The 2021/22 tax year ends on Monday 5 April 2022. This is the date when many allowances reset, and it could be your last opportunity to make use of some of them.

Keeping track of how you’ve used your allowances can reduce your tax liability and help you boost your wealth. Reviewing your finances ahead of the tax year end could reduce the amount of tax you pay and improve your financial security in the future.

This guide covers seven allowances and exemptions you should consider making use of to ensure you’re ready for the new tax year:

  1. ISA allowance
  2. Marriage Allowance
  3. Pension Annual Allowance
  4. Dividend Allowance
  5. Capital Gains Tax annual exempt allowance
  6. Inheritance Tax annual exemption
  7. Gifts from your income.

Download your complete 2021/22 end of tax year guide to learn more about these allowances and exemptions. If you’d like help preparing for the end of the tax year, please contact us.

A woman holding a cup of coffee overlooking a green landscape

As we head into a new year, it’s common to think about the changes you could make to your life to improve your wellbeing and reach your goals. Taking steps to instil positive habits at the start of 2022 could set you up for greater wellbeing in the long term.

If you’re thinking about making a resolution this year, listing your priorities now and in the future can help give you some direction and lead to a habit that will have a long-lasting impact. Here are seven positive habits that could help you, whatever your goals are.

1. Create a routine and stick to it

Your daily routine can help improve your mental wellbeing. From setting a regular bedtime to eating at the same time every day, a consistent routine can reduce stress and help you focus on the important things. Finding a routine that works for you and your lifestyle could deliver a health boost.

A routine is also a good way to instil other habits that you may want to adopt. If you want to improve playing an instrument or learn a new craft, carving out a dedicated time each day or week to focus on this can help ensure you give these goals your full attention.

2. Think about what makes you happy

What makes you happy or gives your life purpose?

Regularly spending time thinking about what is important for you can help you make decisions that will lead to a lifestyle that brings your more joy. Yet, it’s something that many people don’t do. According to an Aegon report, only 4 in 10 people think about what gives their life joy.

It can be as simple as thinking about what you’ve enjoyed the most in the last week or what you’re looking forward to, but it’s a habit that can improve your mindset. Making a habit of doing this can help steer decisions to those that will make you happier and give you clear priorities when you think about the future.

3. Increase your physical activity

When your body is healthy, your mental health improves too. Physical activity is an excellent positive habit to adopt that can mean you’re able to make the most of your life. Not only will it improve your physical health, which can help keep you active and independent later in life, but it can reduce stress and leave you feeling happier.

Making exercising, from a brisk walk to swimming, part of your routine is a great way to improve wellbeing.

4. Get outdoors more

Being outdoors can make you happier and healthier, especially if you head to a place filled with nature.

Being surrounded by trees or other natural sights has been found to lower blood pressure and stress. It can instantly boost your mood and improve your focus too. A habit of going for a walk through your local park, or visiting national parks and nature reserves in your free time can improve your mental health and provide a chance to exercise outdoors.

5. Embrace mindfulness

Modern life can be stressful and mean it’s difficult to focus on the present. If you find that your mind wanders to other tasks or plans instead of enjoying the present moment, mindfulness can be a useful practice.

Mindfulness is a type of meditation where you focus on what you’re feeling in the moment. It aims to relax the body and minimise stress. It can help you recognise how emotions are driving behaviours and it can help you make positive changes to your life. Just five minutes a day to practice mindfulness can boost your mental wellbeing.

6. Make time to spend with people

Setting out time to spend with other people can be hugely rewarding.

That may be time to focus on your family and friends or to find opportunities to meet new people. Socialising is good for a variety of reasons. It can not only stave off the feeling of loneliness and boost happiness, but it can help improve memory and cognitive skills. Making an effort to meet up with people physically or stay in touch digitally can make your life richer.

7. Make a long-term plan

Don’t just focus on the changes that could improve your life now, but look at what you want to achieve in the future. It can mean you’re able to look forward to the things you plan to do and relieve the worries you may have. Setting out what life you want to lead in 10 or more years can put you in control.

Despite the benefits, just 1 in 3 people have a concrete idea of their future self, according to the Aegon report. Just 13% of people have a plan to reach money goals that could help them achieve their aims. While you may have a vague idea about what you want your future to be like, a concrete plan means you’re far more likely to reach these goals.

This is something financial planning can help you with. We’re here to help you think about your long-term lifestyle goals and the steps you can take now to ensure you have the financial means to reach them. Please contact us to arrange a meeting.

Terraced houses in the UK covered with snow

If you’re hoping to buy your first home in 2022, congratulations! It’s a huge milestone and one that’s exciting, if a little daunting too.

You’ve likely been thinking about purchasing a property and saving a deposit for some time. As you near your goal, there are some things you can do to prepare for the day you put in an offer that could help smooth out the process. Whether you hope to move in soon or at the end of 2022, you should start thinking about these five steps now.

1. Start looking at the property market now

If you haven’t already, start looking at what is on offer in the area you want to move to. Are there any properties that suit your needs? What is the average price of homes in the area?

When buying a home, there are lots of considerations. From the commute to work to whether you want to take on a project, having a clear idea about what you’re looking for can make it easier when it’s time to start booking viewings. It can also help you have realistic goals with your budget in mind.

2. Maximise your deposit

You may already have a Lifetime ISA (LISA) that you’ve been using to save your deposit. If you do, maximising your savings over the next few months can give your deposit a boost. If you don’t have a LISA, it’s not too late to open one.

A LISA is an efficient way to save for your first home. Each tax year, you can place up to £4,000 into a LISA, where it can benefit from interest or investment returns. On top of this, you will receive a 25% government bonus to add to your deposit. If you open a LISA now, you can deposit the maximum amount for the 2021/22 tax year and a further £4,000 when the 2022/23 tax year begins on 6 April 2022. That will give your deposit a £2,000 boost.

Keep in mind that you will face a penalty if you withdraw money from a LISA for a purpose other than buying your first home before you’re 65. As a result, you should only deposit money you want to use to buy a property or that you plan to save long-term. To open a LISA, you must be over 18 but under 40.

While Help-to-Buy ISAs are now closed to new applicants, if you already have one, it’s worth contributing as much as you can to receive the government bonus of 25% of your deposits.

3. Review your credit report

Mortgage lenders will use your credit report to assess how much you can borrow and whether to approve your application. You can review your own credit report free and without affecting the score. There are three main credit reference agencies: TransUnion, Equifax, and Experian.

You should take some time to go through the report and ask the provider to update any mistakes you find. There may also be easy steps you can take to improve your score, such as registering on the electoral roll.

By looking at your credit report in advance, you may also be able to fix red flags that could put a lender off. If your credit utilisation is high, reducing the amount you owe could increase the chances of your application being approved, for example. Being aware of red flags can help, as you may be able to add a note to your application to explain them.

Changes to your credit report and score can take a few months to show up. So, taking this step well in advance of submitting a mortgage application makes sense.

4. Apply for a mortgage in principle

A mortgage in principle, also known as an “agreement in principle”, can give you an idea of how much you can borrow to buy a home.

When you apply for a mortgage in principle, it won’t carry out a hard credit search, and is not a guarantee, but it is still useful. If accepted, it will tell you the maximum amount you could borrow and show an interest rate you could be offered. This can help you see how a mortgage will fit into your budget.

Some estate agents may ask to see a mortgage in principle when you book a viewing or put in an offer. It helps to show that you are a credible buyer. A mortgage in principle usually lasts for three months.

If you’d like help applying for a mortgage in principle, please contact us.

5. Create a budget of other costs

For first-time buyers, the biggest expense they face is often the deposit. It can take years to save the amount you need, but don’t forget about the other costs of buying a home.

In your budget, be sure to include conveyancing, surveys, searches, mortgage application fees, and, where necessary, Stamp Duty costs. On top of this, you may also need to use a moving company or buy furniture for your new place. If you fail to factor these in you could face some significant expenses that may put pressure on your budget and slow down the homebuying process.

Buying your first home is exciting and we’re here to help guide you through the process. Please contact us to talk about your mortgage options and how to start the application process.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Young boy looking out of a window during winter

It’s that time of the year when Santa leaves gifts under the tree. As well as presents to unwrap, your child may receive money from family and friends too. If they receive cash as a gift, they may be eager to spend as soon as possible, but putting it away can help it go further and teach valuable money lessons.

Despite families cutting back ahead of Christmas 2020 due to the Covid-19 pandemic, a YouGov poll estimated that the average person spent £883 on Christmas. Presents made up the bulk of the expenses, adding up to £408. With presents making up a big portion of Christmas expenses, it’s likely your children will receive plenty of gifts from loved ones. So, what are your options when deciding what to do with the money they may receive?

Let your child spend it

Spending the money is probably what your child would choose to do. While you may be eager for them to save it, there are benefits to letting them hit the shops too.

Spending money they receive as a gift can provide children with valuable money lessons. From understanding the value of items to handling money, spending can be useful for getting to grips with finances. If there’s nothing they want right away, adding the money to a child current account can help them take control and start thinking about why they should leave money to spend in a few weeks or months.

Place the money in Premium Bonds

If you’d like to save the money for a later date, Premium Bonds are an option worth considering.

You can place up to £50,000 in Premium Bonds for children. The money is secure, and you can withdraw it at any time. This makes it a useful option for short-term savings. However, unlike a savings account, the deposit won’t earn any interest. Instead, there is a monthly prize draw that could mean your child wins a lump sum. The prizes range from £25 to £1 million and are all tax-free. Of course, there’s no guarantee that your child will win a prize, and more people receive nothing than win.

Deposit the money in a savings account

Opening a savings account can put the money to one side while still providing flexibility. In a savings account, the money will be earning interest, but you can still dip into it to pay for treats or other expenses.

If you want to build a nest egg for a child, a Cash Junior ISA (JISA) can be a good option. The interest rates offered are usually more competitive than a standard child savings account and the interest earned is tax-free. For the 2021/22 tax year, you can place up to £9,000 each year into JISAs for each child. However, the money won’t be accessible until the child is 18, at which point they can withdraw it, or it will convert into an adult ISA. As a result, a JISA may only be suitable if you want to save for the long term.

The drawback with cash savings is that interest rates are likely to be lower than the rate of inflation. This means that the savings will lose value in real terms. If you’re saving for a long-term goal, inflation can have a significant impact.

Invest the money for long-term goals

While saving in cash can seem like the “safe” option, savings can fall in value in real terms due to inflation. If you want to save the money for the long term, investing is something you should consider.

All investments do carry some level of risk, but they can also provide an opportunity for the money to grow at a faster pace than inflation. If you’re saving for a goal that is more than five years away, considering the impact of inflation is important, and it could mean investing makes financial sense for you.

When investing, you need to consider what level of risk is appropriate for your goals, time frame and more. If you’re unsure what level of risk is appropriate, we can help you.                                                                               

Again, a JISA is an effective way to invest on behalf of your child. A Stocks and Shares JISA will mean investments can grow free from tax. As with a Cash ISA, you can place up to £9,000 into a Stocks and Shares JISA for the 2021/22 tax year and the money, including investment returns, will be locked away until the child is 18.

If you want to start a nest egg that can give your child a helping hand as they become independent, a Stocks and Shares JISA could help.

Starting a savings account or investment portfolio for your child can give them more freedom when they reach adulthood. The deposits you make now could be used to help them buy their first car, get through university, or even buy a home. If you want to create a plan for building a nest egg for your child, please get in touch.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

A man pointing to a screen showing data on a chart

When you invest, how much do you expect to receive in return? A survey suggests that some investors have unrealistic expectations that could affect their long-term financial security.

Research from Aegon found that half of UK adults have put money into investments because interest rates are low. While this can be a positive step for long-term financial security, it’s important to understand the risks and potential returns.

Of those that decided to invest, 35% said interest rates falling to between 1 – 2% was the tipping point, and a further 39% said it was when interest rates fell below 1%.

Before you decide to invest, it’s important to make sure it’s the right decision for you. Here are three things you should consider first:

  1. What is your goal? Investments experience volatility and their value will rise and fall. In most cases, you should only invest with a minimum time frame of five years to allow the peaks and troughs to smooth out.
  2. Do you have an emergency fund? Ideally, you should retain some of your savings in an accessible account for emergencies. Worryingly, 10% of people said they had invested all their extra cash, which could leave them financially vulnerable
  3. Do you understand investment risk? All investments will have some level of risk, so you should consider what would happen if the value of your investments were to fall.

If you decide to invest, you should look at what your expectations are.

What are realistic investment expectations?

Investment returns cannot be guaranteed, and the potential returns will vary depending on the investment.

As a general rule of thumb, the more investment risk you take, the higher the potential returns. However, this doesn’t mean you should automatically invest in these kinds of investments. High-risk investments are unlikely to be suitable for the majority of investors, even when the potential returns are high.

What is realistic in terms of expectations will very much depend on the investments you choose.

According to Credit Suisse’s Global Investment Returns Yearbook 2021, over the last 40 years, returns from world equities have been 6.8% a year. In contrast, the Aegon survey found that it’s only when an investment promises a return of 10% or more that the majority of investors become sceptical. The findings suggest that some investors expect returns that are much higher than average.

The dangers of unrealistic investment expectations

Your investments not meeting your expectations can be disappointing, but it could have larger consequences too.

1. It could affect other financial and lifestyle decisions

Financial decisions not meeting your expectations can have a serious impact on your goals. If you were expecting investments to deliver a 10% return, you may have planned to retire early, for instance. Or you may increase your spending in light of this expectation.

Unrealistic expectations can mean you make additional decisions based on this information that are not right for you. To create a reliable financial plan, you need to work with information that is as accurate as possible. That means including investments returns that are realistic.

2. It may leave you vulnerable to scams

One of the signs of a scam is unrealistic investment returns. However, if your expectations are skewed, you may not spot a scam until it’s too late. The research found that just 35% of investors would avoid opportunities that promised high returns. Worryingly, 5% admitted they are less concerned about safety, and always look at investments offering the best returns.

In most cases, money lost to scams cannot be recovered. Taking your time to review investments is important. Keep in mind that investment returns cannot be guaranteed and if it sounds too good to be true, it probably is.

How financial planning can you manage investment expectations

Whether you’re new to investing or have built up a portfolio over the years, getting a second opinion can help. We can demonstrate how different investment outcomes would affect your wealth and help you create long-term plans that give you confidence in the future. We’ll help you understand what you can expect from your investments, and what opportunities may be right for you.

Please give us a call if you’d like to talk about investing and how to make it part of your wider financial plan.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Stacks of pound coins gradually getting bigger

You may have seen inflation in the headlines recently. While the cost of living rising is normal, the rate of inflation has increased over the last few months.

The Bank of England (BoE) has a target to keep the annual rate of inflation around 2%. However, the current rate of inflation is 4.2%, the central bank’s figures show. The rate of inflation used is the Consumer Price Index (CPI), which collects the prices of around 700 items. This is then used to calculate how prices have increased.

There are steps the BoE can take to reduce inflation. One of these is to increase interest rates. While there have been hints that interest rates could rise, the Monetary Policy Committee (MPC) decided to keep rates at historic lows in November. An interest rate rise would have been welcomed by many savers who have suffered from low interest rates for more than a decade.

With the MPC deciding to hold interest rates for now, it’s worth seeing if you’re getting the most out of your savings.

Most accounts will be offering an interest rate that is below the rate of inflation. Over the long term, this gap can mean your savings lose value in real terms. While the figure may grow as interest is added, inflation means that it will buy less. For short-term savings, inflation will have little affect but if you’re saving over several years, it can add up.

Are you getting the most out of your savings?

While you may not be able to change the interest rate, there are some steps you can take to give your savings a boost.

1. Take advantage of offers to move your account

Some banks and building societies offer new customers incentives to move. Taking advantage of these could give your savings a boost.

These incentives could be a one-off deposit to your account or a higher rate of interest for a defined period. Even a small incentive can help you keep up with inflation. Keep an eye out for offers that you’re eligible for. While switching accounts can seem like a chore, it’s often a simple process and banks can even transfer direct debits and standing orders for you.

2. Shop around for the best interest rate

Interest rates might be low across all providers, but there are still differences. Shopping around to find the best interest rate you can access can help you to close the gap between how much your savings are growing and inflation. As with the above, it’s often easy to switch your account.

3. Consider savings accounts with restrictions

Some savings accounts will offer a higher rate of interest but come with restrictions. This may include how much you can put into the account each month, or your savings being locked away for a defined period.

You should assess whether these types of accounts match your goals and would still leave you with an emergency fund. If they do, they can give your savings a welcome boost that could help you bridge the gap.

When to consider moving your savings to investments

As well as reviewing your savings, you should also consider if investing is right for you.

Investing does expose your money to some risk and volatility. However, if you’re saving for a long-term goal, it also presents an opportunity to earn returns that are higher than inflation to preserve your spending power.

If you have an emergency fund in an accessible savings account and your saving goal is more than five years away, investing the surplus savings may be right for you.

While all investments do carry some risk, the level of risk varies. So, it’s important to weigh up how much risk is appropriate for you. We’re here to help you understand investment risk and create a risk profile that matches your situation and goals. We’ll consider areas like your other assets and general attitude to risk.

If you’d like to discuss whether investing and getting the most out of your money, please contact us.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

A crowd of people watching a fireworks display

When you invest, how much do you expect to receive in return? A survey suggests that some investors have unrealistic expectations that could affect their long-term financial security.

Research from Aegon found that half of UK adults have put money into investments because interest rates are low. While this can be a positive step for long-term financial security, it’s important to understand the risks and potential returns.

Of those that decided to invest, 35% said interest rates falling to between 1 – 2% was the tipping point, and a further 39% said it was when interest rates fell below 1%.

Before you decide to invest, it’s important to make sure it’s the right decision for you. Here are three things you should consider first:

  1. What is your goal? Investments experience volatility and their value will rise and fall. In most cases, you should only invest with a minimum time frame of five years to allow the peaks and troughs to smooth out.
  2. Do you have an emergency fund? Ideally, you should retain some of your savings in an accessible account for emergencies. Worryingly, 10% of people said they had invested all their extra cash, which could leave them financially vulnerable
  3. Do you understand investment risk? All investments will have some level of risk, so you should consider what would happen if the value of your investments were to fall.

If you decide to invest, you should look at what your expectations are.

What are realistic investment expectations?

Investment returns cannot be guaranteed, and the potential returns will vary depending on the investment.

As a general rule of thumb, the more investment risk you take, the higher the potential returns. However, this doesn’t mean you should automatically invest in these kinds of investments. High-risk investments are unlikely to be suitable for the majority of investors, even when the potential returns are high.

What is realistic in terms of expectations will very much depend on the investments you choose.

According to Credit Suisse’s Global Investment Returns Yearbook 2021, over the last 40 years, returns from world equities have been 6.8% a year. In contrast, the Aegon survey found that it’s only when an investment promises a return of 10% or more that the majority of investors become sceptical. The findings suggest that some investors expect returns that are much higher than average.

The dangers of unrealistic investment expectations

Your investments not meeting your expectations can be disappointing, but it could have larger consequences too.

1. It could affect other financial and lifestyle decisions

Financial decisions not meeting your expectations can have a serious impact on your goals. If you were expecting investments to deliver a 10% return, you may have planned to retire early, for instance. Or you may increase your spending in light of this expectation.

Unrealistic expectations can mean you make additional decisions based on this information that are not right for you. To create a reliable financial plan, you need to work with information that is as accurate as possible. That means including investments returns that are realistic.

2. It may leave you vulnerable to scams

One of the signs of a scam is unrealistic investment returns. However, if your expectations are skewed, you may not spot a scam until it’s too late. The research found that just 35% of investors would avoid opportunities that promised high returns. Worryingly, 5% admitted they are less concerned about safety, and always look at investments offering the best returns.

In most cases, money lost to scams cannot be recovered. Taking your time to review investments is important. Keep in mind that investment returns cannot be guaranteed and if it sounds too good to be true, it probably is.

How financial planning can you manage investment expectations

Whether you’re new to investing or have built up a portfolio over the years, getting a second opinion can help. We can demonstrate how different investment outcomes would affect your wealth and help you create long-term plans that give you confidence in the future. We’ll help you understand what you can expect from your investments, and what opportunities may be right for you.

Please give us a call if you’d like to talk about investing and how to make it part of your wider financial plan.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.