Host:		Good afternoon and welcome to today's webchat. Neil and Andy are live in the studio ready to take your questions.
Neil Dwane and Andy Parsons:		Neil: Hi, looking forward to taking your questions. Andy: Welcome everyone. Hopefully we will have a discussion around one of the hotest topics of the last six to nine months.
jo:		where do you both recommend investing SAFELY for income at the moment?
Neil Dwane and Andy Parsons:		Andy: I can’t give you specific advice as every individual’s perception of ‘safely’ will vary and is dependent upon your own personal circumstances and attitude to risk. In general however, and following the banking debacle, the Government increased the compensation scheme up to the value of £50,000 per organization for bank deposits. Investors should note that given the current economic conditions any level of income from such investments is likely to be low. Generally any investment outside of these will carry some degree of risk.
terry dempsey:		i have a lump sum of 40000 pounds after taking an early retirement package from BT.What would be the best place for this to invested ,
Neil Dwane and Andy Parsons:		Andy: This will vary from individual to individual and I would advise you and any one else interested in investing lump sums to seek advice from a financial adviser. This will ensure that you receive the most appropriate advice for you own personal circumstances. They will need to discuss and understand issues such as the value and liquidity of your assets, attitude to risk, investment objectives, time horizons.
p berry:		which are best for income over a sustained time, income funds or income from bonds
Neil Dwane and Andy Parsons:		Neil: History clearly demonstrates over the long term that investing in equities and re-investing the dividends produces the best returns to investors. Whilst bonds have in recent times yielded more than equities, they clearly do not do so at this time and will not offer growing income as the global economy recovers.
Joan Newton:		I've seen conflicting advice about investing in Tracker funds, some saying it's the only way forward, others that it's a recipe for diaster in the present climate. What do you think? Is a tracker for the FTSE 250 indeed more profitable than for the FTSE 100?
Neil Dwane and Andy Parsons:		Andy: There has been much speculation as to whether a tracker fund is likely to be more profitable than an actively managed fund. A key point to note is that a Tracker Fund at best will only match the performance of an index, whereas an actively managed fund will look to outperform the market although this cannot be guaranteed. Neil: I believe trackers offer a lower cost route to exposure to equity and other markets. However, as we have seen in the last two years a Tracker Fund has mirrored an index which could be full of companies that could subsequently collpase in value like many of the UK banks. And thus, may not be as effective an investment vehicle for investors.
Mustafa Profitt:		I have taken £10,000 out on various credit cards so i can invest in the market, what would be the best funds to make profit on at the moment.
Neil Dwane and Andy Parsons:		Andy: Without being able to give any specific indiviudal recommendations, any investor who considers this approach would need to appreciate this is a high-risk strategy due to the fact that the investment return would need to exceed the interest rate on the credit card. Personally, this is a strategy I would not recommend.
Brian Richards:		Do you agree with the buy and hold strategy for selective bluechips.
Neil Dwane and Andy Parsons:		Andy: Whenever investing in equities, an investor should always have a pre-determined price target in mind for selling whether for a profit or potential loss. Investors should never shy away from potentially locking in profitable gains and buying back in again on share price weakness. It is far too easy to continually hold and see gains suddenly wiped out. Many stockbrokers now allow investors to set triggers such as ‘alerts’ or ‘tracking stop losses or ‘stop loss limits’ to help lock in potential profits or help minimize any potential losses. Neil: I personally agree with this statement, that a substantial proportion of someone's equity holdings should be investing for the longer term in high quality, well managed companies. Warren Buffett has done it successfully for many years!
john:		my shares have dropped 25% since last year. Should I sell them and buy government bonds or hold on until I need the money in 4-5 years time?
Neil Dwane and Andy Parsons:		Andy: I’m sure you will appreciate that it’s impossible to provide specific advice. In general though, any investor needs to clearly identify the reason for their investment, their time horizons and the risks associated. If a specific sum of money is required in the future, it would be unwise and inappropriate to invest in an asset class that carries a significant risk of losing all or part of the investment. If in doubt always seek independent financial advice. Neil: Whilst I can't give you specific advice, I would suggest 4-5 years investment time previso is long enough to allow a well managed well placed company to recoup your losses. Obviously, you need to satisfy yourself that your investment is capable of generating future profits growth that will be rewarded with a higher share price. The alternative of investing in bonds at this time over the next 5 years will be to a large extent determined by both the size of the UK government deficit and the threat of inflation in that period. So, I would personally stick with the equities.
Neil:		Would you recommend investing in corporate bonds for income?
Neil Dwane and Andy Parsons:		Andy: Again, I can’t provide you with specific advice. However, this is an area of investment that has received much publicity over the past 6-9 months. Any potential investor should be aware that a corporate bond is essentially an IOU from the company and need to consider whether that company will be able to repay the debt. Also, bonds are rated by the various agencies as being either ‘Investment Grade or Non-Investment Grade’. Those rated ‘Non-investment Grade’ generally offer the highest potential return but also carry the greatest risk of default. Neil: Whilst I agree with Andy's comment, I would like to add in many cases the yield from a corporate bond of a company will be significantly less than from a share or equity of that company. Clearly, this reflects the greater certainty of the interest being paid. However, in the case of strong companies, like BP or Royal Dutch Shell, there remains at the moment there is little doubt that the dividend will be honoured and thus, why buy the corporate bond when you can buy the equity with all the attractions on it?
des coleman:		sorry, but what does investing for income actually mean?
Neil Dwane and Andy Parsons:		Andy: Fundamentally, there are three avenues people will look for income: cash deposits; gilts and bonds; equity income from shares. These three strategies all have a varying degree of risk. So, with cash deposits - these have been heavily under the spotlight due to low interest rates whereas bonds (such as corporate bonds) have received much publicity as a potential alternative, albeit, they carry a higher degree of risk. Advice should be sought before any investment. I am sure Neil will be only too happy to now give some insight into equity income... Neil: Yes, equity income remains a very robust and popular investment strategy for UK investors. This route offers investors the potential to receive dividends (income) according to the amount of equity (typically, shares) they hold. I would note that there have been recent media concerns that UK equity income is very reliant on dividends from oil and telecoms and thus investors should consider looking at broader sources of income, for example, from European companies as well. Again, advice should be sought before any investment.
John Reid:		I have been building a selection of Corporate Bond Funds in my ISA to reinvest the income now with a view to taking income later. I am 70 years of age. Is this ok?
Neil Dwane and Andy Parsons:		Andy: This will depend on your individual circumstances and I’m sure you will appreciate that it’s impossible to provide specific advice. I recommend you seek independent financial advice.
Sam Evans:		What do you think about the news that France and Germany are out of the recession? What are the implications for me as an investor?
Neil Dwane and Andy Parsons:		Andy: I think the news this morning was unexpected give much of the broader economic news and reports over the past few weeks. Obviously this will be seen and looked at in closer scruitiny by experts. Especially, by experts such as Neil! Neil: Indeed it was good news this morning and highlights that Germany in particular remains both cost competitive but also beneficially exposed to the resurgance of growth in China. Euroland remains a two-tier economy with the weaker Garlic-belt countries still needing further structural change to boost their competitiveness relative to Germany and France.
Dan Smith:		Most of my money is in UK Equity Funds. Is there anywhere else I should consider putting?
Neil Dwane and Andy Parsons:		Neil: My personal view is that the UK and the US markets will be the weakest performers in the next couple of years as the economies recover from the credit crisis and the extended housing markets. Thus, I believe investments into Europe (where there are stronger fundamentals such as exports and closer access to the CEE region for example) as well as into Asia (where the global theme of industrialisation and urbanisation will continue to accelerate) are certainly areas in which you may want - having taken further advice - to consider investing. Andy: You will appreciate that I cannot give you specific individual advice, however, I would note that when building a portfolio, it is always beneficial to ensure diversification - whether that be geographically, or through asset-class diversification.
Peter Ranicar:		What market conditions would sugest one sells Corp Bond funds OR High Yield Corp Bond funds from an ISA?
Neil Dwane and Andy Parsons:		Neil: High inflation!
Clive Estall:		You've mentioned the default risk of Corporate Bonds. How can an investor identify if a particular bond issue is secured against specfic assets of a company and thereby understand the true default risk / security of the capital invested? Depending on the underlying security of the assets, surely it may be better to hold a bond investment in the company than an equity investment to reduce the default risk?
Neil Dwane and Andy Parsons:		Andy: Whilst we are unable to provide specific investment advice, a corporate bond can be purchased as either a direct holding or via a collective investment scheme (fund). Buying via a fund means that the bonds have been assessed by the fund manager and their research department. Neil: Equities are the final owner of all the company assets and are therefore the final loser or beneficiary when all the company liabilities have been paid.
Allan:		Good day Gentlemen, There is mounting speculation from reliable and responsible sources on the internet that the American economy will collapse as soon as September due to various countries around the world dumping the dollar. I would like to know your opinions of this and could you speculate what impact this would have on the British and world economy particularly the stock markets if this were to happen. Thank you
Neil Dwane and Andy Parsons:		Neil: The Federal Reserve and the Bank of England reports of yesterday both highlight that the economies remain in a very fragile condition. Therefore if the emerging recovery stalls there will be further need for fiscal action to re-sustain the economies. We saw last week the Bank of England extended its quantitative easing and sterling weakened. Therefore, I think it fair to conclude that further fiscal action from either Government will lead to weakness in Sterling and the US Dollar. Overseas investors remain significant holders of US debt and thus they would be very senstive to a significant weakening of the US Dollar - but in reality the US Dollar remains the global currency of choice at this time.
ARTHUR BRUGGER:		Hello, How do I maximise income. Where is your private money invested at the moment?
Neil Dwane and Andy Parsons:		Andy: Generally speaking, I am firm believer in that any portfolio for income and growth should be well diversified in terms of geographical representation (not solely UK) and asset class (so, cash, gilts, bonds and equities). Neil: The largest asset people own is their property and it is also one of the most tax efficient. Therefore, I think you could consider further investment in residential property where you get tax benefits on the interest and additional income from the tennant. Andy: Any investment, of course, must be considered against a personal attitude towards risk and investment objective.
Georgina Nightingale:		I've been seeing a lot of news about UK companies cutting their dividends. Should I be concerned about this?
Neil Dwane and Andy Parsons:		Neil: During any recession, there are always weaker parts of the economy which are unable to generate sufficient returns to pay their shareholders a dividend. This is, unfortunately, a normal part of the cycle and has been exasperated by corporate leverage and by the share buy-back of the last five years. Strong companies with good business models are increasing their dividends - as you have seen recently with Reckitt Benckiser and the Prudential, this morning. European companies currently yield a higher level of dividend than the UK and thus investors could consider moving some of their portfolio towards this attractive asset class.
Clive Estall:		You've mentioned broader sources of income, for example, from European companies as well. Can you outline the currency risk of overseas investment and how these risks could / should be managed
Neil Dwane and Andy Parsons:		Andy: Personally, for any individual seeking income and prepared to accept a slightly higher degree of risk, the opportunities available outside of the UK are increasing. Many investors, I feel, are still unaware of theses opportunities. Neil: My personal view is that sterling will continue to become a weaker currency over the next five years as we recover from this recession. European investments benefit from a strong currency and stronger government financial positions and therefore investors will not lose from the depreciation of the currency. Many funds can hedge the currency exposures but over the last year everyone in the UK has found Europe increasingly expensive, whilst Europe is finding the UK increasingly attractive. Andy: Advice should always be sought prior to any investment.
Host:		Unfortunately that is all the time we have for today's chat. Thank you for all your questions.
Neil Dwane and Andy Parsons:		Neil: Thank you to everyone for your questions. Andy: Agreed - it's been fun to do and thank you for joining us today if you have been watching. Do be sure to seek professional advice for your own particular situation before investing.