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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

New Year’s Resolution

28 March 202218 December 2019 by Vivian Slattery

I am sitting writing this article just before Christmas. Last week we had the General Election and whether we are happy or not with the result I am sure most would agree that the people of this country sent a clear message that they wanted the Government to sort things out so that we can move forward.

As we enter a new year it’s a time when we consider our New Year’s resolutions. What are yours going to be this year? If you’re having difficulties deciding what they should be and need some help, here’s our advice.

I always think there should be something that we could do to improve our lives or position in life. There are certainly ways in which as individuals we can move forward. So what do I feel is a good starting point? This would be to look back at last year and ask yourself whether you were happy with the way it went, and if not what could you do to improve it. Then try to make your resolution based upon how to improve. For example if you believe you worked too hard and you should have more downtime make it your resolution and include how much downtime you should have.

This will be more meaningful than just saying I am going to give up chocolate for example, and I believe the more meaningful the resolutions, the more likely you will achieve them and hopefully next year when you complete the same exercise you will be more prepared.

As an adviser, I always feel you should include a financial resolution. This should not be just what you are going to improve upon but should also outline exactly what you want to achieve. With our clients we hold annual reviews and this is what we try to do as part of this review.

Also, I believe that any goal or resolution needs to be written down and clear about how it can be achieved. So don’t leave them to the last minute, take the time to sit down and really think about what you want and if you feel this is too much to expect to achieve in one year, consider what steps you can take to make it happen.

We do offer a free, without obligation consultation so if you need a hand give us a call and hopefully we can hold your hand through the process and help you to reach your goal.

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

Don’t get ripped off and lose your pension!

28 March 202218 January 2017 by Vivian Slattery

Did you see the Panorama programme shown on the BBC back in July 2016, called Pension Rip-Offs Exposed? It revealed how some people have been duped into losing their pension funds, thinking they were just taking advantage of the new rules that allow greater access to their pension.

The problem usually started with a ‘cold call’, i.e. someone ringing up out of the blue offering a ‘free pension review’. It often ended up with the pension being transferred to a scheme that sounded wonderful, but was actually too good to be true. Once transferred, the monies are potentially afforded no regulatory protection, including coverage from the Financial Services Compensation Scheme. This means that if things go wrong there is very little which can be done in terms of recourse, corrective action, and receiving any compensation for errors / mis-selling.

Petition
During 2016, an IFA friend of mine started a parliamentary petition to have the law changed to ban cold-calling and in the Autumn statement the Government pledged to tackle this.

However, just making cold-calling illegal won’t stop all the calls, and some people still risk being taken in.

Be aware
You need to be aware that a reputable IFA would never simply ring you out of the blue, although many will offer a free initial review of your pensions if you ask. If you receive a cold call, there’s no need to discuss or argue, simply Hang Up.

Further resources

The Pensions Regulator booklet about how to avoid being taken in by pension scams
http://www.thepensionsregulator.gov.uk/docs/pension-scams-booklet-members.pdf
10-step guide to protecting yourself from scams
http://www.thepensionsregulator.gov.uk/individuals/dangers-of-pension-scams.aspx
Parliamentary petition to ban cold calling about pensions, as mentioned above
https://petition.parliament.uk/petitions/166980

At Monetary Solutions Ltd, you can book a free initial consultation about any financial matters, so please call us on 020 8655 8488.

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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Coronavirus and your money

How much cover should I have?

New Year’s Resolution

Don’t get ripped off and lose your pension!

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