Because that’s what the government is asking right now, as it consults on how to make major changes to tax-free savings and investments.

A recent major reform of ISAs already means that you can now save up to £15,000 a year into a tax-free account, either in cash or stocks and shares, or a mixture of both. But our leaders want to go even further and allow savers to include peer-to-peer lending in the pot of stuff the taxman can’t touch.

It’s consulting right now on whether that should be within a standard ISA or if a new ISA product needs to be created.

What is peer-to-peer lending?

If this is new to you, it probably won’t be for long. Peer-to-peer lending — essentially lending without the need for a bank — is a massive growth industry, with high demand among would-be lenders and borrowers.

It works by individuals lending money to other individuals via dedicated websites, often receiving higher returns than they would get if their money simply sat in the bank. Of course, as with stocks and shares, there’s a risk and lenders could lose their money if a borrower doesn’t repay a loan.

The sector has been growing at more than 100% a year and more than £1.6 billion has been lent this way to date.

Right now, lenders pay tax on the money they earn in interest, but once these loans are available within ISAs they’ll be able to protect some or all of their investments from the taxman.

Why would the government want to do that?

The peer-to-peer lending industry might be seeing massive growth but it’s still relatively unknown. Including it in ISA savings is likely to see it snowball and provide a major alternative source of lending.

And that is clearly a major reason why the government is interested in doing it. As a spokesperson said:

“Allowing P2P loans to be held in ISAs will provide greater choice to ISA investors, and will support the government’s aim to diversify the different sources of finance that are available to borrowers by encouraging the growth of the P2P lending sector.“

So is everything rosy?

Not everyone thinks this is a good idea. At the moment, peer-to-peer lending isn’t protected by the Financial Services Compensation Scheme, making it essential that lenders understand the risks.

Some analysts have also argued that a huge influx of cash into the peer-to-peer lending pot will cause issues by potentially lowering lending standards.

The post Could You Use Debt to Boost Your ISA? appeared first on The Motley Fool UK.

More reading

• How to earn £596 a year in second income from 1 FTSE stock
• With the stock market at record highs, should I invest now or wait?
• How can investors aim to turn £100 a month into £6,515 in annual passive income?
• Here’s how Lloyds shares could climb another 50%… or crash 50%!
• What a ‘forgotten’ £30,000 ISA could turn into by 2046 in passive income

According to the life insurance company, the costs of actually getting legally separated have actually fallen. But the costs associated with divorce — such as moving house and child maintenance — have rocketed, so that the average cost per person has climbed from £28,000 per couple to £43,958.

Other costs factored into the figure include splashing out on treats and holidays as people celebrate their newly single status.

£22 grand each is a hell of a bill for an unhappy marriage. So how can you keep the cost down?

How to keep the cost of divorce right down

Unless you start fighting, the cost of a straight-forward divorce is pretty reasonable. In England and Wales, the fee for filing for divorce is £410; the fee for obtaining your decree absolute is £50; a court fee for an application for financial proceedings is £255; and once you’ve agreed those then it will cost you £45 for a judge to approve them and make the consent order binding.

So, for a couple who can amicably split, the whole thing should cost no more than £760. But even amicable exes may want to get some legal advice so their interests are protected; and that can cost around £100 to £200 an hour. The Money Advice Service reports that if you use a solicitor to negotiate for you, you’ll typically pay between £3,000 and £10,000 per person – so that’s as much as £20k gone.

So how can you cut the bill?

If you’re seeking an uncontested, dispute-free divorce then you could potentially use an online ‘DIY divorce’ service or one of the law firms that caps the cost of a simple divorce so that you’re not hit by an unexpectedly high bill.

You might also use mediation to resolve any financial and custodial agreements before you arrive in court, to reduce the need for expensive legal representation and long, drawn-out battles. According to the Ministry of Justice, the cost of mediation starts at £500 per couple.

However, it is usually still be a good idea to consult a lawyer even briefly to make sure your interests are protected.

What about the treats?

Becoming newly single can be frightening or liberating, and, as Aviva’s research found, it can really make people spend.

We spoke to 30-year-old Cathy (not her real name), who divorced at the age of 28. She explained how she kept a check on the extra costs:

“When the decree nisi came through I had this crazy urge to spend money. I thought about buying a new wardrobe, taking a holiday, joining the most expensive gym and signing up to every dating site going. I was kind of scared about the prospect of being single and I suppose I wanted to… buy confidence.

“But fortunately I stopped myself in time and worked out how much I could afford to blow. I ended up joining one dating site and buying a few new dresses to wear on dates. I joined a better priced gym and resisted the urge to spend thousands on a holiday using my credit card – although I am saving up for a trip with my friends.”

Finding financial freedom

Divorce can be sad or it can be liberating, but once the paperwork is done and dusted then you’re free to get on with your life. And that might include a holiday or treat or two, but it’s also a good time to think about your finances.

The post Does Divorce Have To Cost You A Fortune? appeared first on The Motley Fool UK.

More reading

• How to earn £596 a year in second income from 1 FTSE stock
• With the stock market at record highs, should I invest now or wait?
• How can investors aim to turn £100 a month into £6,515 in annual passive income?
• Here’s how Lloyds shares could climb another 50%… or crash 50%!
• What a ‘forgotten’ £30,000 ISA could turn into by 2046 in passive income

Just this weekend I attempted to buy a bag of veg, only to be told I couldn’t as it was “not registered on the system”. I waited for the cashier to manually input its code or add the cost some other way, but she simply put it to one side and sighed sadly. “Can’t you sell it to me then?” I asked in surprise and the cashier shook her head and repeated slowly: “It’s. not. registered. on. the. system.”

There was a whole shelf of veg bags, none of which could apparently be sold – what a crazy, crazy waste coupled with appalling customer service.

Dawn of the discounters

And I am not the only person to have noticed Tesco’s fall from grace; sales have plummeted as customers abandon it in favour of low-cost supermarkets such as Aldi and Lidl. Disastrous overseas investments lost the company money and also lead to accusations it has lost focus on its core business.

Just this week, speculation that the company might slash its very competitive dividend has seen Tesco PLC’s stock market value slip below £20 billion for the first time in a decade.

So why is this on my ‘buy’ list? Quite simply, I believe that when you’re riding a beast this big, it takes time to turn it around. Tesco is beyond vast; it’s a high street under one roof with groceries, financial products, beauticians and more. Transforming the fortunes of such a vast empire takes time, and I am prepared to give the newly appointed chief executive Dave Lewis a chance when he takes over in October.

After all, there’s a Tesco in pretty much every town and the supermarket is investing more in its Metro and Express brands. The discounters may be winning bargain hunters but Tesco is in a strong position to capture customers who value convenience over sprawl.

While the brand’s overseas misadventures have cost it money, Tesco is actually enjoying decent growth in South Korea, Thailand, Poland, Hungary and the Czech Republic. That’s a pretty good starting point for a recovery.

Finally, the source of the dividend-cut rumours was David Herro of Harris Associates, which owns 3% of Tesco. He told The Sunday Times: “In general, dividends should be covered by free cash. This is not the case with Tesco . . . Either [it needs to cut the dividend] or generate positive cashflow. It should be cut if it’s paid for by borrowing.”

Frankly, if a major investor can stomach a cut in the dividend in order to get the supermarket back on track, then I can too. If you’re investing for the long term rather than hoping to make a fast buck, then Tesco could yet pull the rabbit out of the hat. Just give it time.

The post Tesco PLC Stinks… So I’m Buying! appeared first on The Motley Fool UK.

More reading

• 5 years ago £10k bought 4,484 Tesco shares. How many would it buy today?
• Is now the time to consider buying Tesco shares?
• The Tesco share price is struggling to regain 500p even after strong results – where to from here?
• 2 reasons a stock market crash could be a good thing!
• Think the soaring Tesco share price is too good to be true? Read this…

Felicity Hannah's immediate family own shares in Tesco. The Motley Fool owns shares of Tesco. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

The CEO, who is also creative director for the brand, became one of the highest-paid men in Britain when he took the job earlier this year, commanding a basic salary of £1.1 million, pension contributions of £330,000 and up to £6.6 million from various incentive schemes.

He was also given more than £1 million in free shares as a golden hello and his salary is topped up by a cash allowance of £440,000 a year. The total package is potentially worth tens of millions, including rewards based on performance. He’s not short of a bob or two, is what we’re saying.

But can anyone be worth such an impressive pay packet?

Value for shareholders?

Most shareholders want to be sure the company is delivering the best value possible. Most are unlikely to object to high salaries if they were sure it maximised their own returns. But how can any of us know if Bailey is worth this massive amount?

Clearly he is a popular choice for CEO, with his appointment being approved by 99% of the shareholders. And although more than half of investors were unhappy with the remuneration report, almost 84% did support the overall pay policy – meaning Bailey gets his millions.

In an attempt to pacify angry shareholders, the chairman Sir John Peace claimed Bailey had helped add £4.5 billion to the value of the brand and warned that head-hunters had already tried to lure him away. So clearly the board felt the pay was entirely justified to keep a vital talent on board.

Yet the Investment Management Association issued an ‘amber’ warning over the scale of pay at the company and Pirc, a corporate governance organisation, called it “excessive”.

So what IS normal pay for top bosses?

Most of us accept that the head of an international brand such as Burberry is going to command a higher-than-average salary. But what is normal among the rest of the FTSE 100?

A new report from think tank the High Pay Centre found that the average FTSE 100 chief executive earned £4.7 million last year, up from £4.1 million the year before. To put that into context, that is almost 180-times what the average worker earns (up from 60-times average pay in the 1990s).

Do shareholders often revolt like this?

Back in 2012, shareholders at a record number of top UK companies challenged boards over pay and strategy, in what came to be known as the ‘shareholder spring’.

For example, 54% of shareholders voted against Aviva’s (LSE: AV) (NYSE: AV.US) remuneration policy, with the figure rising to almost 60% if you factored in deliberate abstentions. A key reason for investor anger was the £2.2 million ‘golden hello’ given to the new head of UK operations Trevor Matthews, after which the company pledged to review its policy on such welcome packages.

However, that acrimonious shareholder meeting was nothing compared to the Barclays (LSE: BARC) (NYSE: BCS.US) shareholder meeting in the same year. The bank’s chairman had to beg shareholders to behave in an “adult” manner after angry heckling disrupted proceedings.

Nearly a third of shareholders refused to back the bank’s remuneration report, following a year in which the bank handed out more money in staff bonuses than it did in dividends. Quite a lot more, actually, with £2.1 billion going to staff and £700 million to dividend payments.

This year there has been similar dissent, particularly when it was revealed that 481 Barclays bankers had received more than £1 million over the previous 12 months.

So where can you find value?

If you invest in a company, you are most probably not motivated by bitterness or envy; you just want to be sure you’re getting the best value for your portfolio.

After all, we can’t all rely on pay bonuses to make our millions; some of us have to do it ourselves!

The post Hey Barclays PLC, Burberry Group plc, Aviva plc! Are Your Bosses Paid Too Much? appeared first on The Motley Fool UK.

More reading

• What a ‘forgotten’ £30,000 ISA could turn into by 2046 in passive income
• No savings at 30? How investing £5 a day in an ISA could target a stunning second income of £40,208 a year
• Here’s how Aviva shares could soon rise a further 20%… or fall 15%!
• 5 years ago Barclays shares cost just 181p! Are they still a buy at today’s 434p?
• These 5 FTSE 100 shares all offer dividend yields well above average!

Felicity Hannah has no position in any shares mentioned. The Motley Fool recommends Burberry Group.

When you look at UK retail spending, almost 55p in every pound is spent on groceries, so this is undeniably a booming sector. But which supermarket should you invest in? The beleaguered Tesco (LSE: TSCO)? The steady pair of hands, Sainsbury’s (LSE: SBRY)? Walmart  (NYSE: WMT.US)-owned ASDA? Morrisons (LSE: MRW) or Ocado (LSE: OCDO)? We’ve taken a Foolish look…

Sainsbury’s

There’s no doubt that Sainsbury’s shareholders have a right to feel smug just now. Although like-for-like sales have fallen for two quarters in a row, this was by a mere 1.1% – a smaller drop than many of its rivals. Not only that but its pre-tax profit for the year to 15 March rose more than 16% to £898 million.

It has focused on quality rather than discounting, but is now investing into the discount brand Netto to scoop a “share of the action”. Some analysts have questioned whether this move will simply encourage the discount sector to further undermine established brands like Sainsbury’s. However, others argue it will widen the retailer’s customer base and help future-proof it against the growth of the discount stores.

ASDA

In the 12 weeks to 25 May, ASDA grew its market share from 17% to 17.1%, according to research from Kantar Worldpanel. Meanwhile, Tesco, Sainsbury’s and Morrisons all lost market share.

In fact, the supermarket was the only large grocer to grow its market share year on year. Walmart investors may hope this means the supermarket can simultaneously compete with the discounters and the other large grocers.

Morrisons

Following a disastrous set of first-quarter results, Morrisons staged a fight-back against the discount brands. It has formed a £1 billion plan to drastically cut prices, bringing down the cost of many everyday essentials by up to 17%.

However, independent analyst Louise Cooper warned earlier this year that the company was only just catching up with other supermarkets by developing online shopping and loyalty cards, “let alone the changes happening now”. She accused the company of a lack of urgency in its efforts to win back market share.

Ocado

Online-only grocer Ocado has just released an encouraging set of first-half figures. It reported a pre-tax profit of £7.5 million for the six months to 18 May, which is a vast improvement on its performance last year when it saw a loss of £3.8 million.

And Ocado is also busily growing its business. Its specialist online pet store Fetch is reportedly doing well, sales of its own-label range have increased by more than 50% and it’s planning to launch a specialist kitchen and home website later this year.

Tesco

What about the behemoth of UK supermarkets, Tesco? Performance has been undeniably poor just recently with its worst-ever decline in quarterly sales announced earlier this month. And that follows its disastrous forays into the US and accusations that it neglected its customers at home. But could now be the time to buy and gain on a storming recovery?

Chief executive Philip Clarke pledged to invest a further £200 million into cutting prices, but some analysts said that simply didn’t go far enough to win back customers from the discounters – after all, it hardly compares to Morrisons’ £1 billion plan.

The post Which Supermarket Deserves Your Investment: Tesco PLC, ASDA, J Sainsbury plc, Wm. Morrison Supermarkets plc Or Ocado Group PLC? appeared first on The Motley Fool UK.

More reading

• 5 years ago £10k bought 4,484 Tesco shares. How many would it buy today?
• Down 90% and 93%! Are Ocado Group and Aston Martin shares set for a mind-blowing recovery?
• Is now the time to consider buying Tesco shares?
• The Tesco share price is struggling to regain 500p even after strong results – where to from here?
• 2 reasons a stock market crash could be a good thing!

Felicity does not own shares in any of the companies mentioned in this article. The Motley Fool owns shares in Tesco.

“It is already having an impact on businesses around the world and across all sectors,” the report stated, warning that 95% of its fresh produce is under threat by the global changes we are seeing.

And that’s not the only recent study warning of the dangers posed to business and economies. A new bipartisan report commissioned by a group of politicians, financiers and academics has warned that climate change could cost the USA alone hundreds of billions of dollars by the end of the century.

Over the next 25 years, annual property losses from hurricanes and storms could cost $35 billion, falling crop yields could leave farmers billions out of pocket and heatwaves could add up to $12 billion a year onto consumers’ energy bills.

That’s in the States, where major changes in the economy will inevitably affect the UK. But what about British business — is it more prepared for the changing climate? Can shareholders future-proof their investment by looking to companies with clear strategies for this changing world?

Meanwhile, in Britain…

Last year CDP, an international not-for-profit environmental group, worked with PwC to publish a report into how well British business is prepared for the international impacts of climate change.

It found that there has been a “seismic shift” in corporate awareness of the need to build resilience to climate change into growth. This was particularly true for the FTSE 100, which “show a much more sophisticated response to the threats and opportunities of climate change than FTSE 250 companies.”

That increased sophistication can be explained by the larger corporations’ international operations, which leave them more exposed to extreme weather events across the planet. For example, in 2011 the Thai floods wiped more than £1.6 billion off Lloyds of London’s books, and restricted the flow of some electronic goods into the UK.

Celine Herweijer, a partner at PwC, concluded that the globalisation of supply chains has “shortened the distance between headline disasters and our high streets”.

Over the next years and decades, consumers are going to be made more aware of the impact of climate change on the goods and services they expect. However, canny investors need to be assessing now what impact the environment could have on companies’ value, growth and even their survival.

Rising to the challenging temperatures

The American study concluded: “It is time for all American business leaders and investors to get in the game and rise to the challenge of addressing climate change.”

Perhaps it is also time for UK shareholders to increase the pressure on boards to protect their stake in business and the planet.

The post How Will Climate Change Affect Your Wealth? appeared first on The Motley Fool UK.

More reading

• How to earn £596 a year in second income from 1 FTSE stock
• With the stock market at record highs, should I invest now or wait?
• How can investors aim to turn £100 a month into £6,515 in annual passive income?
• Here’s how Lloyds shares could climb another 50%… or crash 50%!
• What a ‘forgotten’ £30,000 ISA could turn into by 2046 in passive income

Its first-quarter results show a 3.8% fall in like-for-like sales, and there are claims in the press that it is currently haemorrhaging one million customers a week.

The press may be exaggerating, but it’s still worth questioning why one of the most popular UK retailer and the world’s third-largest supermarket group has seen such a fall from grace.

So why has it? Some analysts point out that it didn’t listen to customers, it didn’t adapt, it didn’t learn from the competition… Heck, it even planted ‘anti-homeless spikes’ outside the doors of one shop, garnering massive public outrage (for the record, it says they were to deter anti-social behaviour).

Here are the lessons that British business must learn from Tesco’s fall from grace…

Never forget the core customers

Tesco has seen incredible success at home; at one point it was widely claimed that £1 in every £7 spent in Britain was spent in Tesco (closer examination of the figures suggest that was closer to £1 in every £8, but that’s still a vast market share).

But its relentless drive to expand into America, China, India and Europe led to claims it had forgotten its home market, and in some cases was simply throwing good money after bad.

As the overseas business failed to take off as the supermarket had hoped, it had to retrench, pulling out of the USA at a cost of £1.2 billion. Meanwhile, back in the UK there were claims that the group was failing to adapt to changing shopping patterns and consumer preferences.

If you don’t adapt, the competitors will

Many analysts believe that customers are forsaking Tesco because it offers neither the cheapest bargains nor the best-quality produce, meaning customers at both ends of the spectrum are looking for alternative supermarkets that better meet their needs.

Other supermarkets have been relentlessly pursuing these disaffected customers. Sainsbury’s and Waitrose advertise high-quality, highly ethical produce while discount supermarkets Aldi and Lidl highlight their bargains, and entice even affluent shoppers with cut-price lobster and award-winning produce.

Protect your reputation

No matter how big the business, a bad news story can be immensely damaging. Whether customers’ priorities were quality or price, both were put off by the horsemeat scandal – a scandal to which the retailer initially seemed light-hearted about (tweeting that it was ‘off to hit the hay’).

Take some (corporate) responsibility

Thanks to Twitter, Facebook and other social media, a negative story can spread like wildfire and there’s so much supermarket choice that a boycott is surprisingly easy to carry out.

So no wonder Tesco winced when stories of the ‘anti-homeless’ spikes outside one of its stores hit the internet. Thousands of people protested online, accusing the supermarket giant of treating the homeless like pigeons. The studs have since been removed.

Respond fast to failure

Every company experiences occasional hiccups and extraordinary growth may not be sustainable in the long term. Shareholders and customers accept that. However, when a blue chip does falter, it needs to show that it has learnt lessons and adapted its strategy.

Yet some analysts have criticised Tesco’s action plan, which includes cutting prices, training more staff and revamping stores. Clive Black of Shore Capital commented: “The business, once a shoppers’ champion is… in a cycle of what seems to be structural decline involving a sustained period of downgrades to earnings.”

There’s a risk that such statements can be can be self-fulfilling, making a fast, authoritative recovery plan essential following poor results.

What now for Tesco shares?

If you own Tesco shares, what’s the right move? Do you buy more and hope for a strong recovery, or do you cut your losses and drop the shares like they’re a horsemeat lasagne?

The post Are Your Investments Safe From Tesco-Style Failure? appeared first on The Motley Fool UK.

More reading

• 5 years ago £10k bought 4,484 Tesco shares. How many would it buy today?
• Is now the time to consider buying Tesco shares?
• The Tesco share price is struggling to regain 500p even after strong results – where to from here?
• 2 reasons a stock market crash could be a good thing!
• Think the soaring Tesco share price is too good to be true? Read this…

Felicity owns no shares in Tesco or any of the other companies mentioned in this article. The Motley Fool owns shares in Tesco.

An official review in 2011 showed that just 12.5% of board members were women, but that figure now stands at 20.7%. That’s edging closer to the target of 25% by 2015, which was set by former trade minister Lord Davies of Abersoch when he headed the review.

One company that’s aiming to exceed that target is Lloyds Banking Group (LSE: LLOY) (NYSE: LYG.US), which recently pledged that 40% of its top 5,000 jobs will be held by women within six years. Currently, that figure is 28%.

It was the first FTSE 100 company to set a formal gender target for its most senior management positions. But a 40% goal isn’t just paying lip service to equality, it’s a major change. It seems unlikely that a group as large as Lloyds would make any decisions that weren’t supported by a strong business case, no matter how good the PR.

So what is the argument for having more women at the top?

Backed by stats

Shareholders need to know that there are good business reasons to get more women into the boardroom; it goes beyond questions of equality.

Research among European companies has shown that strong stock market growth is more likely to occur in companies where there are a higher proportion of women in senior management teams.

In fact, companies with more women on their boards considerably outperform their more masculine rivals, with an average 42% higher return in sales, 66% greater return on invested capital and 53% higher return on equity, according to the government’s review.

Some people have even suggested that more balanced boardrooms could have averted some of the catastrophic decision-making that led to the financial crisis. Jayne-Anne Gadhia, the head of Virgin Money, recently suggested that a higher number of women at the top could have made a difference.

She told one newspaper that some of the worst-affected banks had succumbed to an “alpha male environment”, where they were “motivated by the thrill of the chase”.

Gadhia added she wasn’t criticising men, but believed that having more balanced boards helped companies adopt more balanced strategies.

Gentlemen’s club

The UK has come a long way from 2011 when one in five of the FTSE 100 had no women at all at the top table.

Just one top company still has an all-male board: Glencore Xstrata. Vince Cable recently attacked the company for failing to break the male dominance at the top, saying it was “simply not credible” the company had been unable to find any suitably qualified women.

The business secretary argues that greater diversity is good for growth, saying: “This is not about political correctness; this is about good and profitable business sense.”

Principles and profitability

Many experts believe that shareholders should be interested in the ethics of their companies, because a lack of corporate responsibility can lead to risk-taking and reputation damage. But corporate responsibility is no guarantee of growth, particularly when the wider economic recovery is still tentative.

The post Do We Need More Women Running The FTSE 100? appeared first on The Motley Fool UK.

More reading

• Here’s how Lloyds shares could climb another 50%… or crash 50%!
• Lloyds shares just dipped below the £1 mark!
• Here’s how much an investor needs in Lloyds shares to earn a £125 monthly income
• Selling for £1, are Lloyds shares still a bargain?
• Here’s what fresh legal news could mean for Lloyds shares

Felicity owns no shares in any company mentioned here.