Category: News

As we head into a new year, it’s common to think about the changes you could make to your life to improve your wellbeing and reach your goals. Taking steps to instil positive habits at the start of 2022 could set you up for greater wellbeing in the long term.

If you’re thinking about making a resolution this year, listing your priorities now and in the future can help give you some direction and lead to a habit that will have a long-lasting impact. Here are seven positive habits that could help you, whatever your goals are.

1. Create a routine and stick to it

Your daily routine can help improve your mental wellbeing. From setting a regular bedtime to eating at the same time every day, a consistent routine can reduce stress and help you focus on the important things. Finding a routine that works for you and your lifestyle could deliver a health boost.

A routine is also a good way to instil other habits that you may want to adopt. If you want to improve playing an instrument or learn a new craft, carving out a dedicated time each day or week to focus on this can help ensure you give these goals your full attention.

2. Think about what makes you happy

What makes you happy or gives your life purpose?

Regularly spending time thinking about what is important for you can help you make decisions that will lead to a lifestyle that brings your more joy. Yet, it’s something that many people don’t do. According to an Aegon report, only 4 in 10 people think about what gives their life joy.

It can be as simple as thinking about what you’ve enjoyed the most in the last week or what you’re looking forward to, but it’s a habit that can improve your mindset. Making a habit of doing this can help steer decisions to those that will make you happier and give you clear priorities when you think about the future.

3. Increase your physical activity

When your body is healthy, your mental health improves too. Physical activity is an excellent positive habit to adopt that can mean you’re able to make the most of your life. Not only will it improve your physical health, which can help keep you active and independent later in life, but it can reduce stress and leave you feeling happier.

Making exercising, from a brisk walk to swimming, part of your routine is a great way to improve wellbeing.

4. Get outdoors more

Being outdoors can make you happier and healthier, especially if you head to a place filled with nature.

Being surrounded by trees or other natural sights has been found to lower blood pressure and stress. It can instantly boost your mood and improve your focus too. A habit of going for a walk through your local park, or visiting national parks and nature reserves in your free time can improve your mental health and provide a chance to exercise outdoors.

5. Embrace mindfulness

Modern life can be stressful and mean it’s difficult to focus on the present. If you find that your mind wanders to other tasks or plans instead of enjoying the present moment, mindfulness can be a useful practice.

Mindfulness is a type of meditation where you focus on what you’re feeling in the moment. It aims to relax the body and minimise stress. It can help you recognise how emotions are driving behaviours and it can help you make positive changes to your life. Just five minutes a day to practice mindfulness can boost your mental wellbeing.

6. Make time to spend with people

Setting out time to spend with other people can be hugely rewarding.

That may be time to focus on your family and friends or to find opportunities to meet new people. Socialising is good for a variety of reasons. It can not only stave off the feeling of loneliness and boost happiness, but it can help improve memory and cognitive skills. Making an effort to meet up with people physically or stay in touch digitally can make your life richer.

7. Make a long-term plan

Don’t just focus on the changes that could improve your life now, but look at what you want to achieve in the future. It can mean you’re able to look forward to the things you plan to do and relieve the worries you may have. Setting out what life you want to lead in 10 or more years can put you in control.

Despite the benefits, just 1 in 3 people have a concrete idea of their future self, according to the Aegon report. Just 13% of people have a plan to reach money goals that could help them achieve their aims. While you may have a vague idea about what you want your future to be like, a concrete plan means you’re far more likely to reach these goals.

This is something financial planning can help you with. We’re here to help you think about your long-term lifestyle goals and the steps you can take now to ensure you have the financial means to reach them. Please contact us to arrange a meeting.

While economies continue to recover from the effects of the pandemic, there are signs that the pace of growth is beginning to slow.

According to the Organisation for Economic Co-operation and Development (OECD), the recovery of the world’s major economies is losing momentum. The organisation said consumers remain reluctant to eat out, visit attractions, and shop like they did pre-pandemic. As a result, growth figures are expected to slow over the coming months.

Businesses around the world are also being hampered by supply and stock issues, with many struggling to access the materials and skills they need to maximise operations.

Globally, the situation in Afghanistan is also impacting markets. As of 30 August 2021, the last American military plane departed from Afghanistan, ending the 20-year long Afghanistan war. However, a huge amount of uncertainty remains, and the situation could affect markets for some time.

UK

The National Institute of Economic and Social Research has revised UK economy forecasts upwards. The organisation now expects the UK to grow by 6.8% in 2021, an increase of 1.1% on the forecast given in May, and by 5.3% in 2022. However, the figures will still mean the UK economy is behind where it would have been expected to be if the pandemic had not occurred.

One of the challenges investors could now face is rising inflation. In the latest report from the Bank of England’s Monetary Policy Committee, inflation was forecast to rise significantly. The Consumer Price Index (CPI), which measures the rising cost of living, is expected to increase by around 4% in the fourth quarter of 2021. This is double the Bank’s 2% target. The committee has not taken any action yet, but acknowledged that it could in the coming months to stay on target in the medium term.

UK wage growth also jumped 8.8% in June, the highest since records began in 2001. It could mean interest rates, which have been low for over a decade, begin to rise sooner than expected.

From a business perspective, shortages are causing problems. Brexit combined with the impact of Covid-19, including staff self-isolating, is affecting business operations.

A survey conducted by the Institute of Directors found that 44% of businesses are currently experiencing staff shortages. 65% attributed this to the UK’s long-term skills gap. However, 4 in 10 said they are struggling with a lack of workers from the EU, and 2 in 10 said self-isolation was having an impact.

The latest Industrial Trends Survey from the Confederation of British Industry also found UK factories are being hit by the worst stock shortage since records began in 1977. Businesses are struggling to access electronics and plastic products, in particular.

Other headline figures this month include:

• UK factory output remains in growth mode. According to IHS Markit data, the PMI (Purchasing Managers Index) for July was 60.6, where a reading over 50 indicates growth. The reading is below May’s record high, but is still positive.
• The service sector is also growing with a reading of 59.6. Again, it’s fallen from 62.4 when compared to a month earlier, but remains in growth territory. Shortages, in both staff and supplies, are one of the reasons for the fall.
• Overall, the UK PMI fell from 59.3 to 55.3 in July. It’s the lowest reading since February 2021 and worse than expected. However, it signals the UK economy is still growing.

Europe

IHS PMI data shows that business activity in the eurozone remains high, reaching an almost 15-year high.

Factory output, in particular, remains high. The PMI for July was 62.8, well above the 50 benchmark that signals growth. In line with rising demand, Eurostat data reveals factories are increasing their prices, which could signal rising inflation. In June, factory prices increased by 10.2% year-on-year.

Despite positive economic data overall, research group Sentix find investor morale is falling. A survey found investors are fretting about economic prospects and the risk of new lockdowns after 18 months of uncertainty.

US

Figures from the US show signs of a strong recovery, but business confidence is weakening.

US manufacturing has now risen above pre-pandemic levels after output increased by 1.4% in July. US job openings have also reached a record high. According to the US Bureau of Labour Statistics, there were over 10 million job openings at the end of June – 590,000 more than May.

The job opening figures suggest businesses are reopening, and perhaps expanding. But it also highlights that some firms are struggling to attract workers to fill vacant roles. The National Federation of Businesses found that confidence is falling, with labour shortages playing a key role in this sentiment.

Tesla stocks have experienced high growth in the last year as pioneers of self-driving technology. But after a series of crashes, Tesla’s autopilot feature is being investigated by US regulators. The results could impact not only Tesla, but other businesses in the industry.

Asia

China continues to recover from the impact of Covid-19. However, industrial output hasn’t been as strong as expected. Year-on-year industrial output increased by 6.4% in July, according to the country’s National Bureau of Statistics. The figure is below July 2020’s figure.

However, the PMI data for China’s recovery sector is accelerating. The PMI in July was 54.9, up from 50.3 in the previous month. While positive, there are concerns that the spread of the delta variant of Covid-19 could affect the recovery.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

The amount of Income Tax paid to HMRC has doubled since the turn of the millennium. With tax bands now frozen until 2026, more workers are likely to find themselves in the higher- or additional-rate tax band. It means it’s more important than ever to make use of allowances to make your money go further.

In the 1999/2000 tax year, £93 billion was paid in Income Tax, according to a Financial Times report. The most recent figures for 2018/19 show that that figure more than doubled to £187 billion. For the current 2021/22 tax year, HMRC predicts that £199 billion will be paid in Income Tax.

The rise is partly linked to the number of workers paying Income Tax. In 1999/2000, there were around 27.2 million taxpayers, compared to 31.6 million in 2018/19. But the tax brackets freezing is likely to have a huge impact over the next few years.

Why does freezing tax brackets matter?

In the 2021 Budget, chancellor Rishi Sunak had to address the hole left in public finances by the pandemic. Rather than increase Income Tax, he froze Income Tax bands. This has been dubbed a “stealth tax”.

Usually, Income Tax thresholds would increase each tax year in line with inflation. This preserves workers’ spending power as the cost of living rises because, as wages increase, the amount you continue to pay in Income Tax remains broadly in line with this. However, tax bands are now frozen up to the 2025/26 tax year.

The Income Tax thresholds in England are expected to remain:

This freeze means thousands more people will find themselves in a higher tax bracket, even though they’re no better off when you factor in inflation. HMRC estimates that there will be an extra 440,000 additional-rate taxpayers in 2021/22, an increase of 10.3% when compared to 2018/19.

With more of your money potentially going to HMRC through Income Tax, it’s more important than ever that you make use of tax allowances to make your money go further.

Here are two allowances to consider in your financial plan.

1. ISA allowance

If you’re a higher- or additional-rate taxpayer, you may have to pay tax on your savings. The personal savings allowance (PSA) lets basic-rate taxpayers earn up to £1,000 in interest without paying tax on it. However, this falls to £500 for higher-rate taxpayers, and additional-rate taxpayers do not benefit from the PSA.

So, finding a home for your savings that minimises tax is important. An ISA offers a way to save without incurring additional tax. For the 2021/22 tax year, you can place up to £20,000 into ISAs.

ISAs also offer a tax-efficient way to invest. Opting for a Stocks and Shares ISA, rather than a Cash ISA, means your savings are invested and returns aren’t taxed. If you have long-term goals, a Stocks and Shares ISA can make financial sense. You need to consider the investment risks you’ll be exposed to but, as a high earner, a Stocks and Shares ISA can help you make the most of your money.

2. Pension Annual Allowance

As a higher- or additional-rate taxpayer, you can benefit more when contributing to your pension.

Tax relief is paid at the highest rate of Income Tax you pay. So, as a higher-rate taxpayer you can receive 40%, or 45% if you’re an additional-rate taxpayer. It can give your retirement savings an instant boost. To add £100 to your pension, you’d need to pay just £60 or £55, respectively.

Usually, your pension provider will claim 20% tax relief for you. To receive the extra relief due, you’ll need to complete a self-assessment tax return.

However, you can’t simply put as much as you can in your pension and benefit from tax relief on all contributions. The Annual Allowance limits how much you can claim each tax year. Usually, this is £40,000 or 100% of your annual earnings, whichever is lower. However, if your annual income is more than £200,000 you may be affected by the tapered Annual Allowance, which could reduce your allowance by up to £36,000. If you’re not sure what your Annual Allowance is, please contact us.

If you’re increasing your pension contributions, you need to be mindful of the Lifetime Allowance. This is the total amount you can hold in your pension in your lifetime without incurring additional tax charges.

For the 2021/22 tax year, the Lifetime Allowance is £1,073,100. This allowance is also frozen until 2026. That figure may seem high, but this threshold doesn’t just consider your contributions; it also considers the total value of your pension. This includes employer contributions, tax relief, and investment returns, so it can be easier to exceed this threshold over your working life than you might think.

If you’d like to talk about how to reduce your tax liability and get the most out of your money, please give us a call. We’re here to help you put a tailored plan in place to suit your goals.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. 

In the space of just 12 years, the global economy experienced two events that are considered “once in a lifetime” occurrences. As well as having an impact on economies, the 2008 financial crisis and 2020 Covid-19 pandemic are likely to have affected your finances too.

Many people will remember the impact of the 2008 financial crisis that triggered a global recession and the uncertainty it caused. From job insecurity to large falls in the markets, it had a far-reaching impact. Then, just 12 years later, the Covid-19 pandemic created uncertainty again.

While government support in the UK through the furlough scheme has helped to protect jobs and limit redundancies, it’s come at a cost. The latest fiscal report from the Office for Budget Responsibility show that over £1 trillion was added to the public debt, which is now above 100% of GDP for the first time since 1960.

With two unlikely events occurring so close together, can this be put down to bad luck? The report warns that while there are no guarantees, larger economic shocks could become more common.

The report says: “The arrival of two major economic shocks in quick succession need not constitute a trend, but there are reasons to believe that advanced economies may be increasingly exposed to large, and potentially catastrophic, risks. While the threat of armed conflict between states (especially nuclear powers) appears to have diminished in this century, the past 20 years have seen an increase in the frequency, severity, and cost of other major risk events, from extreme weather events to infectious disease outbreaks to cyberattacks.”

The report outlines the fiscal impact of the events and how to mitigate risk at a national level. But what can you do as an individual investor to protect your assets?

1. Think long term

One of the most important things to do when making financial decisions is to keep the long term in mind.

While investors experienced high levels of market volatility in 2020 due to the pandemic, this has calmed in the space of a year. Many investors who held their nerve and stuck to their investment strategy have seen their investment values recover or even rise in the months since. The same can be said of the 2008 financial crisis. It may have taken longer for the market to recover, yet, when you look at the bigger picture, investments overall did recover from the crash.

It can be easier said than done when an event is happening, but focusing on your long-term goals can help. If you’re saving for retirement in your 40s, market volatility is unlikely to knock your plans off course. That’s not to say you should never make changes to your plans or adapt. However, these should be carefully considered rather than knee-jerk reactions to what’s happening now.

2. Diversify your assets

Both the 2008 financial crisis and the 2020 pandemic have highlighted how interconnected the world is. Events happening on the other side of the world can quickly spread and influence markets globally.

However, even during these periods of downturns, some sectors were stable and, in some cases, even thrived in the circumstances that were negatively affecting others. Spreading your wealth across various assets and investments can help reduce the impact should markets experience volatility. This may mean choosing to invest in companies that operate in various industries, geographical locations, and have different risk profiles.

3. Understand the risks

You can’t eliminate risk entirely, but that doesn’t mean you can’t manage risk or ensure that you take an appropriate amount for you.

All investments come with some risk. However, investments can have very different risk profiles. An established company with a record of delivering profits and growth is likely to be far less of a risk than a start-up. It’s important to understand your own risk profile, which should consider a range of factors, from goals to other assets, when making any decisions.

As a general rule, higher-risk investments have the potential to deliver higher returns. So, it can be tempting to invest in higher-risk ventures. However, if this doesn’t align with your risk profile, you could end up taking far more risk than is appropriate for you and potentially lose your initial investment.

Not all your investments need to have the same risk profile. As you create a diversified portfolio, you want the overall portfolio to reflect your investment needs.

If you would like to discuss your financial plan and the decisions you need to make about assets, please contact us. We can work with you to create a plan that puts you on the right path to reach your goals, with potential risks in mind, so you can pursue your goals with confidence.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Have you ever thought about the impact your money has? You may have considered how your money is invested, but how about where your money is saved? Good Money Week raises awareness of sustainable, responsible, and ethical finances. This year it runs between 2–8 October, making now the perfect time to learn more about the impact your money has.

But what does “ethical” money mean?

There are pressing global issues, from climate change to inequality, and, in many cases, companies are contributing to these problems in some way. You may already make decisions in light of these challenges, such as choosing fair trade grocery products or clothes made from sustainable materials. Ethical finance means making the same thought process a part of your financial decisions. How you use money, whether spending or saving, has an impact on the world.

When you think of ethical decisions, climate change and the environment may spring to mind, but the term encompasses far more than this. It could also mean how a company treats its employees or an executive’s bonus pay, and whether these reflect your values.

Ethical money decisions are becoming more popular. According to an FT Adviser report, ESG funds, which take environmental, social, and governance factors into consideration, accounted for 90% of equity inflows in July.

If you want to reflect ethical values in your financial decisions, where should you start?

Review your savings account

When saving, you probably focus on the interest rate, but the account and provider you choose can have an impact on the world too.

You can choose a bank or building society that has internal ethical policies, such as promoting gender equality within the workplace or paying a living wage to all staff.

It’s common to view savings as static, that the money you place there simply stays in your account. However, providers use this money for a variety of purposes, such as lending money to people and businesses. Does the bank or building society use your money in a way that aligns with your values?

It can be difficult to know if your bank is ethical or how it compares to your views. The Good Shopping Guide provides a rating table that allows you to compare different options and see how different organisations are rated across a range of criteria, from political donations to environmental destruction.

If you decide to switch your current account, there is a seven-day switch guarantee that makes it simple. Your new bank will switch your payments, such as direct debits, then transfer your balance, and close your old account within seven days.

Choose ethical investments

As mentioned above, ESG investing is on the rise, and it may be something you want to consider too.

ESG investing doesn’t mean discounting the usual considerations you make. You should still consider things like your investment goals and risk profile. However, in addition to these factors, you’ll also look at how a company’s practices have an impact on environmental, social, and governance issues.

It is possible to select investments with your own ESG criteria in mind, but this can be a time-consuming process and requires a lot of resources. For most investors who want to incorporate ESG issues into their portfolio, they can choose an ESG fund that aligns with their financial situation and values. This allows you to invest in a variety of companies that meets the fund’s criteria.

Remember, your pension is invested too. As your pension is typically invested over decades, the decisions you make can have a large impact. Usually, your pension will be invested in a default fund if you don’t choose one. However, there will often be several funds you can choose from, including an ethical fund or ones with different risk profiles.

You should consider your risk profile before switching your pension, as returns could affect your retirement plans. If you do decide to switch your pension fund, it’s often possible to switch by logging into your online account.

Do you want to reflect your ethical values in your financial decisions? We can help you understand what changes you could make to your finances. Please get in touch if you have any questions. 

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.