Wimbledon officially kicks off next week

Wimbledon fever is in full swing with pre-tournament matches taking place at The Queen’s club last week and the Tennis Classic at Hurlingham taking place over the next few days. The first round of the 130th Championship kicks off on Monday and the entirety of the UK will turn its focus to this year’s play. With Ivan Lendl back in Andy Murray’s court and Serena Williams seeking a 22nd Grand Slam title to tie Steffi Graf, this year should prove to be an exciting one.

Even if you weren’t one of the lucky one’s to receive a ticket in the ballot, there are still lots of ways you can take part in the fun. In addition to joining the queue for tickets, loads of bars, pubs and restaurants around London will have indoor and outdoor screenings of the games. What better way to watch than kicking back in a lawn chair with a Pimms in hand.

You can find a full schedule of play here..http://www.wimbledon.com/en_GB/atoz/schedule.html

Don’t go there. Live There. – Airbnb’s advice on travel

As summer travel begins to kick off thoughts turn to all of the logistics around staying at your destination of choice. The type of lodging you have in a particular city as well as the neighbourhood you choose to stay in can have a huge impact on your overall experience.

A few years ago Airbnb introduced the concept of ‘Belong Anywhere’ which drives the company’s brand identity. Through its community driven marketplace its mission is to universally bring people together from all parts of the world.

The UK tax system explained through a weekly visit to the pub.

I hope you enjoy this amusing anecdote that pokes holes and fun at the UK tax system, but in doing so raises some serious points that I am sure will resonate. It is attributed to David R. Kamerschen, Ph.D., Professor of Economics

Suppose that once a week, ten men go out for beer and the bill for all ten comes to £100.
If they paid their bill the way we pay our taxes, it would go something like this: –
The first four men (the poorest) would pay nothing.
The fifth would pay £1.
The sixth would pay £3.
The seventh would pay £7.
The eighth would pay £12.
The ninth would pay £18.
And the tenth man (the richest) would pay £59.

So, that’s what they decided to do.

The ten men drank in the bar every week and seemed quite happy with the arrangement until, one day, the owner caused them a little problem. “Since you are all such good customers”, he said, “I’m going to reduce the cost of your weekly beer by £20. Drinks for the ten men would now cost just £80.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free but what about the other six men? The paying customers? How could they divide the £20 windfall so that everyone would get his fair share? They realized that £20 divided by six is £3.33 but if they subtracted that from everybody’s share then not only would the first four men still be drinking for free but the fifth and sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fairer to reduce each man’s bill by a higher percentage. They decided to follow the principle of the tax system they had been using and he proceeded to work out the amounts he suggested that each should now pay.

And so, the fifth man, like the first four, now paid nothing (a 100% saving).
The sixth man now paid £2 instead of £3 (a 33% saving).
The seventh man now paid £5 instead of £7 (a 28% saving).
The eighth man now paid £9 instead of £12 (a 25% saving).
The ninth man now paid £14 instead of £18 (a 22% saving).
And the tenth man now paid £49 instead of £59 (a 16% saving).

Each of the last six was better off than before with the first four continuing to drink for free. But, once outside the bar, the men began to compare their savings. “I only got £1 out of the £20 saving,” declared the sixth man. He pointed to the tenth man, “but he got £10″

“Yes, that’s right,” exclaimed the fifth man. “I only saved £1 too. It’s unfair that he got ten times more benefit than me”

“That’s true” shouted the seventh man. “Why should he get £10 back when I only got £2? The wealthy get all the breaks”
“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor”. The nine men surrounded the tenth and beat him up.

The next week the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important –they didn’t have enough money between all of them to pay for even half of the bill.

And that, boys and girls, journalists and government ministers, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy and they just might not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.”

David R. Kamerschen, Ph.D.

Exercise Your Right to Vote While Abroad

Unless you’ve been living on a remote island with no access to communication for the last several months, you are no doubt aware of the highly controversial U.S. Presidential election campaign in which the nation is currently embroiled. Regardless of your political affiliation or preference (or abhorrence) for one candidate over another, this election cycle has reiterated the importance of being a part of the political process. The stakes are high as the candidates have widely diverging views on topics such as economic policy, immigration reform, gun control, LGBT rights and everything in between.
Participating in a general election while abroad requires advance planning in order to ensure you are registered for an absentee ballot by the applicable deadline. The Federal Voting Assistance Program (FVAP) recommends mailing your ballot in at least 4 weeks before the election. Some states now allow voted ballots to be submitted by email or fax, though this means you may have to waive your right to a secret ballot. Many states also now offer verification services to voters to help track registrations and ballots.
Even if you have enrolled as an absentee voter in the past, you will need to complete a new Federal Post Card Application for each election cycle. The State Department recommends doing this each January to account for any mid-term elections.

To learn more or to complete your absentee ballot registration, you can visit the following sites:
U.S. Department of State:
Federal Voting Assistance Program (FVAP)

Risk Warnings and Important Information

The above article does not take into account the specific goals or requirements of individual users. You should carefully consider the suitability of any strategies along with your financial situation prior to making any decisions on an appropriate strategy.

MASECO LLP trading as MASECO Private Wealth is authorised and regulated by the Financial Conduct Authority, the Financial Conduct Authority does not regulate tax advice. MASECO Private Wealth is not a tax specialist. We strongly recommend that every client seeks their own tax advice prior to acting on any of the strategies described in this document.

By Ashley Scher


Thanks to David Cameron’s pledge to hold a referendum on a Brexit, the news agenda looks set to be dominated by talk about whether the UK will end up inside or outside the European Union – and the potential ramifications of either result. It is hard not to get caught up in the forecasting and supposition in the media from “experts” and commentators on this hot topic.

Given the bombardment of information and conflicting views and whatever your personal stance on “In or Out” it is natural to believe one of the losers from such a campaign is likely to be your investment portfolio. Stock markets do not like uncertainty, and with business leaders already highlighting the potential risks of an exit from the EU, sterling has weakened and the risk to UK bonds and equities seems high. The ejection of the pound from the European Exchange Rate Mechanism in 1992 had a short-term impact on UK domestic fixed income, and this may happen again. For equity investors the impact may be less obvious, as approximately 60% of FTSE All share company earnings come from overseas[1]. Any weakness in sterling would therefore compensate for share price weakness. On conclusion of this referendum uncertainty will be removed and this is likely to offer an improved environment for financial assets in the UK.

“……Financial assets in the UK” is a key point – in a global investment context Brexit or otherwise is likely to be just another touch point in world news. Diversification by geography and asset class aims to reduce such specific risks and it is one way to help insulate investment portfolios from these events.

[1] According to Royal London Asset Management

Henry Findlater

Where do bulls and bears come from?

Countless tomes have been written on the causes of bull and bear markets, but have you ever wondered on the origin of these charging euphemisms….? I was recently alerted to the following notice posted on a display in the museum of the San Miguel Mission in California. We learn something new every day….

Bull and Bear Baiting
The grizzly bear was the largest creature in California. The Spanish and Mexican rancheros began to use this noble creature for entertainment. The left rear paw of the bear would be tethered to the right front leg of an enormous bull. The animals would then fight to the death. The bear would usually be gored to death by the upward motion of the bull’s horn. The stooped shouldered bear aggravated its own fate by downward thrusts, often impaling it’s paunch on the shaped horns.
After seeing one of these events a San Francisco merchant coined the phrase “bull market” for a period of rising values for stocks and commodities, and a “bear market” for when values declined like the downward thrusts of the bear. By the 1860s, the grizzly bear was hunted into near exti

Rory Dorman

“The Folly of Prediction”

At times of market volatility when bad news is pervasive investors are often left wondering where to turn. Sometimes it can seem tempting to seek out commentators or other “gurus” with decided opinions and seemingly stellar credentials for having identified and called market crises in advance correctly in the past.

We at MASECO believe that making market predictions over the short term and trying to time financial markets is a futile exercise as it is all too often purely conjecture.  An example of this can be seen in the following recent Bloomberg story whereby Goldman Sachs abandoned five of their six  recommended top trades for 2016 –  just six weeks into the year. http://www.bloomberg.com/news/articles/2016-02-09/goldman-sachs-abandons-five-of-six-top-trade-calls-for-2016

Replacing a well thought out financial plan, underpinned by decades of empirical and academic evidence, with one “informed” by predictions can be a dangerous business. Why is it then that we can be drawn in by them when we feel vulnerable?

Professor Steven Levitt of Freakonomics fame offers the following explanation for why bad predictions abound:

So, most predictions we remember are ones which were fabulously, wildly unexpected and then came true. Now, the person who makes that prediction has a strong incentive to remind everyone that they made that crazy prediction which came true. If you look at all the people, the economists, who talked about the financial crisis ahead of time, those guys harp on it constantly. “I was right, I was right, I was right.” But if you’re wrong, there’s no person on the other side of the transaction who draws any real benefit from embarrassing you by bring up the bad prediction over and over. So there’s nobody who has a strong incentive, usually, to go back and say, Here’s the list of the 118 predictions that were false. … And without any sort of market mechanism or incentive for keeping the prediction makers honest, there’s lots of incentive to go out and to make these wild predictions.”

If you are interested in exploring this further the Freakonomics Radio podcast, “The Folly of Prediction”, can be accessed with the following link – http://freakonomics.com/podcast/new-freakonomics-radio-podcast-the-folly-of-prediction/


Cormac Naughten

Mindful Investing

At MASECO we are strong believers in focusing our efforts on controlling what we can and optimizing the chances for success over what we cannot control.
Arguably the most important factor we should be able to control is our behavior through the market cycles, but as most experienced investors know this is easier said than done.

Perhaps the most famous study on investors’ average returns compared to the market is the DALBAR study, which found that over the last 30 years equity fund investors achieved an average return of 3.79% against the index return of 11.06% and the average fixed income fund investor achieved 0.72% against an index return of 7.36%. Inflation was 2.70% over the period. Fund fees can explain some of the underperformance, but the vast majority is down to bad market timing decisions. The investor is his own worst enemy – why is this?

A lot of research has been done on this and it is essentially down to what John Maynard Keynes called ‘animal spirits’ that overpower our logical better knowledge in situations of stress.

However, perhaps the more helpful question is what can we do about it? Well the first step is to engage a good wealth manager that can guide you through highs and lows, but education is also powerful. I am a big fan of TED talks and recently watched a talk about using mindfulness to beat addiction and compulsive behavior. I think it translates very well to investing and is well worth a watch.


Risk Warning
‘The value of an investment and the income from it could go down as well as up’. You may not get back the full amount of your original investment. Past performance is not an indicator of future performance.

Torgeir Flonaes

Protecting Your Estate from an Uncertain Future: The $4m Quandary

Where will you be in five years? Ten years? Twenty years? Perhaps the answers to these questions are straightforward, but for many expatriates, there is tremendous uncertainty in longer-term planning. Job changes, family obligations and retirement goals can affect not only one’s physical trajectory, but also tax residency and domicile situation. Additionally, what starts as a two-year job secondment can turn into 20+ years in residence outside of the US. Given the fluid nature of such circumstances, many people avoid planning altogether and put it in the “too complicated” or “deal with later” mental buckets.

Unfortunately, taking no action can be a costly mistake. An individual’s domicile can have a significant impact on the complexity of one’s estate planning. Even if your plan is to return to the US in retirement, if you’ve been in the UK for many years or maintain your primary home here, you may be considered deemed domicile in the UK for inheritance tax purposes and thus have a large potential UK liability. In the US, one’s estate can grow to $5.45m USD ($10.9m for married filing jointly taxpayers) before estate tax is assessed. In the UK, however, the limit is much lower, currently £325,000 per individual or £650,000 for a married couple. The difference between the two tax regimes is nearly $10m USD (depending on the exchange rate). Therefore, for those who are currently deemed domicile in the UK but who intend to leave in the future to break these ties, there is approximately $4m USD at risk which could be lost to tax if death occurs in the interim.

One solution is to use insurance to help protect against this potential liability. For example, term insurance can be a low-cost strategy (depending on age and health) to bridge the gap until the domicile ties have been broken. There are also hybrid plans that can have lower initial premiums renewed every ten years on a guaranteed basis. These plans are often attractive for those who don’t know exactly when they may break their domicile ties. This type of planning is complex and may require legal counsel to ensure the policy is not includable in the gross estate. It is certainly worth pursuing advice to ensure beneficiaries aren’t surprised with an extra $4m tax bill.

Risk Warnings and Important Information
The above article does not take into account the specific goals or requirements of individual users. You should carefully consider the suitability of any strategies along with your financial situation prior to making any decisions on an appropriate strategy.

MASECO LLP trading as MASECO Private Wealth is authorised and regulated by the Financial Conduct Authority, the Financial Conduct Authority does not regulate tax advice. MASECO Private Wealth is not a tax specialist. We strongly recommend that every client seeks their own tax advice prior to acting on any of the strategies described in this document.

Ashley Scher

Should I Stay or Should I Go?

The title is from the British punk rock group, The Clash. However, it feels very relevant in today’s stock market environment. We have investors constantly enquiring as to when and if they should sell out of the market. It’s easy to understand this question, especially as this year is off to a horrible start. But, before doing anything, first try to understand what’s happening in the world. First and foremost, the global economy is still growing, even if its rate of growth is less than the “experts” believe. Take for instance the US, Banks and individuals are supposedly carrying a lot less debt now than they were. Therefore, if that’s the case, they should have more “rainy day” funds on hand if the downturn worsens.

The goal for most individuals is to invest for decades and not days or months. Yes, markets move up and down, but according to reports, over every 15-year period since World War II, people have generally made money, sometimes a lot of money. The markets tend to reward optimists and pragmatists for that matter. When markets fall or have fallen, “smart” investors are very likely to have applied the following strategies:

1. DON’T Panic. Investing is as much about psychology as it is about the raw numbers. Selling out of fear is almost always a mistake.

2. Diversify. Not applying this strategy might be the number one mistake made by individuals. Basically, it means don’t put all your eggs in one basket. An article I recently read stated that the Bible and even Shakespeare spoke of not putting all your money in one asset.

3. Rebalance. It is critically important that from time to time, to check in and make sure a portfolio is still adhering to the plan. Taking the concept further, from an intuitive standpoint, this makes all the sense in the world. Many people like to believe they buy low and sell high, but empirical data suggests otherwise. Rebalancing, means buying those asset classes at a low which have dropped in value and selling the ones that have done better at a gain. Moreover, by rebalancing it can reduce the risk in the portfolio.

Mark Scher
Partner/Senior Wealth Manager