UFO Info Week-End

Neither of these is expected to end up in receivership but if any on the

Neither of these is expected to end up in receivership but if any on the sector do, policyholders can claim most of their investments back from the independent Financial Services Compensation Scheme.How do I tell if it is going to go bust?Ordinary people simply cannot. Most financial information is not in the public domain because it could start a rush of people wanting to get out, almost like a run on a bank. Financial regulators do not want this to happen.For some guidance, you can ask an independent financial advisor to look at measures such as the “free asset ratio” of a company you are thinking of investing with. But this will not provide the full picture of a company’s financial health.Even if my insurer is financially solid, should I stick with it if the prospects for the stock markets don’t look good? The problem with not sticking with an insurance policy is that you suffer by cashing in, or “surrendering”, early. You lose the final bonus, which can be worth half the total bonus, and most insurers are imposing extra exit penalties. Most experts say it is best to stick with the policy if possible.If you have an endowment, you can try to sell it to another investor, which tends to provide a better settlement than trading it with the insurance company But the price of traded endowments has fallen recently. If you do not want to, you can try to sell your endowmentWhy not cash in and put my money into something else, such as property?In the first place, you will lose the tax if the money is in a pension scheme or Isa.

The UK housing market has performed much better than shares in the past two or three years. But closing a pension fund or Isa would mean sacrificing lots of tax benefits and there is no guarantee the value of property will continue to soar.Who is to blame for this mess?The root of the problem is the fall in the stock market, and it is hard to blame that on any one factor. For once, it does not look as if it can be pinned on ill-thought economic policy, either by this government or America’s. As often happens, the market crashed following previous excesses, notably the dotcom boom of the late Nineties. The uncertainties from 11 September have added to that.Some insurance companies, notably Equitable Life, have committed the cardinal sin of not maintaining sufficiently high reserves to protect their policyholders against such a crisis. But when even Standard Life and Prudential start cutting bonuses, you can be sure no one would have escaped entirely..

Amid the economic gloom and the preparations for war, there may seem few reasons to buy shares right now. September was the worst month for the UK equity market since the crash of October 1987 and, despite a rebound yesterday, is languishing close to six-year lows. Yet the bulls are massing once more, convinced a recovery is on its way and wielding an impressive piece of graphical evidence: the reverse yield gap. The gap is the difference between the yield on Government bonds and on shares. The dividends from shares have been lower than the return on gilts since the “cult of equities” began and long-term investors piled into shares, sending the price up and the annual dividend ret-urn down.The cross-over point in 1959 signified a revolution, reversing the picture from the earlier part of the last century when gilt yields were better than dividends in all but a handful of years in the 1910s and Twenties.