Financial News from the Costa del Sol, Andalucia, Spain

When the markets are down and volatile, the outlook doesn’t have to be doom and gloom. When is the best time to buy anything? When there is a sale on. With hindsight we could all be millionaires. If we all bought when prices were at their lowest and sold at the peak then we would be laughing all the way to the bank – as long as it was the right bank!

Even banks are not safe anymore. In the last few months Moody’s has re-rated many banks worldwide. Some are going in a downward spiral. Most of the biggest names are still in the A ratings, but even some well known banks and building societies have slipped down as far as C. In certain underdeveloped countries we expect C and D ratings even from their bigger banks, but in Europe? Some of the smaller banks and Cajas in Spain have been hit hard by the sub prime mortgage issue and consequently have seen their asset / liability ratio go from a positive to a negative within a few short months. Many are at a C level now and their rating is again under review.

So what does this mean?Well, if a large number of people wanted to access their deposits, either to spend or invest elsewhere, the banks might not be able to meet those demands. In the UK when this happens, as it has twice recently, the treasury bales them out. Would the Bank of Spain do the same?

I am not scare mongering. I am just asking everyone to review their personal financial situations and look carefully at the institution holding their assets. Is there a safety net? In the UK you are guaranteed to get £35,000 back of any deposits held with a bank that goes bust. In Spain, only €20,000 is protected (€40,000 for joint accounts).

So what should you do with your money? Take advantage of the sale that is on right now. There are 80% protected funds that currently stand at a 10% to 15% discount i.e. you are in effect getting a 90% to 95% guaranteed protection within these funds. For the person willing to take a little more risk, there are many asset classes that are flying. Commodities, especially ones investing in agricultural products such as wheat, rice, corn etc have seen prices double in a year. The Latin American markets are growing stronger and stronger seeing very high returns on investments over the last few years.

To discuss these or any other aspect of your personal financial planning call Pauline Bowden now on 95 289 0383 or Brian Berney on 666 670 187 for a private and confidential review.

SPECTRUM IFA GROUP Baskerville Advisers S L CIF B-63/137.020 Correduria de Seguros; Nº de rigistro RDGS J2306;Seguro responsabilidad civil AIG Europe Nº 0131900503.1330 Registro Mercantil de Barcelona, Tomo 35489, Folio 170, Seccion 8, Hoja B-269534