Investments Archives - monetarysolutions

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

The criteria we used when selecting funds

28 March 202217 June 2019 by Vivian Slattery

In the last week or so there has been a lot of talk about Neil Woodford, but who is he and what criteria should we use when selecting funds?

Neil Woodford ran the Invesco Perpetual Income and High Income Fund. He gained a reputation for being one of Britain’s best fund managers
during his 25 years at Invesco. This was achieved following his management of the funds during the 1990’s dot-com bubble and the 2008 financial crisis. In 2014 he left Invesco Perpetual (now known as Invesco) to set up Woodford Investment Management LLP. In recent weeks some large investors have withdrawn their money from his flagship fund, resulting in its temporary closure, and preventing any further withdrawals from the remaining investors.

So what criteria do we use when selecting funds?
My own personal preference (I may be wrong), is always try to select funds with a proven track record (ideally a 3/5 year track record). We also look at their Crown ratings.

What are Crown ratings?
Reviewed twice a year in January and July, the rating considers three key measurements to derive a fund’s performance: alpha, volatility and consistently strong performance.

The top 10% of funds will be awarded five FE Crowns, the next 15% receiving four Crowns and each of the remaining three
quartiles will be given three, two and one Crown(s) respectively.

When we are choosing and reviewing funds we would look closely at the funds with Crown ratings that had substantially changed and question whether to keep them in our portfolios.

The question you should be asking yourself is do you know the Crown rating of your current holdings?
So, I believe in the importance of reviewing holdings and ensuring that any investment is invested over a range of sectors and funds. This means you will minimise your exposure to any one fund.

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

Tax implications

28 March 202222 August 2017 by Vivian Slattery

Tax implications on your investments

When looking at different types of investment, you also have to consider the tax implications. In fact, you could be entitled to allowances totalling over £30,000*. When deciding on the investment vehicles for your funds, it’s important to take these allowances into consideration.

So what are the main allowances?

Personal allowance

Firstly, we all have a personal allowance that we can offset against income, although this is reduced if you earn more than a certain level, and could even be reduced to zero. Even children have personal allowances, and it’s important to make full use of them.

Capital Gains allowance

We also have a tax-free Capital Gains allowance* of just over £11,000. If you aren’t using this – and you don’t have any personal allowance left – it could be very attractive to offset this against your investments.

Dividend allowance

There is now a £5,000 allowance* that you can offset against dividends. This can be attractive when looking for an investment to help top up your income.

Saving tax on interest

Most people earning less than £16,500 will not have to pay any tax on their saving interest, because they can use a £5,000* saving tax allowance which reduces by £1 for every pound of income earned above the personal allowance.

On top of this, every basic rate taxpayer can receive £1,000* interest on their savings without having to pay tax on it. A higher rate tax payer can receive £500* tax-free.

What to do

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

When you are looking at tax implications, we recommend you also seek advice from an accountant.

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

Keeping your investments in tune

28 March 202214 June 2017 by Vivian Slattery

We recently rescued a piano, which was sadly rather out of tune. The piano tuner came today to tune it. To get it playing well and sounding beautiful, the strings need to be at the right tension and the hammers in good condition so they hit the strings well. It also needs to be easy to play, so the keys shouldn’t keep getting stuck. Once these things are sorted out, the piano also needs to be retuned again regularly to keep it up to scratch.

Unfortunately our poor piano was old and had been somewhat neglected and is now beyond repair, so we’ll have to send it to piano heaven and get a replacement.

Often our finances can be the same. It’s easy to leave the arrangements that we have made in the past, because they worked well when we bought them. Over the years, the investments held within our ISAs, bonds or pensions may be working less well, or there may now be a better way of doing what we were trying to achieve. We can now access many providers’ plans online, or at least consolidate a number of holdings into one place, making them far easier to administer.

Having someone retune your investments means that you can make sure that what you have is still the best way to reach your financial goals. It also means that if your existing setup is out of kilter with what you need, you can replace it with a more appropriate option, or just tweak some of the individual parts. Regular reviews can then make sure that it never gets too far out of tune again.

If you would like a review of your finances contact us today to arrange a free intial 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

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Keep calm and carry on

The criteria we used when selecting funds

Tax implications

Keeping your investments in tune

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