The coronavirus (COVID-19) pandemic has caused massive job losses across the country. But some households have been saving more money than ever [1]. For these households, they have a choice which could have a big impact on their future wealth. This is the choice between saving or investing. More money to invest than usual The
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Paying yourself first Before you pay any bills, consider paying yourself first. This means saving and investing a portion of your earnings before you do anything else with your money. In the book The Richest Man in Babylon, written by George S. Clason, the parables are told by a fictional Babylonian character called Arkad, a
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Last year, Autumn arrived without an Autumn Budget. In fairness, the Chancellor, Rishi Sunak, had already presented one 2020 Budget. This took place last March, and the pandemic made forecasting for 2021/22 all but impossible. The result was that, for the second year running, the Budget was deferred to the Spring. Whether Mr Sunak’s job
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Around three in four people risk outliving their savings in retirement, a report looking into the impact of the pension freedoms indicates. The research found evidence many retirees risk potentially running their pension savings down. It termed this as “sleepwalking into retirement”. The study examined retirement planning and spending habits following the introduction of pension
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The Covid-19 pandemic has produced the most pronounced economic shock in nearly a century. In 2020, recessions around the world were sharp and deep, with significant supply-chain disruptions at times. That said, perhaps more than in previous recessions, policymakers were aggressive in supporting financial markets and their economies. While the global economy continues to recover
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Demonstrating value to our clients is crucial. There have been a number of studies by industry bodies and providers, including Royal London here and Russell Investments here, which quantify the value advice can give to our clients. The results are clear; individuals are better off, net of costs, by taking financial advice. What about business owners? Let us
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There are many ways for the directors of a business to buy its premises. Below we will look at the benefits and drawbacks of the main ways. Company purchase Benefits If the company buys the property, it does not affect how the director’s pensions are invested in any way. If the company owns the property,
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The British Medical Association (BMA) has written to doctors reminding them of the 2019/20 Annual Allowance Charge Compensation Scheme. What is the compensation scheme? The compensation scheme aims to cover annual allowance charges arising in the NHS pension scheme incurred in the tax year 2019/20. The scheme covers NHS England and NHS Wales, but not
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IHT receipts for April to October 2020 were £33 million higher than for the same period last year. October 2020’s receipts were also up 17% compared to October 2019. This could be due to the Covid-19 pandemic. What it does show is that many families who have not done any planning may have paid tax
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We have written a post previously about focusing on income when investing. I wanted to go into some of the evidence behind focusing on income when investing not being the best strategy. When looking at this, there is probably no more famous theory in Finance than Modigliani/Miller. Known as the Dividend Irrelevance Hypothesis it says investors
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Buried amongst the other announcements made on 25 November was a paper from the Treasury looking at measures of inflation. It revealed a decision about replacing the Retail Prices Index (RPI) with the Consumer Prices Index (CPI) including owner-occupied housing costs (CPIH). The RPI has not been an official National Statistic since 2013 because of serious deficiencies
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Thinking about your death is an uncomfortable topic. Combining this with money makes this even worse. There are three places your assets can go at your death. They can go to your family and friends, charities and other institutions, or the government in the form of taxes. Almost half of all Baby Boomers say they
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Market conditions change all the time. Investors may wonder if they should change the composition of their portfolios to reflect this. How could I change the level of risk my portfolio takes? The portfolios we build for our clients align to ten risk profiles. These range from investing purely in cash to more speculative investments
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All registered pension schemes can (in theory at least) invest in property, including land, either in the UK or overseas. Pension schemes can invest directly in commercial property, but many choose to invest indirectly using pooled vehicles. These include unit trusts, open-ended investment companies (OEICs) or real estate investment trusts (REITs). As well as allowing
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When business owners choose how to take their profits, there is a compelling argument in favour of pension contributions. Dividends may still be the preferred route for most. However, changes in how they are taxed may drive more directors who do not need the income to use employer pension contributions instead. Remember, since April 2018,
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In July 2020, the Chancellor asked the Office of Tax Simplification (OTS) to review Capital Gains Tax (CGT). The aim was to ‘identify opportunities relating to administrative and technical issues as well as areas where the present rules can distort behaviour or do not meet their policy intent’. The review has attracted strong engagement from
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The coronavirus (COVID-19) pandemic has caused many households to reassess their financial defences with the purchase of protection insurance. The diagnosis of a serious illness can mean a tough time for your health and your wealth. If you were to become critically ill and could not earn a living, would your family cope financially? Our
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It is always important to manage expectations when investing. We often get questions about whether there is an explicit time someone must invest for how accessible the money is. How long do I have to invest for? If you are investing in an investment account or an ISA, then technically you could invest the money
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A new report from the Institute of Fiscal Studies (IFS) has shown pension saving has crashed among the self-employed. What does it say? Back in 1998, just below half (48%) of the self-employed paid into a private pension. By 2018 this had plummeted to just 16%. The contrast with regular employees, because of auto-enrolment, is
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Employers can pay employees up to a maximum of £6 per week tax-free, to cover additional costs they may have incurred because of working from home. Where employers have not paid their employees the home expenses payment, individuals can claim this tax relief through a new online portal. More than 54,800 claims have been made
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NHS Pensions Savings Statements are prompting enquiries on annual allowance charges. Here is a reminder of the special provisions that apply to annual allowance charges of NHS clinicians in England and Wales for the 2019/20 tax year. Many will have recently received Pensions Savings Statements for tax year 2019/20 and may have questions about their annual
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I have always been passionate about helping people feel more financially confident and achieve financial security. What this can be boiled down to is increasing financial wellbeing. The Financial Wellbeing Book, published in 2016, laid out five parts to financial wellbeing: A clear path to identifiable objectives Control of daily finances Ability to cope with
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Many investors are worried about the US election’s effect on the stock market. One school of thought is a Biden victory could lead to measures that would hit businesses. Another asserts the stock market prefers Republican victories. What does the data say? The logic of efficient markets is that anticipated events do not impact prices.
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The Government has rejected the Public Accounts Committee (PAC)’s proposal that HMRC should evaluate pensions tax relief. The concern was HRMC did not understand the impact of some of the UK’s largest tax reliefs which includes pension tax relief. The committee called for a formal review, but the Government disagreed. They pointed to several recent consultations
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The pace of the global economic recovery from the Covid-19 pandemic appears uneven. Recent US economic data has been at the optimistic end of expectations. However, activity in the UK, where Brexit looms large again, has lagged forecasts. The risks of a second Covid-19 wave (and, potentially, more severe lockdowns) are growing. But so too
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The Institute for Fiscal Studies the effect of the pandemic on those nearing the end of their working lives. In a new Briefing Note, the IFS investigated how workers aged 50 and over have reacted to the pandemic. This has included how their retirement plans have already been affected by the crisis. What were the findings?
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As discussed in a previous post, National Savings & Investments have cut the rates they offer to savers. For most of our clients, we only see cash as a way to cover short term obligations which we looked at here. However, we have a very small number of clients who have pensions and have not
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Open Banking is a secure way to share your financial information. It is now available on your Personal Finance Portal (PFP). The introduction of open banking is a great opportunity to put you in control of your money. It is important to understand what it is and what it can do for you. Briefly, open
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The Money & Pensions Service (MaPS) has undertaken some research among people aged 50-70 with some pension savings besides the State Pension. The results make disturbing reading: 37% of over 50s are leaving their retirement financial planning until their final two years before retirement or won’t prepare at all 35% of retirees said they left financial
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If you were not prepared financially for the first wave, then that is understandable. However, being prepared for a second wave is critical. So, what can we do? Do not rely on the Government When the infection first reached the UK, the government was quick to step in and help people financially through various schemes.
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National Savings & Investments has significantly cut the rates it offers to savers. Savings analysts have long kept one eye on NS&I’s next move. The bank helps to fund the Government’s spending, so it has to balance the rates paid to savers with the cost to the Treasury. NS&I had planned cuts earlier this year.
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Imagine a scenario where your business partner and fellow director has died. Your business partner’s wealth, including their share of the business, passes down to their family. This poses significant potential risks to your company. They could become involved in business decisions they know nothing about. They could also sell the shares without your consent
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A few significant tax changes have been introduced affecting how residential property is taxed from 6 April 2020. Mortgage interest relief Since 2017/18, higher rate tax relief on mortgage interest has gradually been phased out. It has been replaced by a basic rate tax credit reduction from the taxpayer’s tax bill. With effect from 6
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A report claimed thousands of older women have not received their full state pension entitlement. In a follow-up report, Lane Clark Peacock LLP (LCP) summarizes their findings since then. A vital message is to encourage a much wider group of women to check their state pension is correct. Dozens of women have told LCP they
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As well as reviewing the operation of capital gains tax (CGT), the Chancellor asked the Office of Tax Simplification to consider “opportunities to simplify the tax”. What changes could emerge and what could this mean for financial planning strategies for our clients? Charging capital gains made by individuals to income tax If you are taxed
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Inheritance Tax (IHT) can affect property, money and possessions. Your pension is normally free of IHT, unlike many other investments. It is not part of your taxable estate. We say normally as a tax case has just finished concerning one of the times someone’s pension can be subject to IHT. What is the case? The
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You may have some spare money some surplus income. Either way, you might be thinking about what is best to do with this. Is it better to invest or repay your debts early? Paying off your debt could mean means reduced stress, and a greater ability to withstand personal emergencies, recessions, and depressions. Investing means
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Educated guesses are key to financial planning. No matter how diligent we are when gathering information about a client, financial planning is about the future, not the past. As such we will need to make some “guesses, or assumptions, about what will happen in the future. Whilst these guesses need to be as educated as
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The Financial Conduct Authority (FCA) is floating the idea of new rules designed to improve investor experiences in open-ended UK Commercial Property Funds. Most are currently suspended due to uncertainties on the value of the properties because of the COVID pandemic. In the past, they have placed restrictions on withdrawals due to a lack of
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2020 has put our ability to survive financial shocks to the test. However, for many, the financial implications of the pandemic have not been as bad as they could have been. This is thanks to the government’s support schemes. Other than being unable to work, the biggest causes of financial emergencies are cars, properties, family
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The discounted gift scheme is an arrangement which allows you to make a gift for inheritance tax (IHT) purposes while retaining the right to a fixed income (in the form of regular withdrawals) for your lifetime (or until the trust fund is exhausted). Firstly, from the amount of capital which is to be gifted you
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Did you know that people are twice as likely to take out insurance for a pet than they are themselves? This is a choice which could have server financial consequences. In a survey by Cirencester Direct, over a third of respondents said they have, or would take out, pet insurance. However, just 17% would take steps
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Investing for the financial future of children and grandchildren are key areas of concern for parents and grandparents. This can be for various reasons including funding education or helping them to buy a house in the future. There are special rules to consider when investments are made for the benefit of, or on behalf of,
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DIY investors now have unprecedented access to investment information and markets. This has levelled the informational playing field between them and professional investors. Even though you may have the tools to do manage your own portfolio, should you go down the DIY route? What you need to be a successful investor Time and interest You
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Venture Capital Trusts (VCTs) have always been viewed as highly useful when looking at someone’s tax planning. Over time VCTs have become more mainstream and for certain clients are just another way to invest tax efficiently. VCTs are publicly-listed companies which invest money in small UK businesses who are not quoted on the main stock
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Every business owner is likely to have considered insurance for accidents, company vehicles and their premises. However, many do not feel business protection is relevant to them. Small business owners are often too busy to focus on the wider ‘what if’ risks their business could face. Protecting business profits Can a business die of a
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It is no secret the Government debt has reached epic levels. With interest rates being as low as they are, it is accepted that servicing the debt may not be as challenging as the size of the debt would (superficially at least) indicate. Low to negative yield Government Bonds (Gilts) are being bought by the
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This month has some welcome positive news. There was an increased likelihood of economic growth picking up in China as early as the second quarter. While economies are recovering in many parts of the world, they are a long way from where they would have been in the absence of Covid-19. Predictions are that global
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Level term assurance policies have a known level of cover that will be paid out in the event of death within a known period of time. Premiums remain level throughout and should you survive the policy term, there will be no benefit. As this type of contract only provides cover in the event of death
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First-principles thinking helps reverse-engineer complicated problems. The idea is to break something down to its base elements. We can then reassemble them from the ground up. This approach was used by the philosopher Aristotle. Elon Musk and Charlie Munger are among those who use it now. It allows them to cut through the fog of
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There are many benefits of turning using a financial planner. Financial planners have the expertise to advise on how best to achieve your goals. They can play a role in deciding where to invest your money to ensure it is working hard in pursuit of your ambitions. You are bound to think about how safe
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Unit trusts and OEICs (open-ended investment companies) are collective investment schemes which allow individuals to participate in a large portfolio of assets by pooling their money together with other investors. This gives the individual access to a much wider spread of holdings than can normally be achieved with smaller sums of money, which in turn
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A report on the front page of Wednesday’s Financial Times has added weight to the possibility. It has highlighted a quirk of the calculation which could cost the Government dearly if no changes are made. To understand why we need to understand the fundamentals of the Triple Lock. The increase each April is the greater
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Deferring the state pension is the default option. If you do not claim it the Government will not pay it to you. For a lot of people, this might be a better option for them. Of course, you need to think about how long you defer for too. Factors to consider As with all pension
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Markets have continued to make progress in May, encouraged by further evidence in the developed world of an easing of both Covid-19 related deaths and new cases. There is strong evidence the lockdown measures put in place in Europe have delivered the desired results. Countries such as Denmark and Germany, where restrictions have eased more
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There is a growing unease about the economic fallout of COVID-19. Many businesses are laying off contractors and putting staff on extended leave. There is also the natural worry about contracting the disease. What this crisis has shown is being unable to work can turn our world upside down. No one likes to think something
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More than a fifth of UK households live in privately rented accommodation. The Government has introduced measures to protect renters affected by COVID-19. This radical package of measures protects renters and landlords affected by COVID 19. With these in force, no renter in either social or private accommodation will be forced out of their home.
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Although many spend a lot of time trying to, no one can accurately predict the future. If I could, I doubt the Governments of the world let me spend my time dealing with investment portfolios. Because we do not know which investments will outperform, we invest money into a wide variety of them. We know
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Something happened yesterday which has never happened before. The Debt Management Office (DMO), the Treasury arm charged with the task of selling government debt, sold £3.8bn worth of gilts at a negative yield. The stock concerned was 0¾% Treasury 2023 and the average yield was -0.003%. There was no shortage of market interest as they could have
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a Accumulation Units A type of fund where any income generated (dividends/savings interest) is used to purchase more units in the fund. An accumulation unit will have ‘Acc’ at the end of the fund name. This differs from Income Units. Allocation Rate The insurer may decide to allocate more or less than the contribution to
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There is a debate about whether gold makes for a good way to protect portfolios against stock market declines or rising inflation. When I was at school the currency of the playground was premier league stickers. If you had a “shiny” you could command a higher price than the standard card. Deep down, there is
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Some mortgage borrowers may have been adversely affected financially by The Coronavirus (COVID-19). Because of this, they may consider requesting to take a mortgage payment holiday on their mortgage for up to three months. The Government’s policy aims to ease the stress some borrowers will face during the pandemic. It also provides some flexibility at
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A Whole of Life Assurance policy with guaranteed premiums promises payment of a known level of cover upon death of the life / lives assured whenever death occurs, provided that premiums are maintained. The premium and sum assured are fixed throughout the life of the policy (in some cases it is possible to include an
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The damage from falling victim to a fraud or scam is not only financial. It can also have huge emotional consequences. Remember that if you are a victim of this type of crime, you are not alone. Support is available, but you need to report what has happened as soon as possible. How to spot
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MIT AgeLab has identified three simple questions to ask yourself to gauge how prepared you are for retirement. They uncover crucial factors which may determine your future quality of life. When it comes to retirement planning, we are inclined to focus on accumulating wealth and spending it wisely. While not outliving our wealth is essential
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The research on how best to generate retirement income has been evolving for decades. In the 1950s and 1960s, the leading strategy was to buy bonds live off the interest. This prevailed until the high inflation of the 1970s ravaged the true value of bond interest. In the 1980s, retirees shifted to buying dividend-paying shares
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After the events of the first quarter of 2020, world stock markets bounced back in April. The US market was the standout performer, enjoying the best month since 1987. Over March the S&P 500 rose by more than 14%. Indeed, the index is up by 30% from its 23 March low, meaning that the US
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One of the most valuable assets of a business is its staff, with business success or failure depending on them. Some of these people because of their specialised knowledge, skills or contacts, are vital to the profitability of the business. They are often referred to as ‘key persons’ as their death or incapacity could result
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Watching your portfolio’s returns go up and down can be an emotionally trying experience. Rebalancing to a predetermined, diversified asset mix makes it so you do not have to worry about market instability as much. Having a suitable mix of assets in your portfolio can serve as a buffer against extreme swings in the market.
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The Lifetime Allowance (LTA) limits how much someone can draw from their pensions without incurring tax charges. It currently stands at £1,073,100 (2020/21). Lifetime allowance charges can arise on various occasions with the main ones being: When benefits are initially taken (Taking tax-free cash from a pension is an example of this), On the death
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Whether you want to spread your risk Let us look at four scenarios where you have your money in shares in: a single company, Many companies in the same industry in the same country, Many companies in many industries in the same country or, Many companies in many industries in many countries around the world.
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We have updated our guide to actions which could be taken to minimise taxes here. For our clients, some of the key ones are making full use of the ISA and Pension allowances. The only thing we would advise against doing now is disturbing invested assets to make use of these allowances. An example of
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Lifetime ISAs aim to help people aged between 18 and 40 save for their first home or retirement. A Lifetime ISA (LISA) lets you save up to £4,000 per year. At the end of the tax year, the Government will top up your ISA with a 25% bonus. These bonuses are available on LISA contributions
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The Government introduced personal pensions in 1988. This allowed the self-employed or employees of companies not offering a pension scheme to have a pension. They are money purchase schemes where contributions receive tax relief. Pensions underwent a radical change from 6th April 2006 with the introduction of Pensions Simplification and the March 2014 Budget announced
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Everything that goes into growing the money in an investment plan or pension involves time and money. You should expect to pay a reasonable level of charges. These charges do reduce growth. Let us use an example where the underlying investments within a plan grew by 5% before charges. If charges were 1%, they would
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Anyone, who is a taxpayer and has money to save or invest, should look at Individual Savings Accounts (ISAs). These are “wrappers” in which someone can hold a range of savings and investment products. They are free of UK income and capital gains tax by anyone aged 18 or over (16 or over for cash
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Junior ISAs (JISAs) became available from November 2011. Both cash and stocks and shares JISAs are available. Children can hold one of each at a time (two accounts in total). Who is eligible? All UK resident children under the age of 18 who do not have a Child Trust Fund (CTF) are eligible for JISAs.
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On 25 March the Coronavirus Act 2020 received Royal Assent. It is a bumper piece of legislation, running to 348 pages and covering a wide range of areas (many excluding Scotland because of its devolved powers), including: Food supply; Statutory Sick Pay (SSP) modifications, such as the funding of the employer’s liabilities; Suspension of the rules that
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On Friday the Chancellor gave a graphic illustration of what ‘whatever it takes’ means. After waiting a year and a half for a Budget, within the space of nine days we have had three. The latest, presented in Downing Street was a real money-no-object blockbuster: Coronavirus Job Retention Scheme This type of scheme echoes measures
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As the world grapples with a global pandemic, we face a tough time. There are lots of opinions on Covid-19, some more informed than others. Our role is not to add to these but to advise them on how they have impacted on their financial planning. Stock markets across the world have fallen, recovered briefly,
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Zoom is a video meeting app which is like skype but works on any device. All you need is a device with a camera, a screen, a microphone and speakers. This could be a laptop, tablet, or your phone. It is safe and secure. It works very well, and also allows us to share screens.
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Further to the recent government announcements and in the interest of staff, their families, and our clients, we will have a reduced team in the office. Also, all client face to face meetings are suspended over the short term. Any staff who are not in the office will be working remotely. If you have a
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It is an unbelievable 500 days since the last Budget in October 2018. The Chancellor, Rishi Sunak, has only been in the job a few weeks and to say the Budget will have represented a challenge for him is a massive understatement. Even more so given current world events. Budget Day started with an announcement
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As you might imagine, this is a question clients ask us often. A rule of thumb is the “4% rule”. This means on a £100,000 pot you would withdraw £4,000 and increase the withdrawals each year with inflation. Taking any more runs the risk of the pot dwindling and running dry within 30 years. We
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Every year, thousands of people lose millions of pounds due to investment scams. Technological advances mean scams are becoming more common and harder to identify. There are some warning signs you can use to avoid falling victim to scammers. Investment scams aim to get unsuspecting people to hand over money. They can seem legitimate, appearing
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It is natural to see headlines about world markets falling and to worry about your portfolio. While it is never fun to see your portfolio take a hit, losses are a normal part of investing. Over the last near eight years, our portfolios have fallen in value a significant portion of the time. A key
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The returns you can get from your money can mean different things to different people. To some, getting better returns is something to boast about. We believe returns are meaningless unless they go towards making your life better in some way. This can be being able to retire earlier or being able to help loved
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When taking an income from your pension pot, you will start with two choices. Do you want to hand over your money to an insurance company and they will pay you an income for the rest of your life? Or do you want to keep a pot of money from which you decide how much
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A survey of 2,000 people reveals we spend 110 hours a year think about what might have been. Eight out of ten believe their lives would be better if they had taken more risks. The most common regrets were: Not saving more when younger Not keeping in touch with old friends Not taking the plunge
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On Friday 7th February, the House of Commons Library (HoCL) issued a briefing paper entitled ‘Reform of Pension Tax Relief’. The following day the front page of the Financial Times (FT) ran a headline “Javid eyes tax raid on high earners”. The article suggested restricting tax relief on contributions to 20% could “raise more than
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Investing involves risks. It’s important not to take more risk than you can afford, which we call your “risk capacity.” Imagine two hills: one is steep and rocky but offers a beautiful view, while the other is easier to climb but doesn’t have a great view. You can reach the top of the steep hill
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If you want to make better decisions with your money, we can help. However, working with us is not for everyone. We help our clients take the necessary steps to get the most out of their money. There are some things some expect from us which bear little relevance to what we do. Some of
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Although often in the news, Inheritance Tax (IHT) is easy to misunderstand. If you thought IHT was for wealthy people to worry about, think again. Rising property prices have meant more estates than ever are likely to face an IHT bill. The amount of IHT collected has doubled over the last decade. If your estate
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To be in control of your money, you should have a plan for what you spend. This allows you to give each pound you make a purpose. Although this may seem like a lot of work, it is key to lasting financial success. A good spending plan will help you take each financial step as
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Perhaps you have been asked to be a trustee or you are considering setting up a trust yourself. In either case, there are a few things you should know before deciding. Being a trustee requires a certain level of involvement. This blog post should hopefully give an insight into what is involved. What does a
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Divorce is one of the most difficult subjects to talk about. The emotional upheaval of divorce can be difficult to deal with. So too can the financial implications. When relationships end, there are so many things to consider. Children, home, and support are the first things you focus on. When you begin the process of
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Getting the most out of life can be like climbing a mountain. The goal is to reach the peak and hoist up your flag. The journey will be challenging, so you need to be passionate about it. Most financial plans involve investing and markets always have difficult periods. It is essential to have something to
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Over time, those who have invested money into the world equity markets have generally done best. However, investing our hard-earned money, and the risks involved, can make any of us feel nervous. Any decision you make involves risks. The decision to invest is no different. Whatever you invest will go down in value as well
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Proposed rules mean solicitors must increase their due diligence on whoever they refer to. So, what does this mean for law firms? The Solicitors Regulation Authority (SRA) urges firms to have a holistic picture of their client’s needs. Part of this is having formal relationships with financial planners such as ourselves. There are clear links
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The start of the new year is the time when tax planning comes to the fore in the financial planning calendar. It gives enough time to put anything in place before the end of the tax year on April 5th. But does the General Election on 12th December mean tax planning should take place early?
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