An accident policy is the best protection for your daily life, which is always full of surprises. We run the risk of having an accident every day, wherever we are, so to avoid additional medical costs, the accident policy is tailor-made cover to protect you and your family, no matter what happens. Read more
I personally am feeling very upset about Brexit as no lorries seem to be getting here and English supermarkets are getting emptier and emptier. Let us hope that they will still be able to continue supplying us with some of our favourite foods at some stage. Due to COVID, very little is mentioned in the press about Brexit but there must be many companies distraught about the trading conditions. Read more
As I suspected, the demand for TIE/Residencia appointments is very quickly increasing. It is vital that if you have not got your Residencia and you wish to stay in Spain after 31/12/20, you need to get your TIE sorted now, or as soon as possible. Read more
Our fully comprehensive home insurance is the best on the market. Liberty have just added a number of exciting optional extras, which I know that you will find of great interest. Here are some of the extras that you can choose from:- Read more
All the world is experiencing a very frightening time, due to this dreadful virus that is circulating everywhere. Until a good vaccine has been developed, we are going to have to live with it and I understand that there are a number of people who are very fearful and not leaving their homes to go anywhere. To do this for such a long time could create problems with their health. All I can advise is doing what many other people are, going out locally and being extremely careful where they go and carrying out all the rules that the government is asking us to do. In the end, however, it is everybody’s responsibility to protect themselves and others. Read more
There are certain jobs (not just in the financial sector) that require companies to be regulated to legally carry out their roles. Being an independent financial adviser is one of them. Individuals could be forgiven to presume that any financial advisory firm advertising in magazines, newspapers or on the radio are fully licensed and regulated – unfortunately, that is not always the case. Read more
Pension Legislation Changes – Malta
Malta remains as one of the world´s leading jurisdiction for pension business and the jurisdiction, its policy makers and industry, are determined to maintain that position by offering well regulated, compliant and prudent pension products. There have, however, been a number of legislative changes to Maltese pensions since the start of 2019, ranging from tighter investment due diligence to full disclosure of commission. For advisers and clients, one of the most important measures introduced is the requirement for advisers to have greater regulation than ever before. Read more
Liberty Seguros has launched a very interesting Bespoke Funeral Insurance, which I thought may be interest to my clients. Never easy to think about your funeral, but of so necessary.
Death is always a difficult subject to discuss, but when living in Spain, it becomes far more important to think about the future and how to make this stressful time easier for your loved ones. With this in mind, at Jennifer Cunningham Insurance, we are delighted to introduce a Bespoke Funeral insurance package, at an astonishing starting premium from € 70 for the whole year.
For the Spanish, funeral insurance is more or less a necessity and is taken from a very early age. Funerals are very expensive and will put an enormous amount of pressure on your loved ones. Before any arrangements can be made, it is necessary to have a NIE number, your bank accounts may be frozen and the paperwork completed, which all makes it far more difficult for your family.
Funerals plans can be made in one payment or a deposit and the remainder paid over 5 years, with interest added. This option is an excellent choice.
However, it may not be the correct time financially to commit to this option. You may have an investment coming to you in the future but what if something happens before then, or your income may not be able to stretch this far? Liberty Seguros have introduced an amazing funeral insurance, a Bespoke package that gives you the choices to tailor make the insurance to your needs and those of your family, at an affordable yearly premium. There is just no reason not to come and talk to my consultants now, for the best way for you to protect your loved ones.
If you wish to ensure that your family has more financial protection on your death, Bespoke Life Insurance is further option. This also can cover the cost of the funeral and provide the necessary funds to cover other outstanding costs.
Another excellent option from Liberty Seguros is the Accident Plan, which protects you in so many ways.
Newsletter January 2019-01-31
General News from JC Expat services financial colleagues
Well, where do we begin? It has certainly been an interesting quarter, with endless developments on Brexit (“the gift that keeps on giving”), the ongoing tariff disagreements between the US and China, and the increasing problems Italy and their economy are experiencing.
Brexit, without doubt, is the most known and spoken about topic, as we simply cannot get away from the news – even if we wanted to. This is also the most relevant subject to the majority of us living here in Spain, as, depending on the outcome, it could have a direct impact on us, especially if there is a no-deal scenario. This, as we know, is not a certainty and there are many people who still believe that the UK will not leave the EU if there is a strong campaign for a second referendum.
Over the past 3 months we have seen Theresa May suffer a humiliating defeat in the House of Commons, which led Mr Corbyn to table a vote of no confidence. The PM survived the vote of no confidence the following day, and pledged to return to Parliament with a revised deal which she believed would pass. This didn´t quite go to plan, and the PM now has to head back to Brussels and attempt to re-negotiate her deal. The early indications are that this will not be easy, with the EU seemingly holding its ground and dismissing any possibility of a re-negotiated deal.
Importantly, from an investor´s point of view, we do believe that the possibility of a “no-deal Brexit” has already been accounted for in the market. As many of you are aware, we speak with discretionary fund managers from the likes of Rathbones and VAM on a regular basis, and they have echoed our sentiments.
Markets suffered badly the second half of 2018, mainly due to the unknown outcome of BREXIT and, as time passed by, the increasing likelihood that there will be no deal. Markets tend to be more volatile in times of uncertainty, compared to times of a known outcome (whether this be a good outcome or not).
The start of 2019 however, has been positive. Following the two parliamentary votes, and the conclusion that Theresa May will be revisiting Brussels, there is new hope we can avoid a no-deal scenario. Despite ongoing volatility, this has boosted the majority of European Markets to post positive returns for January 2019.
Based on our view that a no- deal Brexit has already been accounted for in today´s market, perhaps the biggest threat to investments, and subsequent fund performances, rests with whether a trade deal can be agreed on between the US and China.
China and the US are engaged in a trade war as each country continues to dispute tariffs placed on goods traded between them. The disagreement has been known for a number of months but there is now a deadline of the 1st March 2019, at which point both countries hope to agree on a deal.
President Trump, in typical Trump style, has handed out numerous threats since the start of this disagreement, with the latest comment from his admin team being “if, by the 1st March, the parties are unable to reach an agreement, the 10% tariffs will be raised to 25%”. From an investment point of view, we hope that a trade deal is agreed upon, as this will bring some stability to the market and should, in theory, benefit equities throughout 2019.
This then brings us to Italy. Italy has now fallen into recession after its economy shrank by 0.2% during the last quarter of 2018, its second consecutive negative quarter.
Italy’s economy has been weakening since early 2017 and has recently been hit by a slowdown in key trading partners, including Germany and China. The country’s government has also been involved in a fight over its budget deficit with Brussels. Critics say this has damaged market confidence, pushing up Italy’s borrowing costs and hurting the economy.
Having said this, Italian PM Giuseppe Conte said on Wednesday that conditions were in place for a recovery over the second half of 2019, but we will wait to see if this comes to fruition. From an investment point of view, we do not believe that this will be a major drag on the market, for the time being at least.
The Modelo 720 is an informative declaration made to the Spanish authorities advising them of any asset an individual holds outside of Spain, with a value of 50.000€ or more. This declaration has to be made before the 31st March and is in relation to the value of the assets as of the 31st December the previous calendar year.
Modelo 720 has 3 reporting categories, split into bank accounts, investments and immovable property and the threshold of 50.000€ applies to each. If the asset in question is in a different currency, the exchange rate will determine whether or not there is a need to declare. For example, if an individual has 30,000 pounds in a UK bank account, this would not need to be declared as with the current exchange rate, the euro equivalent would be approximately 34,200€ and therefore short of the 50.000€ requirement.
Many individuals have bank accounts or investments that are held in joint names with a partner. If this is the case, each person must declare the asset as if they held it individually, stating the full amount and their percentage of ownership. Any asset held within Spain does not need to be declared as it will already be known to authorities.
Once an asset has been declared, there is no need to declare again in later years, unless the value of the asset has changed by more than 20,000€ or the asset has been sold or closed down.
As with many declarations worldwide, there are fines that an individual could face if they fail to provide the information requested. These fines could be imposed due to late submission of the declaration or for misleading or false information.
Staying Invested in the Market
During volatile markets, there is often an urge for investors to try and “outwit” the market by attempting to sell investments ahead of big falls, or buy investments just before a significant rise. Unfortunately, this is nigh on impossible to predict and although we may be lucky enough to disinvest from the market at the perfect time once, it will be impossible to always get it right.
It is also not uncommon to hear investors say that in a gradually falling market, we should disinvest as early as possible. Once again, the right time to do this is extremely hard to predict – hindsight would be a wonderful thing. We have seen numerous examples over the past few weeks and months where a global market has been steadily falling over the short term, but then bounces back with big gains on a particular day.
One of the investment companies we work with, Castlestone Management, carried out an analysis of the S&P 500 (Index of America´s top 500 companies) over the last 20 years, and the results made for some interesting reading.
They concluded that during the period 01.01.1998 – 31.12.2017, “Investors who stayed fully invested in stocks enjoyed the best total return performance” over this 20 year period. This stat is backed up with the following facts;
If an investor had stayed fully invested over this time period, they would have received an annual average growth of 7.20%.
If the same investor had missed just the 5 best days over this entire 20 year period, they would have received an average annual growth of 5.02%.
If the same investor had missed the best 10 days over the same period, they would have received an average annual growth of 3.53%.
If they missed the best 20 days, the average annual growth would drop to 1.15%, and missing the best 40 days would actually put them into a negative loss of an average -2.80%.
These results are quite astonishing considering we are studying a 20 year time period, and only a maximum of the best 40 days missed. There is a saying in the industry which has never been more true having read these results; “It´s about time in the market, not timing the market”.
Sterling has made a strong start to the year, strengthening by around 4% since 1st January. This positive news for the pound is down to the expectations that Britain can now avoid a no-deal Brexit.
There is a strong belief that even if Theresa May returns from the new negotiations in Brussels empty-handed, the prospect of a fresh set of amendments being debated in London on the 13th- 14th February will support the pound.
The assumption that we can avoid a “no-deal” Brexit has prompted the GBP-EURO rate to hit its highest level since 2017, which currently stands at 1GBP/ 1.421€.
Over the pond, the dollar has experienced contrasting fortunes, weakening after the Federal Reserve pledged to be patient with further interest rate hikes. Although the Fed left interest rates unchanged last night, which was expected, they did discard their promises of “further gradual increases” in interest rates.
Following this news, the dollar has fallen to a 3-week low against other major currencies, currently standing at 1GBP/1.3124 USD, and 1€/1.1468.
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