Vivian Slattery, Author at monetarysolutions

Time to review your pot?

28 March 202210 February 2021 by Vivian Slattery

Well here we are into the New Year and I am sure it’s not quite the start we had all hoped for. I think the expression “Sometimes things have to get worse before they get better” comes to mind. However, many of us do have time on our hands at weekends with limited places we can venture to. So it could be a good time to organise finances – as I have noted before, having a project is so important for our mental health.

Often an individual’s second biggest asset after property is their workplace pension scheme, or as it is sometimes called an ‘Occupational Scheme’. This could either be a ‘Defined Benefit’ scheme (‘Final Salary’) or a ‘Defined Contribution’ scheme. A ‘Defined Benefit’ provides a guaranteed income for life and will have a set retirement age, whereas with a ‘Defined Contribution’ scheme your employer and usually yourself pay a portion of your wages into your Pension with the aim to build up a pot of money for your retirement.

The question to ask yourself, if you do have a workplace scheme, is how much understanding do you have of yours and when was the last time you reviewed it? Your paperwork should clarify which one you have and if in any doubt do ask your employer.

Defined Contribution schemes
As these do not have guarantees they need more monitoring, your choice of Pension funds can make a big difference to the final amount. We often see individuals who have accumulated Pensions they have not reviewed, and they are usually invested in a ‘Default Fund’ which is designed to fit all, to meet the needs of both younger and older employees. The question would be: is this the most suitable for you?

Many people underestimate how much fund performance can differ. Most Pension schemes offer a range of other funds and we would suggest you ask your employer for a list of available funds and then compare these to the one yours is in. However the performance of a fund is not the only factor, it’s also important to consider the risk profile and diversification of a fund. For example, an individual fund may have a better performance but it will not be right to switch your whole pension into it as this may not match your risk profile, and would not have the diversification we would recommend. So during this difficult time this could be an ideal time to look at your Pension. If you need help we do offer a free without obligation consultation so why not pick up the phone and give us a call.

Budgeting

28 March 202210 February 2021 by Vivian Slattery

The knock-on effects from the lockdown are impacting everyone in different ways financially. As I mentioned in previous articles there are some who aren’t going out as much and therefore find they have more savings, whereas for others unfortunately the story is very different. But no matter what the situation, budgeting is important. Over the years I have always noticed that it is those of my clients who budget and know exactly how much they are spending who have the most to show for it.

Many times when we do an income analysis with clients they are often surprised about how much surplus income they actually have. As the saying goes, “If you don’t know where you are going you might wind up someplace else.”* I think this is true even when it comes to finances. Many people have said to me that I take a lot of risks but I believe that mine are always calculated. One of the first things a bank does when you set up a business is to ask for a business plan, and I believe if you want to know whether you can afford something, or if you’re planning an event you should do the same. The plan should tell you whether something is affordable or not.

For those who do have financial difficulties the next few months, with Christmas coming, could be harder still and therefore it may be even more important to budget.

As I have mentioned before, we have specialised software we use for cash flow planning and we can help you to plan your future. For example, we can add a stress test to show what would happen if you lost your income, or if your investment rate of return were less than expected, or if there were a stockmarket crash. Clarifying with figures how viable something is can often give us confidence as to whether a goal is obtainable or not and can help to alleviate those sleepless nights.

At Monetary Solutions we do offer a free without obligation consultation which can be done via video call in the current situation, if you would prefer this method. So why not pick up the phone if you would like to discuss your goals, it may also help you to feel more positive by giving yourself a project and something else to focus on.

*Yogi Berra

Allowances, limits and thresholds correct at the time of writing, but are subject to change in the future. Please confirm the current position before taking any action

2021 is here!

28 March 202210 February 2021 by Vivian Slattery

There is always a time delay between writing this article and its appearance in print so I am writing this before Christmas, but I hear many people say that they can’t wait for the new year to arrive and place 2020 behind them. I’m quite sure I haven’t encountered anyone for whom this year has not been an unusual one. I know that for myself the most important thing as I sit writing this article is that my family are all well, I still have the money to put food on the table, and I do fully recognise the significance of this.

But what has happened in the UK financial world? In the first quarter the Dow Jones and the FTSE 100 saw the biggest quarterly drops since 1987, plunging 23% and 25% respectively. Interestingly today (14/12/2020)*1, the Dow Jones*2 is higher than it began this year whilst the FTSE 100*3 has still got some way to go, but then again the Dow Jones does include Apple and Microsoft.

The UK Government has helped the housing market by increasing the stamp duty threshold to £500,000 for anyone completing on a residential property before 31st March 2021. This has meant that we should see a rise in property prices, otherwise we were highly likely to see a drop.

The Bank of England Base rates, which influences most interest rates, including savings accounts, credit cards, loans and mortgages, have also gone down this year to a current rate of 0.1%. The rate was cut to a record low following the financial crisis of 2008/2009, it stayed at the same level until August 2016 when it was cut to 0.25% following the Brexit vote, although we did see a slight increase before the current cut. There is even talk of a negative interest rate for the UK which would mean the lender would actually pay you to borrow money instead of them charging you interest and savers would earn a negative return, other countries have already offered this.

Many people are talking about increases to taxes in the future to pay for all the aid people will receive. As the end of the tax year draws closer maybe its time for you to consider all the tax benefits available if you have savings on deposit. At Monetary Solutions we offer a free without obligation consultation so why not pick up the phone today.

*1 BBC News 31st March 2020
*2 Dow Jones opened on 2nd Jan 2020 28,868.80 Opened 14th Dec 2020 30,123.91
*3 FTSE 100 opened on 2nd Jan 2020 7542.44 Opened 14th Dec 2020 6546.75

Allowances, limits and thresholds correct at the time of writing, but are subject to change in the future. Please confirm the current position before taking any action

Coronavirus and your money

28 March 202216 September 2020 by Vivian Slattery

Financially, the coronavirus has affected each of us differently. For some it has been tough and very difficult. There are also those whose income has not been affected and who, due to the lockdown, have not being spending as much on leisure activities. These individuals have managed to accumulate funds, so I thought I would take this opportunity to run through some ideas on how to make the best use of this.

Firstly, these uncertain times are clearly not yet over. You should first make sure that you have funds which are readily accessible. So what would my recommendation be for funds on short term deposit?

Well, I am very keen on premium bonds. Interest rates that savers can enjoy are influenced by the Bank of England base rate (BBR). The base rate was reduced at the beginning of March to 0.1% which is the lowest level ever in the history of the bank, adversely affecting the interest rate on your savings. The reason why I think premium bonds are attractive is that they work on the principle that the interest the bond holder would have received is pooled and then distributed as prizes to lucky winners selected at random. You can ask for your stake to be returned at anytime. The amount we would recommend an individual has on deposit would vary but for many it would be between £5,000 to £10,000.

The next consideration would be to pay off any outstanding liabilities, starting with those with the highest rate of interest. Check whether there are any penalties and if so, whether there is a portion you can repay without incurring these. If there any funds left over then you should look at tax efficient investments such as ISAs and Pensions, utilising your allowances.

The other current consideration is fixing your mortgage if you currently have a variable rate. Although low interest rates are bad news for savers they are better news for borrowers. Many would argue that the only direction the Bank of England base rate could go is up and therefore it could be a very good time to obtain a fixed mortgage rate.

If you would like to discuss your savings or if you have any other areas of finance you need advice for we do offer a free without obligation consultation which is an opportunity to seek advice on any of your financial concerns. Contact us today to book an appointment.

Allowances, limits and thresholds correct at the time of writing, but are subject to change in the future. Please confirm the current position before taking any action

How much cover should I have?

28 March 202217 August 2020 by Vivian Slattery

The current situation with the coronavirus has made many people realise the importance of protection, as no one knows what’s going to happen to them. As a result they are now reviewing their insurance policies. But what and how much cover do we need?

To start ask yourself, if you were either suddenly to die or be diagnosed with an illness which meant you were unable to work again, how much money would your family need to maintain their standard of living? Maybe you would only need to be covered for a particular period of time, for example until the children were 18 or 21 years of age (or whatever age you feel is appropriate).

If you have life insurance for your mortgage you can eliminate this expense from your answer. Once you have confirmed what is required, you might insure for a lump sum that would be able to repay debts, or fund a certain level of income. One of my favourite (and often more cost-effective) insurance policies is Family Income Benefit. This works instead on the principle that you will be paid an income on death for the remainder of a selected term. This means that each year that you survive, the total that is paid out will reduce. For example if you were to cover yourself for £1,000 per month for twenty years, and you died at the end of year two, it would pay out £1,000pm for the remaining eighteen years (a total of £216,000). If you died in year ten it would only pay out about £120,000 in total over the next ten years. Because the liability for the insurance company decreases over time, the premiums can be lower, so it can be a more cost effective way of providing cover.

When considering the financial impact of illness, there are two main types of sickness cover: Critical Illness and Income Replacement. Ideally you should consider having both. Critical Illness insurance pays out a lump sum if you suffer one of a predefined list of conditions. Income Replacement will pay out an ongoing income if you were unable to work due to sickness after a pre-agreed period of time.
Whilst Income Replacement policies can only replace a proportion of your income, you are covered for all illness that causes you to be unable to work. Critical Illnesses policies are more specific. Stress and back pain are not considered to be a Critical Illness although they’re often a reason individuals are unable to work. Critical Illness policies frequently include Permanent Disability, however you usually have to be off for two years before you can make a claim for this. You may also need to pay an additional premium for this cover.

If you would like to review your cover, why not contact us and arrange a free without obligation consultation.

Allowances, limits and thresholds correct at the time of writing, but are subject to change in the future. Please confirm the current position before taking any action

Risk vs reward

28 March 202216 June 2020 by Vivian Slattery

A key role we have as advisers is to decipher how much risk our clients are willing to take. As a general rule of thumb the higher the risk the higher the potential return but the greater the fall when markets drop. In recent months we have seen the FTSE 100 fall from just above 7,400 on 14th Feb 2020 and although since then it has been lower it opened today (15/06/2020) at just over 6,100. So what effect does that have on your investments?

Investments tracking the FTSE 100 have dropped by over 13% in the last 6 months* and its annual performance also shows currently a drop of over 13%**. We would consider that someone wanting to invest in this type of fund should be willing to take quite a high risk, not just because of the type of investment but also because it only represents one sector of the markets. Other sectors have reacted differently, with some even having a slight positive return over the same time period. This is why we feel it is important to hold diversified portfolios, with funds representing a combination of sectors.

So how have our clients’ portfolios fared? Well, we run 5 main portfolios with a risk rating of Cautious to Adventurous. I have been pleased with the way they have fared. Whilst a few have a slight drop over a 6 month*** period all of them are showing a positive annual return**** (before charges), even though these are minimal. This is because they are diversified into a number of different types of fund, so the drop and impact has been cushioned.

However the most important aspect in our clients’ financial plans has always been to have a contingency plan: to include a reserve held in savings, or emergency fund, to tide them through situations like this, until we know whether values will recover. Understanding the level of investment risk is important and we would always recommend you seek independent financial advice to make sure you are fully aware of that risk before investing any funds.

*L&G UK 100 Index Trust C acc 6 month period ending 15th June 2020
**L&G UK 100 Index Trust C acc 12 month period ending 15th June 2020
***6 month period ending 15th June 2020
****12 month period ending 15th June 2020

Past performance is not a guide to future performance, nor a reliable indicator of future results or performance. The value of investments, and the income or capital entitlement which may derive from them, if any, may go down as well as up and is not guaranteed; therefore investors may not get back the amount originally invested.

Allowances, limits and thresholds correct at the time of writing, but are subject to change in the future. Please confirm the current position before taking any action

Reviewing our goals

28 March 202215 May 2020 by Vivian Slattery

Life in recent weeks has changed for us all, with some affected worse than others especially those who have lost loved ones. I do think it will change the way we approach life – at least I know it will for me. I never thought I would see the day that I would be restricted from leaving my home but grateful, because I am not ill and safe in the knowledge that unlike some I don’t have to leave my house to work. Also I have never been so grateful to the key workers who are ensuring that people are receiving the care they require and that we receive the basic essentials we need.

I have read a lot in the last few weeks and the one thing that has really made me stop and think were the comments saying that we all want our lives to return to normal. But take a moment and work out what parts of normal life you want to rush back to.

I do believe that we need to stay positive during what is a stressful time for many of us and take some time to work out any changes we would like to make when life is back to normal. I can think of a number of changes that I will make. Coming out of this is not going to be easy for any of us and financially many of us have had to face some losses. I have always been a firm believer that having goals gives us direction, focus and the strength to get through tough times. This may not be the answer for everyone but for many of us it could help us to get through the hard times ahead.

Many goals will need a financial plan in place to help us to achieve them. You may be setting new goals, or your progress towards existing goals may have been affected. If you need a hand with these please give us a call.

Allowances, limits and thresholds correct at the time of writing, but are subject to change in the future. Please confirm the current position before taking any action

Keep calm and carry on

28 March 202217 March 2020 by Vivian Slattery

Well just as we thought things were going to settle down after Brexit the coronavirus hit. There’s been so much information it’s hard to know the truth and the markets have gone mad because like us all, they have no idea how it’s going to affect us. I have been amazed by the panic buying and one of the best marketing tools I have seen this week is a stationery company giving out sanitiser with every order. But what would our advice be as Financial Advisers?

My thoughts follow that it is the virus that’s causing the financial market to go down and I do believe that when life gets back to normal so will the markets. But no one knows what’s going to happen in the markets.

Many disasters in the past have had similar looking knock-on effects, for example 9/11 caused the Dow Jones (US stock market index) to plummet: having closed on the 10th September, 2001 at just over 9600*¹, it fell following the attack and closed on the 1st October at just over 8800*².However, it rebounded quickly and on the 9th November, 2001 it closed at just over 9600*³.

There was a similar story with the Gulf war: on the 17 July, 1990 the FTSE closed at just over 2400*4, falling to just over 2000*5 on 1st October, but closing at just under 2500*6 on 15th March, 1991.

But when the markets fall they can also rebound within days: as I am writing this the market has had huge falls within the last week but the Dow Jones surged nearly 200 points yesterday*7 (13th March 2020). Although this was not back to its high of over 29,500*8 on 12th February 2020 it was still a big increase for one day.

This is why investors have to be careful when markets tumble, if they take money out of the market and the market then has a big increase they will lose out. The same goes for switches and transfers, most will take funds out of the market for a few days until they are completed. So our advice is always to sit tight.

Also, the last few weeks have reminded us that we never know what’s around the corner and the importance of planning ahead as markets can turn very quickly.

It is at worrying times like this, that financial advice can be essential. As I have said many times before I see the most important role for us is being a sounding board, and as the saying goes “a problem shared is a problem halved”. So if you would like to review your investment please give us a call. We offer a free without obligation consultation.

*1Dow Jones opened 10th Sept 2001: 9603.36, and closed: 9605.51
*2Dow Jones opened 24th Sept 2001: 8,242.32, and closed: 8603.86
*3Dow Jones opened 9th November 2001: 9586.96, and closed: 9608
*4FTSE 100 opened 17th July 1990: 2407.60, and closed: 2415
*5FTSE 100 opened 1st Oct 1990: 2006.30, and closed: 2030.90
*6FTSE 100 opened 15th March 1991: 2500.50, and closed: 2494.20
*7Dow Jones opened 13th March 2020: 21973.82, and closed: 23185.62
*8Dow Jones opened: 12th Feb 2020: 29406.75, and closed: 29551.42

Allowances, limits and thresholds correct at the time of writing, but are subject to change in the future. Please confirm the current position before taking any action

What is an ISA?

28 March 202217 February 2020 by Vivian Slattery

As I am writing this article what I term as our ‘mad season’ is just about to start. This is when we have many requests from individuals wishing to utilise different allowances before the end of the tax year. One of these being their ISA allowance.

So what is an ISA?
There are 5 main types: Cash, Stocks and Share, Help to buy ISA (which is now closed to new investors), Lifetime and Innovative Finance. You can invest up to £20,000 into one ISA or a mixture, apart from a Lifetime ISA where you are limited to £4,000 pa, however you can invest the remaining £16,000 into other ISAs.

Here’s a simple definition of the different types of ISA:

Cash ISAs – Interest on deposit is taxable above the personal saving allowance which is
dependent on your tax rate Cash ISAs are not subject to tax.

Help to Buy ISAs – You could open before the 30th November 2019 (for first time buyers only). The state adds a bonus (maximum £3,000) of 25% of the amount you have saved, when this is used to purchase a property that meets certain criteria.

Innovative Finance ISAs – This covers a multitude of products and it means that any interest you get from lending money to other people or companies is not taxed (Peer to Peer lending).

Lifetime ISAs – This is open to individuals between the ages of 18 and 40 years old. You can save up to £4,000 per year in these and the state will give you a 25% bonus on each contribution, up to the age of 50. The purpose is to save for retirement or your first house, if you withdraw funds for any other purpose you will be penalised and this cost may be more then the bonus you have received.

Stocks and Share ISAs – This is used to invest into a range of investments including cash, stocks and shares and pooled investments tax efficiently.

So should you be considering one of these prior to the end of the tax year and if so which one?
Everyone’s situation is different and this is why we would recommend you seek advice.

This is based on our understanding of current taxation, legislation and HM Revenue & Customs practice and limits, all of which are liable to change without notice.
The value of your investment can go down as well as up and you may get back less than the amount invested.
The Financial Conduct Authority does not regulate taxation and trust advice.

Allowances, limits and thresholds correct at the time of writing, but are subject to change in the future. Please confirm the current position before taking any action

A financial education

28 March 202217 January 2020 by Vivian Slattery

Time and time again people tell me how little they understand about money, a matter that consumes such a major part of our lives and helps us to achieve our goals. It has been reported that money worries have topped a poll of the biggest triggers of stress in the UK1*. Many people claim they wish they were taught about finances at school but it has only been part of the National Curriculum since 2014.

For example, statistics reported*2 last year are alarming: In 2017 around 6.5 million adults in the UK had no cash savings. Also, with those aged 18-24 having the lowest average amount saved.

A charity carried out a survey to see what people’s understanding of finances was and the results were as follows:

17% of under 35’s thought that the bank of England base rate was over 10% (it was 0.75%)

14% of under 35’s think it is better to start saving for a pension in your 50’s rather than 20’s (this will make it much harder to save enough).

43% of under 35’s don’t understand that inflation of 5% would erode the purchasing power of money in a savings account which pays 3% interest.*3

So does a lack of financial understanding lead to stress?

Well, perhaps a good question for people to start with would be, “If your income was to stop tomorrow, for example due to sickness or redundancy, how would you survive?” A good education in finances could help people to plan to make sure they are prepared for these kind of dilemmas.

So what would our advice be, if you want to achieve a better understanding of this subject?
The first step would be to seek help. At Monetary Solutions we offer a free without obligation consultation, which an individual can utilise to help educate themselves on what’s available.

*1Independent 28th May 2018
*2Statista 5th Nov 2019
*3Money Charity 15th January 2020

Allowances, limits and thresholds correct at the time of writing, but are subject to change in the future. Please confirm the current position before taking any action

020 8760 9940

Time to review your pot?

Budgeting

2021 is here!

Coronavirus and your money

How much cover should I have?

Risk vs reward

Reviewing our goals

Keep calm and carry on

What is an ISA?

A financial education

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