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MAP Blog

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

Bydylanbbd

What can your pension achieve?

Many people stumble through saving for their retirement probably because it is such a blurry picture. Imagine this – trying to save for a retirement – don’t know when, don’t know how much you are going to need, don’t know how long you will live for – and so it goes on. Saving for a pension is vague at the best of times, but because it is a long term contract, then most people lose sight of the end, and so struggle to cope with it all.

Simply put – a pension is just a long term savings contract with tax relief – that’s it. Yes there are complications with what you can and cannot put in, what you can take out and how you can use the pension, but it is simply a long term savings contract designed to be used for retirement purposes and it gives you greater flexibility than ever before due to changes in pension legislation.M A P have developed an estimated cash flow projection that can give you a ballpark figure of what you might come out with and more importantly if you are a M A P client we will update it each and every year and so give you your updated estimate as you go along life’s way. Wouldn’t that be better for you because at least you would have something to work to, and that’s a world away from doing it all blind and hoping for the best.

M A P’s retirement planning does exactly that by looking at what you have saved each year and projecting it forward. What we do is remove the guess work, it is our aim to give you an accurate picture of your long term savings. We work closely with clients to show them what their pension can achieve – 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

Bydylanbbd

Could MAP be the right place to grow your IFA business?

Looking after clients’ investments and portfolios is perhaps the biggest drag on an advisers time. So ask yourself the question ‘How often do you actually look at your clients portfolio’s over a 12- month period’………perhaps just once a year prior to the annual review?
Unfortunately, this is not unusual.
At MAP we approach this in a different way to make sure our advisers don’t spend their days juggling too many balls in the air, we believe their skills are around their client facing attributes and not spending days on end analysing the markets or worse still doing the 12-month fingers crossed approach.
All our advisers have their client portfolios and investments managed in house, our experts track the markets on a daily basis keeping our eyes on the ball on behalf of our adviser team. This makes sure that all our clients have the comfort of knowing that their goals and aspirations are being kept firmly on track and the advisers have the confidence in knowing MAP are supporting them in delivering excellent returns for their clients.


So how does this work? Using technology such as FE Analytics we look for the trends and make sure everything is kept on track. Should a change be required we contact the clients directly explain what is required together with our rational for any proposed changes and only when we gain the clients consent will we implement these changes in-house. We work with the various platforms and providers dealing with the time-consuming paperwork which eats up an advisers time. All documentation from start to finish is logged on our IT systems and advisers can see at a glance what activity has been undertaken by MAP on their behalf.


So in essence we do all the heavy lifting allowing our adviser team to concentrate on the day job growing their business in a profitable way.


If this resonates with you then give me a call on 07788-566547 and let’s explore how MAP could well be the right fit for you and help you develop, support and grow your business profitably without having to juggle those balls.


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 07788 566547 or ian.clisby@mapfinances.co.uk

Bydylanbbd

Pension Planning

When it comes to planning for a pension, it is easy enough for us as advisers to say this that and the next thing, but nothing is better than giving people some kind of estimate to work to. Admittedly estimates like this have to be used with caution because you will be trying to give someone a figure projected over long long periods – and who knows what will happen there, BUT, in my view if you have a figure to work to, it is far better than not having a figure.

What we do at M A P is produce what is called a cash flow and this attempts to give people a ballpark figure of what they might come out with. We will update this figure every year when we review someone’s portfolio, and so we are always trying to make the figure relevant – so what can be better than that ? At least this gives someone a figure to plan for the future and whilst it is an estimate – it is a best estimate.

We normally use what we believe is a pessimistic rate of growth of 5% p.a. and we can project this through until a persons chosen retirement age – so say for example someone has a fund today of £150k and they contribute £5k a year, then by the time they get to age 65 with a growth rate of 5% a year – the fund “should” be about £425k. Now if we extract the 25% tax free cash to savings – so that it can be used as and when desired, the remaining fund should provide a pension to age 90 of around £21,000 a year before tax.

Now if this was your pension and you had this best estimate for what you might come out with, what could be better than an estimate like this, that would then be updated each and every year thereafter in line with actual investment performance – so that you always get an up to date estimate. Bear in mind that at the end of the day it is an estimate but at least it is something to work to as opposed to sweet nothing.

QUESTION Can you tell me what pension you are likely to receive from your pension funds when you retire ? If you can answer this, then you are the exception to the rule, otherwise you should enlist for the MAP projection.

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

Investing to get value for money

I don’t doubt for a minute that everyone but everyone wants value for money – that’s a given. Few people though would actually know what it was even if it hit them in the face. I would bet that most people would look at cost – to see if they could get value for money, but that is oh so wrong.

M A P is not the cheapest offering in the market admittedly, but please remember the old saying that you pay for what you get and you get what you pay for. If someone came to us looking to invest say £100k, then our standard initial charge is 3% and ongoing is 1.2%.

INITIAL charge allows us to do research on what funds to use and we would invariably use 10 funds putting £10k in each – and that starts you off with a good spread.

ONGOING – we review the funds that each client uses on a quarterly basis and will switch funds (with permission) if they are not performing as planned. It is this attention to detail that you are paying for.

Recent results over the last 6 months have shown growth figures of 11.4% up to 16% p.a. as we have given clients a good spread of investments and we monitor everything carefully.

Compare this to someone who has gone for a cheaper alternative of 2% initial and usually 0.5% ongoing, and I would bet that only one fund is used, and this is very rarely changed in any way. This is what they call passive investing.

Sample returns from the big insurers are around 5% or so p.a.

So you tell me what is the best value for money ?

To measure value for money – you need to see what you get back for your money – not just the cost.

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

Life Insurance

Most people will (or at the very least SHOULD) have some life insurance, and bear in mind that this only pays out on death, whereas Income Protection Insurance (IPI) pays out if you cannot work, and pay-outs can go up to 2/3rds of normal income – so these are very good policies to have, but the only problem is, that people invariably never go for IPI – they go for straight life cover.

The whole purpose of insurance is to provide a lump sum (or an income) in the event of something happening, and that money should cover known liabilities or perhaps expected ones. Now for single people, it is my opinion that life insurance is almost a waste as it only pays out on death, whereas that person should be looking to take out Critical Illness insurance that would pay out on that person contracting a major illness. Income Protection Insurance is also valuable for a single person.

Couples should look to cover both parties and maybe slightly more for the higher earner. Now here life insurance is not a waste as the remaining spouse may very well have to face liabilities – and so will need some money to help with these. Family protection policies are also important if the main earner suddenly falls ill and dies. We normally recommend life cover of 4 times earnings, and that gives the family 4 years of peace of mind and give them a chance to get things organised in time.

The big contradiction in insurance is that most people – if they have insurance – it will be life insurance which in a lot of cases is wasted, whereas Income Protection Insurance which helps more people is least taken out.

This is where people need to sit down with their IFA who can guide them through the BEST type of insurance for them and also the right amount of cover as well. It would be a waste if you had the right policy but fell far short of what you need. AT MAP – we can tell you what the best policies are, and give you all the relevant prices, and then you decide what is affordable.

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

Investing money today

I was recently approached by one of my long-standing clients about an investment that they had done with another adviser a while back, and they were not terribly satisfied with what the other adviser had done as the returns from the investment were poor.

Now we can all say in hindsight that we wouldn’t have picked this fund or that fund, and it is far too easy that we would have done something different, but what my main objections were about this, was that ALL of the client’s money – and it was £50,000 – was in one single fund and that is something that I would never do. I am a great believer of not putting all your eggs into the one basket, never have been, and what I would have done is to put this money into 10 funds, as I usually do a minimum of £5,000 per fund.

The other thing to bear in mind with some advisers is that the client as I said was only ever invested in one fund but it had been there since the investment began some 7 years ago, and to me that is totally wrong. The only thing that is guaranteed in life is that EVERYTHING WILL CHANGE, and the research that was done some 7 years ago to justify putting a clients’ money into ONE fund, would not have stood the test of time, and something should have happened to change this – but some people invariably don’t want the hassle of changing funds when they don’t make much if anything from that.

The way that MAP does investments, is to use a platform with a wide range of funds, where switching funds is very easy and inexpensive, but it allows our IFA’s to keep on top of a clients money at all times, so that we work hard to maximise returns. Why else do you invest money after all, but to make a good profit and, as we charge for ongoing advice, the bottom line is that if we can increase a persons’ investments then we in turn benefit form that as well, so it’s a no-brainer.

If you are going to invest any money at all – ISA’s – pensions or investments, please look for an adviser that gives you an ongoing service. 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

Planning your Finances

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. An individual can then do the framework of what he or she wants, and the IFA would then be able to fill in all the details and suggest what needs to be done and when.

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.

If you just leave something to happen, how do you know what the end result is ? Is it going in the same direction that you were hoping. Planning starts to get things moving in the right direction, and then you can tweak things on an ongoing basis when it isn’t, but the main thing is that you keep your eyes on it and do what is necessary to steer it in the right direction.

The old saying is failure to plan is planning to fail. It’s true !!

So why don’t you sit down today and list your objectives for savings, for pensions and even life insurance, and then have a chat with your IFA to see what you need to do to try and achieve those objectives. MAP advisers are only too willing to sit down with you and your plans.

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

Tax Planning – April 2021

Andrew Singleton shares some considerations on tax planning, Money Advice and Planning’s network of independent financial advisers are able to assist with your tax planning needs.

SALARIES       

You may think that this is a strange one to put in for tax planning, but it is an obvious one – and sometimes we do miss the obvious. The main thing to remember about personal allowances is use it or lose it – it’s that simple, and this will apply to people who run their own companies.

In the current year we get a personal allowance of £12,570 which is the amount we can earn without paying any tax.   Now if you have you have your own company, and you or your spouse haven’t used your allowances for the year, then it is worth thinking about taking an amount of salary to use these allowances up – after all, if you don’t use them, then that means that some tax-free money has gone.   

DIVIDENDS

Same again, if you are a shareholder of your own company, then think about taking £2,000 in dividends as this would be tax-free, but please ensure that you have profits of at least this amount, as dividends should only be taken out of net profits. 

You should even look at the possibility of taking out more than £2,000 IF the company can afford it, as dividends are taxed at lower rates than income tax and they don’t have National Insurance on them either.

PENSION INCOME

If you are taking a pension income, and your fund could stand you taking out more – then if you could take out more AND it was tax-free, i.e. by taking up to £12,570 – then why not. You should always maximise the tax free element, even if you extract it and put it in the bank – at least you are not paying tax on it.   Don’t forget that this applies per person – so if you are married, then your spouse can do the same. 

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

It never ceases to amaze me that some people think investing is so easy, that they could do it blindfolded and still make money. Now to a certain extent that is true in a bull market when prices and valuations basically only rise, and let’s be honest, at times like this you could invest in almost anything and it would make money. But, this last week saw a big drop in the FTSE and other markets over fears that the control over COVID is not getting a great deal better, so what do investors do then?

The simple answer is not to panic. Yes, everything will go down in value and you will be hit with losses on some funds, but that is to be expected and the main thing that you need do is anything but a knee jerk reaction – as that will give you the wrong outcome. Of course, some advisers will do nothing anyway as they may have clients in passive type funds, but that shouldn’t stop them reviewing things.

What we do at MAP is fallback to our research BEFORE we do anything, because it is always far better to have a logical approach to things as opposed to a scatter gun approach. At MAP we do two main pieces of research on what funds that we use and this is 1. Long-term and 2. Short term. The long-term approach wouldn’t change things in this aspect as what we look at is what funds have good consistent performance over 1, 3 and 5 years. Where the main difference is though is in the short-term analysis. Every week we analyse all the funds that have a good long term performance to find out the best ones that are still doing this SHORT TERM and in this respect we look at performances over the previous 3 months, and we highlight the top 10 performers in low risk, middle risk and high risk.

So what we would do at MAP is wait until any fall in values has settled down, and then we would look to see what funds have maintained their performance in the short term – and this then identifies the funds that we would use – and it is based on FACTS. This means that you are not doing a knee jerk reaction and instead only making changes based on logical facts and statistics. Far better that way.

We don’t do a lot of research to find out the best funds for our clients only to jump out of them at the first hint of trouble.

MAP does all the background work – so that you don’t need to.

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. Astute Invest Ltd is an Appointed Representative of Money Advice & Planning Ltd who is authorised and regulated by the Financial Conduct Authority. For any enquiries, contact Andrew on 07957 836211 or enquiries@astuteinvest.co.uk