Financial Planning in the Middle Ages

Welcome to my Middle Age blogpost. No serfs here and hopefully with sensible financial planning in the early years there are no peasants. Maybe we are not all Lords of the Manor but we may be landowners (or a freeholder in any event). And the only plague like viruses are being killed by our software.

Following their previous informative video on the early years, Morningstar have followed up with the middle years [yes, my title is much better, isn’t it?!]

In this episode they discuss the fact that you're in a stage where you're perhaps coming senior in your job, you have children, you have a house, other responsibilities. You're starting to think a little bit more about coming into retirement and what the future might start to look like.

http://www.morningstar.co.uk/uk/news/articles/106999/Financial-Planning-in-Your-Middle-Years.aspx

Nick Cann, from the Institute of Financial Planning continues “… it's really important to get a handle on where you are in your personal balance sheet. If you’ve been successful, you've looked at your income and expenditure, you started saving monies, you had a variety of strategies I imagine in different areas to invest, and to save in pensions. You have various life insurances and everything there, but it's now starting to get really important to focus that down to a financial plan to understand fully where you are, how likely you are to be able to retire when you'd like to retire or to do other challenges in your life, where there's things around other important aspects of your family, and other areas are also taken care of.

So, middle years is really important to start making sure you really are on track to have the later years in good order. Because you don't all of a sudden want to panic around 55, 60, and think I really haven't got enough. I wish I had done more in earlier years.”

If this sounds like you, have a look at our ‘How much is Enough? page on the website http://www.iangreen.com/timeline.php

Some readers may be thinking surely I could just do this myself, why do I need a financial planner? Well, a few folks can do this themselves. But many of our clients engage us for a financial plan not through lack of capability, but through a lack of capacity (they just don’t have the time to learn how to do it all properly themselves) or through desire (they’d rather not spend their spare time pouring over numbers and graphs).

That said, if you love DIY finances, Go For It!

But in the same way that professional athletes have coaches and many people report greater results at the gym with a personal trainer, why not consider engaging a financial planner to power up your financial plan and make sure your money isn’t going to run out before you do.

Did you know?
The largest Mint in the middle ages was located in the Tower of London

There is an American website with interesting material on it called ‘Get Rich Slowly’ ( http://www.getrichslowly.org/guide-to-money/ ). The middle ages are covered by the middle three of the following list within the early and later years (see previous blog post http://greenfinancial.blogspot.co.uk/2012/06/are-you-aged-25-to-50.html )

The stages are:

Plan


Protect


Save


Spend


Invest


Live


Retire

If you need any financial help with any of those stages,
for you or your family,
please get in touch, we’d love to hear from you.

7 Financial Year End Tips – Checklist 2011

The weekends are passing fast in the run up to the end of the tax year. Before we know it, it will be 23rd March when the budget will be announced so why not get a head start on the financial planning needed before the end of the tax year and check the list below.

1. National Savings
The interest rates may not be market leading but as National Savings and Investments is 100% backed and guaranteed by the UK Treasury it is arguably the safest place for your money. Disappointingly they currently have no tax free savings certificates on offer – But you can save up to £30,000 tax free into Premium Bonds with a chance every month to win £1 million or one of hundreds of thousands of other tax-free cash prizes. And you can get your original money back at any time.

2. Capital Gains Tax
Got Gains? - Have you incurred capital gains this year? Each individual, even children, have a Capital Gains Tax (CGT) allowance of up to £10,100. You could crystallise gains (for example from gains in the value of shares you hold) without paying a penny of tax.

3. Use your ISA allowance
You can shelter up to £10,200 this tax year. Funds saved in an ISA (cash or stocks & shares) means you pay no further income tax and no tax on any gains.
For more reasons why to use your ISA allowance see the article on:
http://greenfinancial.blogspot.com/2011/03/fye-tips-55-reasons-isa.html

4. Use your pension allowance
Depending on your situation you could contribute anywhere from up to £3,600 to £255,000 before April.
Everyone, even non-earners or non taxpayers can pay in up to £2,880. If you pay this amount the tax man automatically adds £720! Making a total of £3,600 invested.
So real cost to you is £2,880 for £3,600 in your pension
Parents and Grandparents can even do this for their children or grandchildren.
See previous blog posts for more end of tax year pension tips


5. Inheritance Tax
There are numerous ways to mitigate or reduce your liability but a simple end of year allowance that is often missed is the ability to give away £3,000 from your capital each year without any inheritance tax implications. This saves £1,200 per person in potential future inheritance tax liability.
Remember you can also give away smaller gifts of up to £250 per donee

6. Venture Capital Trusts
Often only for the brave of heart or very risk orientated Venture Capital Trusts (VCTs) offer adventurous investors the chance to invest in some of the smaller companies in the UK. In return for taking on more risk a generous tax rebate of up to 30% could be available. Definitely one for professional advice though, not generally a ‘DIY’ product.

7. Will Review (or finances in general)
Have your circumstances changed this year. Births, Deaths & Marriages and all sorts of other happenings can be the catalyst for reviewing and changing your Will, or even triggering a review of your finances in general. Financial Spring Clean anyone?

And finally, want to keep one step ahead?
Why not plan for next year’s ISA contribution now? The annual allowance will rise to £10,680, with half of that available to invest in cash if you wish.

Ask the Expert - then do the opposite?

Free advice – Is it worth it?

There is much chatter amongst the financial adviser community at present of 'RDR', that is, the FSA ‘Retail Distribution Review'.
It means many things but a few of the items being legislated upon financial advisers is fee charging instead of commission and a higher level of qualification. My clients will be aware that I already have the level of qualification being set so that causes me no issues and I have had fees instead of commission as an option since the year 2000.

Some financial advisers are lobbying their MPs AGAINST RDR whereas I warmly welcome RDR.
As can be read on my website (http://www.iangreen.com/approach.php) I provide the ability to purchase as much or as little guidance and advice as a client wishes.

Two recent direct quotes from clients when asked what I do for them in terms of financial planning:
“I just point them in the right direction" or I "hold their hand from start to finish"
I offer specific project fees, investment management based fees and if requested, hourly rates for some work.

For me this approach came about when I decided (at the turn of the millennium when first setting up my own business) that it didn’t make commercial sense to have my company income dictated by a third party – ie product providers and their commission.

So RDR is due to be implemented in 2012 and until then, unfortunately, many financial advisers still give the impression that a commission generating product is somehow ‘free’ to the client. For over a decade now I have been at pains to point out to clients that even if they opt for me to be paid a commission (which sometimes works out cheaper and/or better value) it is not ‘free’. The cost simply is bundled into the product.

Which brings me to the title of this blog. I remember reading an article a few years ago by Toby Young, spectator columnist and author of ‘How to lose friends and alienate people’. He told how three times he had sought the ‘free’ advice of acquaintances or ‘friends in the city’ who were ‘experts’ in their field.
* He consulted an economic analyst regarding interest rates for his mortgage – he followed their free advice – and lost out
* He consulted a currency speculator on whether he should be paid in pounds or dollars for the rights to his film – he followed their free advice – and lost out
* He consulted a friend who specialised in securitising debt regarding an overseas deal buying a property from a bankrupt firm - he followed their free advice – and lost out.

Toby Young ended the article light heartedly saying that sharp eyed readers would notice that despite his losses he kept going back to ‘friends in the city’ for ‘free advice’. He ended by stating “The truth is, I’m too mean to actually pay a financial advisor to give me some proper advice. However, even someone as innumerate as me is beginning to realise that this is a false economy”

So if you are in the market for financial advice, don’t ‘lose friends and alienate people’ by following Toby’s example. Don’t even try to obtain ‘free’ advice from a financial adviser. Consult an adviser and pay a professional fee for professional advice. Because you’re worth it!