Archive for the ‘Investments’ Category

ISAs for Retirement Planning? – Understanding ISAs and Traditional Pension Funds

Friday, January 15th, 2016

ISA PensionsWhen you are planning your retirement you will need to decide which type of saving vehicle will best match your needs.

Whilst your ‘sunset’ years can be a great period retiring can also expensive, and when your regular paycheck stops coming you need to depend on your nest egg to match your lifestyle and expenses.

To make sure that you can not only live well after you stop working full time, but also pay for other expenses; healthcare for example, you would want to invest wisely in a retirement account.

Is an ISA Right for You?

If you choose to invest in cash ISA (individual savings account), not only will your savings work for your retirement years but you will also save on tax.

Because this type of account offers interest without taxes, it could be an ideal tax planning method. This type of investment is more stable so is better suited to those who are risk averse. The downside is that there is the chance that the interest rates will not grow a whole lot, unless you are open to taking more risks.

For people looking for a relatively safe place to invest for their golden years, this might be an option worth considering. Stocks and Shares ISA, while entailing a little more risk, also offer more returns, and the flexibility to invest as you like. It would also lead to greater degree of tax savings. There is also no time limit as to when your account is open for you to withdraw funds. Should you ever find yourself in a financial pinch you can think of using this account to rescue. However, with good financial planning, your savings should remain safe, and there should be no need to prematurely access it.

Pensions Are Still Worth Considering

Pensions have been the preferred way to save for the nest egg for decades. Pensions offer tax rebates, in that the amount you invest attracts relief on taxes, so you get to save more. The more you invest in a pension the more you stand to get as tax relief. Also, for employers that are contributing to an employee’s account, there is tax relief, and for the employee, more funds into the account. However, the planned changes to the tax rates on pension funds, would mean less savings.

Another reason to trust pension accounts is that contributions can be backdated. The contribution limits remain high, although the proposed changes to the law need to be studied in detail. You would also not be able to access the funds until a minimum age, so you would be prepared to do without the cash you saved in your hands, for at least a few years. In such a situation, you might want to consider an ISA. While the money you pay into the pension account may not attract tax, the money you withdraw will carry tax. How much you pay as tax is something your financial adviser will be able to tell you.

The Importance of Financial Advice

The New Pension Freedoms brought in by the current government have shaken up the way people plan for and enjoy their retirement. When it comes to making these important financial decisions, it is important that you seek the advice of a capable financial adviser.

The decisions you take today in regard to your savings and funds for post retirement will have far reaching consequences, for decades to come. That is why with the assistance of a financial adviser, who offers advice customised to your situation, you will be in a situation where you can face the future with confidence.

In addition to understanding the pros and cons of ISA and pension funds, you will also receive advice regarding other types of funds such as savings account, and premium bonds. You might also want to learn more about SIPP or Self Invested Personal Pension.

If you would like to speak to someone about your pension please do not hesitate to contact Maxim Wealth Management on 0141 764 0040 (Glasgow) 0203 841 9941 (London). Alternatively fill out our Contact Form with your question and we’ll get back to you.

What’s My Pension Worth?

Friday, June 12th, 2015

FB - PensionsWorthIt’s hard to argue about the importance of saving for old age.  Those still of working age need to look at how they are going to finance their later years.

Those already retired need to think about getting the most out of their available finances.  The exact rules around pensions and savings can be changed in line with government policy at any given time.  Indeed the pension system has just been through an overhaul and with an election looming, politicians of all colours are setting out their plans for the future of pensions and the pensions of the future.  In reality, however, these plans only have any meaning to people who are focused on saving for retirement.  Let’s therefore look at some key questions on the topic.

What Is A Pension Pot?

Quite simply a pension pot is a common term used to describe savings which are specifically to finance retirement.  People contributing to a pension pot may get assistance from the government (in the form of tax relief) or from an employer (in the form of contributions).  Pension contributions are usually locked away until you reach retirement age.

How Do I Calculate My Pension?

There are plenty of online calculators to help with this.  It’s strongly recommended to keep track of how your pension is doing so that you know where you stand.  If you do decide you need to take action, sooner is usually better than later.

I Don’t Like What I’m Seeing, How Can I Build A Healthier Pension Pot?

You have three options.  You can save more money, you can manage your savings more effectively or you can do both.  It can help to look at this question in the light of your overall financial situation.  For example if you are carrying high-interest debt, such as credit-card debt, then it may well be in your best interests to focus any spare cash you have on paying this down.

Once you have cleared your debt, you can then divert the funds to building your pension.  If you do have spare cash and are in employment, then it may be useful to look at making extra contributions to your workplace pension.  This can be particularly helpful if your employer will top up any contributions you make.  If you’re unsure about locking cash away until you retire, then it may be worth looking at ISAs as an alternative.  Although contributions to ISAs are made out of post-tax income, generally speaking the income they generate is tax-free and the money in them remains accessible if you need it.

What Do I Need To Know About Getting More From My Pension Pot?

For many years getting more from your pension pot generally meant getting the best deal on an annuity.  Now there are vastly more options for those with pension pots.  With this in mind, it can be very helpful to get some professional advice before taking any significant decisions on how best to use your pension pot.

It is also advisable to keep up to date with any changes which may affect pensions.  For example at the current time, the Conservatives have a proposal to allow holders of annuities to sell them on.  If enacted this could have massive implications for existing pensioners.

It’s also worth remembering that, generally speaking, pensioners have access to the same savings and investment products as those of working age.  For example they get exactly the same ISA allowance as working adults. There are even some savings products tailored specifically to their needs (e.g. pensioner bonds). These can all help pensioners to make the most of their finances.

Protect Your Portfolio

Tuesday, May 19th, 2015

Protect Your PortfolioFor all the old jokes about change being the only constant, change also has a habit of making people nervous. Stock markets are ultimately made up of people – traders on one side and the employees of the companies they trade with on the other. Because of this the prospect of significant change can be reflected in the performance of the stock exchange. This effect can often be noticed around election times in general.

Sterling and the Importance of Image

Outside of the Euro zone, most individual countries have their own currency (at least officially). Therefore in order for international trade to take place, there has to be an agreed rate at which one currency is exchanged against another. While individuals may not think of themselves as being involved in the global market, the truth is that it impacts the daily life of pretty much everyone. Many of the products on supermarket shelves are imported and the UK exports both goods and services. Therefore the strength of any currency as compared to other matters to most people’s money management more than you might initially think. In many ways the relative strength of currencies can be seen as an opinion on the prospects of the countries in question. Therefore, when a country’s future is uncertain, such as in a period before an election, that country’s currency may become weaker in comparison to countries with more stability.

Will the Pound Sterling Start to Spin?

It is a reasonable expectation that markets will react when a new government is formed. If the market’s reaction is negative then it is entirely possible that there will be a fall both in the value of the stock market and the value of sterling itself. This may well be only temporary, but this may be of small comfort to investors who prefer stability. Those old enough to remember the 1990s may still recall “Black Wednesday” (16th September 1992) when sterling collapsed and the UK was forced to withdraw from the European Exchange Rate Mechanism. Investors might want to look at their options for protecting their portfolio against a severe drop in the value of sterling. This could be a particularly important step for those with a more international lifestyle, for example those planning on retiring abroad or sending (grand) children to study abroad.

What Does This Mean in Practical Terms?

There are many different approaches to investing, no matter what your attitude to risk you can probably find one which fits in with your financial plan. Some people like to invest directly into stocks and shares, others prefer investing in funds. Whether you are investing for growth or income, whether you specialise in a particular sector or prefer tracker funds or managed funds, you will have to understand that markets and currencies have their ups and downs. At the same time, investing can also be a classic example of the phrase “don’t put all your eggs in one basket”. Opening up your investing horizons to opportunities overseas and in other currencies can be a very helpful way of reducing your exposure to (temporary) issues with the UK market.


You can find Maxim Wealth Management in the London Directory

The Theory of Every Asset

Tuesday, May 12th, 2015

The Theory of Every AssetPhysics is a more exact science than finance, and judging by recent Oscar nominations, it’s often more romantic and glamorous.

Stephen Hawking, one of the great minds of the 20th Century was one of the first proponents of unified field theory, or the theory that explained the entire universe.

So far a unified financial theory has yet to be created, but let’s consider the possible components.

Many of us are acquisitive, and we look to maximise profit and minimise loss in our day to day money management. We balance the need to acquire against the need to limit risk and this leads to a level of security we are comfortable with.

The one insight that is more useful than any other to the novice, or even the seasoned investor, is that their principal role, above all else, is to manage and to an extent, tolerate risk.

A strategy of investing for the long term as opposed to looking for short term higher risk investments generally provides more stability over time.

This is not a new idea particularly, but, as with all the most enduring scientific discoveries in the past, it doesn’t need to be, is simply has to make sense and to work.

Scientists like Stephen Hawking have often revolutionised how we see the universe in small steps, building on the achievements of their contemporaries and as Isaac Newton put it ‘standing on the shoulders of giants’.

A good investment firm with sound investment choices operates in a similar way, using the knowledge of experts in their given fields, to maximise return by investing in funds and minimise risk for the investor.

A well managed fund will seek to perform these two roles and make the investor’s money work hard so the investor doesn’t have to.

Therefore all investors have to accept a degree of risk when they purchase, but in return, the risk takers are entitled to a share of any rewards the accrue.

There now follows a statement that almost goes without saying, one which any investor with a modicum of common sense knows, but one which, by law, we have to reiterate:

“Past performance is not a guide to future performance. The value of stock market investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested.”

Yes, the value of investments can fluctuate, it can rise and it can fall. It is for this reason that the many investors ensure they access financial advice on how to invest their money.


You Can Invest In Property With Buy to Let

Tuesday, May 5th, 2015

You Can Invest In Property With Buy to Let

Back in the day

Ten years ago, nearly every TV show across a wide range of channels was property related. Not only was it cheap, easy TV to make, but the public couldn’t get enough of it.

A Place In The Sun, Property Ladder, that show with Kevin McLeod where people turn barns into mansions, the list was endless.

The vast public appetite for such programmes and for property investment in general was part of a vast bubble that, as we now know, burst in 2008.

It’s easy to be wise after the fact, and Britain’s property market, particularly the buy-to-let market has never quite been the same since.

A super cheap buy to let market between 1997 and 2008 saw large numbers of ‘get rich quick’ casual landlords buy properties in the hope that they would have to do very little in return for a continual income.

Many left the market in 2008, and a few limped on, realising that being a landlord is often quite demanding.

There is still a place for serious buy to letters out there who can work and think strategically to build up a business.

If you are thinking about it as an investment strategy for the future, this blog will give you some useful pointers.

Different finance

You cannot use a conventional mortgage or insurance to buy a buy to let property and switching a regular residential home over to rental use requires a special buy to let mortgage.

Scrimp on this detail and the bank might call in its mortgage altogether.

A mortgage for a rental property will typically have a much higher interest rate than a residential mortgage.

The loan to value percentage (how much of the total value of the property you can actually borrow), is higher for a buy to let mortgage than for a residential mortgage.

This shows that banks are interested in lending to serious investors who can a higher percent of the value of a property themselves.

One aspect of the buy to let mortgage that makes life slightly easier for the purchaser is the fact that they are often interest only.

This means that each monthly repayment covers just the interest payment and not the loan ‘capital’. At the end of the agreement the capital can be repaid by selling the property and the seller can retain any profits.

This presumes, of course, that there are profits. A poor purchasing decision could leave you with negative equity, or you might find, as millions have in the last decade, that markets can slump as well as boom.

Business Strategy

The bank sees the borrower as a business partner, one which it hopes will be fit, healthy and alive towards the end of the agreement.

The risk averse banking sector is no longer throwing money at house buyers (private or rental), and expect a buy to let landlord to take on the bulk of liability.

This means that if you are going into the letting business, you need to make sure that you have a viable business plan.

Are you targeting young professionals, students, married couples or commuters? If you don’t have a niche market in mind, you need to get one before you go any further.

This will determine where, and what you buy. There is no point buying a flat for wealthy young professionals in bedsit land, or a property aimed at families in a row of student houses.

Your Legal Responsibilities

You will also be responsible to the local authority as well as the bank; a rental property has to reach the basic levels of safety, hygiene and energy efficiency.

It might be worth consulting your council’s housing department for further advice on your legal requirements before you proceed.

Remember as well that your property will be liable for council tax payments, a cost that most landlords pass on to the tenants.

If you would like further advice on the kinds of finance available for fledgling buy to let businesses, speak to a financial adviser who deals in mortgage advice.




NISAs – End of Year, Part 2

Wednesday, March 11th, 2015

NISAs - End of Year, Part 2If one of your New Year’s resolutions for 2015 was to improve your finances and ensure that you maximise your savings, the new tax year is an important time.

New increased limits on tax exempt savings pots in the form of NISAs have come into effect and in the next month NISA providers will be offering the best deals in the hope they will get your business.

Therefore, if you haven’t got an NISA already, now may be the time to open one, and if you have one already, it might be worth considering how it is performing and whether you can get a better deal?

Start your new NISA

If you open a new NISA now you have until April 6th to use up your annual tax free savings allowance, meaning that if so far if you’ve deposited nothing in any NISAs you can use the full £15,000.

If you’ve already saved money in one NISA this tax year and want to shift it over to a new account with a better rate, you are free to do so and to top it up to £15,000.

Following April 6th 2015 you will have another full tax year to invest in, and the tax free limit for 2015-16 has gone up to £15,240.

In order to make the most of the opportunity you could save regularly and realistically, and it makes sense to consider channeling as much of your spare cash as possible towards your NISA.

Create a savings plan

The more of the tax allowance you take advantage of, the better, so in order to make the most of your NISA, you need to develop a sustainable savings strategy.

Firstly, if there are major outstanding unsecured debts like loans, credit or store cards, pay them off as quickly as possible as they will eat into your wealth quicker than you can save.

Secondly, once you’ve dealt with debt, you need to conduct a one month spending diary, examining where you are paying too much or what you are spending unnecessarily on.

From this you should be able to see where your money is going and what you can cut back on, and what can be saved.

For many people, the money audit is quite a sobering experience, but it should help you realistically see what your potential for saving actually is.

Check rates on older NISA’s.

When you’ve gone to the time and trouble to audit yourself like this, it makes no sense to allow money to slip through your fingers in other ways.

Now you need to audit any of the NISAs or other savings accounts that you already have, to make sure that they are working as hard as you are.

Keeping your wealth concentrated in the NISA that has the best rate is also essential if you have stocks and shares ISA, and in this case you need to make sure that the account has the lowest fees and charges you can find.

You can move the money to a new NISA with a better rate.

If you are looking for cash NISAs with the best rate or a stocks and shares NISA with the lowest charges, you might benefit from some professional financial advice.



NISAs – End of Year, Part 1

Wednesday, March 4th, 2015

FB - NISAAs the end of the financial year approaches in April, taking stock of the performance of your savings is an essential task for anyone who wants to see their personal wealth grow effectively year on year. This blog is a useful guide to savers who invest in NISAs and want more for their money.

Tax Efficient Savings

The annual allowance that a saver can invest in an NISA without incurring tax on their nest egg in 2014-15 is £15,000 per year, and it can be divided between cash and stocks and shares, depending on your preferred method of investing.

While most cash ISAs are free to open, a stocks and shares ISA will normally incur a service fee.
It is also important to remember that high value stocks and shares portfolios can still face capital gains tax and taxes on dividends.

If you invest in shares heavily, it is essential to check the overall annual cost of your ISA, as monthly charges over time can stack up.

Savings Check

No broker, fund manager or financial advisor is a better guardian of your wealth than you are, since you are the person who cares the most about your savings.

As such, the only way to build your personal wealth is to keep a close eye on it and carry out at least an annual savings audit.

Checking up on your rate of interest, return, and any costs that might be associated with the account you have is vital.

Money is easily lost by simply assuming that it is in safe hands or that your NISA is working for you as hard as it can.

Best rates available coming up to end of tax year

The end of the tax year starts to resemble financial products ‘Black Friday’ as we move into February and March.

Banks and building societies know that you are likely to be scrutinising your investments and they offer attractive deals in the hope they can poach your custom.

With this in mind, don’t simply settle for the first NISA that comes your way, you are in a buyer’s market and you afford to hold out for a good offer.

These market conditions are unlikely to emerge for a further 12 months so it’s important to make the most of them while they last.

Maximise your investment for this tax year

If you feel you missed valuable opportunities in the past twelve months to keep your hard earned personal wealth safe from the predations of the tax man, then the end of the tax year is a perfect opportunity to make a difference.

By being proactive about managing and monitoring your savings and shifting money out of NISAs that aren’t performing into ones that are, you can save a considerable amount on larger investments.

If you are committed to making your wealth count in the coming twelve months why not seek some professional financial advice.




How To Build Your Children’s Nest Egg

Friday, December 19th, 2014

Our Guide To Multi Asset Funds

Thursday, December 4th, 2014

fb - Multi Asset FundsThe popularity of multi asset funds as a means of investment has grown in the past five years. The recent financial crisis has led to periodic crises and underperformance in a range of markets so funds that diversify have become more appealing.

The Investment Management Association classifies a multi asset fund as an investment product that diversifies, holding a minimum of 20 percent of its value in shares and a maximum of sixty percent in shares. It must have at least 30 percent invested in fixed income such as corporate and government bonds, with a minimum of 60% in established currencies, of which 30% must be in sterling

Previously, these funds existed as balanced funds, divided between shares and bonds. A multi asset fund offers more than simply a binary division between shares and bonds, and some investors believe this might be advantageous as the world economy is still highly volatile.

A very flexible fund in uncertain times appears to offer investors both rewards and security but it is important to examine the charges that apply to each fund and also the costs that the fund will incur switching from shares and bonds to other investments.

A fund manager will naturally be keen for you to take up the investment opportunity he is presenting you with, but no matter how attractive and versatile a multi asset fund sounds, you need to be able to question whether or not you or the fund manager gets more out of the deal.

The charging structure should show this. With a multi asset fund there may well be more to charge for, though you might also find that even with these increased costs the investment still makes sense.

As with all types of investment there are multi asset funds to suit different needs.

Some will spread risk more evenly and offer returns based on a lower level of potential volatility, others suit the more seasoned investor.

You will probably hear a lot more about multi asset funds in the coming months. The UK has become the fastest growing market for the funds in the last year after recent reforms to the investment landscape made other policies less lucrative to investment firms.

It is therefore a good idea to explore your own personal needs with a financial advisor before you make any major financial commitments to one fund or another.


What We’ve Learned About The Psychology Of Investing

Friday, November 28th, 2014

fb What We’ve Learned About The Psychology Of InvestingThere is a theory that there are two ugly emotions that dominate our internal workings when it comes to any kind of financial decision; greed and fear, although this is an oversimplification certain lessons can be taken from this theory.

As naturally acquisitive creatures we are hard wired to want more resources for ourselves but this desire for more (greed) is balanced by a reluctance to be exposed to excess risk (fear).

We constantly walk a tightrope between these two forces and this balancing act determines our investment decisions.

This article is a helpful guide to explore what psychologists have learned in recent years about the hidden motivations behind our investment decisions.

Too Good To Be True

What human beings like more than anything else is congruence – this means that the real, external world needs to be similar, if not identical to the world created in our heads.

If we think we are clever and popular but the reality is that we are disliked, this incongruence can be very difficult to bear.

When we see something that looks like a good investment and we become convinced it will make us a fortune, we will often edit out information to the contrary.

If it doesn’t fit the mental map we’ve already created (or someone has created for us), we can often dismiss it. This is how scam artists succeed; they work with what you’ve already chosen to believe.

It is important to recognise that all human beings tend to fool themselves about the nature of the world around them and this tendency is amplified in investment decisions.

Editing The Past

Creating a happy story about past decisions is also a common human trait. We all have to have a positive tale to tell ourselves and others about how clever we are; we are social creatures and need to constantly be demonstrating value (whether real or imagined).

Therefore when we look at past decisions we will often see the positive and ignore past errors or losses.

Similarly, we will only see what we choose to see (unless we are very careful), when assessing future investments.

The fearful mindset can often be replaced by over confidence. Some investors with a track record of successes come to believe their own myth and become convinced that everything they have the ‘Midas Touch’ – everything they touch turns to gold.

Not only do they forget that King Midas’s magic touch was in fact a curse, but they also forget the simple fact that no one is infallible and errors can and do occur all the time. Far better to accept you might be wrong and avoid errors if possible.

Herd Thinking

The Wall Street created a huge stock market bubble and encouraged people to throw good money after bad into stocks with imaginary share values.

People did so because they saw friends, neighbours and strangers seemingly making pots of ‘magic money’ out of thin air. Few stopped to question where this cash was coming from they simply handed over their life savings in the knowledge that all would be well.

It is important not to follow the herd blindly (sometimes the herd is right, sometimes it is wrong), you need to draw your own conclusions as to whether an investment is right for you.

Spending In The Now

Our evolution has conditioned us to spend in the now. As hunter gatherers we had little idea about where our next meal would come from and so consuming as soon as we happened upon food was the key to survival.

Saving for the future for many of us is the delaying of gratification, but it often is the determinant factor between those who retire rich and those who retire poor.

If you don’t want to be dominated by your hidden drives when it comes to investing, it might be an idea to speak to a financial advisor.



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