The technical term for the ratio concerned, the price/earnings ratio, compares the price of a company’s share to its annual profits, or earnings. At the moment, UK plc’s average p/e ratio is in the high twenties – a high figure in historic terms. The Barclays study forecasts it could fall to the low teens in the next five years, a level not seen since 1994, before the recent hi-tech bull market.The study argues that this bull market was driven by easy credit from the banks and a growing belief among investors that advances in technology would deliver higher company profits.Since the bubble burst last spring the banks have pulled in their horns and investors are more sanguine about dotcoms and their ilk.Barclays reckons this may mark the end to a one-off period in stockmarket history, when inflation fell from a historic highpoint, and when advances like the internet delivered a big boost in productivity. Now these changes have taken place, Barclays suggests, we should expect much more modest growth from shares.The other big point the study makes is that an ageing population will eventually switch from investing in shares to cashing them in, or at least demanding higher annual dividends, in order to provide an income in retirement. This could again drive down stockmarket returns – although few people are brave enough to predict when this “baby boomer” effect is liable to kick in.For the moment, Barclays says shares still provide a better average return than gilts. And British shares offer fewer risks than American ones.All of which suggests that you would be best off spreading your risk among as many shares and regions as possible, perhaps through a tax-free scheme like an ISA.One last thing.

This week marked the official death of “The Man From The Pru”. The Prudential announced it was axing its entire 1,400 direct salesforce – which stood at 9,300 as recently as 1991.This is part of a damaging trend. The Pru’s better-off customers will get an expensive, tailor-made service, while ordinary customers will be fed an absolute minimum-cost service based around anonymous call centres in odd parts of the country, where you will never speak to the same person twice. The Pru is also investing heavily in its internet service, another passport to anonymity. The one silver lining to this cloud is the Pru’s increased enthusiasm for selling through a third route – independent financial advisers (IFAs). As for the friendly tap on the door, like Dickens, it’s history.John Willcock is the personal finance editor of The Independent.j.willcock independent.co.uk. With the first follow-on TESSAs now maturing, British savings institutions are queuing up to get their hands on the money.

This year the market is bracing itself for an injection of around £21bn in funds from these tax-exempt accounts, says HSBC. With the first follow-on TESSAs now maturing, British savings institutions are queuing up to get their hands on the money. This year the market is bracing itself for an injection of around £21bn in funds from these tax-exempt accounts, says HSBC.
But what are the rules for reinvesting maturing TESSA money? In its survey, HSBC found only 20 per cent of TESSA holders know there is a separate ISA (Individual Savings Account) allowance for reinvesting TESSA capital.When the Labour government introduced ISAs in 1998 as the new tax-exempt savings vehicles to replace the PEPs and TESSAs of the Conservative years, the scheme included an additional type of ISA, designed for capital from maturing TESSAs, called the TESSA-only ISA.TESSA-only ISAs can contain all of the capital, but none of the interest, from a maturing TESSA or follow-on TESSA, and this can be held in addition to your £7,000 annual allowance for other types of ISA.After your TESSA matures you have six months to move the funds to a TESSA-only ISA, and after this you lose your entitlement to this extra tax-free savings allowance. You can shop around for a TESSA-only ISA, and do not have to stick with your existing provider. The provider has to issue you with a “TESSA maturity certificate” to enable you to re-invest the funds elsewhere.What will happen to the maturing TESSA money? HSBC’s survey says just seven per cent of TESSA holders plan to spend all the money from their maturing investment, 43 per cent plan to reinvest both capital and interest, but a third of TESSA holders with maturing funds are still not sure what they will do with their money.Banks, building societies and other institutions are offering the highest rates of interest available on any cash investment in a bid to lure customers. But most of the best rates are only available to the institutions’ existing customers.

The Skipton Building Society is offering 7.25 per cent gross on its TESSA-only ISA, for existing members. The account requires 30 days’ notice for withdrawals, and the minimum deposit is £500. The Society’s spokesman, Mark Smitheringale, says it is their 11 subsidiary companies which help it pay high rates of interest – the profit from the smaller companies can be passed on to members in the form of higher savings returns.A similarly high-paying account with no opening restrictions is offered by the Universal Building Society. Its TESSA-only ISA pays 7.25 per cent interest, however five years’ notice is required for withdrawals and the minimum deposit is higher than the Skipton’s product at £1,000.Many of the TESSA-only ISAs offering the highest rates do not qualify for a CAT mark – the government benchmark which sets out certain minimum criteria for conditions, access and terms. This is usually because the accounts require savers to tie up their money for a period.

“Most people like the idea of instant access,” says Kim North of IFA’s Pretty Technical Partnership, “but in reality, especially with the latest 25 basis point rise in base rates, if you want instant access you’re going to receive lower rates.”Some accounts offer the convenience of a cashcard and instant access, though they pay more modest returns. Abbey National pays 5.95 per cent on its instant access CAT-marked TESSA-only ISA, and issues a Link cashcard.But take care to read the details of an account before opening it. The Portman Building Society, for example, offers a high rate of interest on its 45-day TESSA-only ISA, at 7.0 per cent The account is also open to all. But the building society is phasing out this type of account on 2 October 2 2001, at which point it will transfer into a Portman Easy Access TESSA-only ISA, which currently pays just 5.75 per cent interest.Kim North says savers should choose a TESSA-only ISA from a provider they know and trust.Since many of the accounts tie your money up for months if not years – but the interest paid is variable – you need an institution which you feel will keep its rates high after the initial drive to attract customers.Look carefully to see how the ISA’s interest rate is graded according to the amount held in the account, points out Ms North. She also advises savers to be aware that in some cases it is easy to drop to a much lower level interest rate by withdrawing cash.. Anyone who reads the financial pages of the newspapers can be in little doubt as to the time of the year We are right in the middle of the season The ISA-selling season, that is Exhortations to buy are legion. The only problem for the poor investor is that there is too much information and much of the advice available appears contradictory.