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Divorce Financials


Divorce Financials

6th April 2022 was the date of the change in legislation that has brought in the “no fault” divorce.

This means that couples wanting to divorce can now do so without the former minimum two years separation clause.

A change of this magnitude is probably the biggest change in 50 years. There are fears that it could lead to an increase in couples divorcing.

Why worry?

The concern I have is from a financial point. As the system becomes easier, the financial arrangement talks could become harder and more unfair.

Financial arrangements I have seen in the past often favour one person more than the other. If one party is stronger willed or more confident, I can see even more people losing out on an entitlement.

There is now the added concern I have that individuals with a “no fault” divorce may decide to sort matters themselves to save money. This, for many, will be a false saving and for the reason given above, could lead to one person receiving less than their fair share.

Splitting the assets

Splitting assets should seldom be 50/50 in my opinion, especially if one party has stayed at home or worked part-time to bring up a family, while the other has forged a career with future enhanced benefits.

I am not a divorce lawyer, and neither do I offer family legal advice, but I do offer financial advice and my involvement has led to enhanced pay-outs for my clients.

I am a firm believer in marriage and trying to make it work. But I do recognise the importance of extracting yourself from an unhappy relationship. I just don’t think you should be penalised because you or your solicitor have missed the bigger picture, so please feel free to contact me if you want advice.

PS. there is no charge for an initial chat.

Financial advice from a highly qualified and experienced adviser can be the difference between settling or splitting the finances fairly.

Get in touch

Contact our experts on 01480 869466 or email info@beaconwealth.co.uk to see how we can help you.

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Coping with the Rising Cost of Living in 2022


We are now about a third of the way into 2022 and inflation has just hit 7%, interest rates are 0.75%; petrol is £1.68 and a lot of people have received notification of what the increases in their new utility bills are going to be, and have gone into panic mode.

 

It is not a good time if you are on a limited budget and savings will need to be made. This is sometimes a daunting thought but analysing your finances and seeing where the cut backs can be made will help, and you may surprise yourself with how much you can save on unnecessary expenditures.

 

The older generation, in which I include myself, will remember when mortgage interest rates hit 15% and a £50,000 mortgage cost £640 per month. We did not have Netflix or Sky and people gave up smoking and we had no food banks – we simply went without. I say this, not as a badge of honour, but from living it first-hand. I can tell you from personal experience, hiding from the milkman until pay day and never having a spare few quid was not nice, but we cut back everywhere we could.

 

As Bob Dylan said “The times they are a changing” and just at the moment they are not changing for the better, so we have to ask ourselves how we ride the storm and make plans longer term.

 

The country, however, is at near to full employment and yet there are still so many vacancies that are not being filled and average pay increases are 4%.

 

So, what can we do, and who of us are managing to help? Well, I have mentioned food banks, and I am sure that they could do with more donations or deliverers. But what else could we do? Why not offer advice and guidance to those who you know would benefit, child mind or parent sit if you are able to, to enable someone else to go out to work.

 

Investment markets did well last year and although they were hit in January and February, March was not so bad and April has been pretty flat, so those with a reasonable level of savings have not really seen much, if any, real impact to their lives. Fund values are, after all, up over the last 12 months.

 

The gap will get wider between the haves and the have not’s and whilst some of us have traversed from one to the other, a little assistance I am sure would be gratefully received.

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Limitation – Imagination


Never be limited by other people’s imaginations – Mae C. Jemison

Many of us are in or approaching our longest holiday, by which I mean retirement. A holiday that may last, on average, 20 years.

This means that we need to build a number of things into our lives:

1. A sense of purpose
For 40 to 50 years we have worked in a role, often with others, where we could see the results of our actions. Now we need to have a new purpose or we could feel insignificant. The purpose doesn’t have to be huge or important and can be one of our own choosing.

2. Sufficient wealth
Not everything that brings joy to our lives costs money. In fact, many of the things that cost nothing bring the most pleasure. But having sufficient wealth can bring peace of mind and choice.

3. Maintaining cognitive health
Without continuing to use and stretch our brain it can lead to the slowing down and potential earlier signs of dementia.

Retirement is a huge part of our lives and one that we should either plan for, or if you are already there, make the most of.

Mentoring, teaching and volunteering are all areas that my clients become engaged in. But often retirement brings holidays and time to catch up on the jobs you have been putting off.

For many, once the initial worry of not working has been replaced with the euphoria of being retired and wondering why they didn’t do it before. The realisation of there just not being enough hours in the day comes in, and they wonder how they had time to work before.

It is a bit like when you have small children and the process you go through to go out anywhere causes you to question why it took so long before you had kids.

Part of my role as a Financial Planner is helping clients prepare for retirement, and to assist them in retirement with a purpose. This comes from reviewing assets, liabilities, income and expenditure.

You need a clear understanding to help your imagination.

If our assistance interests you, contact us on 01480 869466.

Download the PDF version of this article here April 2022

 

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Spring Budget 2022


Click here for our summary of the Spring Budget 2022

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A Sustainable World?


For those of us born during the sixties, the world has changed beyond recognition.

The printed word hadn’t changed that much from the 1500’s when Gutenburg designed his printing press, but today with social media and the internet, everything is instant.

Asia was regarded as small and the land of the cheap, but now it is highly advanced with a population of four times that of Europe. India is adding about one million people to the workforce a month and growth in many of the nations is growing fast.

The continued increase in people and changing demographics cannot be sustained, everyone needs to be fed, clothed and provided with energy, which should be everyone’s basic entitlement.

If you add to that the financial structure, it basically needs a ratio of about two workers to finance one older person via tax. The UK is now about 1:1.58 and Korea is as low as 1:0.9.

Medical improvements and standards of health and hygiene are thankfully improving, but this is adding to our problem of increasing costs for the aging population.

With an increasing average age, the power base is shifting to the older generation.

In the 1960’s the UK had 100,000’s of people going to university, now it’s millions. Many would argue that degrees or diplomas simply delay the time they start paying tax and that’s why an apprenticeship not only provides better training, but money in the tax system (don’t shoot the messenger).

So given the changing demographic, increased need for basic commodities and finance for the older generation, something needs to change and quick.

Do I have ideas? Yes of course I do, and I am sure you do as well.

The changes made by the Government and individuals throughout the COVID period, and now the war on Ukraine, has shown that when faced with an immediate need, focus is incredible and years of slow decision making can be condensed into weeks or months.

COP26 and a zero-carbon world are important to save the world, but what will the world look like if we cannot sustain the future anyway?

Let’s hope that those with bigger brains than mine can take forward things like virtual farming and food creation, or as Private James Frazer said in Dads Army “we’re doomed”.

Working as a wealth management company, we have to take into account the above scenario’s when choosing the type of fund to invest in, and which of those will have an Ethical bias.

Environmental, social and governance (ESG) criteria is now of high interest to most companies and investors and the demand for Ethical investing is increasing as our social conscious’ continue to grow.

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Price vs Value


Price vs Value

We usually know the price of most things, but actual value is sometimes difficult to calculate.

If you have paid for buildings and contents insurance for many years its price was known. But if you have never claimed, value is measured by peace of mind.

The price of an umbrella is known, but its value depends on whether it’s raining.

Fund Management

Fund management is similar, who would have paid top price for shares in travel companies or airlines over the last two years? But now confidence is growing that we can get away, they may offer a better option.
*May does not mean they will. This is not advice to buy travel company shares.

For a managed portfolio you need to consider things such as size of the company, the industry, past performance and managers skills. Sometimes the economy favours large, small or medium size companies, sometimes UK, European, American or Far Eastern.

Value often differs between shares that grow in value, against those that remain stable but pay a dividend.

Fund Switching

Fund switching is not something that can be looked at quarterly, half yearly or annually, as you will find yourself either missing the boat or staying too long; so constant management is required.

At Beacon we have three investment managers as part of the investment team. One for whole of market, one for Ethical and one who works on both, completing 15, 10 and three years service respectfully and they have a great track record, plus they are ably supported.

Beacon’s portfolios under their management recovered quickly from the crash last March, through a quick dash to cash and several timed flows back in to various funds.

Pensions and investments are often your largest asset, or second only to your home. You maintain your home but many ignore their investments as they are out of sight. I urge you to take action now.

“Learn from yesterday, live for today, hope for tomorrow” – Orson Swett Marden.

Our highly qualified experts are here to help, call us on 01480 869466 or visit our home page to find out more about us and how we can help you.

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How a Passport Can Teach You To Manage Money


How a Passport Can Teach You To Manage Money

Have you ever looked at your passport properly?

If you have, you will see that the front has two French sayings:

“Dieu et mon droit” at the bottom, and “Honi soit qui mal y pense” at the coat of arms.

If you haven’t, you may be surprised.

Where does it originate from?

You may have thought it was Latin, but given the unhealthy relationship with France over the centuries. It was a surprise to me when I looked and saw it was French.

For those who do not understand the French language, the first means “God and my right”. This is the motto of our Monarchy, which was first adopted by Henry V in the 15th century. It was also the battle cry of Richard I against Phillip II the King of France in 1198.

The second means “shame on he who thinks evil of it”. This comes from King Edward III when Norman French was the UK’s common language. It is also the motto of the Order of the Garter. First set up by the King to rival the knights of the round table.

The Legend

Legend states it was a chivalrous act when Edward III was dancing with his cousin/daughter-in-law, Joan of Kent, and her garter fell down. To stop guests sniggering he put it on his leg to spare her blushes and said “Honi soit qui mal y pense”.

The British passport, possibly one of our most nationalistic items, including French sayings is not the only surprise. The Patron Saint of England, St George, is also the Patron of many other places including Venice, Portugal and Ethiopia. This is due to him having been adopted in the middle-ages due to his personification of the ideals of Christian chivalry.  He was established as a Patron in Tudor times: long after his death, which is assumed to be 23rd April 303 AD. He only lived around 23 years.

Why is that important in Financial Planning?

There are lots of things that seem to make little sense until we look into things further and this really builds on my last article about Theory X and Y. At first glance we make assumptions (theory X), but it is only when we give it further consideration (theory Y) we end up at a true understanding.

Financial Planning is exactly the same, as is Wealth Management. It is not until you look at what is important and why that we really know what needs to be done, and a considered approach comes from knowledge and experience. One doesn’t work without the other.

It is great being experienced, but if your knowledge base is restricted so will be the experience. This is why I continually emphasise the importance of approaching a Chartered Wealth Manager for Investment Management.

At Beacon we are both experienced and chartered, find out more about how we can help you at https://beaconwm.co.uk/

 

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99.9% The Same


Have you ever wondered why other people have better or worse lives than you, or what you need to do, or are doing differently and why?
It’s fairly well known that we are not the people we used to be and I mean that quite literally. We shed our skin over roughly 27 days and our bones replenish themselves every ten years. Yet we share 99.9% of our DNA with all other humans!
So if we share the same structure and yet we keep changing ourselves over the years, we surely have the ability to change what we want from life and to do what’s necessary to achieve our wants if others can.
Darwin spoke about the survivalist being not the brightest, but the one most able to change, and the Italian economist Pareto said 80% of the value of anything is in the top 20%.
Being rich or wealthy is not about your level of education, it’s about the choices we make. Do we leave our money in bank accounts which lose value compared to inflation, or do we invest in stocks and shares, property, or both? Do we take a cautious approach or build in more risk?
The answer will depend on when you need the funds and what they will be used for.
Do we invest in a fund and leave it, or invest in a number of funds which are switched in relation to changing world events, and if so, who is going to do the switching and when?
Traditionally, investors used a financial adviser who reviewed their funds when they met each year. The problem with this is that fund switching depended on when you met and that would seldom be the right time to change. Usually several changes a year to either fund, or allocated percentage are required.
Today, Wealth Managers like Beacon exist with an in-house investment team with full discretionary permissions to make changes when they feel it’s needed, who are managed by Chartered Wealth Managers whose sole role is portfolio management.
If part of your New Years Resolution is to “improve your lot” then Beacon can help with your Financial Planning and Wealth Management. We can help you with your thoughts on what you want and how it may be best achieved. Of course, my recommendation is first find a Chartered Financial Planning practice and talk to them about how they work and what they can do for you. After all, we and others like us need to be able to do what you need to add value.
Our highly qualified experts are here to help, call us on 01480 869466.

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Theory X and Y


Theory X and Y – featured in the Hunts Post on 26.01.22

Anyone who has read or listened to anything about the brain would have heard about the part of the brain called the “amygdala”.

Which are basically two sets of cells located either side of the brain that help define and regulate our emotions.

We react to situations either with an immediate response or with a delayed, considered view.

I feel sure, like me, that you have responded in a certain way to a question or scenario and then at a later date, when you have had time for more consideration, come up with a different, more appropriate response.

Try and answer these three questions with your first thought and then again after further consideration:

1). A bat and ball cost £1.10 in total and the bat costs £1 more than the ball.

How much does the ball cost?

2). If it takes five minutes for five machines to make five widgets.

How long does it take 100 machines to make 100 widgets?

3). In a lake, there is a patch of lily pads. Every day the patch doubles in size.

If it takes 48 days for the patch to cover the entire lake, how long does it take to cover half of the lake?

Source: S Frederick Cognitive Reflection and Decision Making Journal of Economic Perspectives 19 (2005).

Don’t worry about how well you did in the quiz, Frederick tested 3500 people and only 17% scored three out of three, with 33% getting all of them wrong.

Theory X deals with your immediate response and Theory Y deals with your considered opinion. The way that we look at scenarios and how we react is important when it comes to both financial planning and investment management, and experience helps with theory Y.

When you first looked at suduko or a rubik’s cube, you probably found it difficult and although you may still, your experience teaches you that there are logical considerations needed.

Beacon started our Ethical portfolio’s over 10 years ago and decisions have evolved with experience and knowledge, due to the extra layers of research beyond normal portfolio construction and management. Theory Y if you like. Our outperformance of other Ethical portfolios is, we believe, because others use Theory X based on normal rules.

The same applies to financial planning. As a chartered and certified planner, the level of knowledge is vast and far exceeding that of the basic diploma level. Theory Y is therefore, in my opinion, more considered. Afterall, how can you consider things you don’t know? It’s another reason why we have specialists in almost every field, be that Education, Medicine or architecture, for example.

No-one knows it all but I would rather rely on Theory Y.

How did you do with your answers?

Answers:

1). 5p.

2). 5 minutes.

3). 47

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The Investment Crisis


Following COP26 back in October, there have been a number of pensions and investment funds that have suffered, together no doubt with a much larger number of investors.
Decisions were made at the Glasgow meeting, and although watered down dramatically, there will be a knock on effect that will be seen through investment managers approaches to investing in certain companies.
The fact that China, India, Russia and America failed to agree or sign up to certain points means different opportunities will arise.
One big point was that the average person with a pension or investment can put pressure on decision makers by investing more in an Ethical style fund. The problem is, very few places have the knowledge we have accumulated over ten years of researching and investing in Ethical portfolios, and fund names and marketing can be misleading.
Few will understand the EU directives or classifications, or see through what the “Greenwashing” companies are doing to attract investors, to help their share price go up.
Funds themselves have also been effected as they take a hit on returns when they sell out of shares that have fallen out of favour.
Another way individuals are being hit is with the asset allocation in a portfolio. I was comparing the portfolios of a major bank this week with our own, and was surprised to see such a large organisation following the text book asset allocation of over 34% going into their own Corporate Bond and Government Bond index funds; both of which have NEGATIVE RETURNS.
At Beacon, we have our own in-house discretionary investment management team and surprise, surprise we do not currently allocate funds to either of these areas and haven’t done for some time. It means we are holding a bit more cash than we would like, but better that than negative producing returns for the last year.
It takes commitment to save, and we all know bank accounts give little or no return, and in some cases even charge you to hold money in them.
If you have investments, look under the bonnet at what funds you are invested in and ask questions if you see little or no change for negative performing funds.

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