Monthly Archives: January 2018

Helping you realise your retirement vision

We’ve now entered a new age of retirement planning with the introduction of pension freedoms. But Britain has an ageing population, highlighted by the fact that the number of telegrams sent by the British Monarch to 100-year-olds has risen from 24 in 1917 to nearly 7,000 today.

It is projected that the number of centenarians – people who live to 100 years old and beyond – will continue to rise by more than tenfold over the next 30 years (when the NHS will also celebrate its 100th birthday). This growth is due to the higher birth rate between the First and Second World Wars, and dramatic improvements in health and healthcare.

Thinking about pensions sooner rather than later can mean the difference between a comfortable retirement and struggling to make ends meet. Unfortunately, some people put off retirement planning when they are young because they think they’ve got time on their side. However, the earlier you start saving for your future, the bigger the pension pot you’ll end up with when you’re older.

Seven pension tips for nurturing your nest egg 

Research shows we’re more likely to achieve our financial goals if we write them down and start with a clear plan of action. Work out what financial goals you want to achieve, then break them down into realistic steps that will lead you there. We’ve provided seven pension tips for you to consider to keep your retirement plans on track at the start of the New Year.

  1. Consider consolidating your pension pots – while it might be hard to keep track of pensions with job changes, the Government offers a free Pension Tracing Service. Bringing your pension pots together may help you manage them but take care to understand the benefits associated with the existing contract, along with any potential risks/disadvantages of transferring the funds – and always seek professional financial advice to see if it’s suitable for you.
  2. Make use of your tax reliefs on pension contributions – when you can do this, particularly at higher rates, this can be beneficial. The Government may well revisit pension tax relief post-Brexit to help ‘balance the books’.
  3. Maximise your workplace pension contributions – if your employer pays a contribution that is linked to your contribution, see if it’s affordable for you to pay the maximum to receive your employer’s maximum.
  4. Invest for the long term – there have been various moments of uncertainty in the markets – think back to the ‘crash’ of 1987, which now looks like a blip. Keep an open mind, and don’t panic or have a knee-jerk reaction. You must remember that when investing in the stock markets, it is inevitable that there will be times of volatility when you need to weather the storm.
  5. Review your State Pension entitlement – given so many changes, it is worth keeping your finger on the pulse and looking at what you may need to do to top up to the maximum entitlement available.
  6. Review your expected expenditure in retirement – it’s key that you clearly establish ‘essential’ and ‘discretionary’ spending, so that in poor market conditions you can always look to reduce income from pension funds if necessary to cut back on discretionary expenditure that can wait for another day.
  7. Ensure your income in retirement is set up as tax-efficiently as possible –making full use of all available tax allowances/exemptions is crucial. Don’t forget to look at how different tax wrappers can work for you.

What does retirement mean to you?

From stopping work altogether to a slow and gradual reduction of commitments, retirement means different things to different people. Making sure you can sustain the level of income you need as you move away from full-time employment or your business interests is key to a long and happy retirement. To discuss your requirements, please contact us.

Source data: 

Investor Pulse Survey – BlackRock’s Global Investor Pulse Survey examines investing attitudes and behaviours across the world. The 2017 survey included 28,000 respondents in 18 countries. The UK sample included 4,000 respondents between the ages of 25 and 74. Survey conducted in Q1 2017.

 

 

How much money do you need to retire?

You may have had it drilled into you from an early age that you should save. Being a diligent sort of person, you may have always done that; maximising your yearly ISA allowance, putting 6% of your salary into your pension, investing wisely, even purchasing a buy-to-let property as an additional investment.

But once you’re into the habit, is there a danger of saving too much? More importantly, when can you afford to stop?

Of course, it’s different for everyone. Perhaps a more relevant question is what kind of lifestyle are you planning for when you have financial independence and how much will you need to meet those requirements?

Our culture today is focused on acquiring things: the latest iPhone, that designer jacket you’ve seen, a top of the range sports car. There comes a point, however, when we reach a kind of saturation point without even realising it. That’s why it’s good to take a step back and consider how much money you really need.

Once your basic needs are met,

The bank that likes to say ‘yes’

Repeated pay-outs to children could have a detrimental impact on your own long-term saving

Many parents who are in a position to do so would want to provide financial help to their children. However, in many cases, this financial support ends up being gifts from Mum and Dad rather than the loans from the Bank of Mum and Dad they start out as.

Long-term dent

These written-off loans risk making a long-term dent in the finances of parents, often at the stage in their lives when they would like their money to be invested for the future and working hard for them in a pension. If the choice is between providing loans to their children or continuing to contribute to a pension, parents should obtain professional financial advice before making that decision.

On average, those who have lent money to their children or grandchildren are owed £12,700, and more than one in ten (11%) of the Bank of Mum and Dad’s loans are for figures of more than £20,000.

Repaid in full

Research from Prudential[i] has revealed that in many cases, the Bank of Mum and Dad doesn’t expect its loans to be repaid in full, with more than two in five (44%) parents who have lent money to their families admitting it is unlikely that they will ever see the full amount of money again.

However, the potential for significant financial loss from written-off loans doesn’t appear to deter them. More than two thirds (68%) of the parents interviewed have already loaned money to their families, or have definite plans to do so in the future, while the remaining (32%) all hope to be in a position to act as their children’s preferred lender sometime in the future.

Considering lending

Of those parents who are considering lending to their offspring in the future, many are also unsure they will get the money back – nearly two fifths (37%) think it is unlikely

To Bit or not to Bit?

Bitcoin and other cryptocurrencies are receiving intense media coverage, prompting many investors to wonder whether these new types of electronic money deserve a place in their portfolios.

Cryptocurrencies such as bitcoin emerged only in the past decade. Unlike traditional money, no paper notes or metal coins are involved. No central bank issues the currency, and no regulator or nation state stands behind it.

Instead, cryptocurrencies are a form of code made by computers and stored in a digital wallet. In the case of bitcoin, there is a finite supply of 21 million,[1] of which more than 16 million are in circulation.[2] Transactions are recorded on a public ledger called blockchain.

People can earn bitcoins in several ways, including buying them using traditional fiat currencies[3] or by “mining” them—receiving newly created bitcoins for the service of using powerful computers to compile recent transactions into new blocks of the transaction chain through solving a highly complex mathematical puzzle.

For much of the past decade, cryptocurrencies were the preserve of digital enthusiasts and people who believe the age of fiat currencies is coming to an end. This niche appeal is reflected in their market value. For example, at a market value of $16,000 per bitcoin,[4] the total value of bitcoin in circulation is less than one tenth of 1% of the aggregate value of global stocks and bonds. Despite this, the sharp rise in the market value of bitcoins over the past weeks and months have contributed to intense media attention.

What are investors to make of all this media attention? What place, if any, should bitcoin play in a diversified portfolio? Recently, the value of bitcoin has risen sharply, but that is the past. What about its future value?

You can approach these questions in several ways. A good place to begin is by examining the roles that stocks, bonds, and cash play in your portfolio.

EXPECTED RETURNS

Companies often seek external sources of capital to finance projects they believe will generate profits in the future. When a company issues stock,