plonkee money an english-er's thoughts on personal finance

February 28, 2008

tell me about finances for couples

Filed under: philosophical — Tags: , , — plonkee @ 12:00 pm

As time goes by…

I’m a happy singleton, so I don’t know much about couple or relationship finances. I won’t let that stand in the way of an opinion though 😉 .

As far as I can tell, there are three main options (with variations) for the practicalities of joint finances:

  1. totally combined finances, one pot where all the money goes
  2. totally separate finances, two (or whatever) pots with each person paying their share
  3. mine, yours, and ours finances, one pot for joint money plus separate pots for each individual

I’m a deeply independent person, I can’t imagine wholly combining finances with another person, the closest I’d be likely to go was mine/yours/ours but I’d probably want to have quite a bit of control over the system.

As I say though, I’m single, so I’m throwing this out to everyone else:

How do you manage joint finances, and why? 

Image by Hamed Masoumi 

February 27, 2008

reminder: saving is different to investing

Filed under: investment — Tags: , , , — plonkee @ 12:00 pm

Detrained

Being crammed like sardines in the Tube is not a lot of fun. On the plus side it’s the perfect environment for marketing to ABC1s (sociologist speak for professional and above, similar to American upper middle class and up?) as those people are very likely to be London Underground commuters for at least part of their journeys.

Advertising to well off people is a plus because, it turns out that one of the things that people like to market on the tube are financial services – something that unsurprisingly, I’m interested in. The other day, an advert from Prudential caught my eye. The strapline was something like ‘tired of your savings floating away with taxes?’ and the product being advertised was an ISA, a type of tax-free account.

Now I have a problem with this ad campaign. I’m a big fan of savings and ISAs, and you can get an ISA savings account, it’s called a cash ISA. But this campaign wasn’t for a savings account, it was for the other sort of ISA you can get. One that I’m also a fan of. The Stocks and Shares ISA. Does a Stocks and Shares ISA sound like a savings account to you?

The clue really, is in the name. A stocks and shares ISA is an investment account. It’s not a place for your savings, but for your mid to long term investments – stuff you won’t touch for at least five years gives a good rule of thumb. The man from the Pru is misleading you with his ad campaign.

For me, this leads on to the bigger picture. Too many people don’t realise the difference between savings and investments. This means that they are mis-sold investments without understanding the risks involved (check out endowment policies for example), and lose money that they can ill-afford to. This is the problem that might occur with the Pru ad.

There is an even more insidious risk though with confusing savings and investments. That’s people thinking that they don’t need or want to invest because it’s too risky, and that savings will be enough. Although it’s possible to use savings to generate sufficient return for the long term, it takes a lot more money to do so, and although it’s conceivable that savings could outperform investments, it’s relatively unlikely.

Over the long term, cash is one of the worst performing investments that you can make. Which means that savings accounts are one of the last places you want to put your long term money (one of the few things they beat is ‘under the mattress’). Getting people confident and educated about investing in the UK is already massively hampered by previous investment mis-selling. It doesn’t need to be made worse by investment companies mis-advertising their products.

Image by tompagenet

February 26, 2008

designer furniture: knock offs vs. the real thing

Filed under: shopping — Tags: , — plonkee @ 12:00 pm

What do you think of knock off modern classic furniture?

Happy ChairsI’m in love with modern design, especially modern furniture. My current most coveted purchase is a Louis Ghost Chair by Phillippe Starck for Kartell, which will go in my living room. Fortunately, the real thing costs about £135 ($270) which, for a modern design classic that I love, is pretty reasonable.

Some of my other furniture wants are a little less affordable in the official version. Take, for example, the Jacobsen Swan Chair designed for the SAS Radisson Copenhagen Hotel in the 1958. The licensed version is made by Fritz Hansen and costs about £1300 ($2600). However, in the UK you can get a knock off for about £300 to £400 ($600 to $800) from various online retailers.

There are quite a few people who get quite passionate about the undesirability of knock offs. Check out this post on Apartment Therapy, for example, where various people chime in about the (reasonably assumed) lack of quality on the knock off and that you should support the designer.

Part of me thinks that that I should think that buying a reproduction is a bit like condoning copyright theft. But I don’t. It’s not like people don’t buy reproduction Chippendale, and no one thinks that’s a problem. And, I’m never going to spend £1300 on an armchair, no matter how nice it is, even £350 is quite a lot of money, really.

Is it worse to market it blatantly as a knock off, or to make something very similar without acknowledging it’s origins?

Ikea make a stool. It’s called the Frosta stool, it retails for £8 in the UK. It bears a remarkable similarity to a birch stool by the Finnish designer Alvar Aalto, Stool 60. The designer version is better. It looks nicer, it’s made from solid wood, rather than veneer and particleboard.

But is the Aalto stool 15 times nicer? The genuine article sells for around £120 in the UK, a price point that could be affordable for me. But could you ever really justify it when the Ikea version is so much cheaper? And for those that say that Ikea furniture doesn’t last, if it only lasted 3-4 years, it would take between 45 and 60 years for the Aalto stool to work out more cost-effective. I know that the Aalto stool can last that long, but I’m not sure that I will, besides which I’ve had excellent Ikea furniture before now.

At the end of the day, I would like the satisfaction of knowing that I own the real thing, but I want reasonably priced beautiful furniture more. Paying more than a few hundred pounds for a single item (inflation adjusted in the future) is probably never going to feel like a good use of my money. What do you think?

Image by Larsz

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