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Elena Kale

Oct 02
0

Learning how to make your money work for you…

By | Financial Planning, Latest News | No Comments

Financial Education is now compulsory in all secondary schools throughout the UK (and in some areas, primary schools as well).  Whilst this is a very positive step for school children, there are generations of adults who will not have benefitted from this kind of education and who therefore lack the knowledge to make effective financial decisions during their lifetime.

With 62% of employees aged between 45-54 years not knowing how much they’ll have to retire on* and one in 5 working Brits with no retirement savings at all** , it’s becoming increasingly important for us all to gain a greater education in how to make our money work.  This education could be found in the workplace with 38% of employees claiming they’d consider moving to a business that prioritised their financial training.  Final salary pensions are now a rarity and with the average pension pot standing at £50,000, relying on companies’ auto-enrolment schemes may not provide sufficient income as we’re living longer, with no guarantees that the state pension will offer a future security blanket.

Gaining a financial education will vastly increase individuals’ wellbeing, sleep and stress levels.  Knowing that you’re making a solid provision in later life also provides a level of security and comfort so you can just get on with living your life more comfortably without any nagging worry about the future.

So if you think you could benefit from learning how to make your money work what can we do?

  • We can consider developing a strategy to achieve your long term financial goals, to realise your anticipated lifestyle. This can include your pension, property and other forms of investment
  • It’s possible to avoid unnecessary tax payments by utilising allowances that are very infrequently used. Only 700,000 people in the UK used their Capital Gains Allowance in 2017 to generate tax free returns of £11,300
  • We can advise on how to mitigate the 60% tax rate for earnings over £100,000 p/a
  • It’s important to know the part that pension schemes can play in your longer term financial goals, as well as the legal limitations on pension contributions and the benefits they provide, (e.g. the 55% tax charge on pension funds, in excess of the Lifetime Allowance)
  • There are many benefits and disadvantages to the wide range of investment options that are available to assist you in building capital savings outside a pension fund
  • We can look at ways to ensure maximum capital goes to a family, if they were to die in employment

Being forewarned is to be forearmed.  If we gain enough knowledge to plan early, then retirement can be approached positively.  After all, you don’t know what you don’t know.

*Source: research by LV   http://www.telegraph.co.uk/financial-services/investments/investment-pensions-service/what-is-a-good-pension-pot/

**Source:   https://www.express.co.uk/finance/retirement/787180/pension-crisis-working-one-in-       five-brits-no-later-life-savings

 

Oct 02
0

Millennials warned to plan ahead as intergenerational wealth gap widens.

By | Latest News | No Comments

Britain’s younger generation are likely to get left behind due to debt and high house prices creating an inequality of wealth, according to a new report.

Commissioned by Channel 5, the report revealed that fewer than half of millennials (those born between 1981 and 2000) are expected to own their own home by the age of 45, while debt amongst this group is also rising.  This also poses issues for the children of these millennials who will have no property inheritance passed down to them and a greater need to focus on saving for retirement.

A separate study recently conducted by the Financial Conduct Authority (FCA) found that 25-34 year olds have above average debts.  On top of this one fifth of 25-34 year olds have no savings and a further third have less than £1000.

According to the IPPR (the Institute for Public Policy Research), “every generation since the post war baby boomers has accumulated less wealth than the generation before them and at the same age.  The next generation is set to have less wealth, largely due to housing inequalities.”

Home ownership has been falling across all age groups since the mid-2000s and is at its lowest in nearly 30 years.  For 25-34 year olds, it has fallen from 59% in 2003 to 37% in 2015.  In fact in London house prices are now over ten times the average salary for first time buyers.

This makes it “increasingly hard” for the younger generation to share in the UK’s wealth, according to the report, unless they have “substantial” support from family.  A survey undertaken by YouGov/Royal London, shows a growing intergenerational divide where wealth is held by older generations (aged 75-85) who are keen to pass some of this wealth directly to their grandchildren, split on average between 4-5 recipients.   However, less than a quarter of those aged 25-44 (4 million out of 17 million) will inherit from grandparents, leaving many younger family members excluded altogether from inheritance,  especially as their parents are in many cases already part of the “Generation Rent” with private renters accounting for more than 20% of the housing market.  It is this “sandwich generation” (aged 45-64) who feel under more pressure to pass on any accumulated wealth as they can see for themselves the pressures their children are and will be facing.

Whilst the Government will be called upon to take action over this generational  wealth gap, experts also agree that it is down to individuals to review their savings and focus on building a financially secure future.  Talking to an independent financial adviser such as NLP Financial Management Limited will allow people to explore options they may not have previously considered to enable them to build a financial nest egg to either help with the purchase of property or go towards their retirement in later years.