PERSONAL FINANCE NEWS

TRYING TO TIME THE MARKET IS COSTLY
Research commissioned by Barclays Wealth has revealed that investors’ habit of chasing performance is costing more than one percentage point a year in returns. The study, which analysed fund flows between 1992 and 2009, discovered that market timing decisions by retail investors (when investing in equity mutual funds) reduced their returns by an average of 20 percentage points over an 18-year period. Investors buying global funds fared the worst, missing out on an average of 2.27 percentage points a year, compared to just 0.6 percentage points lost by investors in Asian funds.

AVIVA OFFERS GUARANTEED FUND TRANCHE
Insurer Aviva is launching a tranche of its Guaranteed Fund, which is designed to provide capital growth and guarantees that the value at the fifth anniversary will be no lower than the original investment, less any withdrawals. The fund, which is 15 years old this year, has £1.95bn in assets under management and is available exclusively through the Aviva Portfolio investment bond. The asset mix is 17 per cent equities, 5 per cent property, 75 per cent fixed interest and 3 per cent cash.

HSBC UNVEILS PLAN FOR HIGH EARNERS
HSBC announced earlier this week that it will launch in January 2011 an open architecture Maximum Investment Plan for sale through independent financial advisers (IFA). It is a ten year regular savings plan with life cover, providing investment returns which are not subject to higher rate income tax.

The plan gives access to more than 2,000 funds and was launched in response to recent tax changes, which introduced a 50 per cent income tax rate for high earners and restricted pension tax relief, HSBC said.

It is only available on the Ascentric platform, and off-platform as the MIP-Select plan.

PEOPLE MORE CAREFUL WITH THEIR MONEY
Almost two thirds of people (63 per cent) say that they are more careful with their money now than they were a year ago, according to a YouGov poll. Slightly more women are more careful about their finances than they were a year ago than men, the survey showed. However, the Financial Planning Survey 2010 showed that just under half of respondents find it difficult to make their money last until their next pay day, with women finding it harder than men to eke out their earnings. Eighty-seven per cent of respondents say that they would be encouraged more towards saving if products were easier to understand or more flexible. A third of people expect to improve their financial situation by winning the lottery, while 11 per cent are counting on Father Christmas to improve their finances.