Simple Pound

Triggered by a recent post over at No Credit Needed I wanted to introduce you to Goodgifts, a firm working together closely with a number of charities to promote donations instead of “ordinary” presents. This is obviously a rather hot topic around Christmas time where hundreds of thousands of people are left wondering what to give to their loved ones this year.

For weeks (if not months) I have been trying to find a nice present to give to my parents for Christmas. Unfortunately there’s only so much you could give that they don’t already have, not mentioning gifts they would actually want and find useful.

I came across the goodgifts.org website after staring at one of their ads in the tube on my way home from work one evening. They offer a range of presents to replace the ordinary Christmas gift by contributing to a selected number of charities instead and hence helping people who are in real need. Instead of unwrapping another boring and uninspiring present that they will probably not ever look at again, you could be giving your parents, partner or friends the warm and content feeling of having helped and probably changed someone’s life.

They currently have 180 gifts ranging from as little as £10 to as much as £5,000 which should provide a good selection of potential presents for every budget. Let me mention a few examples to give you a better idea of what sort of gifts you would be buying:

• 4 ducks or chickens including initial supply of feed for women in Sierra Leone for £15
• One lamb for Indian villagers for £15
• Clean water for a Bangladeshi family through a simple filtration system for £20
• Health checks for 20 people in India for £20
• A year’s schooling for one African child for £25
• Half an acre of rain forest for £25
• A trio of food trees for £30
• A bike for a mid-wife for £35
• A cow for an Indian family for £95
• A mobile library for African schools for £100
• A water tank for an African school for £500

What I like most about the gifts on the Goodgifts website is that they help children and families towards becoming self-sustaining rather than simply providing them with e.g. a supply of food for a week after which they will have to starve again. Giving some chickens will not only enable them to produce their own food, but they could also potentially sell any surplus they might have. In the longer run, they can breed chickens and hence not only sustain this source of food but also share the chickens with their neighbours and the village.

For every gift you choose, you receive a card as well as a cracker bearing a description of the gift. In order to ensure that every single penny of your donation is used towards the chosen gift(s), Goodgifts levy an administrative charge of £4.95 per order (an order can comprise multiple gifts…). Gift cards can also be sent overseas for a charge of £9.95 which would potentially enable people from the US to use this service as well.

I haven’t decided which particular gift I am going to give my parents (probably one each…), but I am pretty certain that it will be ordered through this website. Oxfam is running a similar scheme at the moment, so if you find that none of the gifts on Goodgifts.org are really for you, check out Oxfam Unwrapped for more ideas with a similar purpose.

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It has been all over the news since August this year - credit squeeze here, liquidity crisis there. So we certainly can’t claim that we haven’t had enough press and media coverage on the topic, but - if someone walked up to you and asked you to explain the credit crisis to them, would you be able to?

To come to your (and most likely my own) rescue, I luckily discovered a really good video on the FT website that explains this rather complex economic phenomenon in fairly simple, easy to follow animations. It’s definitely a must read/watch if you want to understand how the world’s largest and most stable economies were forced to their knees.

Check it out here. Don’t disregard the suggested further reading either as it will provide you with a deeper understanding of the dependencies between the different players in the market, their role in the crisis and the wider macro-economic impact the current situation is likely to have.

If any questions remain unanswered, you’re welcome to post them in the comments and I will do my best to shed some more light!

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I have fully funded my mini cash ISA for this tax year (which ends April 5th, 2008). Since the contents of my piggy-bank didn’t make it all the way to the £3,000 that an individual may “invest” in cash with tax-free returns per year, I used some of the money I got from my grandparents for my 21st birthday.

Now, I fully intend to invest the full amount they gave me in a fairly conservative fund to utilise it for my first downpayment on a house - but as that is not going to happen anytime soon, I figured it might as well earn some tax-free interest in the meantime.

I have opened an ISA account with National Savings & Investments which is paying a whopping 6.30% interest. This is exactly the same amount I get from my Icesave savings account - with the crucial difference that it’s tax free and hence about 20% more in actual money being credited to my account.

The only downside to this account is that interest is only paid annually (at the end of the tax year), while I like monthly interest payments to “watch my money grow”. You also can’t transfer money from existing ISAs, but that’s not a big problem for me as this is the first year I’m making use of ISAs (didn’t really have much money to save as a student…).

Find out more about the account here.

Your best transfer-in option seems to be an account with the West Bromwich Building Society, which will pay a total of 6.50% but enforces a 60-day notice period. I’m not a big fan of notice periods, but 60 days isn’t all that bad. The real downer for this account is that you can only administer it through a branch - no online, phone or postal options at all. This clearly rules out this account for me, as I like being able to query my balance whenever and wherever I want - at the click of a button. But if you can live with restrictions like that (and happen to have a branch of the West Bromwich BS right down the road), you should definitely go for it!

Otherwise, the next best options seems to be Bradford & Bingley as they offer an instant-access mini cash ISA with 6.05% AER which allows transfers, can be managed online and you even have the choice of getting your interest paid monthly! If that isn’t good news…

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Okay, you can breathe again. I haven’t actually lost money, but simply reduced the value of my model (!) portfolio by 1.5% yesterday. At work, my team decided it would be fun to see who could make the most money out of £1,000,000 and hence we all started our own little fake portfolios.

Yesterday was the first day that my portfolio, which I had set up over the weekend, was actually subjected to the market and, well I have lost a staggering total of £16,875.24. Of course, I forgot absolutely everything about thorough company research, diversification and asset allocation and simply bought what I thought would make the most money in the fastest possible way (guess that didn’t work, huh?). In my defense, this trial has more to do with competitive speculation than actual investment and hence the it becomes much more of a gamble than stock market investing should be (at least if you eventually want to live of your return!).

I thought you might be interested to see what “horses I bet on” and whether I had an ever so vague reason for doing so (follow link!):

• 3i Group (III): Venture capital firm that favours tech start-ups; + 1.98%
• Anntaylor Stores (ANN): Women’s clothing retailer in US - reason? I contributed to way too much to their profits and now I want something back! +3.24%
• Apple Inc (AAPL): manufacturer of personal computers and related software - some people seem to want to spend a lot of money on the iPhone (why?); -7.02%
• Archer Daniels Midland (ADM): agricultural processing company; -2.22%
• Atlantia (ATL): Italy’s largest operator of motorways; +1.57%
• Banco Santander (SAN): Spain’s largest bank; +0.20%
• Bateman Litwin (BNLN): oil equipment services and distribution sector; +4.44%
• BG Group (BG): Gas and oil exploration arm of old British Gas and major player in global energy market; -2.74%
• BTG (BGC): pharmaceuticals & biotechnical sector; -3.20%
• Carphone Warehouse Group (CPW): Europe’s largest independent retailer of mobile communications; -0.84%
• Clean Harbors Inc (CLHB): I don’t even know what they are/do… was recommended to me (ah well); +0.70%
• Exxon Mobil (XOM): used to be world’s largest publicly traded energy company; -2.73%
• First Group (FGP): one of Britain’s largest transport companies; 0.48%
• Google Inc (GOOG): search engine and do-gooder (*lol*); -4.80%
• L’Oreal (OR): cosmetics group - I love Lancome products and yes I am aware that this is a very girly reason for investing in a company; -1.15%
• PetroChina (PTR): Chinese energy company with market cap of $1,000bn - new world’s largest energy corporation; -5.39%
• Petroleo Brasileiro (PBR): also “PetroBras” - Brazilian oil company announced discovery of new oil field; -11.77% (do you get that??)
• Premier Foods (PFD): food manufacturer; +3.45%
• QXL Ricardo (QXL): online auctioneer; +3.87%
• Rio Tinto (RIO): Mining company for aluminium, copper, gold, diamond, iron and lead; +0.60%
• Rheinmetall AG (RHM): German defence company; +0.45%
• Ryanair Holdings (RYA): no-frills airline operator; -0.20%
• Siemens (SIE): German engineering and mobile phone company; -1.13%
• Telefonica (TEF): communications company who owns O2; +0.89%
• Tiffany and Co (TIF): internationally renowned retailer, designer, manufacturer and distributor of fine jewellery - again active profit contribution on my part; +3.28%
• Vallourec (VK): French steel tube-maker subject to take-over rumours; +2.14%

Let’s see how today’s market will be treating my portfolio…

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You will probably think I’m mad when reading this headline, and you’re right, I’m quite possibly a little nuts. But while studying for my IMC I just had a thought about how much fun it would be if countries were to issue shares. They issue bonds after all, so why not shares? (Yes, it is governments issuing the bonds but that’s just boring and doesn’t help my argument…)

First of all, once the country’s shares were listed, we could hope that governments would now actually have to work in the best interest of their shareholders, something they have frequently failed to do for their voters.

Moreover, there would be no need for wars anymore - we’d have mergers and acquisitions instead. And seriously - how cool would it be to tell everyone that you own your share of the UK?

(Just to clarify - this is not financial advice in any sense. Just in case you wondered )

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The FT reports that within the last two months a whopping total of 125 credit card related charges have increased. You could argue that this is clearly a symptom of the credit crunch as financial institutions scrape for liquidity, i.e. good old plain cash.

The trouble is that competition in the credit cards market is strong with hundreds of providers and cards to choose from. This means that increasing the annual percentage rates (the APR you see quoted) is dangerous and would potentially drive away many (existing) customers as well as decrease the number of new issuances. Hence the plan to increase liquidity would result in exactly the opposite - as less customers translate into lower revenues, profits and thus less of the much desired cash.

Look at these statistics:

• 69 cards have seen an increase in the charges for cash withdrawals
• 18 cards are now more expensive to use abroad
• 10 cards have increased balance transfer fees

Banks belonging to the first category include for instance Halifax, Bank of Scotland and Smile, so beware of the fine print before signing a new application with them. This obviously applies for any new credit card application you make as these increased charges might be hidden in lengthy terms and conditions and will thus not be immediately obvious.

Let us know whether you have encountered any other cards other than the ones issued by the banks named above. It would be fantastic to have a detailed list of cards affected by these rate rises.

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