fbpx

Blog

Bydylanbbd

Protected: Moving Pensions

This content is password protected. To view it please enter your password below:

Bydylanbbd

Apathy

The biggest danger that I see all the time – and almost in every direction is APATHY.

On a few occasions when I have been asked to transfer money from a self-invest platform to our advised platform, I come across cases where people have made their investments some time ago and have never changed it in a long time, and they wonder why it is not doing as well as they thought.

We have a number of clients ourselves that we have contacted to ask them for their permission to switch funds from a poor performing one to a better performing one – and we don’t always get a reply – or even a quick reply.

And then there are numerous people that we tell about our investment process that has produced good returns because we are continually watching what funds perform and what ones don’t. We spend a lot of time on our research so that clients can benefit from this with the right selection of funds, what frustrates us is that some people will invariably still go for the cheapest option in the marketplace solely to save money which kind of defeats the purpose of investing, as the saying goes ‘you only get what you pay for’. It would be interesting if those self same people looked at things in say a years time and looked at the return they got from their cheaper option against what M A P might have done – but I suppose that this is viewed as being theoretical. In an ideal world, they would have been able to see that M A P would have given them better value for money – but as stated, for a lot of people this would be theoretical.

To invest money successfully, you need to do your research again and again and again – in fact you don’t stop doing your research. This is how you make money – not doing a one-off bit of research and putting your money into funds and then leaving it there for God knows how long without any changes.

A lot of people start off with the best of intentions, but guess what – that vanishes like the proverbial snow off a dyke given a few weeks and APATHY kicks in.

If you don’t want to look after your investments properly – then give it to M A P who will.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority. For any enquiries, contact Andrew on 07957 836211 or enquiries@mapfinances.co.uk

Bydylanbbd

Asset Allocation

Asset allocation is the phrase used by financial professionals and might sound fancy – but all it is – is a spread of investments.

When I place a persons investment money into funds, it’s common sense that you don’t put them all in the one area. Say for example I was investing £100,000, then I would invariably use 10 funds, and I would not put all this money into 10 different UK equity funds – that’s the old saying about putting all your eggs into the one basket.

What I would do for this person is pick a range of areas and types so that you get a spread of areas and if bad news hits one area, then it will only affect any investments in that area but not everything. Let me give you an example of what I would do today –

LOW RISK FUNDS

  • UK based Sustainable fund
  • Global Sustainable fund
  • UK Growth portfolio

MIDDLE RISK FUNDS

  • American growth
  • European Growth
  • Global Opportunities

HIGH RISK FUNDS

  • Global Startups
  • Global Technology
  • American Growth

Asset allocation means that you allocate your assets to a wide range of possibilities, and if one fund fails – then it doesn’t bring the house down. The only way to do logical investing is to do such a spread AND to continually keep your eyes on things as everything will always CHANGE.

All you need to do on an ongoing basis is ensure that you always have a spread of areas, types of funds etc – so that you can capture the good areas and minimise losses. There is nothing scientific about it – just plain old common sense.

What we do at MAP is invest a clients money and then monitor this at regular intervals and if economic conditions change and a fund starts to lose money or even go down in value, then we contact the client and change it. In our opinion this is the ONLY way to invest money. What would you rather have ?

1. Somebody carefully watching over what you invest in and adapting it to current conditions OR

2. Put money into an investment and then walk away and do sweet nothing

I know which one I would do – and that is what MAP DOES.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority. For any enquiries, contact Andrew on 07957 836211 or enquiries@mapfinances.co.uk

Bydylanbbd

‘Aren’t you the client’?

Somewhere in the mists of time the relationship between advisers and their respective firms and networks has in some cases sadly eroded.

Advisers themselves treat their clients with respect and professionalism building a binding long-term trust between both parties.

So ask yourself this question ‘Am I being treated the same way’? Do you get the same respect and trust, do you feel valued as a client because when all is said and done that is exactly what you are? You probably pay a lot but do you get a lot in return?

At MAP we approach this in a different way, our team are at the core of our business and central to everything we do. We work closely with them to help them build a successful and profitable business with a raft of support tools designed by them, our view is that they know better than us what they need and we work together to build our support model to the benefit of the whole business.

At MAP we are proud to display our ‘Investors in People’ award signifying we commit to making work better for all our team. This for us epitomises our commitment to how we interact with individuals and treat them in a fair and supportive way.

Does it work………NO ONE EVER LEAVES MAP AND THAT ALONE SPEAKS FOR ITSELF

If you want to feel valued then give Ian a ring on 07788-566547 and let’s discuss how we can bring a smile to your face again, our advisers don’t sink, they swim.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority. For any enquiries, contact Ian on Andrew on 07788 566547 or ian.clisby@mapfinances.co.uk

Bydylanbbd

Change

Everyone it seems ignores change, but in my opinion, the only thing that is guaranteed – apart from death and taxes of course – is that EVERYTHING WILL CHANGE. This is not a maybe or a might but WILL change.

What I have never understood is why people invest money and then just basically leave it alone for the cobwebs to attack it at random as that is just asking for trouble. The only way that returns are likely to go then are down the way, so why leave it alone?

OK I will admit that you might take out a mortgage fixed for 5 years and you won’t change that, but that is to cut your long-term costs, so it is logical. But can you imagine a Building Society giving YOU a mortgage and leaving it for 25 years at the same rate – absolutely no chance, because they would invariably lose money over the long period. What they would do is change this as and when base rates at the Bank of England changes, so that they continue to make money on a mortgage, just as any business would do. So why oh why do people invest money and leave it invested for a long time without change – apathy? laziness? lack of knowledge? Who knows why people do this, but I have come across a lot of people who do this with their pensions and investments, which I can half understand, only because the pension is a long term savings contract, but they will still lose out nonetheless.

From cases that I have seen over the last few years, a lot of investments and pensions that have been left to stagnate will get around 2% to about 4% per annum, whereas if something is actively managed, then you would be looking for 6% to 8%. That is a world of a difference, and makes you want to shout some people out of their indifference. A lot of people will merely stumble through with their 3% or 4% and think that they are doing not too badly – but this is because they do not know what is out there to compare it to.

My message is simple – EVERYTHING WILL CHANGE, so if you have investments or pensions, they need to change as well, and if you don’t – you will lose out.

What we do at MAP is invest a clients money and then monitor this at regular intervals and if economic conditions change and a fund starts to lose money or even go down in value, then we contact the client and change it. In our opinion this is the ONLY way to invest money. What would you rather have?

1. Somebody carefully watching over what you invest in and adapting it to current conditions OR

2. Put money into an investment and then walk away and do sweet nothing

I know which one I would do – and that is what MAP DOES.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute an endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority. For any enquiries, contact Andrew on 07957 836211 or enquiries@mapfinances.co.uk

Bydylanbbd

Investment Risk

Let me say first of all that when anyone invests money there WILL BE SOME RISKS INVOLVED. How much depends on the individuals choices and approach. Let me explain. 

ALL investments have risks involved and as you can imagine – some risks are higher than others. What we do at MAP is divide all funds into 5 categories – although we mainly use only 3 of these (2, 3 and 4). 

Category 1 risk is the situation where you have very little risk at all such that the chances of losing money are small if not negligible. If you choose this category though you will get very little growth in return and an example of this is bank interest, and this explains why this is not used a great deal as returns don’t cover costs. 

Category 2 risk is where someone is looking to invest and make returns at least more than inflation, and the chances of loss are not that high. Such investments are not in high volatile areas – hence the low-risk rating.   

Category 3 is middle risk and there is a chance of losing money, although no-one will say how much.    

Category 4 is high risk where you could lose a significant amount of your investment and finally 

Category 5 is where you could lose everything, and that’s why we very rarely use this one – as you can imagine.     

At MAP we do a spread of funds when we invest a clients money because that spread alone will reduce risk, and I would say that anyone investing should not put all their eggs into the one basket – but take a spread. 

When we invest a clients money, it is the client who chooses what risk levels they want and what they are comfortable with, and that choice is not cast in stone and can be changed as and when the client wants. This ensures that the risk levels are kept to comfortable levels.  

When we do investments, we do a lot of research on what funds we are going to use, and this alone will reduce risks, because we only use those funds that have a good consistency over time – thus reducing risk.     

Remember that at the end of the day, you will only get a return if you take some risks, so there will always be risks there – you just have to watch them, but if you control things along the lines discussed here, you can reduce risks levels to what you are comfortable with.   

The material is for general information only and does not constitute investment, tax, legal or other form of advice.  You should not rely on this information to make (or refrain from making) any decisions.  Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation.  Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.  For any enquiries, contact Andrew on 07957 836211 or enquiries@mapfinances.co.uk  

Bydylanbbd

The Cost of Investing

I had a recent case, where a potential client asked me to look at her pension and give her advice on what she could do with it. It was worth just over £600,000 and so was a sizeable pot, and my recommendation was to put this onto the investment platform that we use with a spread of between 10 and 15 funds. That to me was the logical way to approach things because the best kind of protection you can give a pension pot of this size is NOT to put it all into the one company or the one fund. This client however didn’t take my advice as it cost too much and she was looking for the cheapest option out, which in my opinion was not the best way to look at things.

In this world today – you pay for what you get and you get what you pay for, and in this instance this lady was looking for the cheapest option and logic would go out the window. The cheapest option is usually to transfer the money into one of the big insurers, maybe use a 2 or 3 funds – and invariably it would never get touched at all for the rest of its life. The initial cost would be 1% or 2% and then something like 0.5% or 0.75% a year.

What we would propose at M A P is that this money would go into 12 funds to get a good spread of risks and areas, and we would then monitor the funds ongoing making switches as and when necessary. We have always found that economic conditions change – and so should any investments change at the same time or they can become obsolete. In our opinion to do anything else would be foolish and more importantly when you consider that this pension pot is what you are going to be living on for the next 10 15 20 years – or whatever time span, then you really need to look after this money.

We don’t think that our charges are expensive and we charge 3% initially and then 1.2% a year thereafter, and our track record speaks for itself as current reviews for existing clients all show double digit figures in growth. Yes we will look more expensive than someone charging 1% or 2% but everyone needs to remember that if you don’t pay for a service – then you won’t get one, and to pay 0.5% or even 0.75% a year isn’t getting close.

We offer VALUE FOR MONEY, and I would dearly love to tell people the growth rates that we get for existing clients but current legislation prevents this, but we certainly offer value for money advice and as evidence of that, we don’t have any clients leaving us and going elsewhere.

I would say that if you pay little – you will get little in return. I appreciate that it doesn’t always hold out that if you pay more, then you will definitely get more – but in the vast majority of cases – we do.

When looking to give business to an IFA – LOOK and see what you are getting for your money, and then decide if that is the best course of action for it. Bear in mind that when it is pension money – it NEEDS to last a lifetime – will a cheaper option do that ? You owe it to your pension and future retirement to look after it and not just withdraw from it.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority. For any enquiries, contact Andrew on 07957 836211 or enquiries@mapfinances.co.uk

Bydylanbbd

What kind of pension can you expect from your pension fund

One of the big challenges that people have is trying to figure out what they “might” come out with a pension when they retire, and the problem here is that this can be over a long time – hence the confusion. M A P has developed a simplified cash flow model which is usable as long as you use reasonable parameters – which is what M A P is here for.   

What we can do for you is use your current value of pension and calculate annual growth of 5% a year (because we think that that is pessimistic enough) and so build up a total pension figure that we think is achievable at your retirement age. We then work out form this what we reckon you could safely withdraw form your pension fund each year – and this is your taxable income. 

We invariably extract your tax free cash from the pension before we start doing this, because everyone is allowed to take out up to 25% of your total pension pot as tax free cash, and this is worthwhile doing because it gives people a cash buffer to fall back on and you can always take a regular income from it as well – with no tax implications.

Finally, we encourage clients to contact the DWP to get a pension forecast and this will tell everyone how much State pension they will get and when it starts.

Collecting all of this information together then allows us to show what kind of pension income you are looking at, and this then  

  • Helps you plan 
  • Monitors your progress to achieve your target/goal 
  • Is adaptable to changing circumstances  

Moreover, we will then update that cashflow every year with actual growth achieved – and so allow you to keep on top of things. 

M A P will do this for all clients that use our retirement planning service and that can help you plan, after all we are Money Advice & Planning. 

The material is for general information only and does not constitute investment, tax, legal or other form of advice.  You should not rely on this information to make (or refrain from making) any decisions.  Links to external sites are for information only and do not constitute endorsement.  Always obtain independent professional advice for your own particular situation.  Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.  For any enquiries, contact Andrew on 07957 836211 or enquiries@mapfinances.co.uk  

Bydylanbbd

What does planning actually mean?

When someone thinks of planning, they may very well imagine that this involves a lot of technical stuff that is beyond them, but I would suggest that this is where an IFA comes in.     It never ceases to amaze me how many people do not do any planning and are then surprised when they get a tax bill, and ask me IN ARREARS what I can do to make it go away.  You won’t be surprised to know that in many cases I can do very little because actions needed to have been taken BEFORE certain events. 

INCOME TAX –  you should always use the personal allowances that we all have, and the main example is husband and wife.   If for example, a husband has got all the household income taxed on him – he may very well be taxed at 40%, whereas his wife might not even be taxable at all.      If a couple actually planned things out, certain income streams could be hived off to a wife and that would then allow here to use her personal allowances of £12,500 a year.   There is also the £2,000 dividend allowance, and also the personal savings allowance of £1,000.      If one spouse is taxable at 40% and the other at 20% with room to spare, then they can save tax of 20% by moving some income from the higher rate taxpayer to the lower rate – if it is possible to move of course.  

PARTNERSHIPS – Don’t forget that if you have joint income with your spouse, this doesn’t need to be shared 50/50 – it can be shared basically how you like.   It’s not the first time I have shared this 99%/1% because one spouse is paying tax at 40% – and the other 20%.

INHERITANCE TAX –  yes I know fine well that most people don’t look at this until it is far too late, but instead of Inheritance Tax read Voluntary tax.   Given a bit of time, I can invariably get a couple’s potential tax bill down from hundreds of thousands to nil – or close to nil as is possible.     If you PLAN for IHT, you can reduce it quite considerably, and the alternative is true – because if you do nothing about it and wait until it hits you in the face, then you will pay dearly for it.    I have seen this so many times.      

All we are doing with these tips is using the allowances that have been given by HMRC – use them to the full or lose them. It’s as simple as that.

There is one of these sayings that I have seen on banners from motivational people – that says “Failure to plan is planning to fail”, and you know what – IT’S CORRECT.

Don’t wait for a disaster to happen – contact MAP now and start your planning.

The material is for general information only and does not constitute investment, tax, legal or other form of advice.  You should not rely on this information to make (or refrain from making) any decisions.  Links to external sites are for information only and do not constitute endorsement.  Always obtain independent professional advice for your own particular situation.  Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.  For any enquiries, contact Andrew on 07957 836211 or enquiries@mapfinances.co.uk

Bydylanbbd

Pensions and Tax

It’s easy enough to recommend a pension to people and mention the fact that the Govt gives you tax relief on all contributions, but when it’s time to start withdrawing from your pension when you retire – they start to take it all back, and this is what a lot of people don’t take into account.

The ideal situation is to take £12,500 a year from your pension as that would mean that you don’t pay any tax at all on it. However, not a lot of people would be able to live comfortably from this, so what do you do then ? Well, there are two alternatives as follows :-

  1. When we activate a person’s pension, we invariably always extract the 25% tax free cash that is available from the pension, and if this is not needed at the time, then we put this into a savings package that can then be accessed at any time thereafter. In quite a few cases, where people need something in excess of the £12,500 a year but perhaps not that much, then we can setup a monthly withdrawal from the savings and of course this would be tax free. We have had quite a few situations of clients getting £18,000 – £20,000 a year all tax free, with £12,500 being taken form pension and the balance being taken from savings.
  2. Where the total pension needed is in excess of this, then more can be taken form the pension but any amounts in excess of £12,500 will be taxable, so you need to bear that in mind.

As you can probably imagine, there are all sorts of alternatives here especially when you take the taxable State pension into account as well, but as financial advisers, M A P can quite easily plan things out for you at commencement and then monitor them on an ongoing basis. That way, when you have got tax relief on paying into your pension, and you are minimising the amount of tax you are paying when taking it out, can make an enormous difference to the end result, and give you so much value for money – which is what we always try and do.

The last thing that you want to do is merely take out x amount every year and pay the tax WITHOUT planning, as that could cost you a great deal.

This is what I have mentioned before when discussing cash flow models – where we update them every year as you go through life. This then gives you something to work to each and every year and gives you a great deal of comfort knowing that you are looking after your money to ensure it lasts as long as possible and that the taxman doesn’t take a bigger share than is necessary.

We work closely with clients to show them what their pension can achieve, and also to reduce tax wherever possible – why don’t you let us help you.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority. For any enquiries, contact Andrew on 07957 836211 or enquiries@mapfinances.co.uk