Archive for the ‘Money’ Category

What does one million pounds look like?

Sunday, May 9th, 2010

If you’ve ever wondered what a million pounds (£1,000,000) looks like this post may help. Unfortunately I don’t have a million pounds, but I do have one single twenty pound note. Here it is:

twenty pounds

I also have a ruler, a calculator, and a copy of Paint Shop Pro. I’m therefore going to create a million pounds out of £20 notes. To do this I need to know the dimensions of the £20 bank note. Each one is 149x80mm with a thickness of 0.113mm. A stack of 100 notes with a value of £2000 will therefore be just 11.3mm high. Or 1.13cm if you prefer.

Here is £2000 with some mystery legs to give you a sense of scale.

two thousand pounds

Of course your £2000 stack will only look like this if you use fresh new banknotes straight off the printing press. If you build the stack out of used banknotes it won’t look so neat because of all the crinkles and folds.

What does one hundred thousand pounds look like?

Next what might one hundred thousand pounds (£100,000) look like? A bit like this photo, 9 stacks, each with a bit over eleven thousand pounds in it. A nice block of money I’m sure you’ll agree.

one hundred thousand pounds

What does one million pounds look like?

So what does a million pounds look like? I’ve built my million pounds out of 25 blocks of £40,000. Each of these blocks is 22.6cm high. So my million is about 45.2cm high with a single block of £40,000 at the front. One million is made of 50,000 £20 notes.

one million pounds

What if instead of being in a big block, all the notes were in a single pile? If that were done we’d have a stack of notes 5.65m high. To put that in perspective I put the stack next to a London double-decker bus. You can see that one million is a bit higher than a bus.

million pound stack and bus

There are a few more all important questions to answer.

Would one million pounds fit in a brief case?

If we imagine a film or crime drama where the villain brings a brief case full of bank notes to a meeting how much would fit in there? If it is filled with £20 notes then we could fit about £100,000 in a brief case.

If we are dealing with £50 notes then we could fit about £250,000 in a slightly bigger brief case.

As for bringing a million pounds in a brief case – it isn’t going to work.

Would one million pounds fit in a suit case?

With a suitcase you can transport much more serious money. You can definitely fit a million in a suitcase using £20 notes. And using £50 notes you can easily lug two million pounds around.

What would one million pounds weigh?

One million pounds using £20 notes would weigh about 50kg! You’d have to be pretty strong to be able to carry it. If you put it in a suitcase and tried to check it on to an aircraft you’d be racking up some serious excess baggage charges. Luckily you’d have to cash on hand to pay for it!

Using £50 notes your million would weigh about 22kg. This would almost fit into your usual 20kg airline allowance. And if you put some of the notes in your hand luggage you’d completely escape any excess baggage charge.

If we go back to the suitcase example £100,000 of £20 bank notes in a briefcase would weigh about 5kg. If you add in the weight of the briefcase you still have a fairly portable brief case of cash.

What are the bank note dimensions?

For reference:

£20 – A twenty pound note is about 149x80mm, 0.113mm thick. About 1g in weight.

£50 – A fifty pound note is about 156x85mm, 0.113mm thick. And about 1.1g in weight.

How to get an ordinary power of attorney

Friday, May 7th, 2010

There are two types of power of attorney (PoA) in England. There is a lasting power of attorney (which replaced the enduring power of attorney), and the ordinary power of attorney.

power of attorney 1

The lasting power of attorney can be used to grant someone the power to handle your financial, property and health affairs if you are no longer able to deal with them yourself due to ages / illness / reduced mental capacity.

I’m not going to talk about the lasting power of attorney. I’m writing here about the ordinary power of attorney. I’m no legal expert so make sure you consult a proper solicitor before arranging anything, but maybe my experience will help you.

The ordinary power of attorney is a much more limited power, which can be used for very specific purposes. For example:

  • Allowing a relative or trusted person to handle specific aspects of your finances if you go abroad.
  • To allow someone to carry out a specific transaction on your behalf.

Arranging one is very simple.

First find a solicitor. You can use the Law Society Find a Solicitor site to search for one.

You don’t actually need to find one near you as there is no need to meet up with the solicitor to arrange this. In fact you may find that if you use a solicitor in a ‘cheaper’ part of the country you’ll get a better rate than one in London for example.

Once you’ve picked a solicitor you should get a quote. You’ll need to tell them exactly what you want by phone or email. Sometimes email has advantages for these kind of dealings as what you want is in writing, and you have a record of your communications.

You’ll need to ask for something such as “an ordinary power of attorney to allow my father to arrange a lease extension for my flat”.

The solicitor should be able to give you a price – and in usual solicitor fashion they’ll probably quote it without VAT so you’ll have to take that into account. When I arranged an ordinary PoA I was quoted a figure of £95.00 + VAT. Which is £111.63.

If you are happy with the price give the go ahead. At this point you are committed to paying for the solicitor’s service.

The solicitor will need the full names and addresses of yourself, and the person whom you are granting the power of attorney to. This person is known as the ‘attorney’. You should also re-state what the scope of the PoA is.

You solicitor will then prepare the document. This will take them literally about one minute to do as all they do is to fill in some gaps on a PoA template. They’ll then probably post it to you.

When you get it you’ll probably see it is just a single page of A4 paper. First check that all the details are correct. Then you’ll need to sign it in the presence of a witness, who will also need to add their details to the form.

power of attorney 2

You’ll then need to post the form back to your solicitor. They may also ask you to send them some photocopied proof of your address and identity (such as a bill, passport, or driving licence). They’ll probably want your money as well at this point.

Then once they have received it they’ll check that you’ve filled it in correctly, photocopy it for their records, and send the original one back to you.

And that’s it. If the solicitor is efficient the whole process might be completed in about a week – and the only reason it takes this long is due to the posting of documents back and forwards.

It isn’t difficult to arrange, you can do it all by email and post. And at the end of it you get a single sheet of A4 paper for a cost of over £100. But if that piece of A4 paper allows you to do what you need it could be worth it.

Other options

If you want a cheaper option than going with a solicitor you can get off the shelf ordinary power of attorney forms from clickdocs and Desktop Lawyer . I can’t however vouch for what they service is like, or how easy their forms are to use.

Certainly if you are willing to pay the money to use a qualified solicitor arranging an ordinary power of attorney is very straight forward and quick.

Filling in the Inland Revenue self assessment online tax form

Thursday, April 22nd, 2010

If you need to file a self assessment tax form in the UK to work out your income tax you have a number of options. You can fill in a paper tax return, do the online return, use some 3rd party tax software, or pay someone else to do it for you.

I’m going to show you what the HMRC online self assessment forms are like, from the beginning to the end.

To start off you log into the system and choose the option to ‘File a return’.

01 self assessment overview

You’ll get an explanation of who can use the online self assessment, and who can’t. As long as your financial isn’t too exotic you should be able to use the online tax forms.

02 self assessment welcome page

To get started you’ll need to confirm some personal details about your name, national insurance number, etc. Most of these should have been filled in for you already, so you only need to update them if necessary.

03 self assessment tell us about you

In the ‘Tailor your return’ section you need to enter some high level details about your financial situation, such as whether you are employed, self-employed, have received bank interest, have other income, and more. The answers to these questions will set up which parts of the form you’ll see later on. Don’t worry too much about getting your answers correct first time. Up until the point that you make the final submission, you can go back and change any parts of the self assessment form later.

04 tailor your return

06 3 tailor your return

If you are stuck on any section you can click on the green question marks next to the boxes, and you’ll get a pop-up with help messages in it.

05 help screen

Got to the next page (1 | 2 | 3)

Thomas Exchange Global in London

Monday, April 19th, 2010

Where do you go when you need foreign currency for your holiday? Do you go to your bank, post office, a high street currency dealer, or order online?

Before deciding where to get your holiday money I highly recommend you check out Martin Lewis’s He’s the guy who runs the Money Saving Expert website, and is regularly on UK TV giving advice on saving money.

On the TravelMoneyMax website you enter how much of what currency you want, and the site will tell you the best place to get it. One of the places that is always near the top of the list is the Thomas Exchange Global currency dealer at 402 Strand, WC2R 0NE in London.

View Larger Map

I’ve been to the Thomas Exchange Global quite a number of times to get various currencies. Here is my review of what their service is like when you visit the exchange in person to buy currency. I’m not reviewing any of their other services.

The shop itself is on the North side of the road on the Strand. It is a very small premises so you’ll have to be careful not to walk past it.

Thomas Exchange Global foreign currency exchange London

There are about three counters in the shop, but this seems to be enough as they are very quick. Ask them what price they will give you, and if you are happy with the rate, give them your money.

Once you tell them how much foreign currency you need, the person serving you passes this information onto a backroom member of staff. The backroom staff get the foreign currency ready while the counter staff member counts up your own money.

When I’ve requested smaller denomination notes they often haven’t been able to get them for me. But as long as you are happy with whatever denomination bank notes they give you Thomas Exchange Global do a good job.

They always count your original money out in front of you. If you give them a reasonable wad of notes they’ll then put it through a note counting machine to count it again.

They’ll then bring your foreign currency over, and count it out in front of you. They’ll do this at least twice. They don’t accidental want to give you too much!

To finish up they’ll give you a receipt, and give you your foreign money in an envelope.

If you are exchanging a large amount of money then I’d recommend you carry your money in a money belt to make sure you don’t lose it. And to make it less likely that it will get stolen. This is a very busy area of London and you could easily get mugged if an opportunist thief saw you walking out with a big bundle of bank notes.

Thomas Exchange Global official website.

Find out the cost of calling any telephone number

Tuesday, October 7th, 2008

Often you will see UK telephone numbers with codes such as 087xx, and a price for calling that number will be listed. How do you know that the price is actually correct?

I would have thought the BT would have a simple page where you can enter a telephone number into a box and be told instantly the correct cost of calling it. I’ve been unable to find such a page but I have (after a fair bit of searching) managed to find out how to get this information from BT’s web site. I wanted the information from BT’s website as it is more likely to be accurate and up to date than from any other site.

I was prompted to find out how to do this as I wanted to be sure of the cost of an access number for calling a Japanese mobile phone. The web page of the dialing company told me it would cost 7p / minute.

0871 call cost

Looking up the price seems to be a two stage process. You need to find the Tariff Guide on their Products and Services page in the Personal section of their site.

You need to click on the Residential and Business special number call prices PDF link under the Pricing information heading.

This document has a large list of the starting codes of all phone numbers. You need to search through this list until you find the one that matches the number you have. You then need to make a note of the ‘Type of call’ code. In my case it is ‘g13’.

telephone number lookup

Further down the document you will find another table that tells you the cost of calling each ‘Type of call’ number. By cross-referencing these two pieces of information I’ve confirmed that the number is correctly advertised as costing 7p / minute.

call cost table

2008 – 2009 UK Tax Graphs

Monday, September 1st, 2008

I’ve produced some graphs using data about the 2008 – 2009 UK tax situation (I also have tax graphs for 09/10 and 10/11).

I’ve tried to make them accurate but beware that I’m not a tax expert so there could well be errors. They have been created for interest only, not for serious use.

The first graph is showing how much income tax you pay depending on how much you earn. This graph is based on the standard un-adjusted tax free allowance of £6305, a 20% band for the next £34800 and 40% after that.

income tax 08 09

Next is a similar graph but for national insurance contribution. I’ve used £105 per week as being free from NICs, 11% for £105-£770 per week and 1% after that.

national insurance 08 09

The third graph combines the total of the two to show the total taxation.

total tax 08 09

The final graph shows what percentage of your gross income you pay as tax. The interesting shape is caused by the National Insurance contributions changing to 1% before the 40% tax band kicks in.

percentage of income as tax 08 09

You may spot that when your salary reaches just over £40k the percentage of salary that you pay in tax actually goes down by a very small amount before going back up again.

Graphing the AXA Sun Life 50 Plus Protector

Wednesday, August 27th, 2008

Following on from my post where I graphed the AXA Sun Life Guaranteed Over 50 plan I thought I’d look at a more complex product to see what kind of graphs I could get out of it. Unlike the Over 50 plan, the AXA Sun Life 50 Plus Protector features a lump sum and premium that increases over time. There is also a maximum number of years that the premiums are payable for. As there are a number of extra rules it should produce some interesting graphs!

As before I’ll mention that I’m not writing this to offer an opinion on this particular product. I’m not a financial advisor. My interest is to show how you can convert the information about financial product into graphs. These graphs can be of great help in deciding whether a financial product is suitable for you.

I got a quote from their website for a 60 year old male paying in a premium of £7 per month. These figures are what I was quoted on the day I did the quote (late August 2008).

The premium of £7 will rise by £0.35 per year for a maximum of 20 years when it will be double the initial premium. It will then remain level until it stops altogether at the age of 90. The cash lump sum is payable on death after two years. It is £1095 and will rise by £50 per year. If you were to die within two years the lump sum would be 1.5x the amount paid into the plan. There is no cash in value – if you stop paying money into the plan you get nothing.

The first graph I’ll make is to show how your premiums vary over the years. You can see them increasing every year, until the age of 80 when they level off. After the age of 90 you don’t pay any more premiums.

axa sun life 50 plus protector cost of premium

The next graph shows the cumulative cost of all the premiums paid into the plan, against the value of the lump sum. You can see (if you look carefully) that the premiums paid line increases in angle for the first 20 years. It is then a straight line for the next 10 years. The line then goes flat from age 90 as no more premiums are payable. The lump sum payment starts off at 1.5x the amount of premiums paid in, after two years it goes to the full lump sum value which increases by £50 each year.

axa sun life 50 plus protector plan cost vs lump sum

You can see that there is a crossover point at which you pay more in premiums than the lump sum you get back. You can also see that as you don’t pay any more premiums after age 90 the lines start coming together again. I continued the age range to 120 to see at what point they diverge for the second time.

I then produced a graph to show by what percentage the lump sum and the premiums go up. The text on their website says that both go up by 5% of the original lump sum / premium each year. An increase of £0.35 is indeed 5% of the £7 premium. However £50 of £1095 is actually 4.6%. I’m not sure whether they are rounding the lump sum increase down, or whether there is some error in their calculation.

axa sun life 50 plus protector lump sum increase

Despite the slight discrepancy in percentages both premium and lump sum follow an almost identical curve of decreasing percentage increases each year. The premium increases drop to 0% after the age of 80 as per the plan description. The lump sum increases by £50 each year so the percentage increase keeps dropping. It is therefore important to understand the effect that inflation will have on this plan.

I hope you found this interesting. These three graphs took me about 15 minutes to do and provide details of this product in a much easier to analyse format than the pure text description of the product as given on the AXA page.

As I started before I’m not offering you an opinion of their plan, more a reason why getting to grips with a spreadsheet package like Microsoft Excel will help you with making financial decision.

Graphing the AXA Sun Life Guaranteed Over 50 Plan

Friday, August 22nd, 2008

On TV recently I’ve been bombarded by adverts about the AXA Sun Life Guaranteed Over 50 Plan. The current version of the advert is presented by Michael Parkinson. Previous versions have been presented by June Whitfield.

I am no way near the age of 50 and these plans have no relevance to me. I should also point out that I am not a financial advisor, and am not intending to offer any opinion on these plans. My interest is to look at them from a simple mathematical point of view.

In case you’ve missed the advert the basic idea is this. If you are over 50 you can pay AXA a fixed monthly sum for the rest of your life. When you die a fixed sum (fixed at the time you open the plan) is payable to your family. If you die within two years you don’t get the fixed sum, but your family do get 1.5x your premiums back. If you ever stop contributing you don’t get anything.

I went on their website and got a quote for a 60 year old male paying in £6 per month (the minimum a 60 year old male can pay in on the day I got the quote). This produces a cash lump sum of £760, payable on death after 2 years.

Here is a graph plotting how much you pay in, against how much you get back. You can see there is a cross-over point at which you end up paying in more money than you get back. In this case you end up having paid in more then you’d get out when you reach 71 years old.

axa sun life over 50 plan graph

The government publish data on life expectancy. I got the latest male life expectancy data from 2004 and 2006 and plotted this into another graph. Note how your life expectancy goes up as you get older. This is because you have already managed to avoid dying in the preceding years.

uk life expectancy

You might not be able to make out the detail on the graph but the life expectance for a 60 year old male in the UK is 80.81 years.

This means that if you are an average person you are likely to be paying in 9 years of premiums beyond the lump sum value that you would get back.

However calculating the benefit of these plans isn’t quite as simple as this – they often provide extra benefits such as extra payouts in the event of dying in an accident or whilst travelling.

An obvious factor to look into is the effects of compound interest when adding the same amount (£6) into a bank savings account every month.

compound interest graph on a monthly saving of £6 at 4%

This graph is showing the effect of saving £6 a month based on a modest 4% gross interest rate. I based the calculations to produce this graph on the formula given on patrick schneider blog post. The final figure after 40 years matches the figure given by other compound interest monthly savings calculators I’ve seen on the internet so hopefully the graph is accurate!

Below I’ve put the compound interest curve on top of the previous graph comparing contributions against the cash lump sum.

compound interest graph on a monthly saving of £6 at 4% compared against AXA Sun Life Plan with £6 per month contribution

There are further complications to consider such as the effect of inflation. The real worth of any money your family would get back when using these plans is reduced every year due to inflation. On the other hand the real world cost to you goes down each year as your £6 per month will gradually constitute a smaller percentage of your income.

What are my conclusions? I’m not giving you any! Any decision on whether to use a financial product should be taken based on your personal financial circumstances and with the help of a trained financial advisor (which I’m not).

I would say that these are the kind of analyses you should be doing when investigating or comparing any kind of financial product, whether it be a savings account, loan or mortgage. Turning financial information into simple graphs is a very powerful tool that can save you a lot of money!

Certified copies of documents for £7

Friday, April 18th, 2008

I was recently sent a letter from a company I have an account with telling me that I needed to provide them with certified copies of two documents in order to verify my identity.

A certified copy is a photocopy of a document (such as passport, utility bill, birth certificate) that has been verified as being true by a person who holds a certain position of responsibility. This person could for example be a solicitor, notary, teacher, bank manager or post master.

Certified copy document statement

I’d heard that it is possible for solicitors to do this service for about £2. However when I contacted three local solicitors (all in London) for quotes they all gave me a price of £70-£80 for certifying two A4 copies. Anyone know where those £2 solicitors are? Not in London it would seem.

Instead of paying these rip-off prices I found out about the Post Office Identity Checking Service. For a fee of £7 they will check up to three different documents and certify the copies of them.

Not all Post Offices offer this service so I checked online and went to one that did. When I got to the counter and asked for the service it seemed obvious that they don’t provide it very often. The guy behind the counter had to study the application form carefully before he worked out what to do.

They check your documents, write “this copy is a true likeness of the original” on the copies (you need to bring your own photocopies), sign the document, and then stamp it with their standard Post Office ink stamp.

The copies are now certified and ready for whatever purpose you needed them for.

This is a useful service that I hadn’t heard of until now. You may be able to certify your copies for free (if you happen to know a teacher or doctor who would be willing to do it), or for as low as £2 (if you can find a solicitor who will do the service for such a low price). However it is convenient to know that you can get this done in the Post Office without an appointment for a fixed fee.

Spanish Lottery Scam Letter

Tuesday, April 8th, 2008

I got my first Spanish Lottery scam letter on Friday. It is from the ‘Spanish Sweepstake Lottery S.A’. I knew it was a Spanish Lottery scam even before I opened the envelope. I’m including images of both letters and the envelopes. There are largable images for both the letters that you can see by clicking on the thumbnails.

Spanish lottery scam letter Spanish lottery scam letter

Spanish lottery scam letter

It is hard to understand how people can be fooled by these letters, but they clearly get a large enough response otherwise they wouldn’t be sending them.

Here are some clues that this is not genuine…

  1. I did not enter the Spanish Lottery. You don’t win lotteries if you don’t enter.
  2. It is clearly a cheap ink jet printout rather than being on proper business headed paper.
  3. The letter does is not personally addressed to me.
  4. The deadline for claiming the money expires in a few weeks.
  5. The photo uses a British National Lottery image which is nothing to do with the Spanish Lottery.
  6. The number given is a Spanish mobile number. Spain’s dialling code is +34. The first number after this is a 6 which is a Spanish mobile number.
  7. The letter says that you need to pay a charge to claim the prize (what kind of crazy lottery makes you pay to claim your prize?).
  8. The English language on the letter is poorly translated. I’m sure the real elGordo Spanish Lottery could get a correct English translation.
  9. The letter says that the ‘win’ should be kept top secret.

The scammers have however taken a bit of effort to make it seem more authentic.

  1. The letter was posted from within Spain and has a Spanish postmark.
  2. The letter is really signed rather than having a printed signature. I can even see an impression on the letter where ‘Pedro’ has signed another ‘winning’ letter. Pedro Camacho is a composer from Portugal by the way.

You can find more information on these pages: