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Our Philosophy: The thinking behind Money Surgery.

Future Dreams

(Debts cleared, start investing)

Undergoing the tortuous path back to being in the black can be very difficult. The Money Surgery programme and philosophy is strict but ultimately rewarding. When we finally pay off the last pound of that loan or that overdraft, should we relax and loosen the chains around our purses? A little, yes, but we have found that having adopted a more careful attitude to money, we tend to be careful with our savings too.

Please read on.

Once the snarling demons of debt are vanquished, we recommend a reward of a reasonable nature. Say a nice meal out that you've deprived yourself of, or why not that winter coat that you've been needing. Then the planning turns to investment and by following the Money Surgery philosophy, we can maximise the amount that we can save.

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That feeling of being debt-free can be summed up by one word:


The months of deprivation and of survival are finally over. Breathe a sigh and pat yourself on the back. You did it. By sheer determination and willpower. WELL DONE. That feeling of having NO DEBTS is wonderful. Like having a great weight lifted from your shoulders, or a big, long dreaded, exam being cancelled forever. Truly wonderful.

When fighting debt, you had to muster all your resources and focus on that one enemy. Now that you have defeated him, your focus has gone. Instead of dropping your guard and slipping back into old ways, use your wisdom and cunning to build up your savings. Re-focus on investment.

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Investment Strategy

There are many reasons for investing, such as planning for school fees, paying off your mortgage or funding a happy retirement but there is no need to have a clear goal in mind to invest. We believe, however that having a goal is very useful in maintaining focus and having an end point. If you really have no purpose but you have money to invest we suggest inventing a goal that may, or may not, be the intended purpose. Pretend you want that holiday home in Devon or that shiny sports car. Even putting money to one side for emergencies is perfectly valid and sensible.

Financial planning is essentially matching money and goals. There are many products on the market, some of which are designed to achieve a specific goal, like a pension plan, while others are more general. An investment strategy helps pick the best investment mix to attain the goal

Investment Details

Financial advisers will carry out a Fact Find with their clients. This is a list of all your investments and savings, loans and debts, income and outgoings. In assessing how much money you have to invest, the main priority is almost always to clear any debt, with the exception of the mortgage perhaps. Then look around for a safe place to put some cash aside, like a high interest bank or building society account. We suggest looking at our Money News page for a selection of accounts paying the best rates.

An initial goal may be to build up an emergency reserve of say three months salary. Then many are comfortable with building societies savings accounts and mini-cash ISAs until they've saved a fair amount. Once ten or twenty or thirty thousand pounds is stored, many people feel prepared to invest in the stock market, shares have provided a return of over 10% per annum after all. A good place to start is to open an index tracking Unit Trust account within a stocks and shares ISA tax-efficient wrapper. The charges on some tracker funds are comparatively low too. Legal & General's UK Index Tracker charges just 0.5% per annum on monthly payments, lump sum investment is fee at the moment, and it invests in the FTSE All-Share, spanning the top 800 companies, thereby spreading the risk more than with a FTSE 100 tracker. The experts usually advise taking a five year view of investments in equities.

Reducing the risks

There are two ways to reduce the risk of investment: Time and diversification. Over a five-year cycle, dips and peaks in the markets usually even out, resulting in steady growth. Invest for a shorter time, and there is a greater chance of selling during a trough. The effect of compound growth also works in favour of the longer-term investor. Leave the money aside for long enough, and the profits from good years grow, providing a cushion against any falls. Many experts suggest first timers only invest in shares what they can afford to lose.

Diversification means spreading risk across a range of investments. Clearly, it is much safer to invest £500 in each of ten companies than £5000 in one: the odds of all ten falling on hard times at once are that much lower. Collective investments such as unit trusts pool investors' money, spreading the risk still further. The astute investor should aim to hold a combination of collective investments and shares, spread across industry sectors and markets.

One further way to keep risk under control is to do plenty of research. The general principles of investing start to break down where bad investments are involved. A bad investment need not be particularly risky: it could be very conservative and fail to grow at all, or it could have charges that mean that however fast the investments grow, the benefit to investors will be eaten away. Investors should look carefully at the charges, performance and the management of any investments they hold, either directly or through a pension or other investment plan. If a fund really is under-performing, think about moving companies. Shareholders should check their portfolios regularly too; this year's star performer could be next year's dog, in the same way that savers should always monitor the rates on their deposit accounts.

Please read on.

The Richest Live in the North

(Friday 17th May 2003 news story)

The North of England is the richest region in England and Wales according to a new survey measuring "real" local incomes. The survey undertaken by Barclays Private Clients takes into account the local cost of living and balances the scales to identify people's true income.

Top of the pile is Tatton in Cheshire with a real average income of £41,506, with Sheffield Hallam second at £41,289 and Kensington/ Chelsea third at £40,951. Although wages were higher in the South-East and London, the high costs of living cancelled out many of the gains, with high house prices being a major factor. Of the top 50 areas in the survey, 12 are in the North-West, 9 are in the South-West, 7 in Yorkshire, 6 in the West Midlands, 5 in the East Midlands, 4 are in London, 3 in the South-East, 2 in Wales, with one each in the North-East and the East.

Xerox Copying WorldCom's Bad Behavior

(Friday 28th June 2002 news story)

Investors are bracing themselves for a second US accounting scandal in one week after office equipment mega-company Xerox said that it would have to restate revenues of around £1.4bn booked over the last five years. The revelation threatens to spark more selling when Wall Street reopens. Xerox had already attracted US regulators with estimates earlier this year that Xerox had "improperly accelerated" sales by £2.1bn between 1996 and 2000. New York newspapers put the total amount of improperly recorded revenue over that five years could be more than £9bn.

A Xerox spokesperson did not comment on the report but stated: "Xerox expects its revenues to be restated by around $2bn over the five year period." Revenues over the five years originally amounted to $92.5bn. The news comes in the same week as American telecomms household name WorldCom confessed it had noticed a $3.8bn black hole in its accounts, much to the horror of markets. Xerox's books are being pored over by accountants PricewaterhouseCoopers, which took over last October after Xerox fired long-time auditor KPMG.

Okay, they got their revenues wrong by about 2 percent over five years. They should survive. "What does this have to do with us?", as some patients have asked. Well, all these shock stories about big companies cooking their books sort of pulls the rug from under investors' feet. What you believed was Black is suddenly revealed as Red. Profits were really losses. After Enron, Anderson, Worldcom and perhaps Xerox, people start asking why they are handing their savings, pension funds, PEPs and ISAs to such a dirty rotten bunch of scoundrels and sell what's left of their share-based investments. Gold, Oil, Building Societys and Government Bonds become a whole lot more attractive as alternatives. The loss of confidence in markets could pull us back into a global recession, and we all know what that means.

It certainly shows what a bubble the late Nineties stock markets were. Perhaps things from now on can get better. Shares are very cheap, possibly bottomed out, as some analysts say. A regulatory crackdown would be welcomed too to wipe the slate clean. History shows us that things are cyclic. With that in mind shouldn't we all be buying heaps of cheap shares?
Answers on a postcard e-mail!

Site for Sore Eyes?

(Sunday 14th October 2001 news story)

The Financial Services Authority has launched a new web site revealing the terms, conditions and charges on investment ISA's and OEIC's. Located under, the tables show all the details based on criteria that the visitor has to key-in first. The details can be sorted in order of charges or provider name, similar to

We have tried and tested both sites and we can highly recommend them. Both sites are easy to use and reveal the, sometimes, awful truth.

The glaring omission from the FSA site is past performance details. The site seems to over-emphasise the charges and terms on funds and this has upset a few financial advisers who claim such tables, lacking in fund performance data are next to useless. However, the FSA is keen to underline its philosophy on past-performance in that it genuinely is NO guide to future performance and that charging has to be clarified. Used in conjunction with which shows past performance figures, the internet based investor is supplied with a rich source of up-to-date information, underlining the increasing advantage that internet users have. Unfortunately for managers of poor performing and high charging funds, the writing is on the wall.

Please read our other pages.

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Copyright 2000 - 2008 ©Kevin Anthony Jones. All rights reserved.

Please read on.
Saving Money: Switched on ways to keep hold of your precious cash.
Getting Money: Clever, barely legal ways of getting money.
How a house, open a bank account...
Future Dreams: Planning, after your debts have been eliminated.
Financial X-Ray: Let the nice doctors at Money Surgery X-ray your wallet.
Money News: The latest from the world of personal finance.
The best interest rates for saving and borrowing.
Feedback: Write to the Surgery.
Contacts: Other people who may be able to help, if we can't.
Money Surgery.