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Keep an eye on the future

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I think many of us suspected that life after lockdown was not going to be easy, even before we knew that there was going to be a war in the Ukraine. We are now seeing the cost of energy on the increase, together with the Bank of England base rate being increased again this month to 1%, which is the highest level for 13 years.*1

With the price of many of our essentials on the increase, what would my advice be for approaching this period of time? My first piece of advice, as I have said many times before is to budget. None of us know how long this duration of increased prices will continue and I think it’s important to avoid getting into debt. Many of the people I have talked to during lockdown said that they enjoyed the simple life and I do think it can help to look back at this time.


It is very easy at times like this to think about stopping Pension and life insurance premiums. However, yet again COVID has taught many people that we don’t know what is round the corner, and therefore this is a reminder of the importance of insurance.


With Pension premiums it can often be hard to see the benefit of putting aside money for a period of time that we may not see for many years ahead, whilst at the same time we are struggling to put food on the table and pay for heating. Nevertheless my advice, yet again would be to think very carefully about this.


Time goes by very quickly and we can always find reasons for not reserving funds for our future. However, it is important to remember that retirement is a time that generally we will have little or no income coming in, and we will be totally reliant on the assets and savings we have accumulated. If you have not already done this exercise I would suggest looking at the income needed in retirement and then also looking at whether you are on target to be able to fund this level at your chosen retirement age.


We do offer a free without obligation consultation so if you do need help with budgeting why not pick up a phone today and book a free without obligation consultation.


*1bbc news 05.05.2022

The “what if” scenarios

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Restrictions are now disappearing and life is quickly returning to normality. I think it’s important to look back and reflect on this and on the impact of it all. When I have talked to people about the pandemic it seems to have made many people realise how quickly things can change.

When you think the first news of the virus was at the end of December 2019/January 2020 and by the end of March 2020 we were in lockdown, it has certainly made me realise the quick impact of the crisis. When we are planning for a long healthy life it’s important to remember that things can happen along the way and this has shown how quickly our lives can be affected.

During the pandemic we saw that unfortunately many individuals died, suffered from job losses and from sickness. I do believe we have all had different experiences of the virus and I am sure some people who are reading this article may still be suffering.

For the lucky ones it’s important to realise that it really was pot luck if you were in an industry that was not badly affected.

When we plan finances we use what we call “what if” situations to see how individuals’ finances would fare, given certain situations. So if you have not been badly affected by the pandemic why not sit back and use it as a “what if” scenario for your own finances, based on the stories of others who did not fare as well as yourself during this time.

So, when you look at these “what if” situations and realise that you would have issues coping financially during this time, and if your circumstances were different maybe you should consider insuring yourself in case this happens again in the future.

If you would like some help considering what insurances would be appropriate for you, why not give us a call and book a free, without obligation consultation.

Female Accountants

Lifetime Allowance

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A couple of years ago I wrote about the Pension Lifetime Allowance but as it’s something that we tend to advise on quite a lot at this time of the year, I thought it would be a good time to refresh readers’ memories.

The Lifetime Allowance was introduced on the 6th April 2006, and originally was set at £1,500,000. Over the first few years this amount increased and peaked at £1,800,000. It then decreased to £1,000,000 in 2016/2017. Since then there have been a few increases, but it has now been fixed at £1,073,100 until 2025/26.

When this was first introduced I remember thinking, as an adviser, that it was unlikely to affect many individuals, but following its reductions more and more individuals are affected.

The Lifetime Allowance is the maximum you can build up within a Pension while still enjoying full tax benefits. Pension benefits are tested against this allowance at “benefit crystallisation events” which generally arise when Pension benefits are taken. Any benefits in excess of this Allowance are subject to a Lifetime Allowance tax charge.

It is possible for individuals to have a higher Lifetime Allowance, for example by having a form of protection, and you can still apply for this.

The first question you should ask yourself is, are you near or over the current Lifetime Allowance? If you are, we would recommend that you seek advice. Paying tax is not necessarily a bad thing but there may be things you can do to help your position. You should not just stop paying into a Pension because you are near to this allowance, as there can be additional benefits to keeping the Pension, for example if your employer is paying into it. So, if this or any other area is concerning you why not pick up the phone today and book a free, without-obligation consultation.

The content included on this page is based on our understanding of the UK tax law at the time of publication. It may be subject to change and may not be applicable.

Don’t stick your head in the sand

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Over the years I have met numerous people who have had financial concerns for many years before they have chosen to seek help. The issues have included whether their mortgages would be paid off by retirement, or knowing that they have a pension shortfall. Others had accumulated debts and had no idea how they were going to repay them. Generally speaking the earlier these problems are addressed the easier they are to solve.

My first piece of advice would be to face up to your fears, they are often not quite as bad as you may think. One of my favourite sayings is that a problem is not a problem when you have a solution. For example, if repaying your mortgage by retirement was your concern, and you were shown that making an additional payment of £500 could solve this, you would still have the same problem but now you have a solution. Normally, this would eliminate the concern.

Clients have often said to me that they wished they had sought help much earlier. Financial worries can lead to many things including sleepless nights. YouGov* research commissioned by Equifax revealed that a third of people in work have said they can’t sleep at night because of money worries.

We are coming up to the 2nd anniversary of the first lockdown in March 2020. All our stories of this period are very different. Many still have financial concerns as a result of this and these still may need to be addressed.

So, as we have entered into spring, why not give your finances a spring clean and at the same time address any concerns you may have buried. As another one of my favourite sayings goes, “A problem aired is a problem halved”

We offer a free without obligation consultation, so if you have any financial issues why not pick up the phone today and we can chat with you about your concerns.

 *Debt and mental health in the workplace – June, 2018

It’s all about tax and allowances!

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As I have said many times before, this time of the year is all about tax for us, and trying to use up allowances. Over the years I have found that the significance of this has increased. Whether it’s trying to make sure that no one in the household earns over £50,000 (if you qualify for full child benefit) or utilising your personal allowances, these can have a big impact on your overall financial position for the year.

Over the years, as a financial advisor, I have always been amazed how many people move their utilities around for very little savings, and yet knowing and understanding the implications of tax allowance can sometimes save hundreds of pounds.
For example, someone who earned £52,000 and therefore failed to qualify for full child benefit because their earnings are above £50,000 could make a pension contribution and bring their earnings below £50,000.

Another example I have seen a few times is where someone has a personal pension and is not due to claim their state pension for a few years, and rather than drawing their Personal Pension they are living off savings. These individuals were not utilising all their personal allowance. It could make sense to draw some early so that the personal allowance is utilised and they can enjoy more than the first 25% tax free.

But it’s not just about saving on the tax you are paying, you may also be entitled to tax relief. Anyone can make a pension contribution, even if you are not earning (when it is limited to £3600 gross), and enjoying tax relief at your highest rate on this contribution up to the age of 75.

But tax and allowances are complex, so you have to tread carefully because you may save it one way, but that could then make you subject to another tax. For example, in the case above you need to consider whether there is the possibility of a lifetime allowance tax charge. So why not pick up the phone today and utilise our free without obligation consultation.

● This is based on current UK taxation, law and practice all of which may be subject to change.

The New Year 2022

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So, are you optimistic or pessimistic about the New Year?

As Bill Vaughan said: “An optimist stays up until midnight to see the new year in.
A pessimist stays up to make sure the old year leaves.”

As I am writing this article in mid-December it’s difficult to predict whether we will be back in lockdown by the new year. But I for one hope that I am an optimist. I know I have said this before, but it is always nice to be able to start afresh. I think, in considering the last few years it is even more important.

We may not reflect on our lives very often but for me the new year is such a good time for this, and to consider whether you have achieved what you wanted to do this year or whether you would do anything differently. Speaking to people over the lockdown I know many have said that every time they make plans they have been forced to rethink them, but I don’t think this should prevent us from trying.

According to statistics the most common new year’s resolutions are:
• More exercise and improving fitness
• Losing weight and a healthier diet
• Taking up new hobbies
• Saving money

I know that from my past experience of helping individuals to save money, you are more likely to succeed with this if you have a solid plan for how you are going to achieve it. For example, if you actually sit down and work out your budget and figure out exactly how much you really are able to save. Then work out where you are going to invest the savings, and think about what you will potentially be able to purchase with them.

So even if your ‘new year resolutions’ have passed by the time you pick up this article why not think about what you would like to achieve this year ? Also, try your best to clearly define how you are going to carry this forward.

If your plans are savings orientated why not ask for our help to achieve them?
We offer a free without obligation consultation so pick up the phone, and call us today.

Work smarter not harder

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This is a saying that I always think should apply to all aspects of our lives, including our savings. Although I think this rule is always key, it could be argued that with the interest rate at an all time low it’s even more relevant at this time.

So as an adviser how do I believe you can be smarter with your finances? As many of us have time on our hands due to the lockdown I thought I would write a checklist of some of the things you could consider, especially with the end of the tax year looming when many of the allowances for this year come to an end. Here are a couple of key questions I feel you should ask yourself:

Are my investments in the most tax efficient medium? Each of us have a number of different allowances and the tax treatment can also affect our rate of return. For example, pension contributions can attract tax relief and this in turn can enhance their returns, although it is also important to consider the tax treatment of withdrawals too.

Moving funds into a more tax efficient environment may not result in a gain that you can instantly see, but in the long term may enhance your returns. For example, you may have funds in Unit Trusts which are not in an ISA wrapper. It could be beneficial to do what is known as a “Bed and ISA” which would allow you to take the funds tax free at a later stage. Care needs to be taken as Unit Trusts are subject to Capital Gains tax on their disposal but there is currently a Capital Gains tax free allowance which could be utilised.

The ISA allowance is another one you should consider utilising. One of the benefits is that it can help build up for more tax efficiency at a later stage.

Am I utilising my personal allowance? This I feel is especially relevant when you are drawing funds from a pension, to help minimise your tax. But it may not be just the personal allowance that needs to be considered, it could be utilising other tax bands if you know in the future that your tax band could increase.

Manipulating our savings to maximise our returns may not be straightforward and seeking professional advice may help. I have often said that I feel my key role is being a sounding board. We offer a number of alternative ways to access our services safely during this lockdown, including video and voice call. We offer a free without obligation consultation so it may also be a good time to utilise this if you currently have some spare time on your hands.

*This is based on our understanding of current taxation, legislation and HM Revenue & Customs practice, all of which are liable to change without notice. The impact of taxation (and any tax reliefs) depends on your circumstances.

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

Time to review your pot?

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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

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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!

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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

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