Monthly Archives: April 2018

Where are we now?

I feel the above sketch by Carl Richards explains what we do for clients and what they can do for themselves at the beginning of our relationship so that we can work out where they are today.

When it comes to money, what we don’t know can hurt us. I’ve seen this truth play out time and again when people tell me that they want to take their finances seriously by investing and making plans for the future.

“Excellent,” I’ll say. “So, what can you tell me about your current finances?” Occasionally I have a client who is fully aware of what they have, but the most common response is a blank stare.

I’m not surprised.  Sometimes we just don’t want to know.  As soon as we start listing our current assets and liabilities, we come face to face with both our good and bad financial decisions.

Maybe we’ve done a great job of saving money every month, but we’ve also had a credit card balance for over a year. We need to know both the good and the bad. Otherwise, we can’t plan for the future. Getting a handle on our current reality starts with something simple: a personal balance sheet.

To start, grab a piece of blank paper. Draw a line down the middle. Write “Assets” on the left, “Liabilities” on the right. Then, make a list.

Assets are anything we own. Liabilities are any debts we owe. On the asset side, list things like savings accounts, ISA’s, Pensions and the value of a home. On the liabilities side, list things like credit card debt, a mortgage balance, and any other loans. For this process to work, we need exact numbers, especially for our liabilities. Be prepared to call credit card companies and banks if needed to get this information. Again, not knowing these numbers can hurt us.

Of course, the personal balance sheet may also reveal we’re better off than we think. That’s a good thing. We may have saved more and have less debt that we assumed. Once we have all the numbers, add them up. Then, subtract all the liabilities from the assets. This number equals our net worth and our current reality. This process seems simple enough.

The next step is however a little more complex. It needs discussion and some analysis. The “how do you get there?”; that all important middle step is where the advisor with a wealth of experience can help. However, if we keep avoiding or skipping this first step, we’ll have a difficult time figuring out where we want to go, let alone how to get there!

So if you’d like help understanding where you are now, or working out how you get to where you want to be, please do contact us.

 

Financial freedom- Creating and maintaining the right investment strategy

Our life is an endless series of daily choices, and how we manage those choices determines the outcome of our life. We all want financial freedom, but how will we achieve it? Financial goal-setting is the key to building wealth.

There are always going to be bumps in the road on every journey, which is why it’s essential to be flexible enough to adjust your plans when the unexpected happens. Your wealth creation objectives need to be able to adapt to whatever’s going on in your life. Nothing should stand between you and your long-term goals.

Creating and maintaining the right investment strategy plays a vital role in helping to secure your financial future. Whether you are looking to invest for income, growth or both, we can provide you with professional expert advice to help you achieve your financial goals. So what do you need to consider?

Set a goal and start early

Short term, ultra-specific goals are generally very easy to achieve as they don’t really involve any planning, but longer-term goals on the other hand require you to actually plan out how you are going to achieve the goal. Remember that wealth creation is about creating a lifestyle of your choosing, and the earlier you start to invest, the sooner you can enjoy the benefits of compound growth working for you to build value and make your money work harder for you.

By taking the time to step into your future, you can look back and visualise what needs to happen today for you to enjoy the lifestyle you want tomorrow. Ask yourself these three questions to help you visualise your future needs: what do I have? What do I want? When do I want it?

Develop an investment habit

If you think that investing a few hundred pounds every month will offer little in return, you should change your mindset. To start your investment strategy, you should adopt a stable and organised investment routine that will help you achieve your goals. Compound growth is the central pillar of investing. It is why investing works so well over the long term.

The more you invest and the earlier you start will mean your investments have that much more time and potential to grow. By investing early and staying invested, you’ll also be able to take advantage of compound earnings. Making money on your money is the concept behind compounding. Compounding is when the money you earn from your investments is reinvested for the opportunity to earn even more. However, you need to keep in mind that while compounding can make an impact over many years, there may be periods where your money won’t grow.

Be consistent

Many people stop their investment planning particularly during market downturns, as we’ve seen in recent weeks. By doing this, they often miss out on opportunities to invest at lower prices. If you keep to your investment strategy and keep moving ahead consistently, this helps spread risk and enables you to grow your wealth for the long term through pound-cost averaging and careful asset allocation.

It’s important to remember that investing is an ongoing process, not a one-time activity. The right way to begin your investment strategy is by establishing goals that need to be achieved over the short, medium and long term. Secondly, it is necessary to assess your current position in the financial lifecycle. Thirdly, you must ascertain your risk profile, as that decides how much risk you should take while investing. This is particularly important as different financial objectives require different investments approaches.

Maintain a well-diversified portfolio with regular reviews

Regular reviews of your portfolio enable you to adjust your portfolio to meet your changing needs and risk appetite at different stages of your life and in different market conditions. This helps you keep up your investing momentum towards achieving your long-term financial goals. It’s also important not to put all your investment eggs into one basket.

Investing randomly into different asset classes without ascertaining their asset allocation, not following a disciplined approach to investing, exiting abruptly from an asset class and investing without a clear time horizon are some of the most apparent inconsistencies in any investment process.

Create the right investment strategy

We recognise that choosing how to invest your money can seem daunting. When it comes to planning for your future and that of your family, you’ll want to be sure that you have everything covered. We help our clients set goals and then create the right investment strategy to achieve them, whether it’s growing family wealth or leaving a legacy. We know everyone is unique and has different priorities. To discuss your future dreams, please contact us.

 

 

The above information is provided for information only. It does not constitute investment advice, recommendation or an offer of any services and is not intended to provide a sufficient basis on which to make an investment decision.

Pensioners embracing the benefits of retirement and new-found time

As with any new life stage, planning often helps a smooth transition from the old to the new.  Preparing properly for anything new requires planning and commitment. Spending time on planning now will ensure you enjoy the retirement you’ve worked hard to achieve.

According to new research[1], retirement has meant a new lease of life for millions of people who have given up work in the last ten years, with more than one in four (26%) saying they are fitter and healthier since they stopped working. Far from winding down, nearly half of those who have retired since the height of the financial crisis (48%) say they are busier and more active than they anticipated.

Experience of retirement

Through embracing the benefits of retirement and making the most of the new-found time, more than one in three (35%) say they have more time to make their life more adventurous than they could have hoped while they were still at work.

When asked how else their experience of retirement was exceeding their expectations, many of those who have become pensioners in the last ten years pointed to improvements in their relationships. More than a quarter (26%) believe they now get on better with their partner, while 25% think that their relationship with their family is happier since stopping work. Meanwhile, just under one in four (23%) say their social life has improved more than they expected.

Professional financial advice

As people who plan to finish work in the next ten years begin to look forward to their retirement, there’s plenty they can still do to make sure they are as comfortable as the people who have become pensioners over the last decade. Most importantly, in the face of changing pension rules, many people will benefit from obtaining professional financial advice in the run-up to retirement.

Retirement will continue to change over the coming years, but for many people the desire to make the most of their new-found free time will remain. Reflecting on their retirement in general, the vast majority who gave up work in the last ten years (86%) said that it had met their expectations or they were happy with how it had panned out so far, while only one in eight (13%) said that it has been a disappointment.

Thoughts, feelings, emotions

Nearly two in five (37%) thought they would have missed work more than they have since retiring, and in fact one in four (26%) wish they had retired earlier. Meanwhile, on reflection, more than one in ten (11%) wish they had been more active or found a job in the early years of their retirement.

It’s important to prepare your thoughts, feelings and emotions for the next phase in your life: a time to look forward to and welcome as a chance to do the things you have been dreaming about, as well as a rest after a long career. There is likely to be a mixture of feelings and thoughts as you start on this new venture into uncharted territory.

Any concerns about your retirement?

If you have any concerns about your retirement provision or would like to assess your personal circumstances to see what type of retirement income your current planning will give you once you’ve retired, please contact us. If your goals are out of reach, or you’re taking undue levels of risk, we’ll let you know.

 

Source Data:

[1] Consumer Intelligence conducted an independent online survey for Prudential between 26 May and 5 June 2017 among 751 adults in the UK who had retired within the last ten years.