A close up of a man reading a book

This year, add some finance books to your reading list to broaden your knowledge and give you more confidence when dealing with financial matters. There are hundreds of books to choose from, whether you want an introduction to the basics or are ready to dive into some of the more technical aspects of finance. Here are seven to add to your list.

1. The Money Diet by Martin Lewis

Martin Lewis is well-known for his practical money advice and has become a personal finance guru. If you’re looking for a book that contains simple steps you can take to save money, The Money Diet is perfect. From how to organise your credit cards to how to secure a mortgage deal that could save you money, Lewis offers invaluable advice and tips.

2. Money: A User’s Guide by Laura Whateley

Money: A User’s Guide is an ideal book if you’re looking for an introduction to personal finance. It’d make a great gift for young adults who are managing their finances for the first time too. It covers a huge range of topics, from how to improve your credit score to how student loans work. The book offers practical advice that can help readers feel more confident about taking control of their finances.

3. The Good Retirement Guide by Jonquil Lowe

If you’re nearing retirement, there are a lot of decisions to make, and it can seem daunting. This handy book can help you make the most of the milestone. It covers a range of financial topics, like pensions, investments, and property, but it goes beyond this to explore other factors that are important for creating an enjoyable retirement, such as holidays and health. It’s a guidebook that can help you live the retirement lifestyle you want.

4. The Simple Path to Wealth by JL Collins

The Simple Path to Wealth started as a collection of letters written by JL Collins for his daughter, which mostly covered money and finances. While the author was interested in money, he recognised his daughter focused on other things. In a bid to pass on essential information that can seem complex, he started writing letters that would help her make better financial decisions. While the book has a US angle, the basic principles are the same wherever you are.

5. The Psychology of Money by Morgan Housel

Using short stories, Morgan Housel demonstrates the strange ways that people think about money. The book aims to give you a better understanding of how you think about money and how it can affect your decisions. Housel notes that money is often taught as a maths-based field, but, in the real world, far more things can influence how you handle your finances, like your personal history, your world view, and even marketing.

6. The Smart Money Method: How to Pick Stocks Like a Hedge Fund Pro by Steve Clapham

If you want to learn more about the world of investing, The Smart Money Method could be the book for you. Steve Clapham is a retired hedge fund manager who now trains stock analysts. In this book, he details his step-by-step research process when looking for investment opportunities and shows what he looks out for. Even if you don’t want to pick your own stocks, this book can give you an interesting insight into how funds operate.

7. Open Up: Why Talking About Money Will Change Your Life by Alex Holder

Despite money influencing many different aspects of life, it’s still something of a taboo subject. In this book, Alex Holder encourages readers to be more open about money and discussing it. It features insights, practical advice, and money conversations with a range of people, from CEOs to debt advisers. Not only does talking about money more openly help put you in control, but Holder also argues it can help us tackle some of the larger issues associated with money, like pay gaps and the living wage.

A row of terraced cottages in the UK

Despite the pandemic, the property market continued to move in 2021. Thousands of families purchased their first home, moved up the property ladder, or decided to invest in property during the year. Here are a few of the key events and figures that highlight what happened in the property market in 2021.

A Stamp Duty holiday helped support the property market

There were concerns that Covid-19 restrictions would lead to the property market stalling. To combat this, the chancellor introduced a Stamp Duty holiday in England and Northern Ireland in July 2020, and, after an extension, it finished in September 2021. Scotland and Wales also introduced similar temporary reductions when buying property.

The holiday meant that homebuyers could save up to £15,000 when buying a home. The threshold for paying Stamp Duty temporarily increased to £500,000, compared to the usual £125,000, so fewer families need to pay the tax. It encouraged more people to consider moving while they could reduce the associated costs. According to Which?, around 1.3 million buyers benefited from the holiday across the UK.

The organisation also estimates that the holiday led to sellers hiking property prices by more than £16,000 as buyers clamoured to find a property. As a result, the Stamp Duty holiday is associated both with increased demand and rising prices.

2021 was the busiest property market since 2007

The Stamp Duty holiday helped to make 2021 the busiest property market in almost 15 years.

According to Zoopla, by the end of 2021, 1 in 16 homes had changed hands, making it the busiest property market since 2007. Homebuyers in 2021 may have experienced delays in the process, from mortgage applications to solicitors, as professionals in the industry dealt with higher demand alongside the pandemic restrictions.

House prices continued to climb

Rising property prices have been making headlines over 2021. With demand rising and the Stamp Duty holiday placing pressure on home buyers, it’s no surprise that prices increased in line with this.

In November, the average UK property prices reached £270,000 for the first time according to the Halifax House Price Index. In the three months to November, prices increased by 2.3%, while over the year they had increased by 8.1%. Wales, Northern Ireland, and Scotland have outperformed the UK average in terms of property price growth.

The pandemic affected what home buyers were looking for

The pandemic and the associated restrictions led to a shift in what home buyers were looking for in a dream property.

Reflecting a wider trend for working from home, the Zoopla data shows there has been greater demand in commuter zones and more rural areas. With the freedom to work anywhere, workers are increasingly searching for a home with a local area that meets their needs without having to contemplate work opportunities as much.

In addition to this, larger homes with outdoor spaces were in demand after lockdown restrictions meant people were forced to stay in their homes. Home offices and larger living spaces have also become key features home buyers are looking out for. With people appreciating the space their homes offer more, it could change which types of property are in demand in the future.

What will 2022 hold for the property market?

There’s no consensus among property experts about what 2022 will mean for the property market. However, according to a report in the Guardian, demand for property is set to continue driving up property prices, albeit at a slower pace. It is estimated that property values will increase by up to 3.5% a year between 2022 and 2024.

If you’re looking to purchase property this year, whether as a home or as an investment, working with a mortgage broker can help you access a mortgage with a competitive interest rate and the flexibility you want. If you’d like to talk to one of our team, 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.

A person holding a yellow umbrella as they walk down a street

When you look forward to the year ahead, what do you consider to be the biggest risks to your personal finances? A poll from interactive investor has revealed the three biggest financial worries people have. While you may not be able to prevent things from happening, you could reduce the effect they have on your finances.

56% of people worry about a stock market crash

Given the stock market volatility experienced throughout the pandemic, the fact that more than half of people are worried about a stock market crash is not surprising.

In March 2020, as fears of a pandemic and global recession began to escalate, stock markets fell sharply. On 12 March, the FTSE 100, an index of the largest 100 companies trading on the London Stock Exchange, suffered the second-largest one day crash in its history. In the months that followed, investors experienced volatility as the Covid-19 virus spread and governments around the world imposed restrictions.

While many investments have stabilised and recovered, it’s understandable that investors remain concerned about the impact a stock market crash could have on their finances. It may have a significant impact on your goals too, such as when you can retire.

If you’re worried about the effect a crash could have on your finances, there are two things to keep in mind:

  1. Your portfolio should take an appropriate amount of risk for you. All investments come with some level of risk, but the risk varies between investments. When building an investment portfolio, you should take care to create a balanced portfolio that reflects your risk profile. If you’d like help understanding your risk profile and how to ensure your investment decisions reflect this, please contact us.
  2. You should invest with a long-term goal. It’s common for investments to experience volatility over the short term. Yet, historically, markets do recover over the medium and long term. This is why you should invest with a long-term time frame. This means your investments have an opportunity to recover following volatility.

22% say the rising cost of living is a threat to their finances

Inflation is rising and it will affect the outgoings of households across the UK.

Inflation is the measure of how the cost of living is rising. The Bank of England (BoE) has a target of 2% inflation each year. However, in November 2021, the rate was more than double this, at 4.2%, according to the BoE. The Bank suggests that inflation will peak at close to 5% in 2022, before gradually reducing.

For households, this means expenditure from grocery shopping to trips out are likely to start creeping up. Reviewing your budget and how rising prices will affect your outgoings can help put you in control.

There are several things BoE can do to control inflation, including increasing interest rates. If you’re a borrower, a rise in interest rates could mean you pay more interest on your mortgage, credit cards, and other forms of credit. While an interest rate hike hasn’t been announced yet, you should be aware of how it could affect your finances if introduced.

8% worry about the burden of tax increases

The government’s Covid-19 response has left a black hole in its finances. According to the National Audit Office, the total cost of measures announced up to the end of July 2021 is £370 billion. Government borrowing has reached its highest level since the end of the second world war, so tax increases may be introduced to plug the gap.

So far, the government has announced two increases that may affect you:

  1. Introduction of the Health and Social Care Levy: National Insurance will increase by 1.25 percentage points in April 2022 as part of a Health and Social Care Levy. From 2023, this tax will be legislatively separate from National Insurance, and will appear on your pay cheque as a separate deduction. Individuals working past the State Pension Age, who are not liable for National Insurance, will be liable for the levy. As a result, your tax burden is likely to increase from April 2022.
  2. Dividend Tax rate increases: If you receive dividends, you may also face a higher tax bill. From April 2022, the Dividend Tax rates will increase by 1.25 percentage points.

In addition to these two changes that could affect your tax bill, other allowances have been frozen until the 2025/26 tax year. These include the Personal Allowance, the Capital Gains Tax Allowance, and the pension Lifetime Allowance. These freezes have been dubbed a “stealth tax” and could mean your tax liability increases over the next few years, even if rates remain the same.

As the government reviews finances, further tax changes could also affect your outgoings. Making the most of allowances and exemptions can reduce your tax bill and help your money go further. It’s important to review your finances as changes are announced, as it may change what’s right for you.

If you have any worries about the year ahead and want to understand how they could affect your finances, 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.

The Financial Conduct Authority does not regulate tax planning.

An older man enjoying a coffee with his daughter

As a parent, you may want to help your children achieve financial security by providing a financial gift. Yet, you may also be worried about the effect it could have on your own lifestyle, as well as the inheritance you leave loved ones. Before gifting significant sums, it’s important to review your overall finances.

According to research from Canada Life, 38% of parents have already passed on “significant financial gifts” to the next generation. It’s something many more parents may be thinking about too.

There are plenty of reasons for providing a financial gift. Among those given were:

  • To help with general living expenses (21%)
  • To reduce the value of their estate (18%)
  • To act as a house deposit (17%)
  • To fund a car purchase (17%)
  • To support major purchases (17%)
  • To purchase a house outright (13%).

As living costs have increased, wages have been stagnant and so your children or grandchildren may struggle day-to-day or with reaching milestones. Getting on the property ladder is a well-known challenge that they may be facing, and gifts are frequently used to act as a deposit. Whatever your reasons for wanting to provide a gift, you should first assess the long-term effect it will have.

Here are five questions to answer before you gift some of your assets.

1. Do you expect the money to be repaid?

In some cases, you may want the sum to be repaid. If you do, make sure you’re clear from the outset to ensure you’re all on the same page. If you need it for a particular goal, such as retirement, a misunderstanding could affect your plans. It may also be a good idea to make the arrangement formal and contact a legal professional.

2. Will taking a lump sum out of your assets have a long-term effect?

It can be difficult to understand how taking a lump sum out of your assets can affect your long-term wealth. If you remove money from investments, for instance, it will also affect your expected investment returns. Taking some time to assess the effect it could have now means that you can lend financial support with confidence. Making gifts part of your financial plan can help you see how they could affect other priorities and goals. If you’re not sure whether a gift could harm other goals, please contact us.

3. Will you still have a financial buffer after providing a gift?

You may calculate that you have enough to live the lifestyle you want after giving a financial gift, but remember that the unexpected can happen. You should ensure you still have a financial buffer to provide a safety net if you need it.

4. Would gifting now affect how much inheritance loved ones receive?

Providing loved ones with a financial gift now may mean their inheritance is less than expected. In some cases, a gift now could provide greater financial security and makes sense. However, if leaving an inheritance is important to you, it may not be the right decision. It’s a good idea to talk to beneficiaries about how gifts will affect what you leave behind, as it could affect their own decisions.

5. Where will you take the gift from?

As well as deciding whether or not you can afford to give a gift, you should consider where the money will come from. An ISA, for example, is a tax-efficient way to save and invest, and you may not be able to replace the money you withdraw if it exceeds the ISA annual subscription. Withdrawing money from a pension could also affect long-term forecasts. If you’d like to discuss your assets and how you can make a gift, please contact us.

Are gifts an effective way to reduce the value of your estate?

While the research found many parents are gifting to support their children in reaching goals, 17% didn’t have a particular reason. Instead, the motivation was to reduce the value of their estate. If your estate could be liable for Inheritance Tax (IHT), gifting can be an effective way to reduce the bill. However, not all gifts will reduce the value of your estate immediately.

Gifts that are immediately outside of your estate include:

  • Up to £3,000 each tax year, known as your “annual exemption”
  • Small gifts of up to £250 for each person, each tax year
  • £1,000 gifts for wedding or civil partnerships. This rises to £2,500 for grandchildren and great-grandchildren, and £5,000 for a child
  • Regular gifts that help with another person’s living costs
  • Gifts made out of your normal income.

Other gifts may be “potentially exempt transfers” and could be considered part of your estate for up to seven years for IHT purposes. If reducing your IHT liability is a motivation for gifting, please contact us to discuss your options.

If you’re thinking about gifting, whatever the reason, taking some time to weigh up the consequences it could have on your lifestyle is crucial. Please contact us to go through your plans in the context of your other goals.

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

The Financial Conduct Authority does not regulate tax or estate planning.

A couple signing divorce papers

Going through a divorce is difficult. So, it’s not surprising that many couples are failing to consider their long-term future and whether they need to discuss splitting pensions. Overlooking pensions, which may be among your largest assets, could leave you financially vulnerable in the long term.

The law changed in 2000 to allow pensions to be shared in divorce. However, only around 1 in 8 couples are doing this two decades later, according to a Guardian report. While it’s common to share property wealth, savings, and other assets as part of divorce or dissolution proceedings, pensions are often missed. There are many reasons why couples may decide not to split pensions, but it can significantly reduce retirement income.

Women are losing out on £5 billion of assets each year

The gender wealth gap means that it’s often women who are affected by not considering pensions during the divorce process.

According to the Guardian, married men aged between 55 and 64 have more than three times the pension wealth of married women of the same age. Among the age group that is most likely to get divorced – those aged between 45 and 54 – the gap is smaller, but it could still harm long-term plans. Men in this age category have, on average, £86,000 in their pension, compared to £40,000 for women.

A Scottish Widows report estimated that women lose out on £5 billion of assets every year because divorcees are ignoring pension wealth.

The effect can be harmful at any stage of life, but it’s particularly so if you’re nearing retirement, as you have less time to make contributions and benefit from investment growth. Women nearing retirement are less likely to have built up pension wealth in their name than younger generations too. A fifth of women over 50 plan to rely on their partner’s income, and 40% of women over 55 don’t have any pension wealth.

While divorces later in life are less common, they do still happen. Every year up to 6,000 women aged over 60 gets divorced. For those relying on their partner’s pension wealth or who are planning to do so, it’s crucial that pensions are taken into consideration.

How to make pensions part of a divorce process

One of the challenges of including a pension in the divorce process is understanding its value. It could be years before you’re able to access pension savings, so you may instead focus on assets that will provide security now, like property or cash savings. However, pensions can add far more value when you consider the long term.

You should ensure you have up-to-date values for pension and forecasts before you make decisions about how assets are distributed. When splitting pensions, there are three options for couples to consider:

  1. Pension sharing: With this option, pension assets are split immediately. One partner will be awarded a percentage of the other’s pensions, which can then be transferred into a pension in their own name. Pension sharing allows for a clean split and means both parties have control over their own pension provisions.
  2. Pension offsetting: Each party keeps their own pension assets in this option. However, the value of the pensions is considered when dividing the remaining assets. For instance, the person with the lower pension wealth may take property to offset this. This can be a simple way to divide assets, but may also mean one person is left with little or no provision for retirement.
  3. Pension earmarking orders: Also known as “pension attachment orders”, this means some of a partner’s income will be redirected to their ex-partner when the pension benefits are paid. It would mean a couple’s finances are still linked, so it doesn’t allow for a clean break. For example, there may be some uncertainty around when the payments will be paid as it will depend on when the pension holder retires.

If you’re getting divorced, it’s important to reassess your goals and financial plan. The break-up of a relationship can mean the lifestyle you want now is very different to your previous plans. Your income and expenses may also change, so it’s important to consider both the short- and long-term effects this could have. If you’d like to talk to a financial planner about your goals, 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.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The value of your investments (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances. Levels, bases of and reliefs from taxation may change in subsequent Finance Acts. 

A close up of an older couple holding hands in a park

If you’re creating a financial plan as a couple, you should consider the effect one of you passing away could have. If one person’s income or assets are vital for the household’s financial security, it could leave the other in financial difficulty should they pass away.

One of the questions couples sometimes ask is: “Will my partner be financially secure if I pass away?” It’s a difficult topic to discuss. Yet, it can help you put a plan in place that gives you both confidence in the future even if the worst should happen. Financial planning as a couple can help you understand scenarios that could cause financial stress. This means you’re in a position to take steps to minimise the insecurity they could cause.

If you’re worried about how your partner would cope financially if you pass away, here are five steps that could improve their security

1. Write your will

If you haven’t already, writing your will should be a priority, especially if you’re not married or in a civil partnership. “Common-law” partners have no legal right to inherit in the UK, no matter how long you’ve been cohabiting.

A will is the only way to make sure your assets are passed on according to your wishes. Despite this, data from Will Aid shows that 49% of UK adults have not made a will. Without a will, your assets will be distributed according to intestacy rules. This could be very different to your preferences.

Even if you’re married or in a civil partnership, you should still have a will in place. Under intestacy rules, if your estate is worth more than £270,000 and you have surviving children, grandchildren, or great-grandchildren, your partner will inherit:

  • All personal property and belongings of the person who has died
  • The first £270,000 of the estate
  • Half of the remaining estate.

Again, this may not align with your wishes, so it’s important to set out what you’d like to happen.

2. Complete an expression of wishes for your pension

Your pension may be one of the largest assets you own, and it’s not covered by a will. Instead, you must use an expression of wishes to name the person you’d like to benefit from your defined contribution (DC) pension. This covers investments that remain within a pension, it does not cover withdrawals you have already made or an annuity.

If you pass away, your partner will be able to choose how and when they access the money within your pension. Withdrawals may be subject to Income Tax, but they could take a lump sum or use the pension to create an income.

If you have multiple DC pensions, you will need to complete an expression of wishes for each one.

3. Review any defined benefit (DB) pensions you have

If you have a DB pension, also known as a “final salary pension”, it will often continue to pay a pension to your spouse, civil partner, or dependents if you pass away.

A DB pension pays a guaranteed income from the retirement date for the rest of your life. It can create certainty and financial security when you give up work. As many of these pensions will continue to provide an income to your partner if you pass away, they can be valuable for creating peace of mind.

You should make sure you understand how much your partner would receive from the DB pension if you passed away, and ensure that any necessary paperwork is complete.

4. Purchase a joint annuity in retirement

When you retire, an annuity is something you can purchase to create an income. In return for a lump sum, an annuity can provide an income for the rest of your life. A joint annuity is designed for couples and will provide an income so long as either partner lives.

A joint annuity may offer a lower annuity rate than a single policy. This means the income provided will be lower, but it can be valuable. The amount provided after one partner dies may remain the same or it may pay out a proportion of the original income.

Keep in mind an annuity is just one way to access your pension. You should explore all your options before you purchase an annuity. Please contact us if you have any questions.

5. Take out a life insurance policy

A life insurance policy will pay out a lump sum on your death to a beneficiary. It can provide financial security in both the short and long term. You will need to make regular payments to the policy, or the cover will lapse.

You can choose between a term life insurance policy or a whole-of-life insurance policy.

A term life insurance policy will run for a defined period. This can be a useful option if you’re worried about how your partner would cope with certain financial commitments, such as your mortgage. A whole of life insurance policy will run until you pass away. You can choose the level of cover and who will receive the lump sum.

As well as helping you with the above options, we can also help you arrange your assets in a way that provides the people who are most important to you with financial security, even if the worst should happen. Please contact us to discuss your priorities and the steps you can take as part of a long-term financial plan.

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

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. 

The Financial Conduct Authority does not regulate will writing or estate planning.