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Point of View Archive

New Year, New Plans and a Better Financial Future


January is the month when so many people make a list of resolutions for the year ahead.
 
Many people wish for sweeping changes for the New Year, and wealth, alongside health and happiness, is often high on the list. Yet so often, sights are set unachievably high, and with too short a timescale for them to be fulfilled in the 12 months that lie ahead.
 
The key to gaining wealth is often very simple. It is about choosing goals that you really want to achieve and taking small, affordable achievable steps to reach them. January should not be about making wild and ambitious plans. It should be about reviewing what you have, however large or small, and considering whether you can make your money work more effectively.
 
Resolution one; to grow your wealth.
If you already have savings or investments, the first step is to review what money you have, where and how it is held and to check the tax status of those accounts.
 
It can be a mistake to hold large sums of money in poorly paying cash based accounts, when the money is being held for long term projects or financial security. With interest rates predicted to stay low for some years ahead, money which does not need to be easily accessible could be considered for investing purposes, even if it is held in lower risk funds.
 
On a simple level, making sure you are maximising your ISA allowance is important. If you hold large sums of cash then a financial adviser can suggest alternative accounts which also have tax efficiency as a benefit.
 
Once you are organised with your current savings and investments, you can then make goals for the future. This means making future plans and setting aside a way to save and invest to achieve those goals.
 
Resolution two; to find financial security.
Financial security and insurance policies go hand in hand. Often insurance or protection policies are arranged at a trigger point, such as arranging a new mortgage, and are then forgotten. But family arrangements and therefore financial dynamics can be in flux at other points too, such as the arrival of children, a change from reliable parental support into dependency because of ill health or old age, or an increase in debt such as re-mortgaging to fund an extension.
 
Having adequate insurance protection is a simple way to achieve financial security for your family. There are many different types of protection available, from those which pay out a lump sum on death, those that pay out on diagnosis of a specified critical illness, to those which can provide some replacement income in the event of an accident or sickness which prevents you from working, or redundancy.
 
Reviewing your insurance policies does not necessarily mean paying more, and indeed certain insurance policies have become cheaper in recent years. But a review is about ensuring you have the right type of protection to meet your family’s current needs. Paying for an old insurance policy which doesn’t reflect your situation does not provide the peace of mind it once might have done.
 
Resolution three; to look ahead to a richer retirement.
Many of us will spend a third of our life in retirement. Investing throughout our working years determines how wealthy we will be in our old age. Too many people take a ‘hope for the best’ approach to their pension provision. They rely on the fact that the amount they are paying in each month is enough, that the pension they are investing into is performing well and growing in value, and that the fund they have accumulated when they finish work will be enough to live on.
 
Taking a chance with your wealth in retirement, when you consider the facts, is a dangerous gamble. Not having enough money when you are at your most vulnerable age is not a prospect many of us would welcome and can be avoided by reviewing your plans and pension provision on an annual basis. This will ensure you are investing according to your attitude to risk as well as making sure you are putting aside enough each month, assuming your financial circumstances allow.  
 
If you are approaching retirement, then seeking advice will be beneficial. There are many changes to pension rules which came into effect in 2015 which provide you with more choices as to how you can draw an income from the pension money you have saved. The changes mean that it has never been so important to seek advice before making any decisions which will affect your money in your non-working years.
 
To find out what steps you should be taking in 2016 to achieve a wealthier and more secure future, please get in touch, we’d love to help.   

Date issued: 04.01.16

Please remember any views or facts expressed above are based on information received from a variety of sources which we believe to be reliable, but are not guaranteed as to accuracy or completeness. Any expressions of opinion are subject to change without notice. None of the information should be regarded as advice. Past performance is not a reliable indicator of future results. Investing involves risk and the value of investments and the income from them may fall as well as rise and is not guaranteed. Investors may not get back the original amount invested. Any tax treatment is dependent upon individual client circumstances and may be subject to change.

Sanlam is a trading name of Sanlam Wealth Planning UK Limited (Reg. in England 3879955) and English Mutual Limited (Reg. in England 6685913). English Mutual Limited is an appointed representative of Sanlam Wealth Planning UK Limited which is authorised and regulated by the Financial Conduct Authority.

Registered Office: St. Bartholomew’s House, Lewins Mead, Bristol, BS1 2NH.

Investing involves risk and the value of investments and the income from them may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.