Help to Buy ISA’s

Another boon for the first time buyer in Chancellor George Osbornes latest budget was the new Help to Buy ISA for first-time buyers which will allow the Government to top-up by £50 every £200 saved for a deposit from this Autumn. You can save up to £200 every month and the Government will add 25% on top. You can also start it off with an initial £1,000 which will have £250 added on top of it. The Help to Buy ISA offers relief on the money made towards a house deposit ,the minimum you need to have saved to get the bonus is £1,600 (so a £400 bonus), and the maximum the Government will contribute is £3,000 (which would means you will have saved £12,000).

But couples buying their first home together who don’t want to wait four and a half years to get the Government’s full £3,000 relief on a Help-to-Buy Isa should open an account each.  By doing this they can save the same sum in less than half the time - but both parties need to be first time buyers.

In many way this is equivalent to letting you save for a home deposit from your pre-tax income as the 25% on top is equivalent to the tax a basic-rate taxpayer would pay. To get a £3,000 top-up at the earliest opportunity an individual would need to save £1,000 from opening and £200 every month for 55 months. And a couple each saving the maximum initial deposit of £1,000, followed by the maximum monthly deposits of £200 would get the £3,000 top-up in 25 months.

The Help to Buy ISA will be available through banks and building societies and rates will be set by them and differ just as with other cash ISA’s so  you will earn interest like a normal cash ISA as well as getting the bonus at the end.

Your home could be at risk if you do not keep up your mortgage repayments

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Buy-to-let versus a second mortgage

At Enable in Bishop’s Stortford our IFAs are often asked about buy to let (BTL) as opposed to a second mortgage as BTL loans are not regulated as residential mortgages because landlords tend to be viewed as business borrowers. This means you cannot use a standard BTL mortgage on a property that you or a relative will live in.

Before April last year, when the Mortgage Market Review (MMR) was introduced, about half of lenders that offered BTL mortgages also offered a 'regulated' BTL loan that allowed you to name family members as tenants. "The problem is that with a regulated buy-to-let loan you must declare how much rent your family tenant will pay", says Alistair Hargreaves, mortgage and protection consultant at adviser John Charcol. "Lenders worry that if your tenant is your child or parents this is not fixed and sometimes you may have to help them out with rent. With an ordinary tenant, if they can't pay you can turf them out but you're not going to leave your elderly parents on the street. Lenders consider this could put extra strain on people's finances and it's a risk they don't want to take."

With a buy-to-let loan, you can claim tax relief against mortgage interest payments, as well as the running and maintenance costs of the property. Second residential mortgages, on the other hand, can land you with a significant capital gains bill. Alistair Hargreaves, mortgage and protection consultant at adviser John Charcol, explains: "Say you bought a cottage in Saffron Walden for £300,000 for your older parents that in the next five years goes up to £450,000, at which point you need to sell it to pay for care costs. This is not your main home, so you will be hit with capital gains  for the increase in property value. The same could be said if you bought your student child a home while he or she was at university."

Some joint borrower, sole proprietor mortgages are offered by Woolwich. "This type of mortgage lets you put the property deeds in the name of the occupier, while you are still the mortgage holder for the purposes of having your credit file checked and being liable for the monthly payments," says Hargreaves. "This means that the property is sold only in the parents' name, so there's no capital gains liability."

Enable’s independent Financial Advisors can try and help you find the right deal for you.

Your home could be at risk if you do not keep up your mortgage repayments

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Owning your home outright

As more and more people now own their homes outright, Enable’s IFAs in Bishop’s Stortford wonder what kind of effect this might be having on the market as a whole? To have that choice, of owning your home outright is a privilege that may seem inconceivable for younger generations, even though many people are paying down their mortgage debt rather than leave their savings to gather dust in a bank account. "Leaving money in savings is terrible at the moment," says Nick Hopkinson, director of property company PPR Estates.

Part of the reason behind more people owning outright is simply to do with an aging population who have owned homes through several generations. As Kate Faulkner, director of PropertyChecklists.co.uk, points out: "We have now had several home-owning generations, so people are inheriting homes outright, helping to pay off their debts or their mortgage early" which also contributes to the higher number of debt-free homeowners.

"Cashed-up owners", as Ben Podesta from Domus Nova estate agency describes them "create two opportunities for the sales market. One, they downsize, which means selling and buying – helping the movement of properties. Two, they give money to their offspring, which then have no need for mortgage or are able to buy a bigger first property." The famous 'Bank of Mum and Dad' phenomenon is completely intertwined with the increasing numbers of older, mortgage-free home-owners who are able to help the next generation. Some believe it is partly why property prices have continued to rise since 2000, as money from that equity allows younger people to afford the higher deposits required.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

More essentials of pension planning...

With major pension changes on the horizon for pensions that will increase their tax effectiveness after April Enables’ IFA's in Bishops Stortford can help you get your pension arrangements in order.  Some of the things to consider before the changes come in to effect include making sure you have found all your old pension scheme entitlements. The government estimates that millions of people may have lost track of old pensions amounting to a staggering £3 billion. 

 And have you considered using 'salary sacrifice' for your pension contributions t is a well-established way of saving tax and NI while making a pension contribution, essentially you agree to take a lower salary, and the amount you have 'sacrificed' can be paid into a pension fund for you by your employer. The advantage is that both you and your employer pay lower NI so you save both tax and NI straight away – and have a potentially larger pension later on.

Another thing you may not have considered is paying into pensions for your children or grandchildren.  You can put money into pensions even if you do not pay any tax at all, or invest on behalf of someone who is a non-taxpayer – and still get tax relief. Anyone can put up to £2,880 into a pension fund every year and receive 20% tax relief from HM Revenue & Customs, taking the total going into their pension fund up to £3,600. Whether it is for your children, your grandchildren or a partner who isn't earning at the moment.  Another thing to note from the Budget it that from next year, the pension pot lifetime allowance is going to be reduced form £1.25million to £1million.
Enable’s IFA’s are happy to talk you through your options.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Flexible Saving with cash ISAs

In the budget Enable’s IFA’s also note with interest that the ISA Annual savings limit has been increased again this time to £15,240 and fully flexible ISAs are going to become available from the autumn. Fully flexible ISAs will  leave savers free to withdraw cash without losing the tax advantages, provided they pay it back into the ISA before the year end. This will mean savers can treat their cash ISAs a bit like a savings account, dipping into them if they need or want to. Danny Cox, chartered financial planner at Hargreaves Lansdown says however, "The average person pays less than £4,000 into a cash Isa each year. "From April, the allowance will be £15,240, so they can withdraw money and still have plenty of allowance left."  The new Help to Buy ISA for first-time buyers allowing the Government to top-up by £50 every £200 saved for a deposit has also been put on the table.

 There is some discussion however about what will happen when interest rates do finally rise meaning some of the benefits for savers will not be long term. Danny Cox says: "If rates rose to 4 per cent, basic-rate taxpayers with £25,000 of savings would breach the £1,000 allowance, while a higher rate taxpayer would pay tax on savings above £12,500." He says “this highlights the continuing benefits of cash ISAs, especially for 40 per cent and 45 per cent taxpayers, because you will never pay income tax regardless of how much interest you earn from them.”

It is also important to remember cash ISAs are issued on an individual basis, so couples can double up their allowances. Mark Wood, chief executive at JLT Employee Benefits, says remember: "This year's £15,000 cash ISA allowance is issued per person, so couples can save £30,000 together, "And from April 6, they can each save another £15,240 in cash ISAs, making a total of £60,480 in just a matter of weeks."  In the future, only a tiny number of wealthy savers need ever pay tax on their savings interest.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

New changes to tax on savings...

Enable’s IFA’s in Bishops Stortford are keen on saving; small regular savings and compound interest is the bedrock of wise financial planning. So it is good to see that after six years of rock-bottom interest rates for savers they will finally have something to celebrate. In Chancellor George Osborne’s 6th Budget last week he announced that most people will not have to pay tax on the interest they earn on their savings in a year. He said basic rate taxpayers can receive up to £1,000 of “savings-interest” free of tax from April 6 next year, this however will fall to £500 for higher--rate taxpayers and will not apply to the 45 per cent band.

Essentially this means that most people with savings will not be paying any of the interest made on their savings to the taxman. His decision, to make the first £1,000 of savings interest tax-free should lift 95 per cent of savers out of tax and about 17 million savers are expected to benefit. Anna Bowes, director of rate tracking service Savings Champion, says current low interest rates mean basic rate taxpayers can build up large sums before paying any tax at all: "Savers could deposit more than £66,000 at a rate of 1.5 per cent from 2016 and take all their returns tax free or £33,000 in a fixed rate account paying 3 per cent."

There was also good news for non-taxpayers, with interest that is paid gross many banks and building societies currently automatically deduct 20 per cent tax of the interest paid on standard accounts and no-taxpayers have to complete form R85 to claim this money back. From April 2016, banks and building societies will pay interest gross without deducting 20 per cent tax so there is no paperwork to do.  If you want to look at your saving options Enable's IFA’s in Bishop’s Stortford are here to help.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

What does it mean to choose investment trusts?

Our experienced Independent Financial Advisors at Enable in Bishops Stortford tend to recommend more passive investments. But we also know that Investment trusts are a highly popular and well-established way of investing for wealth management. An investment trust is essentially a public limited company with shares quoted on the stock market. When you invest in an investment trust you as good as become a shareholder in that company, they tend to primarily invest in the shares of other companies but some contain bonds or other financial assets a common one being commercial property.

For some an investment trust is an excellent way of gaining access to the potential rewards that active management of a stock market investment can offer – without needing to constantly monitor and manage your portfolio. These trust pools your money with that of other investors and professional fund managers invest this in a wide range of different companies. So even if you only have a small amount to invest, you can gain exposure – cost-effectively – to a diversified and professionally-run portfolio of shares and your risk is also spread much more than if you were reliant on the success of one or even a handful of companies.

There are also some tax advantages when an investment trust sells shares, it is not taxed on capital gains it has made, unlike direct investment made by private investors. Historically over the longer term investment trusts have delivered but past performance is not a guide to future performance. The value of investments in the stock market can go down as well as up and you may not get back your original investment.  If you are interested in finding out more about investing your savings Enable’s IFA's are here to help.




Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

What will you be if you are mortgage-free?

As more people are owning their homes outright, Enable’s IFAs in Bishops Stortford wonder if you are mortgage free how are you intending to use that freedom in your later years.

If we continue along the same home ownership path that was indicated in the 2011 census, even  more of us will own our homes outright than have mortgages.  Currently about eight million people own their homes without a mortgage, which represents £2,000 billion worth of property and 38% of the total value of the housing market. The top three regions with the highest proportion of owners aged 60 and above, who are also most likely to have paid off their mortgage, according to the Office for National Statistics, are East Dorset, East Devon and North Norfolk. The three areas with the lowest rate of outright owners are all in London - Hackney, Tower Hamlets and Southwark.

Many of those mortgage-free homeowners will be people who took out loans on their properties in the 1970s and 1980s and are now reaping the big financial rewards of decades of house price growth.  They have been dubbed some interesting names ; MIKIs (made it, keep it) are "terribly sensible people who have done well but are determined to pass it down"; the GUTS (gear up to spend) are those who make the most of 'cheap' money to buy holiday homes and boats; the WIFS (wealth is for spending) tend to be the downsizers who intend to enjoy their retirement; and their like minded SKI-ers (spending the kids' inheritance) also like to spend lavishly too. If you are mortgage free but want to make some plans as to how best use that freedom Enable’s IFA’s in Bishop’s Stortford can talk you through your options.


Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Why we all need a pension

Enable's IFAs in Bishops Stortford regularly ask their client when they are thinking about their monthly spending, how much time do they devote to retirement saving. More often than not people are a bit more focused on the short term, whether they can justify dinner out at the weekend, holiday plans, changing cars or doing work on the house.

According to research from Blackrock, UK savers are primarily focused on saving for a rainy day (32%) or holidays (29%) and spend more time planning trips away and new purchases than they do on their retirement. But the same research indicated that we have high expectations of our retirement, 39% of people want to take frequent holidays once they give up work, 27% want to spend time with the grandchildren and 27% want to take up a new hobby.  It is very easy to have grand plans for retirement but not so good if we are not ensuring we will be able to achieve them.

On top of all the challenges of retirement saving there is the added issue of increasing life expectancy: it is good news from a lifestyle point of view but financially it's a bit of a  double-edged sword - if you are going to have a longer retirement, you are going to need more to support it. Peter Quinton, head of annuities at Retirement Assured has pointed out: "Our income needs to last much longer as we are living roughly two years longer for every decade that passes." According to the Office for National Statistics, a 65-year-old woman today can expect to live for more than 20 years, until they are on average 86.1 years old. For men that age, the figure is slightly lower at 83.5 years old.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE 

Using property for retirement plans?

At Enable our IFA’s many recent surveys suggests that one-in-three people plan to use property to pay for their retirement, one set of research revealed that a third of those if spoke to plan to live on income generated by investment properties, while a little more than half said that they would sell their own home to fund their retirement. Patrick Connolly, an IFA said "People are either able to sell their main property and downsize when they get to retirement or buy additional properties and rent them out."

There are lots of reports and surveys that suggest landlords have been enjoying stable yields over recent years, with returns above the low interest rates on savings account. Capital values have of course also been rising too over the last bit of time, encouraging that very British tendency to trust in property.

Despite some of the current figures however, relying on property to keep you warm in retirement could be a risky strategy. "It should be remembered that property prices can fall as well as rise and this will be a real danger when interest rates start to rise and mortgage payments become that bit more expensive." For landlords there is also the risk that you'll have periods where your property is empty, so you would have to find the money to pay the mortgage if there is still money owing. You also need to be prepared for the costs and hassle associated with managing a rental property.

From an investment point of view it is always good to diversify, diversify, diversify. Pensions allow you to invest across a broad range of asset classes, and thereby spread your risk, if you want to talk about diversifying for your retirement funds Enables IFA’s in Bishop’s Stortford are happy to talk it all through.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Bonds have their own language

Most financial plans and investment wrappers involve Bonds in Enable’s IFA’s experience. While bonds work in a fairly simple way, there is actually quite a specific vocabulary that explains exactly what they do and is useful in the understanding of your financial investments.

The first word is coupon, this is the interest rate that investors are paid on the bond – the name originates from the time when physical bonds came with a coupon attached that you would rip off and hand in to get your interest.

Another word to understand is maturity – and you will also see “redemption date” to explain when you are due to get your initial investment back so long as you bought the bond when it was issued. If a bond matures, or has a redemption date in 2025, that is when you would see repayment.
If you don’t want to hold your bond until maturity it is possible to trade it on the Stock Exchange. Trading it gives rise to two more bond related turns of phrase one is par. If a bond is trading for more than the amount originally invested in it – for example a £1,000 bond trading for £1,200, it is “above par”, and if it is trading at £900, it is “below par”.

Yield is the other word you will hear which is the rate of return. While the coupon is a fixed percentage of the bond’s par value, the yield fluctuates as the trading price of the bond goes up or down. The bonds’ values themselves go up and down in value if you trade them on the stock market, so the value of your investment can go up or down. Enable’s IFA’s in Bishop’s Stortford can help you will the language of wealth management and your investments.





Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Know about your pension investments

In the run-up to the new pension rules being introduced in April 2015 it is worth knowing more about your pension investments. Recently Enable’s IFA’s in Bishop’s Stortford noted that “Two thirds of people contributing to a workplace pension scheme do not know which funds they are invested in, while close to a fifth have no idea what percentage of their salary they contribute to their pension.” as part of the results of a Moneywise.co.uk survey of 830 people.  It seems to suggest that lots of people do not have a firm understanding of their pensions - even when they are contributing to a workplace scheme.

The survey also found that: of the 34% of people who know which funds they are invested in, 36% researched the funds online, 30% used their pension provider's literature and website, 20% stuck to the default fund and only 18% used a financial adviser.  The survey respondents contributed an average of 6.19% of their salary to their pension scheme each month, but a third said they contributed 5% or less, while just under 14% contributed 10% or more - and 16.5% had no idea how much they pay in to their scheme. Just under a third of people (29.98%) did not know how much their employer contributed to their workplace pension scheme. But 16% of respondents said their employer paid 10% or more of their salary into their pension, while 10% said the employer pays 5%.

With so many people not knowing what they are invested in or how much they are investing, it's clear there is a need for independent financial advice when it comes to pension investing. If you are concerned to make the most of your retirement and want to make the most of the new pension regulations Enable’s IFA’s in bishop’s Stortford are here to help.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Might a second mortgage be a worthwhile investment?

A quarter of people aged between 20 and 34 are still living with their parents, having been priced out of the property market, according to charity Shelter. Enables IFA’s in Bishops Stortford have noted that as a result, there has been an increase in the number of people opting to take out a second residential mortgage to buy an investment property that doubles up as a way of helping a family member move.

 Andrew Montlake, brand, marketing and communications director at broker Coreco, says: "A second mortgage can work very well for those who have good incomes and are looking to buy a property for a dependent relative. Borrowers are also using this to help their children to get on the property ladder with a joint mortgage. "He adds: "I recently arranged a loan for a client who was a partner in an accountancy firm and wanted to buy a property for his parents to live in. Given their age, this was proving difficult for them to do themselves. As affordability was not an issue for him, it was a good option for everyone. And as the son owns the property from the outset, there are no inheritance tax issues in the future".

A second mortgage works very much the same as any other standard regulated residential mortgage would, and most lenders will offer those looking for a loan for a second home their standard product range to choose from, with the same interest rates and fees. However, they may cap their loan-to-value (LTV), or have some extra-strict affordability criteria. Your lender may also require you to declare if your family member will live in the house and ask them to sign an occupier's consent form. If you might want to consider how to manage a second residential mortgage Enables IFA’s can talk you through your options.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

How much cash should I hold?

Enable's IFA’s in Bishops Stortford tend to recommend that everybody should hold at least some of their money in cash,  for nothing else than to cater for any short-term emergencies or requirements to avoid the need of going into debt but few cash accounts pay a rate of interest that beats inflation.

Financial experts agree that people should put aside a minimum of three months of earnings to cover themselves in case of an emergency such as job loss, six months may give more of a cushion.
But how investors hold cash in their portfolio depends on your personal circumstances. Cash Isa’s still have their place and deposits of cash made by most private individuals in the UK with all UK banks and building societies are covered under The Financial Services Compensation Scheme (FSCS); this scheme guarantees deposit balances in savings accounts, cash Isas and current accounts up to £85,000 per person per financial institution in the event of such an institution becoming insolvent and unable to repay depositors. Those with joint accounts each have a separate £85,000 limit. However, the FSCS protection is per institution rather than per account, so multiple accounts at one bank will still be guaranteed only for a combined total of £85,000 per person.

Sean McCann, chartered financial planner at NFU Mutual, points out that while savers can benefit from security in absolute terms if they hold money in cash, with interest rates still at historic lows, they are continuing to lose money in real terms. “Although cash accounts in banks or building societies are relatively low-risk, savers will struggle to find an account that pays out a rate of interest that beats inflation,” he says. You should keep in mind when saving that the real value of your cash (that is what you can buy with it) can fall with inflation, even though you will get back its nominal value. Enables independent financial advisors can help you manage how much cash to keep and where.




Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Who will inherit your pension fund?

With major pension changes on the horizon, that will increase their tax effectiveness when they are implemented in April, Enables’ IFAs in Bishops Stortford can help you get your pension arrangements in order. 

Some of the things to consider before the changes come in to effect include:

Have you made sure you have given your pension fund manager the name of the person who will inherit your fund? Now, in most cases, your unused pension funds can be inherited free of tax.
The chancellor has tipped the tax scales in favour of pensions by doing away with the 55% death tax charge. Until the changes where brought in (unless you died before age 75 without touching your pension fund, or you passed on your fund as a pension to your partner), 55% of the pension assets in your personal or money purchase pensions went to the taxman.

But you have to have told your pension company whom to pass your fund to. Otherwise, the remaining money will go into your estate and will be subject to inheritance tax. So make sure you contact your pension company to nominate your beneficiary.

You might also want to check if you can contribute more into a pension particularly if you are a higher-rate taxpayer, pensions are probably the most tax-efficient form of savings if you are in this tax bracket and especially if you are near or already over age 55. If you have not yet reached your £1.25 million lifetime limit, and not contributed the full £40,000 annual allowance, you can put more into your pensions by using up any unused allowance from the past couple of years. As long as your earnings are high enough, you can take advantage of the tax relief and the very favourable inheritance tax benefits. Perhaps you should consider moving other savings into pensions to build up a bigger fund for the future. Enables IFA’s are happy to talk through your options.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE