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Financial Planning Posts

Wednesday August 13, 2014 at 11:31am
I am surprised at the number of people I see for whom the concept of retirement is a myth that does not withstand too much scrutiny. Most of the people I work with run their own business, by definition they tend to be self-actuated and motivated. For some early retirement is a negative conceptThis group of people see retirement as a negative step and far from being the holy grail of work they find themselves wondering what they will do with their time, how much they will have to reduce lifestyle....
Thursday June 26, 2014 at 10:00am
There is one common bug bear with pensions; they are simply not tax efficient on death. The good news is with the new pension rules and careful planning this is no longer the case. As the rules currently stand the treatment of your pension fund is different depending upon whether you have taken tax free cash. Let’s say you have a fund worth £500,000. If you die without having taken tax free cash your spouse or next of kin would receive a cheque for the full £500,000 tax free. ....
Thursday June 19, 2014 at 1:29pm
It is not uncommon to come across successful companies with large bank balances. If the owners do not have any immediate use for the money they will avoid paying income tax of between 25% and 32% on dividend and simply leave the money in the company. Sounds a good plan but our advice is always to hold sufficient money in the company to support working capital and do something with the rest. This blog gives you three compelling reasons not to hold more cash than you need in your limited company.H....
Tuesday May 20, 2014 at 10:00am
The credit crunch of 2008 highlighted the unpredictable nature of markets. It is the very unsettling nature of such times that really bring home the importance of a coherent, rational and easily understood investment approach. It is through accepting higher risk that investors find the potential to earn higher rewards over time. It is not possible for anyone to control how capital markets behave but we each individually control how we personally participate in those markets. A sensible start as....
Tuesday May 13, 2014 at 11:14am
If you think success in investment is more an art than a science, think again. Eugene Fama shared the Nobel Prize for Economics last year for his work on stock market prices. Comfort, we hope, for our clients as a large proportion of funds we manage on their behalf are invested using the principles developed by Fama and others. Let’s take a look a these scientific rules of investing. You might want to measure your own financial plan and investment strategy against each one. You’ll s....
Friday March 28, 2014 at 9:27am
“Being Realistic is the Road to Mediocrity” - Will Smith I came across this quote and it really stopped me in my tracks. As accountants we are usually the paragons of the realistic. However what Will Smith was getting at is being realistic is often an excuse for not pushing beyond our comfort zone and achieving much more than we first thought possible. With a little thought I realised we come across this quite often in our work with clients. When it comes to their money people are ....
Thursday January 9, 2014 at 10:00am
You may be wondering what Auto Enrolment is all about and even why the government is bothering with it. The scheme being introduced between 2012 and 2016 makes it compulsory for employers and employees to contribute to employees’ pension funds unless the employee opts out. Most smaller companies will not be affected by the changes until 2016 but it is important for all of us to understand why this is a big issue. Why company final salary schemes are closing Many private sector employers r....
Wednesday December 4, 2013 at 4:46pm
If the inventor of the electric light bulb, amongst other things, gives you advice on how to succeed in life it is probably worth taking notice. This is the man who took 10,000 failed attempts at inventing the light bulb before he succeeded. Although the approach he applied (in italics below) to setting and achieving goals is straight forward, many people miss opportunities because they don’t have help or guidance in tackling what are quite difficult questions. Be clear about what you wa....
Thursday November 21, 2013 at 10:00am
I do a lot of professional development, normally around technical financial matters but one recent talk really got me thinking. I have written many blogs on how life is not a dress rehearsal; we only have around 70 or 80 years if we are the lucky ones. Precious time is passing us by. Ask yourself how well you score in the following areas of your life and decide which parts of your life you may like to work on first. The idea is you score yourself from 1 to 5 on each of these life goals: Fina....
Monday November 18, 2013 at 1:03pm
The Government’s help to buy scheme, designed to help first time buyers onto the housing ladder, is getting a lot of publicity at the moment with many young people welcoming the move. The popularity of the scheme is already said to be resulting in house price rises. For parents with children looking to buy into the current housing market as first time buyers I urge a great deal of caution. The best time to buy a house is at the top of the interest rate cycle, that is because as interest ra....
Thursday November 7, 2013 at 10:00am
It’s odd how we quickly get used to accepting what is really quite unusual as ‘normal’. Inflation is running at 3.3% but bank base rate is 0.5%. In normal times interest rates would have to rise to give a return above inflation. So whilst there might be a benefit for those with a mortgage, anyone with money to invest could be forgiven for scratching their head. Government debt continues to rise, from 1992 when the national debt was £0.2 trillion to £1.6 trillion no....
Thursday October 31, 2013 at 5:02pm
When people talk about ‘the market’ I often find myself wondering if they really know what ‘the market’ is and how it operates. The stock market is made up of literally millions of buyers and sellers who are buying and sell shares based on their judgment of the value of the shares they trade. A typical trading day on the US markets will consist of 39 million trades with a combined value of around $200 billion. The market indices such as the FTSE 100 for example reflect th....
Thursday August 15, 2013 at 10:00am
Last week I talked about some of the personal benefits to writing a trust into your Will. I have continued the theme this week. However, it is important to understand that many of these benefits are available via trusts created in your life-time and not only on death under the Will. Here are some more benefits to leaving assets in trust: Maintaining control over how children spend their inheritance There are many parents who are concerned about how their children might spend any inheritance. By....
Friday August 9, 2013 at 4:31pm
Following on from my blog last week about the importance of making a proper Will, to protect your wealth for your family, this week and next I want to explain why the usual ‘mirror wills’ might not be the best solution. Mirror Wills for married couples are the most common type of estate planning. The Will is written to leave all of the estate to the surviving partner on first death and then on second death it passes to the children in equal shares. This sounds sensible and for most p....
Thursday August 1, 2013 at 10:00am
When talking to clients about their financial affairs I’m often surprised how many haven’t made a Will, or have one that they admit is out of date. They ask me, why should I bother making a Will? My answer is simple, if you don’t you get a ‘government Will’ which is definitely not going to reflect your wishes. Did you know that the courts will only accept an original signed and witnessed Will, a photocopy will not be accepted by the courts. If you die without a val....
Friday July 19, 2013 at 2:37pm
Martin Luther King was not the only civil rights leader in America in the 1960’s however he was the one that everyone followed. Some of his success was down to having a belief or dream that others also held. It’s hardly inspiring to passionately pronounce “I have a plan”. People were motivated to act because they also believed his dream. Most organisations and their employees know what the company does; some will even know how it does it in a way to win business from thei....
Thursday May 16, 2013 at 9:00am
In 2002 the Nobel Prize for Economics was awarded to Daniel Kahneman, a Princeton University psychology professor. He had never even taken a course in Economics. However, Kahneman was recognised “for having integrated insights from psychological research into economic science, especially concerning human judgment and decision making under uncertainty.” We have long advised clients that investment success is as much to do with their own investment behaviour as it is to the performanc....
Thursday May 9, 2013 at 9:00am
Apparently 80% of estates that pay Inheritance Tax could have avoided that charge if planning had been put in place during the lifetime. People often think that the only way to avoid inheritance tax is to give assets away. If they don’t think that they believe the only purpose is to avoid tax. However, often by rearranging your affairs you can be better off and remain Inheritance Tax Free. Death can be an expensive business as these figures show: Estate value     ....
Thursday April 25, 2013 at 9:00am
Last week saw another good example of emotion and the herd instinct at work in the investment world. Richard Buxton is one of the UK’s most popular active fund managers where he manages the UK Alpha plus fund for Schroders. He has announced that he is leaving and he is going to join Old Mutual, another fund manager. Such is his following amongst investors that Schroders have warned that almost one third of the UK Alpha plus fund is at risk of being sold as investors withdraw their money an....
Thursday March 7, 2013 at 11:22am
“Life should not be a journey to the grave with the intention of arriving safely in a pretty and well preserved body, but rather to skid in broadside in a cloud of smoke, thoroughly used up, totally worn out, and loudly proclaiming "Wow! What a Ride!” Hunter S Thomson I came across that quote recently and it really made me stop and think and prompted this blog. The reality is that it is not so easy to “skid in broadside...thoroughly used up” and worn out because to ....
Thursday February 28, 2013 at 9:00am
Probably one of the least well understood yet most important concepts for your future financial wellbeing is the concept of investment risk. When saving for the future, especially for retirement, everyone wants to maximise the return on their investment, yet not everyone has the same attitude to risk. Of course the greater likely return, the higher risk you will need to be prepared to take. Beware of anyone who suggests otherwise. But risks is only part of the picture, it needs to be coupled wi....
Thursday February 14, 2013 at 9:00am
Have you ever noticed how on a two week holiday the second week always seems to go much faster than the first? It’s not so different in life, really. The second half seems to go much quicker than the first. If you don’t take control over whatever life you have left, or don’t give it the time or the importance it deserves you are probably heading for some painful regrets later on when it is too late to do anything about it. This is especially true when it comes to planning your ....
Thursday January 31, 2013 at 10:09am
When it comes to savings and investments many people think that holding cash is the no risk option. However, the better investor makes a decision on which risks to take and which to avoid. Doing nothing, including staying out of the market, carries risk. With inflation running at anything between 3 per cent and 5 per cent depending upon which month and which measure you use, and returns on cash, after tax, often less than 1 per cent holding low risk/return investments actually carries two big ri....
Thursday April 19, 2012 at 1:37pm
The recent Budget saw a concerted attack on tax avoidance, especially the practices used by the super-wealthy. And when you look at some of the headline figures, it’s hardly surprising the Government saw this as a ripe target. Many were dismayed when Gordon Brown abolished the 10% tax band for the lowest earners. However, with a little creativity, 10% tax still exists – only this time for the UK’s highest earners. HMRC found that 10% is the average rate of income tax paid by th....
Tuesday December 6, 2011 at 9:00am
Solar Energy will form an increasing part of the UK power supply over the coming years. This is especially true as a consequence of recent UK and European legislation which requires that 30% of UK electricity is provided from renewable sources such as solar and wind. As only 5.5% of power comes from such sources at present there is significant growth to be expected in the renewable energy sector. In April last year the government introduced a 25 year feed-in tariff to encourage greater investme....
Thursday August 25, 2011 at 9:00am
Although a daily report on the position of the FT100 index of UK shares is totally irrelevant to the long term investor, the media insist on relaying it in almost every news report at the moment. Steve Forbes, publisher of US Forbes Magazine, makes an interesting point; “You make more money selling advice than following it. It’s one of the things we count on in the magazine business – along with the short memory of our readers.” There is no doubt that big movements in s....
Thursday June 9, 2011 at 9:23am
A good way to look at your business is as an investment. By this I mean it produces an income for as long as you own it (the dividend) and you want to maximise the proceeds when you eventually sell it. No different to a portfolio of shares really except you have all of your eggs in one highly specialised and personalised basket. As with most investments the income from the investment is often overlooked as the much bigger number is the sale proceeds. However, for many the sale proceeds are simp....
Thursday May 12, 2011 at 9:00am
Most people find investing noisy, confusing and full of mixed messages such as which fund manager is the best, how to beat the market, what the market will do next and how to time it so you buy high and sell low. It is not surprising when you see the resources stacked against clear thinking. Newspapers, TV, radio, advertising push individual funds, fund managers, sectors and regions. Even radio 4 tells us what the FTSE 100 did today as though this actually means anything to anyone other than a d....
Thursday April 7, 2011 at 10:00am
The number I’m referring to is the amount of money and resources you need to enjoy the lifestyle you desire both now and especially when you start to work less or stop work completely. How much is enough to provide you with the things and experiences you want now, and to allow you to enjoy retirement rather than ‘live it out’? Why should you accept that your lifestyle has to change dramatically if you work less or when you enter retirement? Cutting out holidays, taking the kid....
Thursday March 31, 2011 at 10:00am
It is a rare person that does not strive for financial independence, financial security and financial peace of mind. These objectives may seem difficult to define in financial terms but the aim of personal financial planning is to do just that. Personal financial planning will enable you to define: where you are now financially (your net worth) where you want to get to (in terms of the amount you need in savings to enable you to retire) how you are going to get there (by helping you to crea....
Thursday March 3, 2011 at 10:00am
As the tax year end approaches now is an ideal time to review your tax and financial planning requirements. High earners in particular could save a considerable amount of money by implementing some tax planning ideas before 5th April this year. With the Office of Tax Simplification (OTS) carrying out a review into all tax reliefs, allowances and exemptions, and identifying reliefs, you may want to consider making sure any tax planning is executed before the 23rd March 2011 Budget, which will ta....
Friday February 18, 2011 at 10:00am
The new rules applying from 6 April are now known, with flexibility being the name of the game. Annuity rates are very low at present, with no signs of that changing, and the new rules will allow you to draw income from your pension fund without having to buy an annuity. If you have a secured pension income of at least £20,000 a year you will even be able to access 100% of your pension fund if you wish (with an income tax charge on it of course) and the options in your particular circumst....
Thursday December 16, 2010 at 11:57am
Whilst the Christmas period is a time for reflection, the New Year is all about looking ahead and making plans. The break between Christmas and New Year is an ideal time to take a bit of a financial stock-check and consider whether your finances are in order for the year ahead. Here are the Parker Financial Advisors tips for preparing for 2011. 1. Review your investments Now is a great time to review how your old investments, saving accounts and pensions are performing. Should you be consolida....
Monday December 6, 2010 at 9:47am
One of the changes announced in the June budget seems not to have crossed many business owners’ radar and yet I think it potentially has a substantial impact on how they might be able to reduce tax costs now and in the future. You may have spotted the change to the tax relief on contributions into pensions being reduced from £255,000 to £50,000 per annum for pensions with a pension input period ending after 5th April 2011. You might have been excused for thinking that it&rsquo....
Friday October 29, 2010 at 10:00am
In business cash is king. As accountants we talk about it all the time: what is cash flow like? who owes you money, how can you conserve your cash etc. But when it comes to personal finances and investment strategies the opposite is generally true.Cash is seen as risk free as there’s a perception that it cannot fall in value. Research by Finametrica (specialists in risk profiling) estimates that we are twice as concerned about losing money as we are about seeing an increasing return on our....
Monday October 4, 2010 at 2:39pm
A recent survey from pension provider Aviva suggests that every adult needs to save an average of £10,300 per year to secure a comfortable retirement. I’ve got to admit I’m not in favour of these blanket claims. I know as a country we have a massive pensions shortfall (£318bn by all accounts) but headline rates are very unlikely to inspire anyone to review their savings and retirement plans. Our approach to financial planning and retirement planning in particular is to ta....
Tuesday September 21, 2010 at 4:50pm
If you are in a business partnership now would be a good time to consider whether you fancy running your business with your partner’s wife or husband. Strange thought? Maybe.  But that’s what would happen if your business partner died and their spouse inherited their share of the business.Image this happens and they want you to buy them out but you can’t raise the funds? Chances are neither of you are going to be very happy with the situation. They will have lost a spouse ....
Thursday August 26, 2010 at 1:29pm
Business owners are showing less confidence according to the recent Business Confidence Monitor Survey from the Institute of Chartered Accountants in England and Wales (ICAEW). Around one fifth (19%) of firms said they were less confident about the future due mainly to the tax rises announced in the emergency Budget and promised public spending cuts. Having come through recession, business owners now face a challenge to survive the recovery. Uncertainty is a key factor resulting in a cautious ap....
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