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10th February 2012 – ISA Allowances

 

What is so special about ISA Allowances? - An ISA allowance lasts for just one tax year.  If you don’t use it all by 5th April, you can’t carry the remainder into the next tax year – use it or lose it!

 

An ISA is a savings account that protects your investment returns from tax.  Some people invest in order to grow their savings, some to generate an income – having tax free growth or tax free income is a big incentive.

There are two types of ISA for you to choose from – stocks and shares and cash. Stocks and shares should really be used for longer term growth and cash for shorter term accessible savings.

 

The limits for this tax year are £10,680 for each person and after 5th April, this will increase to £11,280 with the government now saying that the limit will rise each year in line with inflation. Up to half of this can be saved into a cash ISA.

 

When looking at stocks and shares ISA’s, there are literally thousands of funds to choose from which can be off putting. The current market volatility doesn’t help.  However, risk can be reduced dramatically by using a portfolio of funds from across different sectors or by saving regularly.

 

Clients that have saved the maximum into ISA’s over the years are now enjoying tax free income to add to their pension and other income at retirement.

 

10th January 2012 – New Year, New Start

 

It’s certainly been a turbulent 2011.  The Eurozone crisis is deepening, the UK economic growth forecast remains subdued and unemployment is still rising.

The cost of living keeps increasing and this is having a real impact on the living standards of thousands of people all across the country.

Due to this turmoil it has been a very volatile year for the Stock Markets.  The Stock Markets are very responsive to these factors and many investors will have undoubtedly noticed the sharp falls in the values of their investments.

Understandably this volatility can deter some people from investing.   However, when the Stock Markets are depressed this is an advantage for new investors or people making regular payments into the Stock Market, as you will take advantage of the cheaper share prices on offer. 

We firmly believe though that one aspect that that is arguably the most important factor in the process of long term investment planning is Asset Allocation.

Asset allocation is an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investors risk tolerance, goals and investment time frame.

At Sheila Tarr I.F.S. we will identify your overall risk tolerance and use this to determine what risk-rated investment strategy would be most suitable for you.

The New Year is an ideal time to review your financial objectives and investments to ensure you are on target to achieve your desired goals. 

 

10th November 2011 - Inflation concerns

 

According to the Office for National Statistics, the rate of inflation (RPI) is currently 5.4%.  However, for pensioners, the estimated real rate of inflation is closer to 11%, due to the fact that pensioners tend not to purchase i-pods, flat screen televisions or the other items included in the calculation for RPI, on a regular basis. With the Bank of England base rate being maintained at the record low of 0.5%, which is affecting savings rates, it’s no wonder that pensioners in particular are noticing their savings depleting.

 

More and more people are now considering Lifetime Mortgages, also known as Equity Release Mortgages, to supplement their savings or income, and some of the advantages are:-

  • You receive an amount of money to spend on whatever you want.
  • You keep ownership of your home and can continue to live there until you die or go into long term care.
  • You don't have to make any monthly repayments during the lifetime of the loan, as the loan and interest are rolled up and repaid by the sale of your property when the plan ends. This is normally when you die, or move into long term care.
  • You can still move if you want to, as long as your new property meets the lending criteria at the time.
  • There is usually a 'no negative equity guarantee'  which means you'll never have to repay more than the money you receive from the sale of your property as long as it is sold for the best price possible.
  • It can be used to reduce or negate Inheritance Tax.
  • In addition, if you are over 55 years of age, it can be difficult to obtain a ‘normal mortgage’ due to the ‘credit crunch’ and the ongoing economic climate, especially if you have adverse credit or a low income. Equity release could provide a solution in these circumstances.

However, lifetime mortgages are not a solution for everyone and it is very important to talk to a suitable qualified adviser about your own individual circumstances.  Here at Sheila Tarr I.F.S. we will provide you with honest and friendly advice, where we will discuss your circumstances and recommend the best solution for you.  Please call us on 01489 574355 to make a free and no obligation appointment.

 

10th October 2011 - Multi Manger Funds

If you were given £10,000 and told to invest it wisely to get the best possible return, your first response would likely be ‘where should I start?’  Choosing the right investment is not as easy as it sounds. In fact, the sheer number of investment funds available in the UK today can make the task of fund selection an exhausting one.

Performance of funds can vary dramatically and, as the last few years have demonstrated, markets can be extremely volatile from one year to the next. Choosing last year’s star performer is no guarantee of future success and often leads to disappointment.  Even the best investment portfolio will need to be constantly monitored and occasionally refreshed to ensure it continues to meet the needs of the investor.

Multi manager funds were designed to address all these concerns, by taking over the investment selection process. Put simply, a multi manager fund is a fund that invests in other funds and different asset classes, run by other fund managers.

Asset allocation establishes how much of a portfolio should be apportioned to the different types of investment available.  The aim is to combine assets in different weightings to achieve a high level of potential return for a chosen level of risk. Think about how a football manager selects his team.  A good manager will not put 11 strikers on the pitch, as this would leave the team exposed in defence.  Similarly, being too defensive will mean the team will not score any goals.

Multi manager funds have similar selection challenges.  They need to blend a variety of different funds and managers, all with their own styles and performance objectives, and not put all eggs in one basket. Diversification is a key element in delivering predictable returns over time, and is central to the multi manager approach.  Just as a football manager will use the transfer market to buy and sell different players, a multi manager will use the markets to buy and sell different funds. Good investment insight and fund knowledge can therefore really add value, and help boost the performance of their ‘team’.

For more information on Multi manager and different Investment portfolio’s, please contact Sheila Tarr I.F.S. on 01489574355

 

10th September 2011 - Volatile Markets.

We all know that stockmarkets can go up and down, especially at the moment. These movements can at times be quite extreme. Understandably this can deter some people from investing, or make some people wish they hadn’t.

However, drip feeding money into the stock market can take away some of the worry of investing.  Making regular payments means you are staggering investments over time and contributing throughout all market conditions. This is known as ‘pound cost averaging’, which sounds complicated, but is really quite simple, in that when markets drop you buy more shares, and when they are high, you buy less.

If you are already invested, the recent stock market falls can be unsettling and upsetting.  It can tempt some people to change their longer term plans by selling their investments, but stock market volatility does tend to be short lived.  Therefore, most experts agree that investors are probably better off sitting tight through these unnerving periods as it is common for a large gain to follow a big fall (or vice versa).

During a stock market fall, the biggest impact on investments is generally when they are used to provide income.  As prices fall, more units need to be encashed to provide income, making the recovery more difficult, or just take longer.  If you can afford to reduce or stop the income during these difficult periods, you will take control and help protect your investment.

If you would like to discuss any of these issues in more detail, please contact Sheila Tarr I.F.S. on 01489 574355

 

10th June 2011 - Portfolio Planning

With regard to your pension and investment planning, portfolio construction is the way forward.  The key area’s in constructing a portfolio to suit you are your attitude to investment risk, the length of time your investment will be held, and any access requirements.

A portfolio can be put together using some or all of the available asset classes, for example, Cash, Fixed Interest, Uk Equity, Property, Global Equity and Emerging Markets.  A Cautious portfolio will have more invested in Fixed Interest and Cash whereas a more adventurous portfolio will have more invested in Equities and Emerging Markets.

Once a portfolio has been constructed, then funds need to be researched to suit the various asset classes. Bearing in mind there are in the region of 3,000 funds available, a robust selection process needs to be in place.

Here at Sheila Tarr I.F.S., we have aligned ourselves to a company that provides portfolio’s constructed by a specialist company, and then funds independently researched to be included within each portfolio.  Also included are regular reviews and rebalancing. Although you would be right in thinking this level of expertise will be expensive to access, due to economies of scale, the cost will be broadly the same as you currently pay.

To find out more about this portfolio construction, and how it will enable you to meet your investment goals, please contact Sheila Tarr I.F.S. on 01489 574355.

 

10th May 2011 - Investment Expertise

Investing in pensions and investments has become very complicated due to the wide range of funds available to invest your money into. Asset allocation is the new key word, meaning that you should spread your money between different asset classes, for example UK & Global Equities, Property, Fixed Interest and Cash. Depending on your attitude to investment risk will indicate how much should be invested into the different asset classes. For example, a cautious investor will have more invested in Fixed Interest and Cash funds, whilst a more adventurous investor will have more invested in Equity funds.

We are excited to confirm that we have alligned ourselves with key strategic partners so that we have access to a city analyst and two of the best asset allocators in the market. The aim of this is to ensure that all asset allocation decisions are in the hands of professional and well respected actuaries. We can offer 25 different portfolios, based on risk, cost and liquidity. This means that your pension or investment plans will be made up of a portfolio that will contain the correct asset allocation to suit your own investment style, taking into account your personal attitude to investment risk, and reviewed regularly.