6 Ways to Help Grown Ups get their Finances in Order

Parents have started handing over thousands of pounds to their offspring in order to help them fly from the family nest; a process which is neither easy nor affordable in an era of post-Brexit inflation, high cost of housing, and university tuition fees.

According to research conducted by experts, around 85% of parents have stumped up their money for everything right from broadband to bookshelves, with an excess of half of the cash coming in from their savings.


However, getting youngsters started at university is typically one of the biggest outlays. But mums and dads are also subsidising clothes, books, mobile phones, and “spending money”.

This initial hand holding could slowly turn into “failure to launch syndrome”, with kids beginning to rely on their parents financially, in their early 20s and 30s.

If you are a parent who wants to help their kids in getting their finances in order, then you have stumbled upon the right place. Here we have mentioned six ways through which you can help children survive financially in the big bad world.

  • Get to Grips with Property

You can offer a cash gift or an interest free loan to help your kids in order to get them on the property ladder. Ideally, this must be at least a quarter of the value of the property your kid is eyeing up, but even a 10% deposit could give them an access to a more competitive mortgage deal.

Always remember that inheritance tax may be applicable if you die within seven years of making the gift. In order to prevent this risk, you must consider a loan that comes with a monthly interest, under the market rate.

But do agree for a repayment scheme and formalise the contract by making use of a “promissory note”, which is drawn up by the property attorney. In this way, you ensure that the cash is registered as a loan and is paid back.

Alternatively, a guarantor mortgage can do the work. This includes you promising to meet the mortgage repayments on time, if your kids fail to do so. The contract remains in place until the borrower has decreased the mortgage to a certain level in comparison to the property’s worth.

Better-off, parents can also purchase a property outright, but they may incur capital gains tax, especially if it’s later sold, as it’ll technically be their second house. One way you could prevent this is by getting an attorney to place your property in a formal written trust. This way, you lend the trust a deposit and later take out mortgage that you require to guarantee.

The named beneficiaries of the trust, your kids, can then become “life tenants”, and live in that property rent-free. Yet, the named trustees would hold the title to the property.

If you’re turning the house into a student let, you’ll have to pay income tax on the rent, though the income can rather be paid directly to kids as they aren’t earning, then it could fall within the annual tax allowance.

Property experts say that, parents can invest for between 15 to 20 years, so as to assure a return on buy-to-let. You must see it as a long term investment in the first place, and support to the kid. You can even rent to students once your kids graduate, if the house is near the university.

If you’ve already taken out a loan (or thinking of taking one), then you must check for Payment Protection Insurance. If you find out that you’ve been mis-sold one, then you must soon make a claim, as the PPI Claims Deadline has been announced.

  • Drill them in Renting Rights

If any of your kid has to rent, then they’ll have to pay a deposit to the landlord. However, they’ll get it back by the end of their tenancy, provided the place is as clean as it was when they moved in, and there’s no damage, no unpaid rent, and no missing items.

The landlord should make use of an official tenancy deposit plan, unless they also stay in that house. If that is the case, your kid can reclaim the entire deposit along with three times its actual value. You must also check the Government’s “how to rent” guide.

  • Get Help if You Need It

Approximately, two fifths of parents depend upon unsecured debts in order to provide their kids a leg-up. Organisations and universities often offer student scholarships so as to assist students with their living costs.

Your kid might get qualified for this, provided that you’re earning less than £25,000 per year, working in a particular profession, or if your kid is studying a specific subject.

  • Drum in the Savings Habit

Nearly a quarter of parents bail out their adult children each month, but they must also encourage them to save money. The best way out is you training your kids in the virtue of saving, well before they leave the house, and maybe telling them to open a savings account.

If your child is 16 or above, then you ought to tell them to take out a Help to Buy Isa, that offers a 25% Government bonus to a maximum of £3,000, specifically when they’re about to purchase their first house.

Any kid who is 18 can take out a more generous Lifetime Isa, which has been launched recently. This account would pay them a bonus of 25% on contributions of around £4,000 per year. This means that they’ll receive a free maximum injection of £1,000 per year, from the Government.

  • School them to be Savvy

Spiralling education, fuel, and housing expenses mean that inflation is hitting youngsters harder, in comparison to any other age group. Several experts say that, the need for the Gen Y to cautiously handle their finances has become a huge deal than ever.

So, as a parent, discuss unrealistic ambitions and be careful that you aren’t handing down any expensive shopping preferences. You can even pay your kids for doing some of the household work, as this would teach them the value of working.

According to a financial advisor, when one has saved and worked for something, they tend to enjoy it ten times more. By the same token, one might discover whilst saving for it, that perhaps they don’t want it so much after all.

Bear in mind to include your kids in family budgeting, be it through the discussion over dinner, or through some app. All this would give your kids a financial autonomy whilst you supervise them remotely.

Help your child to become “micro-expense” aware. For example, you should tell them how the expense of their daily takeaway coffee can quickly add up. At the same time, you must also encourage them to shop around for affordable deals and to spend more time in reviewing their expenditure.

If you’re paying for any of their necessities, be it the electricity bill or food costs, simply show them how you sought out a much better deal.

  • Offer All-round Sensible Advice

Several studies reveal that on an average, people spend around £1,350 per year on takeaways. So, you should motivate your kids to properly plan their meals, do a weekly shop and learn all the basic recipes when they fly from their nest. In this manner, they could save around hundreds of pounds every year.

You must also help them to understand that when they’re taking out any insurance, it’s not any sort of alternative for locking doors and window, and taking proper care of property is also a very important aspect. 

Author Bio

Adam Martin is a working professional by day and a freelance writer by night. He specialises in writing about personal finance and insurance claims.

How To Check If Your PAN card is Active or Not

You must have recently read in the news that the more than 11 lakh (1.1 million) PAN cards were cancelled because of evidence that people were holding multiple PAN numbers. It is illegal for any person to hold multiple PAN numbers and anyone doing the same can be fined Rs 10000 under section 272B of the Income Tax Act 1961.

Are you worried if your PAN is still active or not? Dont worry, just follow the below mentioned steps to find out if your PAN number is active or not.

1. Go to the Income tax website link at at https://incometaxindiaefiling.gov.in/e-Filing/Services/KnowYourPanLinkGS.html


2. Enter Surname, Middle Name and First Name

3. Select the status of the PAN card holder (e.g Individual, HUF, Association, Company, Government etc)

4. Select Gender of the PAN card holder

5. Enter Date of Birth or Date of Incorporation of Business

6. Enter Mobile number


7. You will get an OTP PIN number at the mobile phone number provided (if correct).


8. You will get know if your PAN is active or not.


Warren Buffett’s Letters to the Shareholders – Berkshire Hathaway 2017

Berkshire’s gain in net worth during 2016 was $27.5 billion, which increased the per-share book value of both our Class A and Class B stock by 10.7%. Over the last 52 years (that is, since present management took over), per-share book value has grown from $19 to $172,108, a rate of 19% compounded annually.* During the first half of those years, Berkshire’s net worth was roughly equal to the number that really counts: the intrinsic value of the business. The similarity of the two figures existed then because most of our resources were deployed in marketable securities that were regularly revalued to their quoted prices (less the tax that would be incurred if they were to be sold). In Wall Street parlance, our balance sheet was then in very large part “marked to market.”

berkshire hathaway

By the early 1990s, however, our focus was changing to the outright ownership of businesses, a shift that materially diminished the relevance of balance sheet figures. That disconnect occurred because the accounting rules (commonly referred to as “GAAP”) that apply to companies we control differ in important ways from those used to value marketable securities. Specifically, the accounting for businesses we own requires that the carrying value of “losers” be written down when their failures become apparent. “Winners,” conversely, are never revalued upwards.

We’ve experienced both outcomes: As is the case in marriage, business acquisitions often deliver surprises after the “I do’s.” I’ve made some dumb purchases, paying far too much for the economic goodwill of companies we acquired. That later led to goodwill write-offs and to consequent reductions in Berkshire’s book value. We’ve also had some winners among the businesses we’ve purchased – a few of the winners very big –but have not written those up by a penny. We have no quarrel with the asymmetrical accounting that applies here. But, over time, it necessarily widens the gap between Berkshire’s intrinsic value and its book value. Today, the large – and growing – unrecorded gains at our winners produce an intrinsic value for Berkshire’s shares that far exceeds their book value. The overage is truly huge in our property/casualty insurance business and significant also in many other operations.

Over time, stock prices gravitate toward intrinsic value. That’s what has happened at Berkshire, a fact explaining why the company’s 52-year market-price gain – shown on the facing page – materially exceeds its book-value gain.

What We Hope to Accomplish

Charlie Munger, Berkshire’s Vice Chairman and my partner, and I expect Berkshire’s normalized earning power per share to increase every year. Actual earnings, of course, will sometimes decline because of periodic weakness in the U.S. economy. In addition, insurance mega-catastrophes or other industry-specific events may occasionally reduce earnings at Berkshire, even when most American businesses are doing well. It’s our job, though, to over time deliver significant growth, bumpy or not. After all, as stewards of your capital, Berkshire directors have opted to retain all earnings. Indeed, in both 2015 and 2016 Berkshire ranked first among American businesses in the dollar volume of earnings retained, in each year reinvesting many billions of dollars more than did the runner-up. Those reinvested dollars must earn their keep.

Some years, the gains in underlying earning power we achieve will be minor; very occasionally, the cash register will ring loud. Charlie and I have no magic plan to add earnings except to dream big and to be prepared mentally and financially to act fast when opportunities present themselves. Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons. And that we will do.

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Losing the Losers Game – PFP Wealth Management

“The  first  panacea  for  a  mismanaged  nation  is  inflation  of  the  currency;  the  second  is  war.  Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.” – Ernest Hemingway.

“Recovery in sight, says departing Bank of England governor Mervyn King..” – The Daily Telegraph.

ppf wealth management

In one of the most powerful and memorable metaphors in finance, Charles Ellis, the founder of Greenwich Associates,cited the work of Simon Ramo in a study of the strategy of one particular sport: ‘Extraordinary tennis for the ordinary tennis player’. Ellis’ essay is titled ‘The loser’s game’, which in his view is what the ‘sport’ of investing had become by the time  he  wrote  it  in  1975. Whereas tennis is ‘won’ by professionals, the practice of investing is ‘lost’ by professionals and amateurs alike. Whereas professional sportspeople win their matches, investors tend to lose the equivalent of theirs through unforced errors. Success in investing, in other words, comes not from over-reaching, in straining to make the shot, but simply through the avoidance of easy errors.

Ellis  was  also  making  the  point  that  as  far  back  as  the  1970s,  investment  managers  were  not beating the market; rather, the market was beating them.
This is a mathematical inevitability given the  crowded  nature  of  the  institutional  fund  management  marketplace  and  the  impact  of management fees on end investor returns. Ben W. Heineman, Jr. and Stephen Davis for the Yale School of Management asked in their report of October 2011, ‘Are institutional investors part of
the problem or part of the solution ?’ By their analysis, in 1987, some 12 years after Ellis’ earlier piece,  institutional  investors  accounted  for  the  ownership  of  46.6%  of  the  top  1000  listed companies  in  the  US.  By  2009  that  figure  had  risen  to  73%.  That  percentageis  itself  likely understated  because  it  takes  no  account  of  the  role  of  hedge  funds. Also  by  2009  the  US institutional landscape contained more than 700,000 pension funds; 8,600 mutual funds (almost all of  whom  were  not  mutual  funds  in  the  strict  sense  of  the  term,  but  rather  for-profit  entities); 7,900  insurance companies; 6,800 hedge funds; and more than 2,000 funds of funds (the horror ! the horror !)

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Why We Think We’re Better Investors Than We Are

From their earliest days, the loosely confederated research efforts that came to be known as behavioral economics spawned a large quantity of studies centered on securities investment. This was not because the field’s pioneers were especially interested in stocks and bonds, nor was the early research commonly underwritten by financial services firms.

better investors

Rather, the hive of activity that evolved into its own field — behavioral finance — reflected that investment markets provide unusually robust data sets for analyzing “judgment under uncertainty” (the title of a seminal textbook co-edited by the winner of a Nobel in economic science, the behavioral economist Daniel Kahneman) and “decision under risk” (a phrase in the subtitle of his Nobel-winning “Prospect Theory”). Every day, global securities markets provide researchers with billions of data points for understanding how people make choices when resources are at stake and the outcome is unknown.

Which, if you think about it, is a fair description of most decisions. Indeed, the majority of cognitive biases and shortcuts that influence everyday judgment and choice have analogues in investment behavior. Consider the “sunk cost fallacy,” a primary reason an unhappy lawyer might struggle to leave the law and an unsuccessful investor might balk at selling money-losing shares.

Both people are highly likely to obsess over their sunk cost — law school tuition and time served for the lawyer, the original investment amount for the stock picker — in a nonconscious desire to justify their earlier decisions. Both are also very likely to fall prey to “loss aversion,” a key tenet of Prospect Theory, which tells us that humans typically respond to the loss of resources — be it time, effort, emotion, material goods or their proxy, i.e., money — more strongly than they react to a similar gain.

What differentiates the typical lawyer and average investor, however, is their justification for engaging in their activity. Lawyers are trained to do what they do, while the majority of investors are not. Ask a random player in a law firm’s basketball league whether he or she could compete with LeBron James, and the most common response will be laughter. Yet many of those lawyers would willingly compete with the billionaire investor Warren E. Buffett.

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Hedge Fund Titan Bill Ackman’s Surefire Bet Turns Into a $4 Billion Loss

A little over two years ago, William A. Ackman, one of Wall Street’s brashest and most self-assured hedge fund managers, was on top of the world. A billionaire before he hit 50, he was generating double-digit gains for his investors and raking in hundreds of millions in fees for his firm and himself. Hailed as a master investor, he clinched his highflier status in the fall of 2014 by paying $90 million with some friends to buy the penthouse at One57, a 13,500-square-foot aerie in Midtown Manhattan overlooking Central Park. He didn’t plan to live there — it was an investment property — but until he sold it, the apartment would make a good party space, he told The New York Times. If Mr. Ackman were a stock, that might have been his peak.

bill ackman

Today, things are very different for him. His company’s performance is way down, he is in the midst of an expensive divorce, and on March 13, he and investors in funds run by Pershing Square Capital Management swallowed a $4 billion loss on Valeant Pharmaceuticals International, a beleaguered drug company. As bad bets go, it was one for the record books. Valeant was a big Pershing Square holding. In May 2015, Mr. Ackman said Valeant’s acquisition strategy made it “a very early-stage Berkshire,” referring to Berkshire Hathaway, Warren E. Buffett’s investment vehicle. But only a few months later, Mr. Ackman and his investors began riding Valeant’s shares all the way from $262 to $11, driven both by rival investors who had bet against Valeant’s shares and former fans who dumped the stock as bad news emerged.

As much as Mr. Ackman and investors in his $11 billion firm would like to close the book on Valeant, they cannot do so quite yet. That’s because of a Valeant-related lawsuit in a federal court in California contending that he and his firm violated securities laws in 2014. According to the plaintiffs, Pershing Square secretly acquired a stake in the pharmaceutical giant Allergan based on nonpublic information from Valeant that it intended to mount a takeover bid. This is not just any lawsuit. Damages in the case may be $2 billion, as noted by the judge who certified the litigation as a class action Wednesday. Mr. Ackman’s lawyers, who in court hearings have put potential damages at less than $1 billion, are vigorously contesting the case and contend there is no liability. Defendants in the matter, which has not received a lot of publicity recently, are Mr. Ackman, his funds, Valeant and J. Michael Pearson, the company’s former chief executive.

The case is entering a crucial stage. Court documents indicate that Mr. Ackman and Mr. Pearson have either been deposed by lawyers for the plaintiffs or will be questioned under oath soon. The documents also show that Mr. Ackman must set aside 12 hours to answer questions. Mr. Pearson was the architect of Valeant’s business model, in which the company acquired drugmakers and jacked up prices on their products. Mr. Ackman, 50, is one of the country’s best-known activist investors — taking large positions in companies and trying to use that weight to influence their direction and decision-making. Initially, Mr. Ackman praised Mr. Pearson’s strategy of acquiring rivals rather than developing drugs internally. Mr. Ackman declined to comment on the mistakes he made in Valeant or the lessons he gleaned from the loss.

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Show Me The Money – Bill Gross

“School days” inexorably continue at the Gross household, not just because of grandchildren, but because of the necessity to teach my own kids the complexities and pitfalls of investing. As I get older, I fear I may unduly introduce them to a 1930s Will Rogers warning about losing money: “I’m not so much concerned about the return on my money,” he wrote, “but the return of my money.” “Don’t lose it” is my first and most important conceptual lesson for them despite the Trump bull market and the current “animal spirits” that encourage risk, as opposed to the preservation of capital.

bill gross

Recently I also explored with them the concept of financial leverage – specifically that of fractional reserve banking, which has been the basis of credit and real economic growth since the system was blessed by central banks over a century ago. “It still mystifies me,” I told them, “how a banking system can create money out of thin air, but it does.” By rough estimates, banks and their shadows have turned $3 trillion of “base” credit into $65 trillion+ of “unreserved” credit in the United States alone – Treasuries, munis, bank loans, mortgages and stocks too, although equities are not officially “credit” they are still dependent on the cash
flow that supports the system.

But I jump ahead of myself. “Pretend,” I told the “fam” huddled around the kitchen table, that there is only one dollar and that you own it and have it on deposit with the Bank of USA – the only bank in the country. The bank owes you a buck any time you want to withdraw it. But the bank says to itself, “she probably won’t need this buck for a while, so I’ll lend it to Joe who wants to start a pizza store.” Joe borrows the buck and pays for flour, pepperoni and a pizza oven from Sally’s Pizza Supplies, who then deposits it back in the same bank in their checking account. Your one and only buck has now turned into two. You have a bank account with one buck and Sally’s Pizza has a checking account with one buck. Both parties have confidence that their buck is actually theirs, even though there’s really only one buck in the bank’s vault.

The bank itself has doubled its assets and liabilities. Its assets are the one buck in its vault and the loan to Joe; its liabilities are the buck it owes to you – the original depositor – and the buck it owes to Sally’s Pizza. The cycle goes on of course, lending and relending the simple solitary dollar bill (with regulatory reserve requirements) until like a magician with a wand and a black hat, the fractional reserve system pulls five or six rabbits out of a single top hat. There still is only one dollar bill but fractional reserve banking has turned it into five or six dollars of credit and engineered a capitalistic miracle of growth and job creation. And importantly, all lenders of credit believe that they can sell or liquidate their assets and receive the single solitary buck that rests in the bank’s vault. Well . . . not really.

“And so,” my oldest son, Jeff, said as he stroked his beardless chin like a scientist just discovering the mystery of black holes. “That sounds like a good thing. The problem I’ll bet comes when there are too many pizza stores (think subprime mortgages) and the interest on all of the loans couldn’t be paid and everyone wants the dollar back that they think is theirs. Sounds like 2008 to me – something like Lehman Brothers.” “Yep,” I said, as I got up to get a Coke from the refrigerator. “Something like Lehman Brothers.”

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The Incredible Shrinking Universe of US Stocks – Credit Suisse

The U.S. public equity market has evolved dramatically over the past 40 years. This is important because the U.S. equity market is 53 percent of the global stock market as of December 31, 2016. The main feature of this change is a sharp fall in the number of listed equities since 1996, which was preceded by a steady rise in listings in the prior two decades.

us stocks

As a result of this drop, there are fewer listed companies today than there were in 1976, despite the fact that the gross domestic product (GDP) is three times larger now than it was then. The Wilshire 5000 Total Market Index, established in the mid-1970s to capture the 5,000 or so stocks with readily available price data, now has only 3,816 stocks. The phenomenon is unique to the U.S. and is not easy to explain.

Economists commonly use the number of listed companies as a measure of financial development and have established  a  positive  link  between  development  and  economic  growth. For  example,  there  was  a  strong appetite to go public in the U.S. following World War II as companies needed capital to finance their “mass production and mass distribution.” There were about 1,000 listed companies in 1956 and nearly 5 times as many a couple of decades later. Over those 20 years, GDP grew at a healthy 3.6 percent compound annual growth rate (CAGR), adjusted for inflation.

In  the  past,  economists  considered frequent initial  public  offerings  (IPOs)  to  be  a strength of  the  U.S.  and believed that they played an important role in encouraging entrepreneurship. But the weak listings in the U.S and the strong listings around the world have created what is now a large gap. This is important because it changes the nature of an investor’s opportunity  set.  In  1976,  an  institutional investor who wanted exposure to U.S. equities had only to buy a diversified portfolio of public companies and a venture capital (VC) fund. In 2016, that investor would have to have access to a diversified portfolio of public companies, a private equity fund, and opportunities in late-stage as well as early-stage venture capital.

Individual  investors  today  have  a  limited  ability  to  access  directly  the  complete  U.S.  equity  market.  The companies that are listed on exchanges are bigger, older, and in more concentrated sectors than two decades ago. This likely contributes to public markets that are more informationally efficient than ever before. The change in the number of listed companies is a matter of simple addition and subtraction. Stocks that are newly listed expand the population and stocks that are delisted shrink it. Additions occur when there is an IPO or  a  spin-off.  Subtractions  are  the  result  of  mergers  and  acquisitions  (M&A),  bankruptcy,  and voluntary delisting.  M&A  includes  strategic  deals,  where  one  company  buys  another,  and  financial  deals,  where  a leveraged-buyout or private equity fund acquires a company.

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Six Impossible Things Before Breakfast – GMO White Paper

I believe the markets are behaving like the White Queen. In order to make sense of today’s pricing, you need to believe in six impossible (okay, I’ll admit some of them are just very improbable as opposed to impossible) things.


1. Secular stagnation is permanent and rates will stay low forever. As we have argued at length elsewhere, secular stagnation is a policy choice and we could exit it reasonably quickly by implementing appropriate policies.

2. The  discount  rate  for  equities  depends  on  cash  rates.  This  is  nothing  more  than  a  belief. It has no foundation in data and not a scrap of evidence exists that supports this hypothesis.

3. Growth  rates  and  discount  rates  are  independent.  This  is  a  very  questionable  assumption.  If,  as  I  believe,  it  is  false,  then  it  makes  the  “Hell”  outcome  Ben  has discussed  in  previous  Quarterly  Letters  less  likely,  unless  the  first  two  beliefs  hold

4. Corporates carry out buybacks ad nauseum, raising EPS growth despite low economic growth. This  would  imply  rising  leverage,  which  is  already  close  to  all-time  highs. Remember Minsky: Stability begets instability.

5. Corporate cash piles make the world a safer place. Cash levels aren’t high by historic standards, and valuations are extreme even when cash is fully accounted for.

6. The “Hell” scenario is the most probable outcome. This requires “this time is different” to be true and, unlike Jeremy Grantham, I am not yet ready to assign this exceptionally useful rule of thumb to the waste bin of history. Put another way, Hell requires that stock prices have reached a “permanently high plateau,” and I’m not about to embrace that statement.

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Blood on the street

Finally after a lot of dithering, the global markets caught the sub-prime flu and what a crash it was. India was the worst performing market today. Almost 1400 points (7%) down in a single day. None of the stocks were spared. Every sector was in the red.


Now is the time for bargain hunting. Whoopie. Am gonna buy now. FMCG, Pharma, Banks, Infrastructure, Finance, Real Estate, everything is damn cheap now. Nothing has changed in a day or two. The India growth story is intact. The fall was more of a sentiment thing regarding the sub prime crisis in the US market and also the market has been going up almost daily. A correction was inevitable. Yes, a portion of my portfolio is in the red, but then Iam not concerned, cos am here for the long term.

worried investor

I know it wont be prudent to say, but i wish for more such days. Now is the right time to buy. Like the pundits say

Buy when everyone sells and sell when everyone buys.

Above pictures courtesy: Rediff