Viewing posts categorised under: Italy

Organize and simplify your financial portfolio

By Spectrum IFA
This article is published on: 9th July 2014

SIMPLICITY: freedom from complexity, intricacy, or division into parts: an organism of great simplicity.

In the course of my travels working alongside expat communities, one of the most frequent complaints raised by retirees is how complicated, tiresome and difficult it is to keep tabs on their financial affairs, primarily because they seem to have a host of different people advising them on a number of issues. So rather than enjoying their well-earned retirement, a lot of people seem to devote an excessive amount of time managing their financial affairs whilst trying to keep up to date with changes in the markets and changes in legislation etc.

This was confirmed by a recent survey of investors where 55 percent responded with the statement, “I am trying very hard to simplify my life”. This was up from 48 percent in the previous year. It seems that most people want simplicity in their lives but the truth is that many just don’t know how to go about it. We live in a world of i-phones, i-pads, e-statements and social media – we are constantly online and constantly contactable and so it is difficult to truly switch off.

One of my services is to help clients simplify their financial lives, eliminate clutter, organise accounts and streamline how they manage their money. This is where I can truly add value.

I help my clients to be as efficient as possible with their day-to-day money management by showing them how to make the best use of banking facilities in Italy (and save money in the process), showing them how to save money by paying bills online, using currency exchange services, looking at how to make the most of the tax credits in Italy, possibly moving UK pensions to other jurisdictions, wills, and managing investments more effectively.

By consolidating everything, you can reduce the levels of incoming mail and paperwork, avoid certain fees and also ensure that assets are properly diversified.

Example
In the course of a recent discussion with a prospective client I asked how their portfolio was being managed. He asked me to wait until he retrieved this information and, finally, some 10 minutes later produced approximately eight files each detailing different investments with a variety of companies.

On enquiring as to how each was performing and what their latest values were, he could not tell me, saying we’d have to obtain new statements and that he was “sick and tired of receiving so much investment correspondence, be it in the form of his own portfolio or marketing advice material that he seldom bothered to read through and normally threw them in the bin. At my suggestion we agreed to make another appointment and sit down, ring the various product providers and obtain up-to-date statements. Once this information was received we sat down and reviewed those elements that were performing well, those that were not so good and discussed what could be done to improve his overall situation. I recommended that rather than employing a financial planner, like myself, to manage the day to day investment management decisions, that based on the amount of money that he had invested, he should employ the services of a Private Client asset manager. In this way they could deal with the day to day investment matters and we could concentrate on how to minimise his cross border tax issues, reduce paperwork, and find ways to improve his overall financial position. This freed up time for him to concentrate on his other interests.

One Final Point
In this man’s situation he was clearly eligible for more sophisticated financial management than he had previously been used to, but was not aware he could access these types of services. Our job is to ensure all elements of your financial affairs are well maintained and that you get the best, based on your situation. By consolidating and streamlining financial affairs you have a real opportunity to help yourself manage the difficulties of cross border tax and financial issues that face expats living in Italy.

If you are over awed by the complexities of the Italian tax system or are concerned that you are not making the best use of tax breaks in Italy, or if you merely want your financial life to be simpler then you can contact The Spectrum IFA Group

Pilot Loss of License and Loss of Training Expenses Insurance

By Chris Burke
This article is published on: 26th June 2014

Aircrew undergo many years of hard work at substantial expense to attain their aviation license. However, a commercial pilot’s career and income are always at risk should they suffer serious injury or deterioration in health.

Pilots Loss of License Insurance provides financial support should your aviation career end abruptly; it provides stability while you retrain for a new career. Policies are available on an individual basis should your employer not provide it; similarly members can ‘top up’ their coverage in addition to their company’s existing group policy.

Loss of license insurance is specifically designed for pilots. As such, it negates many of the associated limitations of traditional group insurance products. For instance permanent health and critical illness insurance policies may provide limited cover and significantly reduced benefits in the instance of losing your license.

Who can we insure?

We can cover any individual commercial, fixed rotary or wing pilots including flight instructors, who hold a current license and who are gainfully employed, and actively at work.

Alternatively, if you’re interested in a group policy, please email us directly at chris.burke@spectrum-ifa.com

Key benefits

Lump sum payment
Monthly temporary benefit option
Continuous coverage
Full psychological illness cover option available
Market leading cover for alcohol and drug related illnesses
No extra charge for rotor-wing pilots
Worldwide cover

I have worked extensively with aviation companies and individuals alike, please do not hesitate to contact me with any questions.

Click here for a quote on Pilots Loss of License Insurance

The Full Spectrum

By Spectrum IFA
This article is published on: 26th May 2014

Having recently started working for the Spectrum IFA Group I thought it time I start a weekly Newsletter covering issues important to all of us, one way or another. Especially for expats who have made Italy their home/spend much of their time here. The main thrust/focus of my Newsletter is to impart in an easy-to-understand, but not too lengthy outline, important matters and up-to-date information to expats residing in my area on matters such as investments, tax and general financial planning issues. And being part of the Spectrum Group means I also have access to professionals in various fields of expertise.

So, taking the above into account, I thought a very good and apt place to start would be to give a broad overview of current happenings in world markets, as we are all affected one way or another, especially with the speed at which events are communicated.

Probably 95% of people I have assisted or advised has had or still has capital in the markets in one way or another. There are many ways this could occur, viz a Pension Fund, a Money Market Fund, an Insurance Policy, Unit Trusts (Mutual Funds) or direct Share Investment.

Markets go up and down, and likewise interest rates. And then we have inflation to factor in. We may not be affected by these movements in the short-term, but are almost certainly going to be in the longer term (five years onwards).

Hence the extreme importance of reviewing your finances on a regular basis, at the very least once a year, in order to ensure your investment aims and objectives are still on course. We are all told to have a thorough medical check-up once a year so as to ensure all our parts are functioning correctly. And we are willing to pay for this because we can appreciate the need – after all, we want to be on planet earth for as long as possible.

Likewise the common sense of having a proper financial check-up at least once a year. And in most cases this involves no fee but at the end of it one wants to walk away knowing everything is alright but, if not, then to be able to change the doctor’s prescription! And this gives us peace of mind.

Unfortunately many are the cases where we come across people who consult an advisor, but then forget to review or the advisor disappears and they fail to take remedial action to consult another.

There is so much “doom and gloom” about these days, so it is wonderful to read of or hear about news filtering through regarding the economies of the UK and EU which are quite positive, and this augers well for investors who have experienced a bit of a bumpy ride over the last 18 months and which offers potential for new would-be-investors or those who have been waiting. Matthias Thiel, market strategist at Hamburg-based M.M. Warburg, which is bullish on southern European assets. “The recovery story is playing out as expected,” he said.

The European Commission had, inter alia, the following to say in its Economic Forecast for EU countries……

United Kingdom: Recovery takes hold, fiscal imbalances still sizeable
Italy: A slow recovery is underway
France: Recovery remains slow amid sizeable budget deficits
Germany: Accelerated growth in the offing
Portugal: Gradual economic recovery
Greece: First signs of recovery
Spain: The recovery becomes firmer while the re-balancing of the economy continues

It is very important to remember that markets experience upturns/good times (good times) as well as downturns (negative periods).

And economic experts never all agree! So when times are prosperous, out of, say, 100 experts, a third will have a certain view or opinion, a third exactly the opposite, and the remaining third will be neutral. And all will have convincing arguments to prove their respective outlook. But true, experienced economists, when asked what they think about a certain economic outlook will be honest enough to simply say “I do not know!”

Economies throughout the globe are all intrinsically linked together, and what happens in one country can impact on another, even if they are miles apart. Like that old adage “If America sneezes we in UK or Italy catch cold.

So, in conclusion, there is much to be positive about but with it comes a caveat: Do not put all of your eggs in one basket but spread your resources across the various asset classes.

In my next Newsletter we will focus on the different asset classes and what it means to diversify.

Until next time, ciao!!

Umbria Expat – Financial Surgeries

By Gareth Horsfall
This article is published on: 14th May 2014

How do the latest Italian tax laws affect me?
What are my financial obligations as a resident in Italy?
How can I reduce the amount of tax I pay on savings and investments overseas?
And what taxes do I have to pay on these in Italy?
What is the retiree tax allowance in Italy and am I eligible for it?
Are there other money saving opportunities that I can take advantage of in Italy?

If you would like to know the answers to these questions relating to life as an expat in Italy then Gareth Horsfall from The Spectrum IFA Group (Italy) will be holding a FREE, drop in, financial surgery on the following dates and times during the months of May and June 2014.

10:00AM – 1:00PM Friday 23rd May at Bar del Castello, Castiglione del Lago
10:00AM – 1:00PM Wednesday 28th May at Antico Caffè Giardino, Umbertide
10:00AM – 1:00PM Tuesday 3rd June, Bar del Castello, Castiglione del Lago
10:00AM – 1:00PM Wednesday 11th June, Antico Caffè Giardino, Umbertide
10:00AM – 1:00PM Tuesday 17th June, Bar del Castello, Castiglione del Lago
10:00AM – 1:00PM Wednesday 25th June, Antico Caffè Giardino, Umbertide

Addresses:
Bar del Castello,
Viale Belvedere 1,
Castiglione del Lago.

Antico Caffè Giardino,
Via Garibaldi 14,
06019 Umbertide

There is no charge for this service

If you would like to take advantage of Gareth’s availability on these dates then you can contact him in advance on gareth.horsfall@spectrum-ifa.com or on cell: 3336492356 or just pop along and feel free to pick his brains!

Witholding tax on overseas money transfers to Italy

By Gareth Horsfall
This article is published on: 15th April 2014

I would like to bring up the subject of the 20% witholding tax on profit from investment, for Italian residents. This piece of legislation that Italy was going to introduce in February and has now postponed until July. This seemed to be one of the main causes for concern amongst attendees at the recent Tour de Finance Forum events in Italy and so I thought I would write the little that I know of it to assist in preparation for its, possible, return.

To recap, the introduction of the law was aimed at automatically stopping 20% on any monies brought into Italy, from overseas, (for personal account holders only) on the assumption that this money was ‘profit from investment’ and not other types of income. Profit from investment can be clarified as rental income on properties overseas, sales of shares, bonds, or other types of financial assets.

Of course, stopping 20% on ALL transfers into Italy would also catch those who are legitimately bringing in pension income, income from employment, banks savings etc, and therefore to avoid the fiscal authorities automatically witholding 20% on these monies a self certification, in the guise of a letter, would need to be submitted to your bank to declare that this was NOT profit from investment. If you submitted the letter then your personal details would be passed to the fiscal authorities (who we can assume would then start to track your money movements through Internationally agreed exchange of information controls)

Now it is worth noting before I continue, that in essence the law itself was a smart move from the Italian fiscal authorities, in that it would force those who do not wish to be caught in the witholding tax to announce to the Italian authorities that they are bringing money in and out of the country. Hence, they are more easily trackable. In addition, and I think this is the more likely target, it would also force those who have not yet registered assets overseas with the Italian authorities, to do one of 2 things.

1. Carry on regardless and therefore run the risk that when they are found out they could be fined anywhere from 3-15% of the undisclosed assets, and should those assets be located in black list territories then those fines are doubled from 6 – 30% of the undisclosed value. Not advisable!

2. They self certify with the bank and as such are submitting a legally signed statement of intent. Should they then fail to report income from profit, when it enters the country, they have actually ‘knowingly’ broken the law.

Of course, all this is based on the assumption that someone is not declaring assets that they have overseas and for most this is not the case. So what about those of you who are doing what you should be doing?

Then, I believe, it becomes no more than another administrative headache. What I mean is that with a self certification letter the bank will not stop the witholding tax and so income can move freely into the country as it had previously done. However, let’s assume that you do want to bring some money in from an investment overseas, which has already been declared through the correct channels. Does this mean that you have to go back to the bank and request that this one transaction is treated differently, just this time and what if this is a regular occurence?

Also, what if you fail to declare that money is coming in from overseas profits on investment but this money is, once again, already declared legally on your tax return? Are you in breach of rules and therefore subject to fines?

Finally, so as not to drag the point out too much, what if the bank mistakenly witholds the tax on pension income, for example, which you need to live on? Can you easily reclaim this back? Doubtful! Or do you have to wait up to 2 years for a tax credit?

As we can see the legislation had some trivial issues which they needed to iron out, but, fundamentally it was an interesting move. The first of its kind that I have seen in Europe, where a direct attack on profit from investment overseas has come under the spotlight. Until now the main focus has been on bank interest payments and rental incomes for homes overseas. On March 24th 2014 the 2nd phase of the EU Savings Tax Directives was submitted for final approval which will now bring monies held in overseas investments funds, OEICS, SICAVs, Unit trusts etc, in the EU and outside, into an automatic exchange of information agreement. Additionally, Luxembourg and Austria will now be subject to full exchange of information agreements as of 1st January 2015 and other dependants states, such as the Isle of Man, Jersey, Guernsey, Dutch Antilles, San Marino etc will be required to share more information with the EU.

Lastly, and most interestingly, the proposed 20% witholding tax in Italy will likely raise its head again in July this year. But, in what shape or form, I cannot say. The report from Brussels in the aftermath of the first proposals was not as you would expect, a damning of the law. But in fact they openly supported the idea and suggested different ways of looking at implementation. Can we expect to see this Italian model being the model that Europe will use in the future?

So, for those who are not quite ‘in regola’ yet, time is of the essence. The transparency agreements are effectively opening the doors to hidden assets, bank account interest is tracked, rental income on overseas properties is tracked, now investment in foreign investment funds is under scrutiny. It is only a matter of time before income payments from direct investment in shares and bonds are fully disclosed, Capital gains, i.e profit on investment, is now under scrutiny, as detailed above and that only leaves Limited companies and other more obscure and substantially more speculative investments.

It is worth noting that one of the speakers on our Tour de Finance Forum events was Andrew Lawford from SEB Life International. He was explaining how it is perfectly possible to keep assets outside Italy, but be compliant with the laws of Italy, and remove the need to keep abreast of these changes in Italian law by employing the use of an insurance wrapper in which to house your assets. It acts like a tax efficient account whereby SEB Life International, in this case, will act as a witholding agent to ensure you do not pay more tax than you need to and that they become legally responsible for reporting the assets correctly.

It removes the worry of reporting error, keeps monies out of Italy and most importantly, whilst the money is held in the wrapper, it is never subject to Italian income or capital gains tax. Only at the point of withdrawal (partial or full) would any Capital Gains tax liability only, (not income tax) occur, which would be paid automatically on your behalf.

Finishing up on the new legislation, in whatever form it takes, will likely be no more than an administrative headache for most, but for those who, as yet, may have undisclosed assets, then more difficult decisions lie ahead. If you think anyone else might find this article useful, please do feel free to pass the information on and if you would like to speak about this or any other financial matter as an expat living in Italy, then plese get in touch.

A successful start – Le Tour de Finance, Italy

By Gareth Horsfall
This article is published on: 3rd April 2014

OLYMPUS DIGITAL CAMERA The Tour de Finance Forum (Italy) events in 2014 got off to a flying start with 2 events in Umbertide and Bagni di Lucca, respectively. Both events were well attended with approximately 30 attendees.

The events were a change from the norm, using the Forum style rather than powerpoint and structured presentations. Thank fully, the change of format worked incredibly well and both particpants and speakers alike gave credit to the new format.

The speakers on the day were Judith Ruddock (Studio del Gaizo Picchioni), Andrew Lawford (SEB Life International), Rob Walker (Jupiter Asset Management) and Peter Loveday (Currencies Direct) covering topics such as the latest rules on residency in Italy and tax returns, to tax efficient investment structures and will the Euro and Europe survive.

All in all the new format was more engaging and the content delivered in an easy to understand and manageable style.

We will be looking to hold further Tour de Finance Forum events in the autumn of 2014, in the Lucca and surrounding area and Le Marche.

We hope to see you there!

The Spectrum IFA Group Expands in Tuscany, Italy

By Spectrum IFA
This article is published on: 12th March 2014

The Spectrum IFA Group are delighted to announce that Peter Francis has joined the Italian team in the Lucca area.

Peter has worked in Financial Services for 25 years covering all aspects of financial planning and investment advice. Initially working within a large bank brokerage and then moving on to advising expats in Cyprus, Kuala Lumpur and Singapore.

Commenting on this recent appointment, The Spectrum IFA Group’s manager in Italy, Gareth Horsfall comments that “ We are delighted to welcome Peter into the Italian team and his appointment high lights The Spectrum IFA Group’s commitment to extend our range of services and advisers in Italy and to provide expatriates with a wide range of specialist financial advice.

You can contact Peter directly here

The Tour de Finance Forum 2014 – Italy

By Gareth Horsfall
This article is published on: 4th March 2014

The Tour de Finance 2014 is back, but this time I have given it a twist!.

Every year we bring a group of financial experts on the road in Italy to talk directly to expats about the financial considerations and concerns that they are facing.

In 2014 we are returning to Bagni di Lucca and Umbertide based on the interest shown and attendance in 2013.

We will be returning on the:

26TH MARCH 2014 Umbertide at Ristorante Pomarancio

27th MARCH 2014 Bagni di Lucca at La Cantina delle Pianacce

Start time: 10.30am for coffee and sweets until approx 1pm with a FREE buffet lunch, wine and an opportunity to meet your fellow expats.

(I would like to add that due to increased demand for our services, we are receiving requests from all over Italy and so we want to extend the Tour de Finance into other parts of the country. So we will not be returning to these same locations for at least 1 year as the Tour de Finance is planning to expand to others areas of Italy in the autumn 2014.)

BUT, this time the format will change!

We are doing away with the Powerpoint presentations and structured presentations!

After reflecting on your feedback from previous events, I have decided to change the format to a FORUM style event. I want to avoid presenting all the information that ‘we think you should know’ and actually try and deliver the information that you want to know. Typical questions that I often hear from people include:

What are the likely implications of the recent implementation and then withdrawal of a 20% witholding tax on profit from investments held overseas, for Italian residents?
Are there opportunities to reduce my Inheritance tax liabilities in Italy?
What risk is there of losing all my money when I invest and how can I avoid this completely?
Are there any tax allowances/credits available to me as a resident in Italy?

So I, Gareth Horsfall (Spectrum IFA group (Italy) will pose questions to the panel for approx 30 minutes, followed by a refreshment break and then a further 30 minutes for questions from the audience.

It really is an opportunity to put the experts ‘on the spot’

The Panel of experts will include:

Judith Ruddock: Studio Del Gaizo Picchioni. Cross border tax specialists and commercialisti.
Andrew Lawford: SEB Life International. He will be facing questions about tax efficient savings vehicles for Italy and ways to potentially reduce your Inheritance tax liabilties.
Rob Walker: Jupiter Asset management, Private Clients. He will be free to take questions on world markets, from the current state of emerging markets to how to generate income from your money.
Peter Loveday: Currencies Direct . He will be taking questions on how to save money on International currency transfers and how they work.

I hope you will register your attendance. And I hope that the FORUM event will avoid all the boredom of powerpoint presentations and make the morning much more interactive for you.

If you would like to register for this event then you can do so by sending your full contact details to
info@spectrum-ifa.com or call Gareth Horsfall on 0039 333 6492356.

Suspended – 20% tax on overseas transfers into Italy

By Gareth Horsfall
This article is published on: 20th February 2014

Suspended – 20% tax on overseas transfers into Italy

The witholding tax of 20% on overseas transfers into Italy has been suspended.

No sooner had the law regarding the 20% withholding tax on transfers from overseas been introduced, than it is suspended. Until July 2014.

The main isssue with the law was one of distinguishing between transfers from abroad that were ‘profit from investment’ and those that were income from other sources, such as pensions. And if you made an auto certificazione’ with your bank to state that you were not bringing money into the country, from profit on investment, then would you have to sign another auto cetificazione when you did? and what happens if you forgot but still declared the asset on your Unico’? These are just some of many questions which needed answering. In the end the law was just another example of very badly thought out policy which really should have been planned more carefully. (Interestingly I have just seen a report that the EU has not condemned the law but says that it needs more thought, essentially)

Athough, the more I think about the law itself, as a way to catch those who were not making accurate declarations, the more I admired it. But once again it came down to implementation and even the best laid ideas are doomed to failure without adequate planning and thought.

That all being said it now seems that, at least for the meantime, Italy will be resorting back to the, what now seems the almost historic, share of information agreements with co-operating countries.

As you may or may not know the EU has an open share of information agreement. Some UK rental property owners found this out to their chagrin in 2012 when the Guardia di Finanza went knocking on doors asking why rental income from a UK property (which interestingly was already being declared and tax being paid in the UK) was not being declared on the Italian tax return. Some of the fines which I heard of were astronomic.

Luxembourg and Jersey have now signed up to a free exchange of information on interest payments, in the EU, from 1st January 2015. Austria will likely follow as the 1st January 2015 marks the entry into force of the mandatory exchange of information agreement across Europe.

The Isle of Man and Guernsey have already agreed a full and open share of information agreement with the EU on income from interest and so the information on offshore bank account holders is fully reported.

And the USA has already entered into agreement with Italy under its FATCA law (Foreign Account Tax Compliance Act) which allows for a free exchange of information on resident individuals in either country. In fact there is a new acronym doing the rounds: GATCA. Global Account Tax Compliance Act.

One of the most interesting points about the Italian move to withhold 20% at source was that it was an open attack on profit from investment.. The share of information agreements, to date, have been mainly focused on interest from savings. Could this mean that the EU is about to enter the next phase of tracking down mis-reported incomes and/or gains from investment. Probably! The mandate has been clear since the implementation of the EU Savings Tax Directive that ultimately the EU will have an open information policy across all EU states on all incomes and profits from savings and investments. We may laugh at the inadequacies of the Italians to implement a law, which on the surface of it seemed ridiculous, but it would not surprise me to see this being the first of many steps throughout the EU to open the information exchange channels even further and to exchange information on almost every financial asset you can think of.

As I have said many times before, if you are a resident in Italy, now is the perfect time to be planning to stay ahead of the game. Many things can be done now to limit losses, limit potential fines, and plan efficiently for tax and it needn’t be painful or frightening.

If you have income and assets in Italy or overseas and want to know how to potentially reduce your tax liabilities and plan more effectively, whilst ensuring you are ‘in regola’, then you can contact me on gareth.horsfall@spectrum-ifa.com or call me on 3336492356

Investing for a higher Income

By Gareth Horsfall
This article is published on: 18th February 2014

Investing for a higher Income

Investing for income, rather than capital appreciation, is as old as investing itself but its relevance becomes more noticeable in times of low bank interest rates. (Or historically low as the media likes to keep reminding us).

It offers an additional lifeline for those who need to live from the interest from their savings and not just accumulate for a point in the future. The relevance is bigger for those who are not working and do not have a regular income due to ill health, out of work or in retirement.

To elaborate this theme, I have written in the past how an investment should be considered to behave like a garden. It should be well cared for, maintained, trimmed, fed and watered otherwise it becomes out of control and the weeds take over. In no time the tendered beauty and joy of a well cared for garden, diminishes.

Well, I would like to expand on that concept further to explain the purpose of investing for income.

For most of our working lives we try to accumulate capital, save from the very money that we earn to amass the assets that we will one day live off in retirement. But during this time, you may be unaware that you are actually investing for income as well. Its just that the income is being reinvested back into your account to make the capital appreciation quicker. The difference is that when you reach the point when you want the income, you invest in those assets which pay the better levels of interest and have it paid out instead of reinvested.

If we think about it another way, it is the equivalent of the garden. A beautiful cottage style garden that you cultivate from seed and over many years that you carefully tend to. The flowers bloom each spring, and you diligently tend to the plants as they grow, check for problems, apply pest control methods, trim the flowers to put on your kitchen table and enjoy the joy that it brings for you and the family over the years. During this time you may have a small vegetable plot. (the equivalent of an income). But during your working years you have to invest in earning a living and this may prevent you from expanding the vegetable plot, after all you earn enough money to buy vegetables from the supermarket instead of growing them. The garden provides joy and pleasure but only a small amount of income.

When you finish working and your income level may drop, you now have more time to spend on the part of the garden that can provide you with more of the supplemental income.

But, there are 2 types of vegetable plot, those that provide and those that don’t. The difference relies heavily on the soil. The fertility of soil in which you plant those veggies. If your soil becomes too abused it will stop producing. (Note, Westernised economies and the reason for low interest rates). So you have to look at either changing the type of vegetables you plant (crop rotation) or changing the soil. Both can be as effective as one another.

This is the basic concept of investing for income. If one area is not providing sufficient rewards, then it is time to look elsewhere. (Note, bank interest rates are so low that to maintaina standard of living it is necessary to look at other forms of income producing assets)

Example

I would like to talk about Vodafone for a moment and in particular shares in Vodafone. We all know the name but you may not know the significance of Vodafone as an income producing share.

The talk of shares in companies scares alot of people, but Vodafone is a good example of a reliable company that rewards it shareholders with good dividends (income) for being an investor. At the time of writing, if you invested in Vodafone stock today, you would be rewarded with an interest rate of 5.13%. And Vodafone also has a long history of paying income to its investors and more importantly a rising income.

See the table below for the facts

Year ended 31 March	Interim Dividend	Final Dividend	Total Dividend	Growth %
2010	2.6600	5.6500	8.3100	6.95
2009	2.5700	5.2000	7.7700	3.46
2008	2.4900	5.0200	7.5100	11.11
2007	2.3500	4.4100	6.7600	11.37
2006	2.2000	3.8700	6.0700	49.14
2005	1.9100	2.1600	4.0700	100.00
2004	0.0535	1.0780	2.0315	20.00
2003	0.7946	0.8983	1.6929	14.99
2002	0.7224	0.7497	1.4721	5.00
2001	0.6880	0.7140	1.4020	5.01
2000	0.6550	0.6800	1.3350	4.95

The thing to note is that from the 10 years till 2010 Vodafone increased its dividend 231.98%. If this were the equivalent of bank interest, assuming bank interest started at 3% in 2000, then you would be receiving 6.959% interest on your bank interest in 2010. (The dividends have also been increased through 2010 to 2013 as well !!, so the rate today would be even higher). All this through 2 stock market crises (the tech boom and bust of 2000 and more recently the financial market collapse of 2008/2009). It should be noted that the underlying stock price has increased during this time as well.

I am not recommending that you go online today and buy Vodafone stock. With all investments of this type it comes with risks, management of the business, future profitability of the business and ability to continue to pay dividends, profit warnings, market sentiment, to name a few. However, you can minimise your risk of investing in this way by investing through a fund that specifically invests, manages the risk and can pay out the income.

The point of this blog post is to reiterate the point that if you feel that bank interest is not satisfactory for your living requirements, or you have a tax bill because of being resident in Italy and need supplementary income to pay it, or you just need some more income to make life easier then there are alternatives to leaving the money in the bank or investing in Government Bonds (the historical investment choice of type for the ‘average’ Italian).

If you would like to know how to build a portfolio of income producing assets or would like to discuss any other ways of improving your current financial situation then you can contact me on gareth.horsfall@spectrum-ifa.com or call me on 3336492356.