Essential personal finance a practical guide for students

www.ebook3000.com i Essential Personal Finance Young people face unprecedented financial challenges: rising student debt, stiff competition for jobs, barriers to home ownership, dwindling state benefits and prospects of a longer working life.Today, students need financial knowledge and skills more than ever before, not just to build their own financial security, but to create the new generation of advisers that can help all citizens navigate the complex world of personal finance Essential Personal Finance is a guide to all the key areas of personal finance: budgeting, managing debt, savings and investments, insurance, securing a home and laying the foundations for retirement It also provides an introduction to some of the essential foundations of a modern undergraduate finance qualification, including: ● ● ● ● ● ● The nature of financial institutions, markets and economic policy that shape the opportunities and decisions that individuals face The range of financial assets available to households, the risk-return trade-off, basics of portfolio construction and impact of tax The importance of the efficient market hypothesis and modern portfolio theory in shaping investment strategies and the limitations of these approaches Behavioural finance as a key to understanding factors influencing individual and market perceptions and actions Using financial data to inform investment selection and to create financial management tools that can aid decision-making A comprehensive companion website accompanies the text to enhance students’ learning and includes answers to the end-of-chapter questions Written by authors who contribute experience as financial advisers, practitioners and academics, Essential Personal Finance examines the motivations, methods and theories that underpin financial decision-making, as well as offering useful tips and guidance on money management and financial planning The result is a compelling combination of an undergraduate textbook aimed at students on personal finance and financial services courses, and a practical guide for young people in building their own financial strength and capability Lien Luu is a Chartered and Certified Financial Planner and a fellow of the Chartered Institute of Insurance She is also a Registered Life Planner and has previously worked as a financial planner helping clients build wealth Lien is currently an Associate Head of School for Enterprise and Commercial in the School of Economics, Finance and Accounting, Coventry Business School and has taught at universities for more than 15 years Jonquil Lowe is an economist and has previously worked as an investment analyst and head of the Money Research Group at Which? Jonquil is now Senior Lecturer in Economics and Personal Finance at The Open University and also a freelance researcher/author www.ebook3000.com ii Jason Butler is an author of the first and second editions of The Financial Times Guide to Wealth Management: How to plan, invest and protect your financial assets He is also a columnist for The Financial Times where, as ‘The Wealthman’, he writes about personal finance-related issues Jason also provides expert comments on personal finance to BBC Radio and a range of other publications, media and websites Tony Byrne is a financial planner and an ex-accountant He has been a regular contributor to both national and local press for many years He has written a regular column for Money Marketing for more than 10 years He is a previous Chairman of The Institute of Financial Planning Northern Home Counties branch www.ebook3000.com  iii Essential Personal Finance A Practical Guide for Students Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne www.ebook3000.com  iv First published 2017 by Routledge Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne  The right of Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne to be identified as authors of this work has been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988 All rights reserved No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Names: Luu, Lien, 1967– author | Lowe, Jonquil, author | Butler, Jason (Financial planner), author Title: Essential personal finance: a practical guide for students / Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne Description: Edition | New York: Routledge, 2017 | Includes index Identifiers: LCCN 2016041399| ISBN 9781138692930 (hardback) | ISBN 9781138692954 (pbk.) | ISBN 9781315531496 (ebook) Subjects: LCSH: Finance, Personal Classification: LCC HG179.L888 2017 | DDC 332.024–dc23 LC record available at https://lccn.loc.gov/2016041399 ISBN: 978-​1-​138-​69293-​0 (hbk) ISBN: 978-​1-​138-​69295-​4 (pbk) ISBN: 978-​1-​315-​53149-​6 (ebk) Typeset in Gill Sans by Out of House Publishing Visit the companion website: www.routledge.com/​Luu www.ebook3000.com  v Contents List of figures vii List of tables ix List of boxes xi Acknowledgementsxiii Introduction Part I Have a vision and a plan   The necessity of private wealth Lien Luu   Defining and achieving your desired lifestyle and legacy Jason Butler 29   Money and happiness Jason Butler 51   Plan your future Jason Butler 66 Part II Build a secure foundation   The pillars of wealth: budgeting and saving Tony Byrne and Lien Luu   Insuring risks Lien Luu 91 93 120 Part III Multiply your wealth   Residual income Lien Luu 145 147   A place to live Jonquil Lowe 168   Make wise investments Tony Byrne and Jonquil Lowe 188 10 Saving for later life Jonquil Lowe 214 11 Help from your family Jonquil Lowe 233 www.ebook3000.com  vi vi | Contents Part IV The next steps 12 Take action Lien Luu 255 257 Appendix268 Glossary279 Index287 www.ebook3000.com  vii Figures 1.1 1.2 1.3 1.4 1.5 1.6 1.7 2.1 2.2 2.3 2.4 2.5 3.1 4.1 4.2 4.3 4.4 4.5 4.6 4.7 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 6.1 6.2 6.3 6.4 6.5 Wealth components in the UK Global distribution of wealth Global distribution of millionaires Distribution of wealth in the UK Distribution of household wealth in the UK Length of working life versus retirement Steps to build wealth Maslow’s Hierarchy of Needs Human and financial capital Emotions and investing The long-​term impact of the behavioural gap Over-​optimism, extrapolation and investor predictions Theory of planned behaviour Life stages How income maps to resources Key components of a financial plan Financial statement Four planning quadrants Back of the Envelope Retirement Planning Tool Initial safe withdrawal rates at various target success rates by country Total debt in the UK Household gross debt to income Mortgage payments and deposit as per cent of income Breakdown of monthly expenditure in the UK, 2015 Total household debt as per cent of disposable income, 2014 Costs of borrowings Savings as percentage of household income in the UK Net consumer lending flows in the UK Simple and compound interest compared Effect of saving monthly or yearly compared The importance of starting to save early Effect of compound interest on debt Financial planning pyramid Human and financial capital over lifetime Types of insurance purchased and annual expenditure by households in the UK, 2013 Frequency and impact matrix Magnitude of human capital www.ebook3000.com 10 10 11 12 22 32 38 41 43 45 52 69 70 78 80 81 81 83 95 96 96 97 99 102 109 110 113 114 115 116 121 122 123 123 125  vii viii | 6.6 6.7 6.8 6.9 6.10 6.11 6.12 6.13 6.14 6.15 6.16 6.17 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 8.1 8.2 8.3 9.1 9.2 9.3 9.4 9.5 9.6 10.1 10.2 10.3 10.4 11.1 11.2 12.1 12.2 Figures Human capital in the UK, 2004–​2015 Human capital per head Distribution of human capital among different age groups Major diseases in the UK Saving versus life insurance Factors to take into account in life insurance purchase Effects of illness on income Unemployment rate in the UK, 1971 to 2016 Unemployment rate among 16–​24 year olds Qualifications and human capital Savings gap Different levels of insurance Celebrities and linear income Residual income Different sources of income House prices in the UK, 1986–​2013 US house prices Index of house prices in Asia House prices in China, Hong Kong and Singapore, 2004–​2010 Effect of leverage on return Housing tenure for selected European countries in 2014 Share prices and house prices compared, 2003–​2015 Index of house prices for selected countries Risk and return trade-​off Inverse relationship between bond price and interest rates Risk-​return diagram Constructing a two-​investment portfolio using Markowitz theory Constructing a portfolio using the Capital Asset Pricing Model Possible portfolios depending on attitude to risk Increase in life expectancy at birth between 1970 and 2013 UK men and women aged 65 in 2015 expected still to be alive at different ages Five pillars of support for retirement Drawdown options An example of cash flow during your working life Example of how Inheritance Tax works Six steps of financial planning Negative and positive forces of wealth www.ebook3000.com 125 126 126 128 129 129 132 136 136 138 140 141 149 149 150 157 157 158 158 165 170 175 176 192 196 197 200 202 204 216 217 219 226 235 247 260 261 x i Tables 1.1 1.2 1.3 1.4 2.1 2.2 3.1 3.2 3.3 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 5.1 5.2 5.3 5.4 5.5 6.1 6.2 7.1 7.2 7.3 7.4 7.5 7.6 7.7 8.1 8.2 8.3 9.1 Global wealth distribution and life expectancy The world’s great philanthropists Income need in retirement Students turned millionaires in the UK Life’s Intentions Inventory Morningstar behaviour gap results Well-​known English money proverbs Career Happiness Index 2012 Categories with the lowest and highest scores on each of the big five personality traits Years to double your money at different rates of return Rate of return to double your money over a specified time horizon The effect of inflation on the buying power of your money How long it takes the buying power of your money to halve Pound-​cost averaging Capital required to meet different annual withdrawal amounts Monthly savings required to accumulate £1,000,000 Growth of £1 over different periods and returns Example strategy and action plan summary UK household finances, 2011–​2015 Breakdown of household expenditure in the UK, USA and China Credit scoring: indicative scores Factors affecting your credit score Household saving as a percentage of disposable income around the world, 2000–​15 Risks associated with the highest number of deaths, 2013 Youth unemployment rate in the EU as of December 2015 Celebrities and residual income Investing in property Renting out rooms Different types of business Examples of famous businessmen Yields from investing in selected companies Examples of firms offering an affiliate marketing programme in the UK Main advantages and disadvantages of renting and buying Stamp Duty Land Tax rates and thresholds, 2016 Example of a reducing-​balance loan Real return on cash and investments in the UK, 1905–​2015 www.ebook3000.com 15 17 18 19 35 42 53 56 60 71 71 72 73 77 84 84 85 88 97 98 103 104 109 127 137 149 159 159 161 161 162 163 172 178 179 191  283 Glossary Life Cycle Hypothesis |  283 An economic model that aims to explain consumption patterns over the life cycle Life expectancy The average number of years that someone may expect to live This can be measured at birth to give the expected total life span or at a later age, in which case, it is a measure of expected remaining life Life planning A process by which an individual takes stock of their life now, identifies their goals and works out the steps needed to achieve them Liquidity The ability to turn savings and investments into cash quickly and with a high degree of certainty about the amount of money you will get back Loan-​to-​value ratio (LTV) The maximum amount of mortgage you can have expressed as a percentage of the property valuation Longevity risk The risk of living longer than expected For individuals, this is the risk of living longer than their savings last For firms, it is the risk of paying out more to customers than had been anticipated and costed Market timing Choosing the best time to buy and sell stock-​ market investments in the belief that it is possible to identify when the market will peak or a trough has been reached Markowitz-​efficient portfolio A portfolio lying on the efficient frontier Means-​tested Describes state benefits which are payable only to people whose income and savings are below a specified threshold Median A way of measuring an average (the central point of a set of data) All the values in a data set are ranked from lowest to highest and the median is the middle value This will usually give a different average from other measures, such as the ‘mean’ Modern Portfolio Theory (MPT) Economic theories that aim to explain how risk-​ averse investors construct portfolios that maximise return for a given level of risk or minimise risk for a given level of return Mortgage A loan taken out to finance buying a property and ‘secured’ against the property ‘Secured’ means that, if the borrower fails to make the agreed repayments, the lender can sell the property in order to recover the money it has lent  284 284 | Natural income Nil-​rate band (NRB) Nominal return Nominal value Offset mortgage Ongoing charges Passive investing Pay-​as-​you-​go Platform Portfolio Pound-​cost averaging Present value Glossary The income (yield) produced by an investment that can, if required, be drawn off leaving the capital untouched A first slice of otherwise taxable gifts made over a seven-​year period on which there is no Inheritance Tax to pay The rate of return from savings or investments without taking account of inflation The amount of money you have considering just the number of pound notes, say, without any reference to what that money can buy Type of mortgage that is combined with one or more savings accounts and/​or a current account and where the interest charged is calculated on the combined balance of the mortgage and these accounts Where the mortgage is combined with just a current account, it may be referred to as a ‘current account mortgage’ (CAM) (previously called ‘total expense ratio’ or TER) A single figure that expresses the operating costs of an investment fund Investing in the market as a whole with the aim of maximising returns by keeping cost low It is underpinned by the belief that it is not possible to consistently beat the market through stock picking and market timing A method of financing where the pensions paid to today’s pensioners are paid for out of the taxes paid by today’s workers An online service that allows investors and/​ or their advisers to buy, sell, value and manage their investments Platforms often include additional services, for example share and fund information and interactive tools A collection of different investments Investing through regular fixed sums (as opposed to a single lump sum) in order to remove the risks associated with market timing The lump sum today that is equivalent to a future sum or future stream of payments It involves reducing (discounting) the amount of future sums to reflect the fact that we tend to value money today more highly than money in future because of the effect of factors such as inflation, risk, the desire for instant gratification and ability to earn interest  285 Glossary Propensity to consume Pull factor Push factor Rational behaviour Real return Real value Reflective (System 2) thinking Residual income Risk premium Self assessment Shortfall risk SMART goals Social capital Social mobility Stock |  285 The proportion of any increase in income that is expected to be used to buy further goods and services An internal reason that motivates a decision or action Pull factors are often positive in nature An external force that motivates a decision or action Push factors are often negative in nature Making reasoned choices that aim to maximise satisfaction The return from savings or investments after adjusting for the effect of inflation The buying power of a sum of money taking into account the change in prices (up in the case of inflation) since some specified base year When the base year is today, the real value may be referred to as a value in ‘today’s money’ Slow, logical processing that requires effort Income that is sustained without the need for continuous effort –​for example, income from investment in property and financial assets The expected extra return from a riskier asset required to persuade an investor to hold that asset rather than one which is risk-​free (where ‘risk’ is defined as capital risk) A process for collecting tax in the UK that involves you completing a tax return once a year and paying tax due in one, two or more lump sums during the year The risk of being unable to reach your goal because the return on your savings or investments is too low Financial planning goals that are Specific, Measurable, Attainable, Relevant and Timely There is no single definition, but social capital can be thought of as the connections, shared values and trust that enable groups of individuals to work together and provide mutual support Movement of people during their lifetime to different levels in a social hierarchy typically linked to income and wealth The amount of something at a point in time –​ for example, wealth  286 286 | Stock picking Support ratio Tax wrapper Tax year Tenure Term Trust Glossary Choosing the best shares or other investments in the belief that it is possible to identify which ones will perform better in future than the market as a whole This is often defined as the number of people of working age divided by the number of people over retirement age, sometimes called the ‘old-​age support ratio’ An arrangement through which you can save or invest that gives special tax treatment to the savings and investments that you choose The 12-​month period over which many tax calculations are made It runs from April one year to the following April The way land or buildings are occupied, in particular as an owner or as a tenant (someone who rents) The time period over which you borrow or invest a sum of money A legal arrangement, where money and/​or assets are set aside to be used for the benefit of one or more people but are legally held and looked after by someone else  287 Index Page numbers relating to figures will be in italics followed by the letter ‘f’, and page numbers relating to tables will be in italics followed by the letter ‘t’ Accident and Sickness Insurance 133–4 action, taking 257–67; case studies 262–5 active income 148; versus residual income 150f active investing 205–6 Active Share measure 206 adaption effect 55 adjustment, and anchoring 44–5 advice 210 advice gap 210 affiliated marketing 163f affordability 182 ageing population 13, 215 AIA 18 Ajzen, Icek 52 Aldi 106 Allen, Robert 153 altruism 32, 33, 37, 59; see also philanthropists, world Amazon 164 anchoring and adjustment 44–5 annual management charge (AMC) 209 annual percentage rate (APR) 102, 104, 181 annuities 139, 227 Anthes, W 33 Apple 47 APR (annual percentage rate) see annual percentage rate (APR) Aqua (credit card company) 104 Asia, house prices 158f asset allocation 198 asset classes 194–8; cash 194; equity 196–7; fixed-interest investments 194–5; property 196; risk-return spectrum 197–8 asset-based welfare 241 assets: classes see asset classes; depreciating 153; importance of 152–4; stock 7; types 259t attitude to risk 193, 204f Australia: financial literacy 22; net-worth 9; retirement needs 18 automatic (System 1) thinking 43 automatic enrolment 230 Automatic Millionaire (Bach) 22, 106 availability heuristic 45–6, 141 average 9, 11 Aviva 18, 95, 133 ‘Baby Bonds’ 243 ‘Baby Boomers’ 112, 217–19 Bach, David 22, 106 bad debt 100–1 balance sheet 38, 79–80, 82 bank accounts 100–1, 103, 106 Bandura, Albert 40 Bank of England Base Rate 101–2, 195 banking services, online 40 Barber, B 47 Barclays 42 bare trust 249 behaviour (performance) gap 42 behavioural finance 30–1, 203–4, 211, 230–1 Behavioural Finance and Wealth Management (Pompian) 100 benchmark index 206 beneficiaries, trusts 249 bequests, Inheritance Tax on 246–8 Berkshire Hathaway 39 BERT (Back of the Envelope Retirement Planning Tool) 81 biases: anchoring 44–5; availability 45–6; disposition effect 47; extrapolation 44; framing 47–8; gamber’s fallacy 46; herd behaviour 204, 211, 230–1; hindsight 46; hot-hand fallacy 204; hyperbolic discounting 230; loss aversion 47, 140–2, 154; mental accounting 48; myopia 230; over-confidence 44; regret avoidance 47; representativeness 46; self-attribution 46–7; status quo 230–1; see also heuristics and biases  28 288 | Birmingham Midshires 108 birth rates, falling 13 Biswas-Diener, Robert 54–5 blogging 164 boiler insurance 138 Bolton, Anthony 206 bonds (fixed Interest loans) 42, 194–5, 196; ‘Baby Bonds’ 243 borrowing: constraints on 109; distressed 234; home finance 182–3; reasons for 104–5; types of 101–3; see also debt Bourassa, S 172–3 Branson, Sir Richard 160, 161–2 BRIC economies (Brazil, Russia, India and China) 197 British Bankers Association (BBA) 101 Brower, L 259, 260 budgeting 105–8; budget constraint 30; budgets 40, 105; checking of income 105; expenses, controlling 105–7; increasing of income 107–8; living within your means 94–105; personal expenditure 40, 74; and reasons for borrowing 104–5 Buffet, Warren 16, 40, 159 Buie, Elissa 85, 86 building society accounts 190, 242, 271t business: examples of wealthy businessmen 161–2; residual income 160–2 business insurance 139 business risk 155 buy-to-let market, UK 157, 160, 177, 274 Call Credit 103 Cambridge University 60 cancer 132 capacity for loss 193 capital: financial see financial capital; human see human capital; mortgages 179; needs 130; social 39, 54, 171 Capital Asset Pricing Model (CAPM) 201–2 Capital Gains Tax (CGT) 176, 239, 241, 246, 274–5; working out 275 capital risk 155 capped/collared mortgages 180 car purchases 98 career and work 37, 56–8 career average revalued earnings (CARE) 224 Career Happiness Index 56t Carnegie, Andrew 16, 22, 153, 160, 260–1 Case, Steve 160 Index cashflow planning 234–6 cashflow statements 105 cash ISA 209 cash reserve, building 75 CASS Business School, London 61, 62 CGT see Capital Gains Tax (CGT) charges 208–10; ongoing 209 Child Trust Funds (CTFs) 236, 241, 242 children 240–3; ‘Baby Bonds’ 243; gifts to 246; Junior ISA (JISA) 240, 241; savings and investment for 242–3, 244 Children’s Bonus Bonds 240 China: demographic factors 13; house prices 158f; life insurance 131–2; millionaires in 9; property boom 157; saving in 110, 111–12, 133; single-person households 14; state pension in 222; support ratio 218; United States compared 6–7 Christianity, and wealth Christmas spending 104–5 Clare, A 42 Clason, George 21 classical and behavioural finance 30–1 close-ended investment funds 199 closet trackers 206 Coelho, Paulo 57–8 collectibles 154 commercial property 196 comparison websites 102, 237, 239 compound interest 70–1, 113–15, 198 compounding process 71 consumer choice 30 Contribution Assets 260 co-ownership 185 Core Assets 260 corporate bonds 194, 196, 197f, 274t correlation 198 costs/expenditure: borrowing, costs of 102f; cash flow game 235; controlling expenses 105–7; and debt 96, 97–8; discretionary expenses 105; fixed expenses 105; ­healthcare, in US 12–13, 135; home finance 177–8, 181; investment charges 208–10; minimising 75; mortgage costs 105–6, 181; periodic expenses 105; variable expenses 105; see also borrowing; budgeting; debt; spending Council Tax 106, 176 coupon 195 credit cards 74, 94, 102, 103, 104, 110 credit history 95, 102–3, 116  289 Index credit record 103, 104 credit reference agencies 103, 183 credit scoring: factors affecting 104t; ­indicative scores 103 Credit Suisse credit/default risk 155 critical illness policy 133, 134 Da Vinci, Leonardo 68 Danko, W D 21 death: premature 122, 127–32, 142 debt: cash flow game 235; consumer 100–1; good and bad 100–1; household 95, 98–9; and planning 74, 76; repayment 76; and saving 94–100; secured and unsecured 102–3; in United Kingdom 94–100; see also borrowing; costs/expenditure; loans; ­mortgages; spending decision-making: automatic 43; emotions, role of 41–4; financial 41–8; heuristics and biases 44–8; reflective 43 default risk 155 defined-benefit pension schemes 14, 224 defined-contribution pension schemes 14, 224, 225, 226, 229 Demartini, John 260 demographic factors 13, 109, 215 Deng Xiaoping depreciation 153 DeVoe, S E 55 Di Tella, Rafael 55 Diener, Ed 54–5 direct taxes 270–7 discount stores 106 discounted rate mortgages 180 discretionary expenses 105 Disney, Walt 40 disposable income 95, 98–9, 108–9, 131, 140, 182 disposition effect 47 distressed borrowing 234 diversification 75; dynamic or static 203; Markowitz-efficient diversification 198–201; terminology 198 dividends 196 Dividend Tax Allowance 241, 270, 271t, 272 Dolan, Paul 62 Dorling, Danny 184 drawdown 226, 228 Dunn, Elizabeth 59 dynamic asset allocation 198 dynamic diversification 203 |  289 earned income, versus residual income 148–56 earnings-related pensions 220 Eastern Europe 170 economic theory, classical 30 Edison, Thomas 160 education goals 37 efficient frontier 200–1 Efficient Markets Hypothesis (EMH) 202–3 Einstein, Albert 70, 198, 261 Eisner, Richard 148 Ellison, Larry 160 emergency fund 21, 79, 86, 96, 108, 130 EMH (Efficient Market Hypothesis) 202–3 emotions, role of 41–4 employee benefits 14, 130, 224 employer, diminishing role of 13–14 Employment Support Allowance, UK 133 endowment mortgage 180 enhanced and impaired life annuities 228 entrepreneurs 239 Equifax 103 equities 42, 73, 76; asset classes 196–7 Esping-Andersen, Gøsta 220–1 estates 177 exchange-traded funds 199 expenditure see costs/expenditure; spending expenses, controlling 105–7 Experian 103 Experience Assets 260 experiences, buying 58–9 extrapolation 44 extrinsic motivation 35–6 Facebook 47 Fama, Eugene 203 family: children, investments for 240–3, 244; diminishing role of 14; goals relating to 37; help from 234–53; home finance, help with 244–6; single-person households 14 family offset mortgages 245–6, 252 fees see costs/expenditure Ferris, Timothy 36, 163 Fidelity 19 final salary pension schemes see definedbenefit pension schemes financial adviser 139, 210 Financial Assets 260 financial capital: definitions; versus human capital 122–4; human capital converting to 37–9; and wealth  290 290 | financial crisis 47, 160; budgeting and saving 99, 100, 110; home finance 182, 195 financial education 1, 6, 18, 87 financial independence 21, 36, 69, 70, 77, 79, 94, 148, 265 financial literacy 22–3, 140, 142, 257, 264 financial planning: core goals, case study 80; current position 79–80, 82; definitions; financial statements 80f; gap analysis 82–5; key components 77–89; policies 85–7; strategy and action plan 87–8; values and goals 78–9; see also planning financial planning policy statements 68 financial planning pyramid 121f ‘financial pornography,’ in media 75 financial risk 14, 21–2, 78, 154–6, 192–3 financial security 74 financial statements 80f financial wealth 8f, 259 first-time buyers 245 Regrets of the Dying (Ware) 258 Fiver Challenge 239 fixed expenses 105 fixed-interest securities 195 fixed rate mortgages 180 flat-rate pensions 220 flood insurance 45–6 flow, of money 7; cash flow game 234–6; cashflow statements 105, 107; net ­consumer lending flows 110f Flynn, Pat 163 Ford, Henry 160 foreign exchange risk 155 The 4-Hour Work Week (Ferris) 36, 163 framing 47–8 France, millionaires in Frankl,Viktor 58 frequency and impact matrix 123f fund administration costs 209 gambler’s fallacy 46 gap analysis 69, 82–5 Gates, Bill 16, 23, 160 Gates, Melinda 16 gearing (leverage) 164–5, 173–4 Germany: debt in 95; housing tenure 172–3; state pension in 221 gifts: to children 246; deposit for first home 244; free from Inheritance Tax 248t; Inheritance Tax on 177, 246–8 gilts 191t, 194, 197, 201, 211, 274t Index Gladstone, Joe 60 global financial crisis 47, 74, 94, 99, 100, 108, 110, 137, 160, 163, 172, 175, 177, 182, 194, 195, 242 goals: career and business 37; core goals, case study 80; defining and prioritising 35–7; education 37; investment 190–2; life 37, 40–1; saving 238t; SMART 79, 260; and ­values 78–9; and wealth government stocks 194 Gratton, Lynda C 32 Gross Domestic Product (GDP) 196, 218 guarantors 245 Hale, Tim 153–4 Hansen, Mark Victor 20–1 happiness: career and work 56–8; experiences, buying 58–9; and income 54–5; and life choice 57–8; main factors affecting 54–60; and money 52–65; others, investing in 59; and social comparison 59; spending habits and behaviour 58–60 Harrison, David 18 Harv Eker, T 151–2 health, and wealth 14–15 (many more references in the book) healthcare 12–13, 15–16, 18, 63, 98t, 109, 111, 133, 135, 162t Help-to-Buy equity loan 185 Help-to-Buy ISA 184 Help-to-Buy mortgage guarantee 185 herd behaviour 204, 230 heuristics and biases 44–8; anchoring and adjustment 44–5; availability heuristic 45–6, 142; disposition effect 47; ­extrapolation 44; framing 47–8; gambler’s fallacy 46; herd behaviour 204, 211, 230–1; hindsight bias 46; hot-hand fallacy 204; hyperbolic discounting 230; loss aversion 47, 140–2, 154; mental accounting 48; myopia 230; over-confidence 44; prospect theory and loss aversion heuristic 47; regret avoidance 47; representativeness 46; self-attribution bias 46–7; status quo bias 230–1 hierarchy of needs theory: definitions 31–3; and humanism 31–3 Hill, Napoleon 20 hindsight bias 46 holiday/travel insurance 138 home finance 169–86; affordability 182; amount to borrow 182–3; buying a home 177–83; costs 177–8; deposit, help with  291 Index 244–5; first home 244–6; house prices 157f, 158f, 176f; housing and stock market companies 174–5, 176f; housing markets 183–5; investment, home as 173–7; joint ownership 245–6; renting or buying 169–73; see also housing; housing markets; mortgages; property Hong Kong: house prices 158f; property boom 157 hot-hand fallacy 204 House, J 55 housing: affordability 182; buy-to-let market, UK 157, 160; house in multiple-occupancy (HMO) 159; house prices 157f, 158f, 176f; markets see housing markets; and stock market companies 174–5, 176f; tenure 169–70, 172–3; see also home finance; property housing markets: economics of 183; help for homebuyers in the United Kingdom, 2016 184–5; politics of 183–5 human capital: balance sheet, showing in 38–9; converting to financial capital 37–9; defined 7–8; distribution among different age groups 126f; versus financial capital 122–4; importance of 124–7; magnitude of 125f; per head 126f; and qualifications 137, 138f; in the United Kingdom 124, 125f; and wealth 7; of wife 132 humanism 31–3 Hungary: debt levels 99; spending habits and behaviour 58 hyperbolic discounting 230 Iacocca, Lee 148 illegal lending 95 imputed rent 171 income: active 148; cash flow game 234–5; checking of 105; converting savings to 226–8; earned, versus residual 148–56; and happiness 54–5; increasing 107–8; and life satisfaction 55; natural 226; needs 130; net 96, 105; protecting 75; reinvestment of 198; residual see residual income; ­retirement, inadequate 139; royalties 149; savings required to provide 82–5; sources 150f; spending limited by 30; uncertainty 110 income protection 134 income statement (also see cashflow statement) Income Tax 239, 270–2; working out 272 index funds 205 India 218 indirect taxes 277 Individual Savings Accounts (ISAs) 184, 208, 209, 224, 241–2; Junior ISA (JISA) 240, 241 inflation: definitions 71; and planning 71–3, 121f inflation risk 155, 192, 225 inflation-linked annuities 227 inheritance 78, 108, 186, 208 Inheritance Tax 239, 241, 275–7; on gifts and bequests 177, 246–8; gifts free from 248t innovative finance ISA 209 Institute of Health Metrics and Evaluation (IMHE), USA 127 insurance 121–44; behavioural issues in protection gap 140–1; boiler 138; business 139; capital needs 130; flood 45–6; frequency and impact matrix 123f; holiday/ travel 138; and human capital see human capital; inadequate retirement income, risk of 139; income needs 130; insurance gap in the United Kingdom 130–1; intangible future benefit 140; legal costs 139; levels of 141f; liability 139; life insurance 129f, 131–2, 133; policy, taking out 129; poor health, risk of 132–5; premature death, risk of 127–32; private 132; protection, importance of 121–7; types 123f, 133–4, 137, 138–9; unemployment, risk of 135–8; see also risk insurance literacy, lack of 140 Insurance Premium Tax (IPT) 277 Intelligent Environments 101 intentional activities 58 interest lottery 243 interest rates/interest rate risk 22, 48, 74, 95, 100, 102–4, 155; see also compound interest; compounding process interest-only mortgages 180 International Labour Organisation (ILO) 137 Internet 163–4 Internet of Things bank account 100 intertemporal choice 30 intrinsic motivation 36 investment: active versus passive 205–6; charges 208–10; for children in the United Kingdom 240–3; and emotions 41; fixedinterest 194–5; goals 190–2; home as 173– 7; importance of 115–16; of long-term money 76; loss, capacity for 193; in oneself 76; or saving 190–2; in other people 59; potential, in rent or buy decisions 171; |  291  29 292 | Index powerful and stable investments 154; in property 76, 159t; rebalancing 205; residual income 162–3; risk and return 192–3; ‘riskfree’ non-reality of 74; strategies 204–7; taxation 208; wise 190–213; see also asset classes; assets investment funds 42, 199 investment income 71 investment potential 171 investment risk 225 investment trusts 199 ISAs see Individual Savings Accounts (ISAs) Jackson, Michael 149 jam jar bank account 106 Japan: fertility rate 13; financial literacy 22; millionaires in 9; values 31 ‘jars system,’ money management 106 Jefferson, Thomas 40 joint ownership 245–6 Joseph Rowntree Foundation 61 Junior ISA (JISA) 240, 241 Kahneman, Daniel 44, 47–8 Keynes, John Maynard 108 Kinder, George 33, 34 KISS (keep it simple stupid) 74 Kiyosaki, Robert 150, 151 Kjellberg, Felix Arvid Ulf 164 Kunreuther, H 141 Lakein, Alan 257 Land and Buildings Transaction Tax 177, 277 Lee, S 33 legal costs insurance 139 Legg Mason (global investment management firm) 18 level annuities 227 leverage (gearing) 150–1, 154, 164–5, 173–4, 175, 199, 202, 261 Lewis, Martin 163, 164 liabilities 80, 82, 95, 130, 139, 152 liability insurance 139 Lidl 106 life choice, and happiness 57–8 life cycle 8, 12, 139 Life Cycle Hypothesis 31 life expectancy: definitions 12; gap between life expectancy and healthy life expectancy 12– 13; increasing 11–12, 215–16; on ­reaching retirement 216–17; and wealth 15–16 life goals 37, 40–1 life insurance 129f, 131–2, 133 life planning 33–4 life satisfaction 33, 35, 53–6, 58 life stages 69 Life’s Intentions Inventory 34, 35t lifestyle, desired 35–41 Lifetime ISA 184, 209 linear income see active income liquidity 190 liquidity risk 155 Living Well for Longer (UK government report) 127 living within your means 94–105; ­borrowing 101–3; credit referencing and scoring 103–4; debt and saving in the UK 94–9; good and bad debt 99–101 loans 101–3, 130, 234, 239; defaulting on 99; fixed-interest 180, 194; Help-to-Buy equity loan 185; home-improvement 99; net ­consumer lending flows 110f; payday 74, 76, 94, 95, 104; peer-to-peer 209; personal 100; reducing balance 179; student 100, 110, 235; unsecured 110; see also mortgages loan-to-value ratio (LTV) 182 longevity: longevity risk 14, 139, 226; and money 61–2; and wealth 15–16 longevity risk 14, 139, 226 long investing 199 long-term care 12, 219 loss, capacity for 193 loss aversion 47, 140–2 LTV (loan-to-value ratio) 182, 185, 245, 283 Luma (credit card company) 104 Lusardi, A 22 Lutz, M 33 Lyubomirsky, S 54 Ma, Jack 162, 163 MacCulloch, Robert J 55 Macmillan Cancer Support 132 Man’s Search for Meaning (Frankl) 58 Maraboli, Steve 257 market portfolio 202 market risk 155 market timing 205 Markowitz, Harry 199 Markowitz-efficient diversification 198–201 Marshmallow Experiment 101 Maslow, Abraham 31–2, 33 material theory 61 Matz, Sandra 60  293 Index means-testing 219 media 75 median 11 mental accounting 48 migration 218 Miles, D 112 The Millionaire Next Door (Stanley and Danko) 21 millionaires: examples of students becoming 19–20; global distribution of 10f; and Internet 163; in the United Kingdom 9, 19t; in the United States 9, 21; see also wealth Minecraft (gaming software company) 55–6 Mischel, Walter 101 Mitchell, O 22 Modern Portfolio Theory (MPT) 199, 210–11 Modigliani, Franco 31 money: anxiety associated with 53; beliefs relating to 33–4; and desired lifestyle 35–41; and happiness 52–65; health and longevity outcomes related to 61–2; ‘jars system,’ money management 106; long-term, investment of 76; perceptions of 70; proverbs relating to 53; putting into context 62; role in achieving and maintaining happiness 52–4; spending habits and behaviour 58–60; as taboo subject 7; see also wealth Money Advice Service 133 Morgan, J P 160 Morningstar 42, 82 mortgages 179–81; applying for 103; and buildings insurance 122; comparison of costs 181; costs 105–6, 181; family offset 245–6, 252, 281; help from family 245; interest-only 180; offset 180, 245; regulation of 182–3; repayment 179; term 179; see also borrowing; debt; loans motivation 30–5; classical and behavioural finance 30–1; economic theory, classical 30; emotions, role of 41–4; extrinsic 35–6; heuristics and biases 44–8; hierarchy of needs theory 31–3; human capital 37–9; humanism 31–3; intrinsic 36; money beliefs and life planning 33–4; and satisfaction 33; self-efficacy 40–1; social capital 39 Motson, N 42 myopia 230 National Health Service (NHS) UK 133 National Institute of Health US 59 National Insurance Contribution 220, 239, 241, 272–4; working out 273 National Savings & Investments (NS&I) 240, 242 natural income 226 needs: basic and higher level 31, 32; capital 130; hierarchy of see hierarchy of needs theory; income 130 negative inflation 71 Nemeth, Maria 34 net consumer lending flows 110f net-worth 9, 152 nil-rate band (NRB) 246, 247f ‘noise,’ in media 75 nominal return 73 nominal value 72, 195 Norton, Michael 59 obesity, and poverty 15 Odean, T 47 OECD see Organisation for Economic Co-operation and Development (OECD) Office for National Statistics (ONS), UK 8, 11, 39, 54, 61, 96, 124 offset mortgages 180, 245 One Minute Millionaire (Hansen) 20–1 ongoing charges 209 online banking 40 OPE (Other People’s Experience) 164 open-ended investment funds 199 OPI (Other People’s Ideas) 164 OPM (Other People’s Money) 164 OPT (Other People’s Time) 165 OPW (Other People’s Work) 165 Organisation for Economic Co-operation and Development (OECD) 23, 39, 56, 112, 137, 169; and saving for later life 216, 217, 218, 219 Other People’s Experience (OPE) 164 Other People’s Ideas (OPI) 164 Other People’s Money (OPM) 164 Other People’s Time (OPT) 165 Other People’s Work (OPW) 165 over-confidence 44 overdraft 97t, 100, 102 over-spending 100, 105; see also borrowing; debt par value 72, 195 passive income 148, 150, 163, 166 passive investing 205–6 pawn shop loan 95 |  293  294 294 | Index pay-as-you-go pensions 220 payday loans 74, 76, 94, 95, 104 pension age: normal 222–3; state 13, 112, 220–3, 241, 272 pensions: Anglo-Saxon (liberal) model 221; Continental model 221; defined-benefit schemes 14, 224; defined-contribution schemes 14, 224, 225, 226, 229; diminishing role of government in retirement provision 13; drawdown 226, 228; earnings-related 220; fairness 223; flat-rate 220; funded schemes 39, 222–3; mandatory state pensions 219–20, 223; pay-as-you-go 220; and planning 76; private 223–6; Scandinavian model 221; state 220, 221, 222; see also retirement provision pension reform 111, 218 performance gap 42 periodic expenses 105 permanent health insurance 134 Perot, Ross 160 personal expenditure budgeting 40, 74 Personal Independence Allowance, UK 133 personality, matching spending to 53, 60 Persson, Markus 55–6 philanthropists, world 16, 17t physical wealth Pierson, C 221 Pillemer, Karl 257–8 planned behaviour theory 52 planning 67–90; cash reserve, building 75; compound interest 70–1; costs, keeping low 75; and debt 74, 76; diversification 75; financial 30, 48–9, 67, 85–7, 121f, 281; financial plan, key components 77–89; and inflation 71–3; investment in oneself 76; life 33–4; and life stages 69; and media 75; pension plans 76; pound-cost averaging 77t, 206, 207; practices 73–7; principles 70–3; property purchases, need for care 76; protection of income 75; regular saving, importance of 74; ‘risk-free’ investments, non-reality of 74; ‘Rule of 70’ 72–3; ‘Rule of 72’ 71, 72; spending 73–4; taxation 269–78; and wealth 23; why essential to success 67–8 platform fees 209–10 platform service 284 Pompian, Michael 100 portfolio, building 198–204; behavioural finance 203–4; Capital Asset Pricing Model 201–2; definition of ‘portfolio’ 284; Efficient Markets Hypothesis 202–3; investment funds 199; Markowitz-efficient diversification 198–201; Modern Portfolio Theory (MPT) 199, 210–11 Potentially Exempt Transfers (PETs) 247, 248t pound-cost averaging 77t, 206, 207 precautionary saving 128–9, 133 premature death, risk of 127–32 Premium Bonds 46, 240 present value 37–8 price comparison websites (PCWs) 239 propensity to consume 31 propensity to plan 22, 23 propensity to save 31 property: appreciation in value 153; asset classes 196; care, need for when purchasing 76; house prices 157f, 158f; investment in 76, 159t; residual income 156, 159–60; tangible movable property 246; taxation of 176–7; see also home finance; housing; housing markets; mortgages Prospect theory, and loss aversion heuristic 47 protection gap, behavioural issues 140–1 psychosocial theory 61 Public Sector Borrowing Requirement (PSBR) 242 pull factors: definitions 11; relationship between health and wealth 14–15; relationship between wealth and longevity 15–16; see also push factors push factors: definitions 285; employer, diminishing role of 13–14; falling birth rates and ageing population 13; family, diminishing role of 14; gap between life expectancy and healthy life expectancy 12–13; increasing life expectancy 11–12; retirement provision, diminishing role of government in 13; see also pull factors quality of life 171 Rajan, Saeed 164 rational behaviour 31 real return 73 real value 72 rebalancing 205 redemption 194–5 redemption yield 195 reducing-balance loan 179 reflective (System 2) thinking 43 regret avoidance 47  295 Index rent or buy decisions 169–73; imputed rent 171; investment potential 171; pros and cons 170–2, 172t; psychological factors 171; quality of life 171; social capital 171; stability 171; tenure around the world 169–70 rental income 105, 107, 159, 196, 270 repayment mortgages 179 representativeness 46 residual income 148–67; assets, importance of 152–4; business 160–2; case studies 152–3, 156; and celebrities 149t; definitions 285; versus earned income 148–56; Internet 163–4; investment 162–3; versus linear income 150f; property 156, 159–60; renting out rooms 159t; risks 154–5; sources 156–7, 164 retirement age 12 retirement provision: amount of money needed 17–19; BERT (Back of the Envelope Retirement Planning Tool) 81; changing face of retirement 36; concept of ‘retirement’ 36; diminishing role of government in 13; inadequate income, risk of 139; life expectancy on reaching retirement 216–17; retirement behaviour 109; systems of 219–28; see also pensions reverse causation theory 61 Ricciardi,Victor 45 rich and poor people, differences between 151–2 Rich Dad, Poor Dad (Kiyosaki) 150 The Richest Man in Babylon (Clason) 21 Right-to-Buy 185 risk: attitude to 193, 204f; business 155; capital 155; credit/default 155; foreign exchange 155; of inadequate retirement income 139; inflation 155, 192, 225; interest rate 74, 104, 155; investment 225; liquidity 155; longevity 226; market 155; of poor health 132–5; of premature death 127–32; residual income 154–5; and return 192–3; risk aversion 31–2; shortfall 192; of unemployment 135–8; unsystematic 155; see also insurance risk diversification 198–201 risk-free asset 197, 202, 211 risk premium 192 risk-return spectrum 197–8 Rohn, Jim 257 Rowling, J.K 40 Royal London 128 |  295 royalties 149 ‘Rule of 70’ 72–3 ‘Rule of 72’ 71, 72 rule of thumb (see heuristics) 204–5 Ruskin, John 262 Saint-Exupéry, Antoine de 67 satisfaction 267; life 33, 35, 53–6, 58 saving: behavioural traits 230–1; and borrowing 109; for children in the United Kingdom 244; in China 110, 111–12; demography 109; giving size/timescale to goal 238t; habit of 236–7; house deposit 108; importance of 108–12; for later life 215–32; life cycle theory 139; net consumer lending flows 110f; or investment 190–2; precautionary 129, 133; regular saving, importance of 74; retirement behaviour 109; in United Kingdom 94–9; and welfare state 109 saving ratio 95, 108, 136f savings: calculating to produce a future lump sum 84–5; converting savings to income 226–8; decline in or lack of savings 96, 108, 133; required to provide an income, calculating 82–4; sufficient savings 228–30 savings gap 18, 140f Scottish Widows 17 secured debt 102–3 self assessment 273, 285 self-actualisation 31 self-attribution bias 46–7 self-control 21 self-efficacy 40–1 self-employment 56 self-insurance 124 semi-strong form EMH 203 settlors, trusts 248 The Seven Sages of Money Maturity (Kinder) 33 shared ownership 185 Sharpe, W 201 Shefin, Hersh M 31 shortfall risk 192 short selling 199 Siegel, J J 192 Singapore: house prices 158f; property boom 157 single-person households 14 Slack, Andrew 163 Slim Helú, Carlos 16 SMART (Specific, Measurable, Attainable, Relevant and Timely) goals 79, 260  296 296 | Smarter Investing (Hale) 153–4 social capital 39, 54, 171 social class 32, 112 social comparison 59 Social Fund Funeral Payment, UK 128 social media 47 social mobility 242 social security 12, 23, 132 Society of Trust and Estate Practitioners 249 spending: at Christmas 104–5; habits 58–60; life cycle theory 139; lifestyle 70; limitations on 30; matching to personality 53, 60; over-spending 101, 105; watching 73–4 stability 171 staircasing 185 Stamp Duty Land Tax 177, 178t, 277 Stamp Duty Reserve Tax 277 standard variable rate (SVR) 180 Stanley, T J 21 state benefits 132f, 141f state pension 13, 14, 18, 112, 133, 219–23, 224, 228, 231, 239, 241, 272, 273 static asset allocation 198 static diversification 203 status quo bias 230 stock stock picking 205 stocks and shares ISA 209 Stocks for the Long Run (Siegel) 192 store cards 74 strong form EMH 203 student debt/loans 6, 80, 100, 104, 138, 230, 235, 236, 257 Sugar, Alan 160 Sunstein, C 46 supply and demand 183, 184 support ratio 217–19 Sweden, state pension in 222 Switzerland: housing tenure 172–3; networth tangible movable property 246 tax wrapper, 208, 241 tax year 241, 243, 270, 273, 274, 286 taxation: anti-avoidance rules 240, 243; avoidance versus evasion 269–70; Capital Gains Tax (CGT) 176, 239, 241, 246, 274–5; direct taxes 270–7; estates 177; importance of planning 269–70; Income Tax 239, 270–2; indirect taxes 277; Inheritance Tax 239, 241, 246–8, Index 275–7; Insurance Premium Tax (IPT) 277; and investment 208; minimising 75; National Insurance Contributions 241; personal taxes 240–1; planning 269–78; of property 176–7; recurrent taxes 176; self assessment 273, 285; Stamp Duty Land Tax 177, 178t, 277;Value Added Tax 277 tenure 169–70, 172–3 term 179 Thaler, Richard H 31, 46, 48 Think and Grow Rich (Hill) 20 thinking: automatic, intuitive, System 1, 43, 44, 279; reflective, rational, System 2, 44, 285 time horizon 37, 48, 68, 71, 85, 190, 191, 192, 204, 242 tracker funds 205 tracker rate mortgages 180 True Potential 17 trustees 248–9 trusts 248–50; bare trusts 249 Tversky, A 47–8 unemployment, risk of 135–8 unemployment insurance 137 United Kingdom: buy-to-let market 157, 160; credit reference agencies 103; debt and saving in 94–9; diseases in 128f; distribution of wealth in 10f; fertility rate 13; healthcare costs, 12; house prices 157f; human capital 124, 125f; insurance gap 130–1; investments for children in 240–3; millionaires in 9, 19t; net income 96; personal taxes 240–1; property boom 157; spending habits and behaviour 58; state pension in 13, 220; tax planning 269–78; wealth components 8f United States: CFP Board of Standards in 68; China compared 6–7; debt in 95; debt levels 99; financial literacy 22; and framing theory 47–8; healthcare costs 12–13, 135; house prices 157f; insurance gap 131; lack of wealth, and health issues 15; longevity and high income 15; net-worth 9; retirement needs 18; Social Security system 12; values 31, 32 unit trusts 199, 249 unsecured debt 102 unsystematic risk 155 Vaillant, George 16 Value Added Tax (VAT) 277 values, 31, 32; and goals 78–9  297 Index Vanguard (fund management company) 210 variable expenses 105 volatility 37, 76, 124, 175, 195 Walton, Sam 160 Ware, Bronnie 258–9 weak form EMH 203 wealth: attitudes to 7–9; cash flow game 235; changes in 110, 176; China compared to United States 6–7; classification of 8; definitions 6–11; distribution in the UK 10f; extreme 9; financial literacy 22–3; global uneven distribution of 9, 10f, 11; guiding principles 21–2; and health 14–15; and longevity 15–16; planning 23; private, necessity of 6–28; pull factors 14–16; push factors 11–14; rich and poor people, differences between 151–2; ripple effect 20; |  297 ways to create 20–3; wealth components in the United Kingdom 8f; why necessary to create 11–17; see also millionaires; money Wealth Secrets of the One Percent (Wilkin) 22 welfare state 109, 133, 141 What if? scenarios 87 Wilkin, Sam 22 withdrawal rates, initial safe 83f Xin, Zhang 19–20 Yeske, David 85, 86 Yield: redemption 195; running 195 Your Money and Your Brain (Zweig) 41 youth unemployment 137 Zuckerberg, Mark 163, 239 Zweig, Jason 41 ... Personal Finance: A Practical Guide for Students has a twofold aim First, it is a textbook for students studying personal finance as part of a finance- ​related undergraduate qualification or for. .. that can help all citizens navigate the complex world of personal finance Essential Personal Finance is a guide to all the key areas of personal finance: budgeting, managing debt, savings and... BBC Radio and a range of other publications, media and websites Tony Byrne is a financial planner and an ex-accountant He has been a regular contributor to both national and local press for many