Remember it’s ISA time of year...

An Individual Savings Account is a tax wrapper around a savings or investment product which means that the interest you get is not taxed.  The system started in 1999 when the then-chancellor Gordon Brown suggested it would encourage people to save. And they have proved popular. About a third of the UK adult population have a cash ISA. They collectively have £158bn saved in these accounts.  Even at the height at the financial crisis, there were 11.3 million new cash Isas opened in 2008-09, with £28bn paid into them.

The ideas is that in times of low interest rates, the government wants more reward for those who have saved.

Over the years ISAs have become gradually less complex but it can still be worth consulting experienced IFA’S like Enable of Bishop’s Stortford to make sure you are getting the best out of your ISA allowance. Each tax year everyone aged 16 or over for cash ISAs or 18 for stocks & shares ISAs, has an ISA 'allowance' which sets the maximum that can be saved within the tax-free wrapper from April to April.

The current limit is £10,680, up to £5,340 of which can be in the form of cash or all of it in shares.
You can put £5,340 into a cash ISA, leaving £5,340 available to fill with shares or you can use it all for shares. You are allowed to invest in £10,680 worth of shares. However this leaves no room for tax-free cash savings. Many prefer to mix and match meaning some amount under £5,340 can be saved in cash, then the rest of your £10,680 allowance put in a shares ISA.

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Getting a mortgage for the first time...

Experienced IFA’s like enable of Bishop’s Stortford have notice that first-time buyers have been helped along by an increase in the number of mortgages available to borrowers with small deposits. This began in 2011 and has continued into 2012 there have been many lenders offering 95% deals.

According to the Mortgage Advice Bureau, the number of 95% loan-to-value (LTV) deals currently open to first-time buyers is at a four-year high, with 59 deals available from 21 different lenders.
This compares with just 25 in February 2011, nine in 2010, and three in 2009.

Liza-Jane Kelly, sales director of estate agent Marsh & Parsons, said that while stamp duty was driving sales, an increase in lending at higher LTVs was also a factor. "The number of higher LTV mortgage deals is slowly increasing, and while criteria still remains a problem first-time buyer demand for finance is by no means dead and buried," she said. "With rents rising and average mortgage rates so low, many see now as the ideal opportunity to get on to the property ladder."

Eddie Goldsmith, chairman of the Conveyance Association, said it wasn't too late for buyers who wanted to beat the deadline, "but time is running out". Buyers should make their solicitor and the property seller aware from the outset that they wanted to complete by 24 March. If you are looking for the best mortgage deal to beat the stamp duty Enable of Bishop’s Stortford can help.

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Get on the ladder before stamp duty goes up...

The number of mortgages taken out by first time home owners increased in December 2011 the latest figures show. Experience IFA’s of Bishop's Stortford, Enable can see that more firs-time buyers have been trying to get on the ladder before the stamp duty holiday on properties costing up to £250,000 changes.

Since March 2010, first-time buyers purchasing properties costing between £125,000 and £250,000 have not had to pay any stamp duty at all it was a move by the government designed to kick start the flagging housing market but from 25 March 2012 first timers will pay 1% on those homes in that price bracket.

Figures from the Council of Mortgage Lenders (CML) indicate that buyers are buying with the intention of beating the deadline to save money. With the average first-time buyer spending about £130,000, buyers typically stand to save £1,300. In December 2011, 18,700 mortgages worth £2.3bn were advanced to first-time buyers, up 7% by volume and 10% by value on November's figures.
There was also an increase in the proportion of properties bought by first-time buyers within the exempt price band from 50% to 53%, a statistic the CML said “suggested they are beginning to rush through purchases before the concession ends in March".

The CML's director general, Paul Smee, said: "We have been expecting a flow of first-time buyers on to the market as the stamp duty exemption ends in March; December's figures appear to show this has now begun.”

If you want to buy before the stamp duty goes up Enable IFA’s of Bishop Stortford can help you with your mortgage, as we have access to the entire mortgage market.

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The UK is not in the euro, so why are we affected?

This is one of the frequently asked questions asked of Independent Financial Advisors up and down the land.  IFA’s at Enable know that even though the UK is not in the euro, it has still been lending money to troubled economies as part of bail-out packages. With various countries in Europe needing financial help to deal with the debt crisis, there is always a tab that needs to be picked up somewhere.

For example, the UK has contributed more than a billion euros to the European Financial Stabilisation Mechanism. This has been used for loans to bail out the Irish Republic and Portugal. The UK's maximum possible contribution is 7.5bn euros (£6.5bn). There is also the UK's loan to the International Monetary Fund (IMF) - more than 10 billion euros a year - that is also used to fund the bail-outs, although it is paid interest on this. The UK also made a bilateral loan of £3.2bn to Ireland, because it is seen as such a key trading partner.

The trouble is that slowdowns in economies across Europe means less trading between these countries and the UK which in other words slows down our economy, meaning they are less likely to buy things made, and services provided, in the UK, and things the UK buys from them could become more expensive in the long run. Enable are here to help you talk through any of your investment worries.

Annuities at the moment

It is common practice as you enter retirement to pull out of the stock market and buy an annuity and   it is usually best to sell shares at the top not the bottom of any cycle but thing do not always go to plan as we know in the financial world, that is where the experience of independent financial advisors like Enable really comes into it’s own.

At the moment the annuity you can get from an insurance company is being affected by the way major investors act. Unfortunately annuity rates being offered can be affected by investors who, worried about global shares, are looking to buy safer investments instead. They are going for gilts, so the price of those is rising and the yields falling. This, in turn, affects annuities and as a result, insurance companies have cut income paid by annuities, according to Billy Burrows, of the Better Retirement Group.

Employees with a workplace final-salary pension are of course better protected from stock market volatility. It is still not really clear how long this volatility will go on for. But financial advisers are suggesting that small investors sit tight at the moment. "People should be looking at the long term," says Adrian Lowcock, a senior investment adviser." Mr Gadd says he expects volatility for six months, so investors should ensure their portfolio is diverse. Remember weak markets often offer buying opportunities." As experienced IFA’s we at Enable always suggest as diverse a portfolio as possible.

Investments - It’s never a good time to panic...

Experienced Independent Financial Advisors like Enable always explain that most investments are generally for the long term, so the current short-term fluctuations should not worry people too much. People who invest directly into the stock market can log into their account and see how their valuation might have dropped but is it really worth the stress with daily, and weekly fluctuations?

Most people only get an annual update on their investments and keep their money in for many years - either for their retirement or to hand down in inheritance. Looking too often is not necessarily a good thing , "This could lead to some panic. People do not pay so much attention when values go up," says Anna Sofat, of financial services company Addidi.
"They should not risk selling out at a time that is not good for them."

Andrew Gadd, head of research at the independent financial advisers, the Lighthouse Group, says: "People should not be panicked out of the market ."Even if you are about to retire there are things you can do, granted  the current situation is probably most acute for those with personal pension funds and on the cusp of retirement. They will be looking to pull money out of the stock market in looking to buy an annuity - a pension income for the rest of their lives.  At Enable our experienced IFA’s never think it’s a good time to panic but it is always a good time to talk through your options.

Volatility in the markets affects us all

We have always know it…..

All those red numbers on stock market boards and ups and downs of the FTSE100 may appear to be a strange and mysterious mix of data to many and we often think it has little to do with us especially when  in the third quarter of 2011, the FTSE 100 index in the UK recorded its worst quarterly performance since the same three months in 2002, and the fourth worst quarterly performance since it was launched in 1984 so we really don’t want to think about it.

Experienced financial advisors at Enable know that it has always been the case that investments can go down as well as up.  It is unfortunate that  this volatility can affect anyone with a pension, those considering retirement, savers with Individual Savings Accounts (Isas), and even money set aside by families for the cost of children's university education..Millions of people in the UK also have money put away in a stocks and shares Isa.  A total of £108bn is invested in these Isas in the UK.

It has always been the case that these investments can go down as well as up in value, and anyone hoping to cash some of this in because they are financially stretched will be most  likely to take a hit.
But at Enable we know that most investment are for the long term and so these short-term fluctuations should not worry people too much. If you want to talk through your investments with an IFA Enable are here to reassure and invest.

Making sure your assets are well spread...

It was interesting to see in the Cambridgeshire news that “The Cambridge ‘Bank’ is at last properly open for business and offering up to 5% return on your cash. It is called The Cambridgeshire Provident Society and is accepting applications for investment in its ‘Sunshine Shares’, which are all about solar power.

CPS is a mutual, rather like the old building societies, according to prime mover Peter Dawe, who created the country’s first internet service provider and became a multi-millionaire in the process. “Being a mutual means that all profits will be donated to local charities nominated by our shareholders,” he said. “Our hope is that there will be hundreds of thousands of pounds in profits to distribute in a few years.” “We believe our launch interest rate of 3% is competitive with commercial offerings, and where investors benefit from EIS tax relief, the rate of return can be equivalent to over 5%. Our aim is to raise £20m in this fund within a year.”

 “Our hope is to redefine how and where people put their savings. Once again it looks like Cambridge will be the pioneers in ‘The New Capitalism’, even if it is actually 19th century ‘Mutualism’.”

As Independent Financial Advisors we at Enable like to see a full complement of investments in anyone’s portfolio.  It is always good to see a local business having big ideas and energy will be vital to all of our future well being and viability.

Did you make any financial resolutions for 2012?

With the economic situation still not looking too bright it is probably wise to make some plans to try and improve your finances, remember the help of an experienced financial advisors like those at Enable could come in handy, even if you are making some of the following adjustments.

A YouGov survey found that the top 10 financial resolutions for 2012 were:

1. 56 per cent of people are planning to cut back on their spending, particularly women
2. Over a third (37 per cent) are going to save more money each month     
3. Similarly, 36 per cent of people hope to reduce their debts                    
4. A small percentage (19 per cent) are going to look for a better paid job to boost their income
5. For 12 per cent of people, ensuring they have the best insurance cover available is a priority
6. While 12 per cent will be cutting down on insurance costs       
7. Just over a tenth of people are keen to shop around for financial providers so they will pay less in charges (11 per cent)
8. And under 10 per cent are going to focus on starting or upping their pension contributions (9 per cent)
9. Eight per cent are going to take more control over investment decisions
10.  And 6 per cent will be switching their bank account
Paying off the mortgage, supporting elderly parents financially, moving house and taking out life and income protection insurance all got votes but didn’t quite make the top 10.

IFA’s at Enable are experienced  at helping people make more that resolutions.

What to do with your savings

Some campaigning groups reckon news of a savings gulf between Britain and stronger world economies comes after analysts at the National Institute of Economic and Social Research warned that the UK is in the midst of recession again. In stark contrast, China's economy clocked up 8.9 per cent growth in the final three months of 2011. Germany, Europe's largest economy, grew 3 per cent last year. It is expected to grow 0.7 per cent in 2012 in spite of the Eurozone debt crisis plaguing the continent.

Rose, of Save Our Savers, says: 'For three years savers have been sacrificed to prop up people who have borrowed too  much money - this sort of short-term political expediency by almost completely blind politicians is putting at risk everyone in the country. 'He says MPs and power-brokers at the Bank of England, which has held rates at an all-time low 0.5 per cent since 2009, must do more to stimulate saving in Britain. This might include suspending income tax on savings, boosting the tax-free savings limit, or hiking rates.

Savers can put up to £5,340 a year into an Isa and earn interest tax-free. The best return is 4.5 per cent from Bank of Ireland. But this still doesn't keep the cost of living, which is rising at 4.8 per cent a year. The effect is to eat away the value of cash over time. If you are worried about the state of your economic affairs Enable IFA's of Bishop’s Stortford can help you work through your options.

Chinese Savers to beat Europe hands down

Greg Coughlan, head of savings at Lloyds, says: 'Despite significantly higher income levels, today's British and German households are both being beaten in the savings stakes by urban Chinese households.' But he adds that China's huge saving rate largely reflects the 'lack of the social safety net' in the form of state pensions and welfare benefits. The average Chinese has the equivalent of £19,000 put aside compared to £5,000 in the UK, a recent study showed. The typical German household has the equivalent of £8,650 - 70 per cent more than in the UK.

It is clear that in the UK families are being squeezed by the soaring cost of living, and have dipped into their pots to make ends meet.  The average Briton's nest egg has shed £600 or 11 per cent over the past year, the research showed. German saving also suffered, falling 5 per cent.

The UK's savings crisis has left nine in ten adults 'stone broke' with no form of saving for the future whatsoever, Lloyds says. This could leave millions of people facing financial ruin if they lose their jobs.  The Chartered Insurance Institute has estimated that Britons are collectively trillions of pounds short of a retiring in comfort due to chronic under-saving in pensions and investments.  Enable experienced Independent Financial Advisors of Bishop’s Stortford know how important savings can be to future planning and are always happy to talk though individual savers needs.

British savers in the doldrums

IFA’s Enable of Bishop’s Stortford have noticed that there has been much in the news about British savers. Many campaign groups have been slamming 'blind' politicians over the damaging low interest rates and claim that the UK saving crisis has been laid bare recently by a report showing that German and Chinese workers are putting  away a vastly greater chunk of their monthly pay-packet.

The slice of income UK workers put into savings, investments or pensions has fallen to just 7 per cent, according to Bank of England figures. In China it is an enormous 47 per cent and in Germany, Europe's strongest economy, workers siphon off 10 per cent - almost half as much again as UK savers.

The gulf between Britain and China's savings ratios is now at an all-time high and may have immediately called on MPs to 'wake up' to the plight of British savers, who have been battered by record low rates since 2009.  Simon Rose, of Save Our Savers, said a higher level of saving in the world's stronger economies is no coincidence. 'Can't our politicians wake up to the fact that most successful countries in the world have a high savings ratio? There is a link and they ignore it at their peril.' He says savers, particularly the elderly who rely on nest eggs for income, have been unfairly exploited since the Bank of England cut rates to a record low 0.5 per cent in 2009 in a bid to prop up struggling borrowers.

Enable can see why savers feel so hard done by so it is important to make every penny work for you our Independent Financial advisors are always happy to talk it through.