Podcast Summary
LinkedIn's hidden talent pool: 70% of LinkedIn users aren't actively looking for a job but can still be great hires. Look beyond headlines for investment opportunities in volatile markets.
LinkedIn is a valuable resource for hiring professionals, as over 70% of its users don't visit other leading job sites. This means that great candidates like Sandra, who weren't actively looking for a new job but were open to the perfect role, might be missed if a business doesn't look on LinkedIn. Meanwhile, in the world of finance, the oil price hitting a 12-year low has left investors feeling blue. However, David Stevenson argues that this could be a contrarian buying opportunity for a generation. Despite the bearish scenario, there are opportunities for risk-averse investors beyond shorting the shares of oil companies. The specifics of these opportunities weren't discussed in the text, but it's worth noting that even in challenging economic conditions, there are always potential investment avenues for those willing to look beyond the headlines.
Profiting from market overreactions in oil and gas: Focus on debt-free oil and gas companies during market downturns for potential bargain buys and future gains
Investors can profit from market overreactions, particularly in industries like oil and gas where prices can experience extreme volatility. When prices fall significantly below production costs, it can decimate the industry, but they will eventually rebound. It's crucial to focus on businesses with no leverage during these market downturns because their equity won't vanish, and they'll be in a strong position to buy quality assets at bargain prices. Companies like Ofir Energy and Royal Dutch Shell, which have minimal debt, are examples of such businesses. While the long-term shift towards renewable energy is inevitable, the oil and gas industry will still be relevant for the next decade. Therefore, identifying and investing in quality, debt-free companies during market downturns can lead to significant gains.
Investment opportunities in low-cost oil producers: The speaker predicts oil prices to rebound to $30-$50, benefiting low-cost oil producers, while the investor remains optimistic about resources sector despite current challenges
Despite the current low oil prices, there are opportunities for investment in low-cost oil producers. The speaker believes that oil prices will rebound to around $30 to $50 in the near future, and those companies that have significantly reduced their cost base will be the ones to benefit. David Stevenson, the adventurous investor columnist, also shared that his own portfolio, which has a significant exposure to resources stocks, has taken a hit due to the oil price plunge. However, he remains optimistic about the future of these investments. It's important to note that there's a possibility of market overreaction on the way back up, leading to sudden share price increases. Despite the current challenges, Stevenson remains confident in the resources sector.
The UK experienced nearly flat inflation in 2015: Despite no inflation increase in 2015, the lack of price rise brings minimal financial benefits and may even pressure the Bank of England to cut interest rates
The UK experienced nearly unprecedented flat inflation in 2015, with prices remaining almost unchanged compared to the previous year. This means that various payments and benefits linked to inflation, such as tax allowances, ISA allowances, and benefits, will also remain unchanged. While some consumers may benefit from lower increases in prices for certain goods and services, overall, the lack of inflation will not bring positive effects on our finances. Furthermore, the Bank of England's target for inflation is 2%, and with current inflation rates below this target, there is actually more pressure for the bank to cut interest rates rather than raise them.
Pension tax relief changes expected in upcoming budget: The upcoming budget may introduce a flat rate of pension tax relief between 25% and 33%, potentially affecting high earners, and interest rates may not rise until 2017 or later.
The upcoming budget may bring significant changes to pension tax relief, with a shift towards a flat rate of relief expected. Currently, tax relief on pension contributions matches an individual's highest marginal income tax rate. However, the government aims to reduce the cost, estimated at £21 billion per year, and a flat rate of relief between 25% and 33% is predicted. The implementation of this change may take time, with industry experts suggesting at least 12 months for preparation. High earners may attempt to cash in before the window for high rate relief closes, leading to potential measures from the government to restrict this. Meanwhile, the Bank of England's Mark Carney surprised few with his statement that interest rates may not rise until 2017 or later. This news is welcome for mortgage holders. The budget is anticipated to address these issues and more, so stay tuned for further developments.
Consider bringing forward large pension contributions before budget changes: Higher earners should act before March 16th budget to maximize current pension tax relief rates
If you're a higher earner and you're concerned about losing out on tax relief for pension contributions due to upcoming changes, it might be wise to bring forward any large, one-off contributions before the budget on March 16th. This will allow you to make the most of the current tax relief rates before any potential restrictions take effect. Additionally, if you have unused allowances from previous years, you can still contribute up to £180,000, but acting before the budget would be prudent. Overall, the message is to be proactive and take advantage of current tax relief rates before any potential changes. You can read FT Money's full article for more details. If you have thoughts on the upcoming pensions changes or other money matters, feel free to share them with us. We'll be back next week with more Money Show content. In the meantime, check out our cover feature on the impact of upcoming stamp duty hikes and other tax changes on the property market. And don't forget to visit 1800flowers.com for all your gift-giving needs. Happy gifting!
