Many of our clients have had their finances brought into sharp focus by recent global events. I don’t think there is one of us that feels invincible in the current climate. It’s time to act positively, and to me, September feels more like a fresh beginning than January, so this time of year is always my favourite time to turn over a new leaf.
However, this year it feels all the more poignant and possibly a steeper hill to climb after months of lockdown and financial uncertainty.
How can we create a positive return to the new normal?
It’s time to ‘line up our ducks’ and address our finances, to ensure the family and we as individuals are taken care of. No matter what, we need to make sure our finances are in the best shape to cope with whatever the coming months and years throw at us.
So let’s start at the foundations and build our way up.
The days of crossing your fingers and hoping for the best regarding what would happen to your finances and family if you fall ill or die are long gone.
A strong, robust plan is key to ease the times of increased threat we are all living in. Those lucky enough to be part of the NHS pension scheme will have access to death in service (Locums beware) and sick pay.
Our starting point..be fully aware of what you are entitled to. If you aren’t sure find out or contact us for help.
Then you need to take an honest look at what you would need if you were ill and unable to work or worse case scenario, you were to die. In the past, I have heard ‘my parents and wider family will help’ as a reason to not prioritise taking out protection. COVID-19 has meant we are all at threat, and relying on family members who may be coping with the same issues is no longer an option.
Independence is key and it is so easy to achieve
There are some additional underwriting questions that providers are asking at the application stage, however, gaining life cover, income protection, and critical illness is not difficult, even if you have some adverse medical history.
DO NOT PUT IT OFF. If you have cover in place but haven’t reviewed it in the last 6 months, or since you experienced a change of job, income, or some personal change review this now.
Ok, I’ll climb back off my ‘protection’ soapbox and move onto an area that has been a bit of a roller coaster for many in 2020.
Are your investment plans on the right track?
It’s wise to check that you know and are happy with your investments, especially if you haven’t assessed your existing plans for a good few years. However, even if you reviewed matter before COVID hit, it’s wise to check in and make sure you are positioned well now. Ask yourself some of the questions below.
- Do your financial plans remain in line with your objectives in life?
- Are the investments that you are making or have made still appropriate for your circumstances and future plans?
- Are you getting the best rate of return on your savings and investments and is this return being taxed?
- Do your savings and investments still reflect your appetite for risk?
- What costs and charges are you paying? Do you know? How do these compare to other options?
- Are your investments best placed in the new COVID world we now invest in?
A year ago, I wrote an article in which I said ‘if you could travel in time back to the end of 2015 and told you that we were going to vote to leave the EU, and Donald Trump would win the next US Presidential election, you’d laugh’. So, now add to that – ‘the world is turned upside down by the global pandemic’!
The one certain lesson we can take from all of this is that, we have no idea what the future holds, but your investments can still move you towards your planned retirement or other goals even in these turbulent times. You just need to be hitching yourself to the right wagon along the way. That’s where strong financial advice comes in.
It’s not recommended to just put a financial plan in place, then turn away and hope it will be ok years down the line. As with anything precious and important, it takes attention and ongoing monitoring.
The end of the tax year may feel a long way off but it’s not
In a blink of the eye, it will be Christmas. Another blink and it will be the end of the tax year.
Try and get ahead and think about your allowances and tax reliefs. I am still amazed at how many people leave money exposed to tax for another year when a simple bit of administration would keep HMRC from relieving you of more of your hard-earned money.
Now is your last chance to make use of your annual allowances and tax reliefs before they disappear on April 6th. If you don’t, you could:
- Miss out on valuable tax-free ISA savings and pension opportunities.
- Lose important capital gains tax (CGT) and inheritance tax allowances.
- Incur totally unexpected annual and lifetime pension allowance tax charges.
Here’s your chance to be proactive. If you have found yourself tipping into a higher tax bracket – one of the most popular reasons our clients request a financial review, there may be opportunities to lessen the blow. You may even be oblivious to the fact that, come April 6th, you will be in a higher tax bracket.
Is your knowledge regarding financial allowances and rules totally up to date? Have you stuck your head in the sand regarding annual and lifetime allowances? What are the different types of ISAs available and which ones should I be using now?
There have been lots of changes particularly regarding pensions and investments in the last few years. ‘I didn’t know about them’ is not an acceptable excuse for the HMRC if you have fallen foul of any allowances and haven’t owned up to an additional tax bill. And what if you are missing out on a valuable tax break and have no clue!!
Raise your game!
If you plan to invest and make the most of your allowances, why wait until the end of the tax year? In the words of a famous sports brand “Just Do It”.
By sorting your finances out early with your financial adviser, you can just sit back and relax for the rest of the year.
Your adviser will also be able to explain how all the changes that are coming into effect impact your tax, income, expenditure, and/or investments. You never know, they may mean your plans need to be altered or new arrangements need to be put in place.
October is a vital month for those worrying about annual allowance
We are fast approaching this really important month. No sadly, not the future winning lottery numbers. If you are concerned about your annual allowance figures and potentially breaching, October is a key month.
From 6th October you can call the NHS pension scheme on 01253 774774 to get your most up to date pension input figures. The sooner you provide these to your financial adviser or accountant the better as we use them to accurately calculate if you have a tax liability.
Are you paying the right amount of tax?
Do you know your tax bracket? Are you paying too much tax, too little tax or you simply don’t have a clue? Are you entering an unwelcome tax bracket, have unknowingly not claimed all the expenses you can? Or are you still completely unaware of the pension legislation that exists and how you can access your private and work pensions?
By reviewing your finances with your financial adviser, in conjunction with a good accountant, you could end up paying less tax or, better still, be due a tax refund. We have even come across cases where clients have received a tax bill but, after looking into it, found it to be an error!
Prevention is better than cure!
Just as you suggest your patients take simple preventative steps to maintain their health and wellbeing to catch any issues early, we urge you to engage in regular check-ups with your financial adviser.
With no disrespect to our wonderful dentists, nobody likes a check-up, and yet if we don’t go, what state would our teeth and general health be in? We all know we’ve done the right thing when we come out of the dentist’s chair (most of the time anyway!). It’s the same feeling when reviewing our finances.
Meeting with your financial adviser may be time consuming and you will almost certainly be able to think of better ways to spend your time, but you (and your finances) will be glad in the end that you did make that appointment. And for our part, we do our best to make sure that you enjoy, not endure, the experience!
Are you and your finances ready for the new normal? Let us know by adding a comment below.