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MoneyWatch - the new personal finance blog from Pulse Financial Consultants

Our new personal finance consultancy providers, Pulse Financial Consultants, begin their blog keeping you updated on money matters. To kick off, consultant Justine Roberts puts the credit crunch into perspective.

Our new personal finance consultancy providers, Pulse Financial Consultants, begin their blog keeping you updated on money matters. To kick off, consultant Justine Roberts puts the credit crunch into perspective.



It is not a good time to be a financial consultant! It is impossible to turn on the television or radio without hearing about global crisis in the financial sector.

Banks we once thought were safe are teetering on the brink, share values are plummeting, the price of oil has rocketed and to cap it all it seems quite likely that America is going to bankrupt itself as commentators become increasingly concerned over the extent of the bail out the US government is making to the banking sector.

Add to this soaring food bills, rising inflation, increased utility costs, falling house values, the price of petrol, global warming and our missing summer, and you would be forgiven for thinking that we all want to pack our bags and go elsewhere!

So what is missing from this picture?

Perspective.

Inflation is at a ten year high at 4.8%, but this is somewhat lower than it has been on average since World War II.

Interest rates are at 5%, the highest they have been since, well, February. It's worth remembering though that interest rates didn't fall below 5% at any point between 1975 and 2001.

Unemployment is higher than recent years but still historically low.

House prices have fallen on average by 10% in the last year, meaning for those who have owned their own homes for the last ten years it will only have grown in value by 150% or so!

Certainly the banking industry has had a shock, however it will survive. Western culture depends upon capitalism and capitalism doesn't exist without a sound banking system. Changes are certain but a collapse of the banking system?

NEVER

The above in no way belittles the real issues that some people are suffering; however the truth of the matter is that most of us are not doing so badly.

So what does this mean for GPs?

For those worried about investments and pensions; most of us invest into our pensions, our ISAs and our other investments for the longer term, While it is certainly a good idea to take professional advice, it is not a time to panic.

Markets through history are cyclical and there is no reason to believe that this is not another of the readjustments that occur from time to time.

The sensible approach for all concerned is to sit out the current uncertainty, for as sure as eggs are eggs the markets will, in due course, recover.

The mortgage market, whilst not being buoyant, is certainly not dead. If you are a first time buyer with a limited deposit there are not many options available, and there are even less available mortgages now than there was a year ago.

But those with mortgage deals coming to an end with some equity in their property, and a good income, there are still many lenders offering competitive rates in order to grab your business.

In these turbulent and uncertain times it is even more important for everyone to review arrangements from time to time.

Clients often have a perception that as financial consultants we are here to spend their money on new products, or savings, or that needed but slightly unwanted new life cover plan to protect their children.

The reality is that we are here to ensure that arrangements are appropriate, cost effective and necessary, and this often means saving clients money rather than spending it! And what better time to save money than during a credit crunch?

Justine Roberts of Pulse Financial Consultants Justine Roberts of Pulse Financial Consultants Further information




Pulse Financial Consultants can be contacted by clicking the image above or by email at enquiries@pulsefinancialconsultants.com

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