With the arrival of the New Year, and ahead of the end of the tax year in April, many people take these next three months to review and consider their financial affairs. Howard Goodship, our chartered financial planner in Ringwood Hampshire has provided some key questions and top tips to consider during the coming few months.
Do I have a financial plan to meet my goals?
Everyone’s goals are different but many of my clients want to know whether they can afford to retire or understand how much they can afford to give away to their family to reduce inheritance tax. For more information on estate planning read our inheritance tax brochure. Whatever your objective, having a plan offers you both peace of mind and more security, resulting in a greater likelihood of taking action.
What level of risk am I currently taking with my savings and investments?
Many clients own investment ISAs but may not fully understand what their ISAs are invested in. This is especially common with pension funds when a default fund is often “chosen” by…..default. Investment conditions have been favourable for a number of years but that won’t always be the case, so understanding whether you are taking the appropriate level of risk is critical to a successful outcome.
How much am I paying in fees/charges?
This question applies to both fees charged by the investment manager and financial adviser, as you are likely to be paying both. If you own older investment products (pre 2012) these fees may be rolled into one. How much you are paying comes straight off your returns, so it is an important figure to understand. Read more in my article - Fees, cost and value
Am I utilising any tax allowances and exemptions?
Tax is another form of charge. We all have to pay our fair share of taxes but why pay more than you need when there are established, allowable exemptions available? For example, each individual has a £20,000 ISA allowance, £40,000 pension annual allowance (that can be tapered back to £10,000 for high earners but it’s also possible to carry-forward unused allowance from the past 3 years). A CGT annual exemption of £12,000, £2,000 dividend allowance, up to £1,000 personal savings allowance and the 10% marriage allowance if eligible. From an IHT perspective further allowances are available; annual gift exemptions & gifting of surplus regular income. Finally, understanding and utilising Chargeable Lifetime Transfers and Potentially Exempt Transfers is critical to successful Inheritance tax mitigation. Of course, tax rules can change but doing nothing is no plan at all.
'At Lonsdale Wealth Management, our independent financial advisers want to help people manage their financial planning. We take the time to explain things and de-mystify financial jargon. We want our clients to better understand their investments and the role they play in supporting their financial plans. If we can’t add value with our independent financial advice, we will tell you but equally if we can, we explain how. Good financial advice should more than pay for itself in saved taxes, lower fees and improved diversification/reduced risk. We offer a free, no obligation first meeting to understand you and your objectives and identify if we are able to help, so contact us now. If we can, we explain how and confirm everything in writing so you can decide whether to work with us. We wish you a very happy and successful 2020.’
The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.