Investment Monthly Round-Up
You can view our Investment Monthly Round-up for May, written by our Investment Manager, Nicholas Carr, by clicking here.
Financial Worries
Financial Worries
With inflation not coming down as quickly as expected, interest rates still going up, and mortgage rates back on the climb, it’s now a goodtime to review your finances.
I’m sure the older generation can remember when mortgage rates were in double figures, but for those with mortgages taken out in the last ten years, these new rates are going to hit hard.
Some standard size mortgage payments are going up £400-£800 per month. Compared to the rates we paid, they seem low, but the amount borrowed today is so much higher.
Many landlords are reviewing their buy-to-let mortgages and are now selling because the rent just doesn’t cover the new loan repayments.
Unfortunately, many companies have taken on extra borrowing due to the lack of sales during and after Covid. So now these companies are having to pay much more in repayments, on top of a higher payroll cost.
Companies also need to look at their structure, as well as individuals. And I am starting to talk to business owners about this concern. Whilst I am finding the demand for this to be low at the moment, it is expected to increase.
Companies, just like individuals, need to take advice early and not wait until it becomes an emergency.
Poor stock market valuations have also curbed the growth expectations and indeed many individuals have seen no growth for a few years.
High inflation, interest rates, and loan repayments –coupled with a lack of investment growth, has lead to many having to review their financial goals and objectives.
My colleagues and I are now helping individuals, and companies, regarding the changes needed to their financial plan and/or investment strategy, which incorporates our in-house investment team.
If you are worrying about your financial plan, talk to one of our Chartered and Certified advisers.
If you would like to speak with our experts, please call us on 01480 869466 for a free initial, no obligation chat.
future fees may apply
Protect and Serve
Protect and Serve
In 2021 more than 150 million working days were lost in the UK due to sickness but research has found only 6% of adults have an Income Protection plan.
What is income Protection?
Income Protection is designed to cover a percentage of your income if you are off work due to sickness or an accident. It can be paid for a limited period or all the way to your retirement.
Government employees have an excellent scheme which normally means that in the event of an illness they receive six months full pay, followed by six months half pay, and then a discretionary period which could also mean an early retirement.
Is it individual or company cover?
Some companies, like mine, have a scheme in place to protect staff incomes.
Whilst for others it is up to individuals to arrange plans for themselves if their company doesn’t offer this as a benefit.
If it is an included benefit, most company schemes will pay for a period of up to two years, which for many is sufficient coverage for accident/illness recovery.
Why does it matter?
Unfortunately, within our company we have had two team members diagnosed with cancer but thankfully both had cover in place, so received income throughout the full time that they were off.
Money is tight for most people given inflation and increasing interest rates but imagine how much worse it would be if you were hit with long term sickness or an accident that meant that you lost your income or even possibly your job…
Increased pay outs of late, due to long-term effects of Covid has proven the importance of having an Income Protection plan.
At Beacon we have found our Employee Benefits department has been receiving more requests for this type of benefit by small to medium sized companies who are recognising the importance of ensuring financial security for their staff.
We never know what’s round the corner, so whilst individuals need to plan for pensions and investments, they also need to plan for the unexpected.
Having cover is always recommended, like a lifebuoy it will protect you and serves to keep you afloat.
If you are interested in reviewing your protection options, please call us on 01480 869466 for a free initial, no obligation chat.
future fees may apply
You can view more useful articles like this at News & Useful Articles
How to be an active listener
How to be an ‘Active Listener’
Often in conversation, we can find ourselves not really listening but listening to reply. This means that instead of truly paying attention to what the other person is saying, we prepare our response before they even finish speaking. This is not because we are uninterested but simply because active listening is a learned skill and not typically something many of us do automatically.
Active listening is often described as ‘listening to understand’, which involves going beyond simply hearing the words by making a conscious effort to make meaning of what they have said. Whereas Passive listening is described as ‘listening to respond’, as I mentioned earlier, is a standard way of communicating, but it doesn’t mean that we are fully paying attention.
This simple action of passive listening can stop you from being open-minded, which may lead you to misinterpret, misunderstand or miss a point completely. If we haven’t heard the other person correctly, we will quite often make assumptions. The problem with these assumptions is that they can stand in the way of building a relationship. After all, how stable can a relationship be when built on a foundation of ineffective communication?
When dealing with a Financial Adviser, you need a foundation of active listening. Whilst it is easy to gather basic hard facts like age, address, assets, etc., it is the soft facts that distinguish us from other people. Everybody is different; therefore, it is only natural that we want the most appropriate solution for our personal circumstances. If we feel we are being heard but not listened to, we can lose faith in the solution, even if it is the right one. Nonetheless, active listening and avoiding assumptions work both ways. Clients may make assumptions about the advice, and rather than taking it in, they might find they are missing what is being said so they, too, can fall into passive listening.
Sometimes making assumptions can pay off. It was Henry Ford who said, “If I’d have asked people what they wanted, they would have said faster horses”, which obviously worked out well for the popular car manufacturer. But when dealing with Financial Advisers, you would rather know they have listened and made a detailed, personalised plan according to your best needs – rather than assuming what you might want.
Though maybe I’m just making an assumption…
Professionals are highly qualified, experienced people, but the best ones listen.
You can read more useful articles at News & Useful Articles
Investment Monthly Round-up
May 2023
You can view our Investment Monthly Round-up for May, written by our Investment Manager, Nicholas Carr, by clicking here.
Rented Property Portfolio
Rented Property Portfolio
What’s the news?
In the news last month, Zoopla found that roughly a third of rental properties were sold off, and rents were going up, so this is a huge concern for many.
People who hold buy-2-let properties usually have them highly mortgaged. Typically, this is done to release equity to then put towards further property purchases. Properties are held: personally, in a partnership, or more often now, in a limited company (given the changes to taxation relief).
Mortgage rates have gone up simultaneously as lending has become stricter, and house valuations appear to have gone down.
Those wishing rent
Now there are problems arising for both owners of rented properties and those wishing to rent. Owners buy properties as an investment, usually as well as having a pension, rather than instead of. This means owners look to profit on the rental receipts after the mortgage and maintenance costs, plus the increasing capital value, to tie in with pension growth. With mortgage rates up significantly and no increase in property values, the margins are small to non-existent.
Therefore, this has led to property portfolios being broken up or sold in their entirety. By way of reference, my company has acquired several new clients recently due to property sales.
Unfortunately for tenants, not only are rents rising at their highest rate for about 13 years but there is also considerably less to choose from.
The outcome
In summary, it is a bad time to be a tenant and not much better to be a landlord with big mortgages. One thing helping people today to get on the property ladder (other than the bank of Mum and Dad) is inheritance. Generally, they are more substantial now than in any previous generation, due again to houses being sold.
With older people having mortgages that are due to extend beyond planned retirement, inheritances are also helping to clear balances. However, inheritances should not be relied on, as care homes and funding care are hugely expensive.
If you are unsure whether to sell or buy a buy-to-let or keep it, talk to our Chartered and Certified experts or someone who understands the right options for you and can best help.
Please call us on 01480 869466 for a free initial, no obligation chat.
future fees may apply
You can view more useful articles like this at News & Useful Articles
Investment Monthly Round-Up
You can view our Investment Monthly Round-up for April, written by our Investment Manager, Nicholas Carr, by clicking here.
Investment Monthly Round-Up
You can view our investment monthly round-up for April, written by our Investment Manager Nicholas Carr, by clicking here.
The New Tax Year
The New Tax Year
The ending of a tax year means that your tax allowances will reboot.
If you are self-employed, you submit a tax return; if you’re employed, your tax code will automatically refresh. Not only this, but it will make a difference to your ISA allowance, Inheritance gifting, and Capital Gains tax. It may also make a difference to your pension.
With the new tax year beginning this April, it may be too late to implement any last-minute tax efficient strategies before the renewal. However, if you do find that you are someone who leaves things to the last minute, perhaps making a plan with a financial adviser from the get-go will ensure that the end of the tax year period runs smoother in the future.
Your £20,000 ISA limit.
If you aren’t closing in on your allowance limit, then the end of the tax year isn’t something to worry about; if you find that you are close to reaching this limit, you may benefit from tax efficiencies as your allowance doesn’t roll over. Any returns on an ISA aren’t subject to income tax or Capital Gains tax. So, an ISA top-up may be the right option for you.
Your Capital Gains tax.
Everybody has an annual Capital Gains tax allowance: for 2022/2023 it was £12,300. So, if you sell or dispose of any assets, such as property, stocks, shares, etc. you won’t be taxed on your profits as long as they’re within this limit. An important note is that the Capital Gains tax allowance will reduce in 2023/2024 to £6000, which may impact your financial planning decisions for the next tax year.
Your Inheritance tax.
A tax-efficient way to reduce your estate value for Inheritance tax is gifting. The annual allowance is £3000. In addition, you can gift small amounts of up to £250 as many times as you wish to as many people as you choose, as long as they haven’t already received anything from your annual allowance.
Your Pension.
Similarly, it may be beneficial to top-up your pension. The annual allowance at the time of writing is roughly £40,000, but this depends on your circumstances, as is the income tax relief you can receive.
If you are uncertain about what is best for your circumstances, a financial adviser can help. So, even if you are a person who leaves things to the last minute, you don’t have to miss out. One tax year ends, and another one begins.
The advisers at Beacon Wealth Management can guide you.
Please call us on 01480 869466 for a free initial, no obligation chat.
Future fees may apply.
Ukraine Exports
War has highlighted nation’s crucial role
The first anniversary of the war in Ukraine was in February. Before the war, I suspect many people weren’t aware of just how significant a role Ukraine plays in the world’s economy and exports. However, the devastating events that took place are certainly highlighting the impact that it is having and just how important the country is.
Over the last decade, Ukraine has exported roughly half of the world’s sunflower oil. Due to the Russian invasion in February 2022, there was an abrupt global shortage in supply that had a knock-on effect on the price increase for vegetable oil, which was a substitute.
Ukraine is also a top three supplier of grain and corn. In July of last year, The Black Sea grain initiative allowed Ukraine to ship 25mn tonnes of grain and oils to alleviate pressure on global food prices. The UN has confirmed that there is a deal to extend this initiative, but at the time of writing, the length of the extension is still being debated. The initiative has been a lifeline for Ukrainian farmers and traders, as the alternative routes are not as accessible. There have been complaints that Russian inspections are slow and cause delays to the shipping processes, potentially impacting global food security.
Needless to say, the economic impact of this war has been profound. The repercussions, unfortunately, may be felt globally for years. Ukraine and Russia have had the biggest economic impact but the global fallout has seen both: direct and indirect consequences. As we have seen the trading halts have had a direct effect on the supply of global commodities, the indirect effects are the likes of rising inflation and the energy crisis.
The world is a stage for large international companies and whilst many are coming under scrutiny for trading ethics, many are seeking to profit from this. The in-house investment team for my company manages £200m in funds, with world-wide investments, so it is necessary to understand what is happening globally to assess what implications this will have on client portfolios. This is especially important when assessing Ethical funds, as these cannot stray from their Environmental, Social, and Governance (ESG) criteria.
Hopefully, the above gives ‘food for thought’ to how companies like mine with discretionary permissions have to consider different factors when conducting client investments.
You can view more useful articles like this one by clicking here.
