Category: Financial Adviser Blog

 

 

 

Generally speaking, and subject to investment charges and performance, the more you save and the earlier you start saving the better shape your finances are going to be in when you need to draw on them.

So why is it then that many of us are reluctant to put money aside for a rainy day, a specific objective, or – perhaps most importantly – our retirement?

Start early!

Helping your child understand the value of money from an early age could help them develop a healthy savings habit that sets them on a good footing for life.

You could do this by dividing money into different pots to help your child visualise where their money is going and understand that, when it’s gone, it’s gone. Use two jam jars, one labelled ‘Spend now’ and one ‘Save for later’. Talk to your child about how they would like to divide their pocket money or any cash gifts they receive between the two jars. If they keep their savings jar topped up, they can see they have rainy day money if they need it when their ‘spend now’ jar is empty.

There are also online tools and savings apps, like goHenry, which allow you to load up pocket money and visually help your child to track their spending.

Swap instant gratification for longer-term satisfaction

When you have spare cash it’s lovely to spend it on a treat – after all, you don’t get instant gratification from saving for the future. But with many of us enjoying long, hopefully healthy retirements thanks to advances in medical science, it’s all the more important to invest now so that you have more time to build up a sufficient pension pot.

Don’t bury your head in the sand

According to Which? every household needs a pension pot of at least £370,000 to feel comfortable in retirement – a target which could put people off from saving anything into their pension when they should be doing the exact opposite.

Don’t ignore your future financial situation, talk to us for advice on how to achieve the retirement you want so that we can work with you to put a plan in place that will help you achieve your investment goals. We’ll follow a meticulous process when it comes to helping you create the right portfolio of investments, starting with getting a deep understanding of the following:

1. What are your investment objectives?
2. What level of risk are you prepared to accept and what potential level of loss can your finances tolerate?
3. Which types of investments we think you should consider in light of your objectives and risk profile?
4. What the most tax-efficient way of holding these investments would be?
5. How your portfolio should be managed on an ongoing basis?

Think about what you want to do with your money and set clear achievable goals with milestones that make it feel like you’re winning but will benefit you in the longer-term.

We offer a professional and personal approach to your savings and investments, not only in the initial design of your strategy, but also over the long-term. Please talk to us to find out more.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

 

 

 

 

 

Despite the recent mortgage interest rate rise, savers will still struggle to enjoy any kind of growth on money they have on deposit, leading some to consider a riskier investment.

If you’re considering investing in the stock market, an important – and very personal issue – is how you feel about the prospect of putting money at risk and your ability to accommodate any loss in value.

Factors in determining risk

As investment advisers, we will consider a range of factors when assessing your attitude to investment risk:

• Age – How old you are may affect how you would like to invest, particularly the closer you get to retirement.
• The need for emergency cash – You should always keep a certain amount readily accessible (for example, in a deposit account) in the event of an emergency or as a foundation for your longer-term savings and investment.
• Can you afford to take a risk? – If your investments dropped in the short term, do you have the time to wait for them to recover?
• Can you afford not to take a risk? – Leaving all your money on deposit may carry minimal risk, but you may miss out on higher potential returns and possibly see the spending power of that money fall due to inflation.

What’s your appetite for risk?

It’s a fact that risk and the potential for reward go hand in hand: Investments that are low in risk are low in potential reward, whereas the more risk you’re willing to take with your money the greater the potential for reward.

Devising an appropriate investment strategy

Once you’re clear – and comfortable – with the level of risk you need to take to reach your goals, you’ll need an investment strategy that’s finely calibrated to deliver the results you’re looking for.

An important part of this is to avoid the ‘eggs-in- basket’ principle and make sure your portfolio is invested across a range of assets in order that the positive performance of some neutralises the negative performance of others.

You’ll also want to know that your money is in the hands of some of the best and most consistent investment managers in the business and you’ll need to give your investments time – the longer you can leave your investments in place, the more likely you are to cope with any short-term changes in market value.

Talk to us

As members of Openwork, the UK’s largest financial adviser network, we follow a clear and thorough process designed to clarify exactly what you need from your investments. We also have access to a meticulously researched and managed range of investments specifically designed to meet different needs. Taken together, you will know not only that your money is in good hands, but also that given time, there is an increased level of probability that it will perform in line with your expectations.

Need advice?

Good investment advice involves building a clear picture of the results you’re looking for, taking into account your current financial position, your future goals and your personal attitude to investment risk.

Talk to us for expert advice.

The value of investments and any income from them can fall as well as rise. You may not get back the amount originally invested.

 

 

 

Just 4% of self-employed workers have income protection in place, leaving the majority vulnerable to financial difficulties if they are suddenly forced to stop working through illness or accident.

In its survey of more than 9,000 adults, LV= identified the self-employed as a niche group who would struggle to make ends meet if they stopped earning. This is partly down to the fact that they have no employer’s safety net and little, if anything, in the way of emergency funds.

The benefits of income protection

Income Protection pays out a regular income if you’re unable to work due to an accident or illness or, with certain policies, unemployment. For a monthly premium that can be adjusted to suit your budget, this valuable insurance will help to reduce stress, prevent your family suffering financial hardship and help you get back on your feet.

And budget is clearly a factor when it comes to the self-employed taking out protection, with two fifths (41%) surveyed saying they could not afford to save money on a monthly basis.

LV= also found there was a lack of understanding among the self- employed, which could account for such a large number having no income protection cover. In fact, four out of ten self-employed workers mistakenly believe they aren’t eligible for this sort of cover.

How can you protect yourself?

Most of us don’t think twice when it comes to protecting our vehicles or treasured possessions, and yet it’s our income that enables us to enjoy these material things. Those of us who are employed may have some kind of cover provided by their employer, but if you’re self- employed you could be exposed.

If you’d like advice on how to protect your finances, or you’d like to review your protection needs, please get in touch.

When you take out a mortgage we would always recommend you take out appropriate life insurance too, so that you know your monthly mortgage payments are covered if things go awry.

If you’re buying on your own, a single life insurance plan will probably do the trick, but if you’re going into joint property ownership, a joint plan may be more appropriate. So, which is best for you?

Property ownership

When it comes to joint ownership, there are two main types:

1. Joint Tenant

Where both individuals each own 50% of the property and have equal rights over it – no matter who contributed what in terms of a deposit. Married couples and those in civil partnerships would typically go into joint tenancy, as it means that if one person dies, their share automatically passes to the other – irrespective of the terms of any will in place.

2. Tenants in common

Where each owns a separate and distinct share of the property (and not necessarily an equal share). This might be the best option for co-habiting (but not married) couples, parents buying for their child, or relatives or friends buying together. This set-up means that if one of the tenants in common dies, their share forms part of their estate, rather than automatically going to the other tenant.

Single or joint life insurance?

Given the differing types of property ownership, it’s important to look at your individual situation before taking out life cover.

A policy taken out on a single life basis covers one person only and will pay out the sum assured if the policyholder dies within the term of the policy. A joint policy covers two lives and will normally pay out on a ‘first death’ basis, at which point the policy will end. There are pros and cons of both types of cover – and you should seek advice so you know you’re getting the cover that’s right for you.

Things to think about

Budget – One joint insurance life policy could be more affordable than two single life insurance policies.

Cover – Do you both have exactly the same life insurance need? Would two plans be more appropriate?

A joint life insurance policy only pays out once – The proceeds could go to the surviving partner (and would be tax-free) so that they could pay off the mortgage. However, they would be left without any life insurance and applying for cover later in life can be expensive.

Relationship break down – It’s possible that the insurance provider would not be able to divide a joint life policy into two single policies. If you have two separate policies, neither will be affected in the event of a split with the joint owner.

If you need life insurance to protect your mortgage, please talk to us before you buy and we’ll advise on cover that’s tailored for your circumstances.

 

 

We’ve scoured the global news headlines to recap the most significant geopolitical and economic events which took place in the second quarter of 2018, as Donald Trump’s unconventional approach to foreign policy sent mixed signals to the financial markets.

UK

Brexit dominated the political agenda in the UK throughout the quarter. Prime Minister Theresa May struggled to come up with a customs deal which would not only satisfy the European Union but would also be acceptable to Tory MPs on both sides of the debate. However, Parliament narrowly passed the EU Withdrawal Bill in June after Mrs May overcame challenges from the House of Lords and the House of Commons. Against this backdrop, the Bank of England decided not to raise interest rates, although a six-to-three split on the Monetary Policy Committee signalled the likelihood of a hike in August – something that was indeed realised.

US

Despite seeming unlikely in the preceding months Donald Trump became the first US President to meet with a North Korean leader when he travelled to Singapore in June for a historic summit with Kim Jong Un. The summit represented an important step in the thawing of relations between the two countries, although it failed to deliver any concrete outcomes. Meanwhile, the Federal Reserve – the most advanced of the world’s central banks in the monetary tightening cycle – raised interest rates for the second time in 2018 and hinted at two more hikes over the next six months.

Asia

Trade tensions continued between China and the US, despite appearing to ease in April as President Xi Jinping offered foreign companies, including the finance and automotive industries, greater access to Chinese markets. Two rounds of talks failed to produce any tangible results, so Donald Trump followed through on his pledge to impose tariffs on Chinese goods. China responded in kind. In other Asian news, the Bank of Japan decided to scrap its goal of raising inflation to 2% by the end of the first quarter of 2020.

Europe

The US also introduced tariffs on European steel imports and the EU countered by imposing levies of its own on a range of American goods including motorbikes and whiskey. Turning to economics, the European Central Bank (ECB) decided to leave interest rates unchanged at its April meeting and announced it would scale back its monthly bond-buying programme after September 2018 and end it completely in December.

Latin America

A mid economic reforms, in May Argentina’s central bank raised interest rates three times in eight days to 40%, as it attempted to support the peso and bring down inflation. Elsewhere, populist candidate Andrés Manuel Lopez Obrador topped the polls ahead of presidential elections in Mexico, and the US imposed new sanctions on Venezuela banning the purchase of debt owed to the government and state-run oil company PDVSA.

If you are concerned about how global events can impact your investment portfolio, please get in touch.

 

 

The 2018 Autumn budget can be deemed as rather less intrusive or controversial as many were anticipating, given the recent financial and political turbulence on the global stage. Nevertheless, there are still some interesting points to take from it that we should familiarise ourselves with.

Please click here to go to a full summary brochure that details the Autumn Budget.

 

An explanation of the recent Omnis funds reorganisation, why we made the changes and what you can expect going forwards.

An introduction to the fund managers who work with Omnis, how we select them, how we monitor them and what we do when changes are needed.

An explanation of how we work together to develop a financial plan to support your life plan, by investing in a diversified portfolio in line with your attitude to risk.

We’ve scoured the global news headlines to recap the most significant geopolitical and economic events which took place in the second quarter of 2018, as Donald Trump’s unconventional approach to foreign policy sent mixed signals to the financial markets.

Please click here to view the full newsletter

Employer pension contributions are one of the most tax-efficient ways for a business to remunerate their key employees.

In theory, an employer can pay any amount of pension contribution to a registered pension scheme in respect of one of their employees or an ex-employee, regardless of their salary.

For tax relief to be given on employer contributions, they need to be deducted as an expense in calculating the profits of a trade, profession or investment business.

In most cases, this will not be a problem as pension contributions often are a central part of any employee reward package, and staff costs are perhaps the most genuine trade expense.

Other components such as salary and bonuses are similarly deductible from profit. However, what sets employer contributions apart from cash rewards is their exemption from employer NICs.

There is no liability to income tax as a benefit in kind for the employee if the employer pays the contributions into a registered pension scheme.

However, an employer’s pension contribution will be assessed against the individual’s annual pension allowance, money purchase annual allowance (MPAA) and tapered annual allowance.

Contributions over the employee’s relevant allowance may result in an annual allowance charge. The following example shows the tax impact of an employer paying an employee in salary, dividends and pension contribution.

Julie owns a small business and wishes to pay herself £100,000 from the company.

To keep things as simple as possible she initially wants to look at the effect of paying the full amount as salary, dividends or an employer pension contribution.

Please note there are a number of assumptions in each case: the salary column assumes Julie has no other income, so has her full personal allowance available; the dividend column assumes that she can pay herself this amount in dividends under HMRC rules; and the pension column assumes that she has sufficient annual allowance available to cover the full contribution and that she will be a higher rate taxpayer in retirement.

As you can see, employer contributions can be a tax-efficient strategy. However, it is important to consider the employee’s annual allowance, as well as the fact that the pension plan cannot be accessed before age 55.