From the 6th October 2009 anyone who is 50 or older by 5th April 2010 will be allowed to invest up to £10,200 in either fully in a stocks and shares ISA account or 50% in a cash ISA  and the remainder in a stocks and shares ISA.

If you currently hold an ISA account and you will meet the criteria you should speak to your ISA provider and if you do not hold an ISA there are plenty of eager providers to be found with a quick search online.

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You don’t get any interest at all but the money is guaranteed safe, you might get a nice little win and any winnings are tax free. National Savings And Investments have increased the winnings pot by around 50% giving more opportunities for your premium bond to win a prize.

The odds of winning any prize have improved from October onwards from around 36,000 to one to a much better 24,000 to one. It is estimated there will be around 1.79 million prizes awarded in October 2009 with the prizes ranging from one £1,000,000 prize through to 1,683,024 prizes of £25.

You can read more about the background and workings of premium bonds and the official site is here NSandI

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So, it is hardly surprising that the average man or woman in the street may not fully understand what financial products are available or which are most suitable for them. This makes us all potentially very easy customers to sell these things to.

When we are confused a financial salesperson will attempt to shine some light on the problem but if they are working for a particular finance company or bank they are likely to only show you their own company products. They may advise you on what is the best of the range they have on offer but there may be others on the market that would be a better deal for you.

Independent financial advisers are able to offer a whole range of financial products from many different companies so they might well suggest products that are a more suitable for you and your situation.

We often spend a lot of time sifting through different deals and offers for holidays, cars and TVs but we will often be happy to accept the first deal offered when it comes to financial products. This could be a mistake that costs us a lot of money and we should reduce that risk by getting advice from several different sources and making a considered judgement once we have a better grasp of the facts and what offers are available.

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This is not a new scenario. I remember, some years ago, commenting that for the first time in my experience interest rates on savings were actually higher than the inflation rate. For many years inflation had been higher than interest rates and though this was beneficial to house buyers, it was always bad for savers.

The repayments on mortgages would be devalued over the years and in the later years of the loan would have been devalued by inflation to such an extent that the payments were almost insignificant while the value of the property would have continued to rise, broadly in line with inflation.

It seems to be particularly irksome that the problems we are currently suffering have been brought on by excessive borrowing by governments, business and individuals. Those people who ‘did the right thing’ and saved to look after themselves are suffering so that those who did not can survive. It doesn’t seem right but that is the way of the world, like it or loath it.

In a financial climate where savings accounts offer tiny interest rates some may find it hard to support saving but it is important to recognise that with savings behind you, it is you that can make choices about your future. The alternative, where your life is funded by either loans or living hand to mouth, spending as soon as money comes in, leaves little room for flexibility.

Given the choice would you rather have some savings behind you, even though they pay little interest, or would you rather not have them.

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Generally speaking we have done so in what we thought was a realistic belief that we would be able to repay those debts and though we may have failed to give a great deal of thought to the future cost of those debts we certainly didn’t intend to dig ourselves into a financial hole.

We are human and we think emotionally. Very few of us work through a spreadsheet of income and expenses to establish exactly where all our money comes from or goes to, though maybe more of us should. We are not professional money managers. It’s a sideline for us, just another part of life and all it’s complications.

You would epect things to be very different in the financial industry where people have been paid huge amounts of money to know what is what, when it comes to money. Yet, every week we hear more tales of financial carelessness causing problems for many of the huge financial corporations and all this has led to governments around the world having to bail out companies, pump money into the system. Today, we are expecting the chancellor to offer us yet more borrowed money in a financial stimulus package which, it is hoped, will encourage us all to spend more.

If we all did our financial spreadsheets we would probably decide we should spend less, not more. The system that has driven business over the last few decades seems to be broken and all these measures seem to be just trying to prop up a broken system.

We are constantly told that the problems arose in the US and travelled around the globe but this is not the fault of a few poor people who thought they could improve their lives with these mortgages that they couldn’t afford. They didn’t have spreadsheets and they just did what financial advisers told them they could do.

Borrowed money was the problem, we are told. Poor people who were either stupid, careless or devious, but these people didn’t have spreadsheets. They did what they were told was the best thing for them. Invest in a house, secure your financial future. What they didn’t know was that they were mere pawns in a game being played by, supposedly, financial experts who did have spreadsheets and were supposed to understand what was going on.

News that the US Treasury is to inject billions of dollars into Citigroup to prevent it’s collapse may help it’s 200 million account holders but it does more to support the system that currently exists. How much longer can governments go on pumping yet more borrowed money in to save this slowly sinking, ship?

I discovered this article The End by Michael Lewis who previously wrote a book Liar’s Poker in 1989 about his experiences on Wall Street and how he thought it was doomed. It’s quite a long article but it makes for chilling reading. To think that these companies and these supposed financial experts were gambling with other people’s money to such an extent and with such little real understanding of what they were dealing with is staggering.

Some bankers have started to say sorry both here and in the USA. I guess that is something similar to someone saying sorry after they accidently shot someone when the gun they were playing with went off. If you play with dangerous weapons you have a responsibility to use them wisely. It’s a shame and a tragedy that the people playing with the financial markets didn’t seem to even realise what they were playing with and how serious it could all become.

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