negate it.

The only true answer to the buy-and-hold argument is it depends on what and/or when you buy-and-hold.

• If you buy the right company at the right price, then buy-and-hold is a great strategy. 
• If you buy the wrong company at any price, then the buy-and-hold strategy is a dumb move. 
• Also, if you buy the right company at the wrong price, then buy-and-hold would once again be a bad move.

http://myinvestingnotes.blogspot.com/2010/10/why-buy-and-hold-will-always-be-sound.html

3 Reasons You Must Invest In Dividend Stocks (Dividend growth investing)

3 Reasons You Must Invest In Dividend Stocks

Written by Tyler 

As a dividend growth investor, I am frequently asked why I don’t invest in high growth stocks and, more importantly, why I believe investing for dividends is a more appropriate strategy.

In bear markets there are great buying opportunities for dividend growth stocks that are offering yields above their historical averages.  Opportunities to buy great dividend growth stocks at above average yields is a great way to finance your retirement and increase the compounding effect of your future income from these stocks.

Here are the 3 most essential reasons that I prefer dividend investing: 

1.) Dividends offer investors fantastic flexibility.

Dividends give you tremendous financial flexibility throughout your investing life. While you’ve got an income from working, you can reinvest those payments to speed the process of compounding your wealth. Once you’ve decided to retire, the cash thrown off by dividends spends just as well as any other source of money!

What is even better, a rising dividend payment can help you fight inflation by providing you more cash every single year.

2.) You can’t fake money in your pocket. 

Dividends also have the added bonus of being exceptionally difficult for companies to fake. After all, it’s difficult to convince lenders to loan money to a company if that company is going to turn around and hand it over to its shareholders.

As a result, to sustainably make and increase those dividends, the business needs to generate serious cash on both a regular and repeatable basis.

3.) Dividends are paid from the company’s cash flow. 

Perhaps most important, a company’s dividend payment comes from its operational success and not from the panic, hype, or analyst interpretations that influence its stock price. Throughout these rocky market periods, dividend payments allow us to make money even when the stock price moves lower.

Why Invest In Dividend Paying Stocks?

• Quicker compounding.
• Increased financial flexibility.
• Cash in your pocket without selling.
• A hedge against inflation.
• An check on the company’s accounting.
• Cash Flow in a down market.

With all of the benefits of dividends, it’s obvious why they can be an integral component of one’s portfolio.

Did I miss any benefits of dividends?  If so, let me know in the comments! 

http://dividendmoney.com/three-essential-reasons-to-invest-for-dividends/

UK: No savings account beats inflation

UK:  No savings account beats inflation
Savers will struggle to erode the effects of rising inflation as there as the savings number of products dries up.

No savings account beats inflation Photo: .Keith Leighton / Alamy

By Kara Gammell

11:33AM GMT 13 Dec 2011

Today's inflation figures show that the Consumer Prices Index (CPI) fell during November from 5pc to 4.8pc.

In order to beat inflation, a basic-rate taxpayer paying 20pc would need to find a savings account paying 6pc per year, while a higher rate taxpayer at 40pc needs to find an account paying at least 8pc.

However, there is not a single savings account on the market that taxpayers can choose to negate the effects of tax and inflation whether it is CPI at 4.8pc or the Retail Prices Index (RPI) at 5.2pc.

The effect of inflation on savings means that £10,000 invested five years ago, allowing for average interest and tax at 20pc, would have the spending power of just £9,210 today.

Sylvia Waycot, spokesperson for Moneyfacts.co.uk, said: "Savers continue to lose out to inflation even though the rate fell today. With returns so low and inflation unsteady, people don't know which way to turn."

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A growing number of people are falling into an eroding spending-power trap which has already wiped nearly £800 off the spending power of £10,000 in just five years, said Ms Waycot.

"Over the last year the number of savings accounts that beat inflation for basic rate taxpayers has dropped successively from 57 to absolutely none, which must leave savers wondering why they save at all," she said.




http://www.telegraph.co.uk/finance/personalfinance/savings/8953110/No-savings-account-beats-inflation.html

Singapore becoming 'less attractive' for expats

Singapore becoming 'less attractive' for expats
Singapore’s reputation as a destination of choice for expats in Asia has been hit by a triple whammy this month

Singapore is now a more expensive destination for expats than Hong Kong Photo: E.J. Baumeister Jr. / Alamy

By Justin Harper

11:48AM GMT 12 Dec 2011

Two measures by the government last week have made the city less attractive to non-Singaporeans – the biggest being a 10 per cent hike in stamp duty for any foreigner wanting to buy property in the city.

Stamp duty was only three per cent at its highest rate, so this move is seen as a strong curb to discourage foreigners from buying homes in Singapore.

Foreign purchases made up 19 per cent of all private property transactions in the second half of 2011. This compares to just seven per cent for the first half of 2009. Low interest rates, political stability and a strong economy have all led to a surge in property investment from wealthy foreigners.

Ku Swee Yong, chief executive at Singapore-based estate agency International Property Advisor, worries that “we leave foreign investors with a bad taste in their mouths.” He said: “Many foreigners are here to work and settle their families down and they need to own one home for shelter over their heads."

Last week the government also scrapped a scheme that lets graduates of foreign universities stay in Singapore for one year while they look for work.

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• Singapore opposition stirs up anti-foreigner sentiment 
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• Singapore's competitive IT industry overtakes the UK 
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• Singapore is best location for expat entrepreneurs 
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The Manpower Ministry previously granted an employment pass eligibility certificate (Epec) to foreign university graduates in the hope to encourage high-calibre students to enter the labour force. But it said the scheme was not meeting its targets.

In the third setback for the city state, Singapore has also overtaken Hong Kong as the more expensive city for expats to live in – the first time this has happened in more than 10 years, according to the latest cost of living survey conducted by ECA International.

Within Asia, Singapore is now the sixth most expensive city to live in while Hong Kong has dropped to ninth. Tokyo is still the costliest location for expats.

George Hackford, a British expat who has lived in Singapore for more than five years, said: “From my point of view, I have seen 'real' inflation rise steeply in the past two or three years. This is mostly in the areas of luxury goods, which are often bought by expatriates.

"Rents have obviously increased substantially but so too have items such as alcohol, groceries and taxi fares. In general, prices of imported electrical goods such as computers and cameras have also inflated strongly. It seems to me that published inflation rates seem to be out of kilter with real prices.”

http://www.telegraph.co.uk/finance/personalfinance/offshorefinance/8950483/Singapore-becoming-less-attractive-for-expats.html