Back view of a man presenting to students at a lecture theatre

As the new school year begins, it might be a good time to start thinking about your child’s future if they want to go to university in 2023. With 164 universities in the UK and thousands of different courses, trying to narrow the endless choices down to five options may seem impossible. 

Supporting your child through this stressful time at every step in the process will help to ease their anxieties (and yours!), as well as giving them the best chance of getting into their dream university. 

How do you know if a university is “good”?

There are many different things to consider when deciding which university to apply to. The Guardian has a league table of the top-ranked universities in the UK, based on student satisfaction, staff numbers, spending, and career prospects of that institution, if you would like to see objective facts.

Of course, other things should also be considered, such as travel options, the courses available, the cost of living in the area, and the facilities offered by the university.

What should you focus on during university open days?

University open days are the perfect opportunity for you and your child to ask any questions you have. If you are unsure about what the course will entail or the quality of the teaching, this is the perfect time to meet the academics teaching the course and quell any concerns.

Another thing to make sure you do on a university open day is to talk to students currently studying there. They understand the student experience, so they can answer questions that staff may not know the answers to, such as telling you about the societies and social life.

Open days also allow you to see the different types of accommodation available, so you can decide which type of room your child may be interested in.

Finally, make sure you check out the city where the university resides!

Look out for grocery shopping options – affordable shops such as Aldi or Lidl are perfect for students on a budget – as well as public transport. Distance is an important factor in choosing a university, as your child may want to remain close to home, or they may want to see the other side of the country. 

What should your child include in their personal statement?

Once you have decided which universities your child would like to apply to, it is time to start the application process. The personal statement is your child’s opportunity to convince the university to give them an offer – and you only get 4,000 characters to do it in.

The focus of the personal statement should be on your child and their passion for the subject they wish to study further.

  • What skills do they have that apply to their chosen subject?
  • Why does it interest them?
  • What are their plans once they graduate from university?

Once you have convinced the university that your child is interested in the course they are applying for, you should then move on to why they will be an excellent student. 

  • What skills have they learnt from extracurricular activities?
  • What are their achievements?
  • Do they have work or volunteering experience?

Once your child has written their personal statement, make sure you go through it with a fine-tooth comb to ensure there are no spelling or grammar errors, which can distract from the point they are trying to make. 

Personal statements, along with the rest of your child’s application, are usually due in around October for certain subjects (such as medicine, veterinary science, and dentistry) and January for the rest of applicants. Check with your child’s teachers for exact dates in case their sixth form or college has an internal deadline for applications to be submitted.

How long does it take to receive offers?

This is dependent on many things, such as the university and course your child is applying for, as well as any extra information the institution might need. Universities often request interviews with their applicants, and certain subjects sometimes require a portfolio of work. The sooner these are completed, the sooner the university can come to a decision and make an offer.

An offer can be made in as little as a few days to several months, but most students receive responses after a few weeks.

How do UCAS points work?

Some university offers will use UCAS points, rather than the more familiar letter grades. For example, a university might offer your child a place if they obtain 120 UCAS points, rather than BBB grades.

An A is equivalent to 48 UCAS points, a B is equivalent to 40, and a C is equivalent to 32.

You can use the tariff point calculator on the UCAS website to calculate the number of UCAS points a student gets for letter grades. 

When should you apply for student finance?

To guarantee your child gets any financial support that they are eligible for, the application needs to be submitted before the end of May preceding the year they go to university. 

You can start the application as soon as your child has selected their firm and insurance choices, and it usually takes around six weeks to be processed.

What other options are there?

If your child is unsure whether university is the right option for them, then consider discussing the other paths they can take once they have completed their A-levels. 

One of the most popular options for students who are not sure that university is the correct choice for them is a degree apprenticeship, which allows you to study for a degree part-time while also working in the industry your child is interested in – with all the tuition fees paid for!

Other options include going into entry-level work positions, doing work experience or internships, or simply taking a gap year.

A hand holding out house keys.

As property prices rise and families face pressure due to the cost of living crisis, the government is reportedly considering ultra-long mortgages. 

It’s well-known that house prices have soared in the last couple of decades. 

According to the Halifax House Price Index, the average house price is now more than £290,000. Property prices increased by 11.8% in the year to July 2022 alone. 

For many first-time buyers, it can make saving a deposit and then securing the mortgage a challenge. A longer mortgage term is a way to reduce repayments to make them more affordable. 

However, it’s not just first-time buyers that are struggling.

Rising inflation means the Bank of England has started to raise interest rates, which affects the cost of borrowing. For mortgage holders, it means repayments are likely to have already increased or will in the future. 

Many other household costs are rising rapidly too. According to the government, the average household energy bill increased by a record 54% in April 2022. Another substantial rise is expected in October 2022. 

So, even households that are already on the property ladder may be looking for ways to reduce their outgoings, such as extending their mortgage term.

The government is considering 50-year mortgages

A report in FT Adviser suggests the government is considering “creative ways” to help first-time buyers afford a home.

Among the proposals are mortgages that could last 50 years.

Traditionally, homeowners have repaid a mortgage over 25 years. However, property prices mean it’s now common to take out longer mortgages and there are already some 40-year mortgages available on the market. 

One of the challenges would be paying off a mortgage before you retire or ensuring repayments were affordable when you give up work. This is something lenders test as part of their affordability checks.

The large deposits needed mean that many are in their 30s when they buy their first home. As a result, ultra-long mortgages would mean making repayments into their 80s. 

The UK wouldn’t be alone in extending mortgage terms. In some places around the world, ultra-long mortgages are already commonplace. In Japan, for example, it’s not unusual to take out a mortgage that lasts as long as 100 years that parents would pass on to their children.

The government is also considering other options, such as creating a rent-to-own scheme. 

How a longer mortgage could reduce your monthly repayments

One of the key benefits of a longer mortgage term is that your repayments will be lower. It could make buying a home more affordable.

The below table demonstrates how your mortgage repayments would change, assuming an interest rate of 3.5%.

Mortgage debtMonthly repayment for a 25-year mortgageMonthly repayment for a 40-year mortgage
£150,000£751£581
£250,000£1,252£969
£350,000£1,753£1,357

Source: Money Saving Expert

However, only looking at how it affects your repayments doesn’t provide a full picture. You also need to consider the effect it will have on the amount of interest you pay. 

When you extend the mortgage term, you’re also increasing how long you’ll be paying interest.

Using the same figures as above, the below table highlights how the amount of interest you pay can add up depending on the mortgage term. 

Mortgage debtTotal interest for a 25-year mortgageTotal for a 40-year mortgage
£150,000£75,358£129,062
£250,000£125,596£215,098
£350,000£175,836£310,140

Source: Money Saving Expert

So, while the proposed 50-year mortgage option could mean first-time buyers can get on the property ladder, it could also mean they spend far more on interest overall.

It’s important to keep in mind that as well as extending your mortgage term, you could also shorten it and make overpayments in the future too. For example, you may choose to reduce your mortgage term after a promotion. These options could reduce how much interest you pay. 

What mortgage term should you choose?

There are pros and cons to choosing a longer mortgage. When weighing up your options, you need to do so with your budget, circumstances, and goals in mind. 

We’re here to help answer your mortgage questions, including how the different options would affect affordability and the cost of borrowing. Please contact us to talk about your mortgage needs. 

Please note:

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

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

A man looking at graphs and data on a computer screen.

The last couple of years have been challenging for investors. Factors outside of your control are likely to have led to your portfolio experiencing volatility. 

However, while market performance often grabs news headlines and your attention, the short-term movements of your portfolio shouldn’t be your main focus. 

Market volatility characterised the first half of 2022 

While markets experienced a sharp fall at the start of the pandemic in 2020, the majority recovered over the following 12 months.

However, volatility has characterised the first half of 2022 for many investors.

A perfect storm of factors has led to some investments falling in value. Among the reasons are the war in Ukraine, post-pandemic inflation, rising interest rates, and soaring energy prices. 

According to Forbes, the FTSE 100 index, which is an index of the largest 100 companies on the London Stock Exchange has fared well. The relatively modest 3% decline was attributed to stocks in the commodities, energy, and financial sectors making up a large proportion of the index.

In contrast, the US S&P 500 stock index fell by more than 20% in the first half of 2022. 

The volatility isn’t expected to calm in the coming months. There’s also a risk that economies, including the UK, could face a recession. 

Seeing the value of your investments fall can be a cause for concern. You may be tempted to make changes to your portfolio as a result.

However, you should keep in mind the common saying: “It’s time in the market, not timing the market.”

If you think back to last year, how many of the events now affecting the markets did you predict? How quickly the economic and geopolitical circumstances have changed demonstrates why trying to time the market consistently is impossible – there are too many factors outside of your control to consider. 

For most investors, a long-term plan that’s designed to ride out the ups and downs of the investment market makes more sense. Historically, investments have delivered returns over the long term, but you should keep in mind this cannot be guaranteed. 

3 things you should focus on instead of market volatility 

Volatility is part of investing. While it can be tempting to check how your portfolio has performed frequently, it can mean you’re more tempted to make changes. 

Instead of checking how your portfolio is performing every day, or even every week or month, try to focus on these three things. 

1. Your goals

When you start investing, you should do so with a long-term goal in mind. 

This could be retiring, supporting your children in buying their first homes, or travelling more in the future. Ideally, it should be at least five years away to allow the peaks and troughs of the market to smooth out. 

Focusing on your goal can help you stick to your plan when investment values fall in the short term. An investment strategy can give you confidence in reaching your goal, even when markets are experiencing volatility. 

2. Whether the risk profile is right for you

Remember, all investments will experience volatility and there is always some risk. Choosing investments that are appropriate for you could help put your mind at ease.

There are many factors to consider when creating your risk profile, from your goal to your financial circumstances. It’s a step we can help you with and could ensure you pick investment opportunities that are right for you. By avoiding investing in companies that present a higher risk than your profile from the outset, it can help you screen out the concerns that volatility may cause.  

3. Long-term performance

It can be easy to focus on daily or weekly market movements. It’s often the focus of media headlines and it can seem exciting. However, it’s also more likely to lead to knee-jerk decisions that may not be right for you.

Instead, look at how your investments have performed over the long term: what’s the annual rate of return delivered? And how have investments performed over the last five or 10 years?

Over a longer period, portfolios should aim to deliver steady returns. Historically, this is what the markets have done, although it cannot be guaranteed. 

So, in most cases, ignoring short-term market movements and focusing on the bigger picture makes sense. Remember, when market values fall, the loss is only on paper until you sell.

Arrange a meeting to talk about your long-term plans

If you’re ready to invest to achieve your long-term goals, please contact us. We’ll help you understand how it can fit into your wider financial plans, the level of risk that’s appropriate for you, and answer your questions about volatility. 

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 grandfather and grandchild walking through a park.

When you start thinking about how you’ll create an income in retirement, it’s probably your pension that comes to mind. Yet, if your estate could be liable for Inheritance Tax (IHT), it could make sense to use other assets first. 

IHT is paid after you pass away if the value of all your assets exceeds certain thresholds. It can significantly reduce how much you leave behind for loved ones. However, there are often steps you can take to reduce a potential IHT bill, including assessing how you’ll use assets in retirement. 

Inheritance Tax receipts reached a record high in June 2022

According to HMRC, IHT receipts between April 2022 and June 2022 were £1.8 billion. The sum is £0.3 billion higher than the same period last year and IHT receipts reached a record high in June 2022 due to high-value payments. 

HMRC expects IHT payments to continue rising thanks to inflation and a freeze on thresholds.

The value of some of your assets, such as property or an investment portfolio, may be rising. Yet, the thresholds for paying IHT are frozen until 2026. As a result, more families are expected to pay IHT if they don’t take steps to reduce their tax liability. 

There are two key allowances to consider if you’re reviewing if your estate could be liable for IHT:

  1. Nil-rate band: For the 2022/23 tax year, the nil-rate band is £325,000. If the value of all your assets is below this threshold, IHT will not be due.
  2. Residence nil-rate band: If you leave certain properties, including your main home, to your children or grandchildren, you can also take advantage of the residence nil-rate band. For the 2022/23 tax year, it is up to £175,000.

If you maximise both allowances, you can pass on up to £500,000 before IHT is due.

IHT is not due when you’re leaving assets to your spouse or civil partner, and you can also pass on unused allowances. So, if you’re planning as a couple, you may be able to leave up to £1 million without paying IHT.

The standard IHT rate is 40%. If it’s something your estate could be liable for, it’s important to be proactive to ensure you pass on as much as possible to your loved ones.

While you may consider gifting assets during your lifetime or making charitable donations, one potential option you may have overlooked is leaving your pension untouched. 

For Inheritance Tax purposes, your pension is outside of your estate

Your pension is likely to be one of the largest assets you have. In fact, according to a report from the Office for National Statistics, private pension wealth represents a greater share of household wealth than property. 

Crucially, the money held in your pension is usually considered outside of your estate for IHT purposes. 

So, while your first instinct may be to access your pension to create an income in retirement, it could make financial sense to deplete other assets first and leave your pension for your loved ones.

The beneficiary of the pension may need to pay Income Tax at their nominal rate when they access the savings. The rate will depend on the age you pass away and how they access it, but it could be lower than the IHT rate.

If you’re concerned about IHT and leaving your pension to loved ones is something you’re considering, it’s important to review your long-term financial plan. You should understand how you’ll create an income in retirement that allows you to meet your goals, and what other steps to reduce IHT may be appropriate. 

You will need to complete an expression of wishes to pass on your pension

Your pension isn’t covered by your will. The pension scheme administrator has the final say over who receives your pension when you pass away.

You can use an expression of wishes to tell the administrator who you would like your beneficiaries to be. It’s important you complete this. If you don’t, your pension may not be inherited by the person you want.

You will need to complete an expression of wishes for each pension you hold. 

Creating a long-term financial plan that suits you

When you plan your retirement or pass on wealth, it’s normal to have lots of questions. We’re here to help you answer them and provide advice.

Whether you’d like to understand how you can mitigate IHT or how to use your assets to create financial security in retirement, please contact us to discuss your needs. 

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 will writing, tax planning or estate planning.

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.  

Someone looking at investment performance on their phone.

When you imagine the worries that might come with taking investment risk, it’s probably “taking too much” that comes to mind. After all, you’ve likely heard stories of people that have invested in high-risk opportunities and lost some or all their money. 

However, when you’re investing for the long term, taking too little risk can also be damaging. 

As inflation remains high, considering how you’ll get the most out of your money is more important than ever.

While interest rates are also rising, they still remain far below inflation, which was 9.9% in the 12 months to August 2022. As a result, money held in a cash account is likely to be falling in value in real terms. So, you may be wondering if investing could provide you with a way to maintain or grow the value of your assets.

One important thing to consider is: how much investment risk should you take?

Too little risk could mean your money isn’t working as hard

All investments carry some risk. However, investment opportunities can have very different risk levels. So, it’s vital you understand what risk you’re taking and whether it’s appropriate for you.  

It’s natural to feel risk-averse when you’re making decisions. After all, no one wants the value of their assets to fall, or you may worry about what would happen if you lost the wealth invested. 

Yet, if you’re taking too little risk, it could mean your money isn’t working as hard as it could be.

As a general rule, the more risk you take, the higher the potential returns. So, taking an appropriate amount of risk could help you grow your wealth and reach your goals. 

While markets experience volatility, historically, they have recovered, although this cannot be guaranteed. Taking a long-term view of your investments and the risk taken can reduce worries that you may have. 

There are steps you can take to give you confidence when investing too. For example, you should have an emergency fund that you can fall back on. This could provide a valuable safety net if the value of your investments fell. 

That’s not to say you should take a high level of risk for the chance of securing higher returns – it’s about balance. There are several factors you should consider when reviewing your investment risk profile. 

4 essential factors to consider when creating a risk profile

A risk profile can help you understand what level of risk you should take. Within your investment portfolio, you’re likely to have investments with different levels of risk. However, overall you should align your portfolio with your profile.  

Here are four key things you should consider when creating a risk profile.

1. The investment time frame

You should always invest with a minimum five-year time frame. This provides time for the peaks and troughs of the investment market to smooth out and, hopefully, deliver returns. 

However, there are many situations where you’ll be investing for much longer. You may be investing for your retirement over several decades, for example.

A rule of thumb is that the longer you invest, the more risk you can afford to take. So, it’s important to set out an investment time frame from the outset. 

2. Your investment goals

What are your reasons for investing? Your response could change what investment risk is appropriate for you.

Let’s say you have a defined benefit (DB) pension that will provide you with a comfortable lifestyle in retirement. You want to invest so you can have more luxury experiences, such as long-haul holidays. You would be in a better position to take more investment risk than someone who is investing to create a retirement income that will pay for essentials. 

3. Your financial circumstances

You shouldn’t make investment decisions without looking at your wider financial circumstances. 

If you’re in a secure financial position, you may be able to take a greater amount of risk, as volatility is less likely to affect your lifestyle.

Ideally, you should have an emergency fund in place before you invest. You may also want to consider other steps, such as financial protection, to ensure you’re financially secure. 

4. Your attitude to risk

Finally, it’s important you feel comfortable and confident about the steps you’re taking, so your attitude to risk matters.

Talking to a professional about your options and the potential risks can put your mind at ease. Once you understand how investing could fit into your portfolio, it may be something you decide to move forward with, or you may consider alternatives. 

Contact us to discuss your risk profile and investment portfolio

It can be difficult to understand how much investment risk is appropriate for you, so we’re here to help. Whether you don’t know where to start or you’d like a professional to review your existing portfolio, please contact us to arrange a meeting. 

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.

An older couple sitting on a wall at a beach.

Some of the decisions you make as you retire could affect your income and lifestyle for the rest of your life. Yet, data suggests that many retirees aren’t taking financial advice and it could mean they face hardship in the future. 

According to the Great British Retirement Survey, only 27% of retirees in 2021 sought the services of a professional financial adviser. 

Separate research shows that many people prefer a DIY approach when managing their finances. A Scottish Widows report found that almost half of households have never accessed professional financial advice.

While financial advice that’s tailored to you can be valuable throughout your life, it can make a huge difference when you make milestone financial decisions. 

If you’re nearing retirement and haven’t sought the support of an expert, here are seven compelling reasons to do so.

1. Understand your different pension options

One of the big decisions you’ll need to make when you retire is how and when to access your pension.

If you have a defined contribution (DC) pension, you are responsible for ensuring it will provide an income for the rest of your life.

There are several options you will need to weigh up. These include purchasing an annuity to create a guaranteed income or taking a flexible income.

Even if you have a defined benefit (DB) pension, which provides a regular income for the rest of your life, you may still need to make important decisions. For example, you may have the option to take a lump sum out of your pension if you accept a lower income.

These decisions can have a lifelong effect and may be overwhelming. A financial planner can explain the options to you and demonstrate what they would mean for your retirement. 

2. Consider how you could use other assets to create an income

While your pension plays a crucial role in creating a retirement income, you may want to use other assets too. 

Pulling together these different sources, from property to investments, can be complex. You will need to consider which sources to access first, the tax implications of doing so, and ensure you don’t deplete the assets too quickly.

A financial planner can help you bring together all these different elements to provide security in retirement. 

3. Have confidence that your assets will last a lifetime

Retirement can last several decades, and it can make managing your finances challenging. 

Running out of money in retirement is a common fear. According to abrdn, almost half of retirees are concerned that they will face a shortfall. A financial plan can help you see how the decisions you make at the start of retirement will affect the long term. 

A professional can also help you consider how your income needs may change during retirement. This may be because of your lifestyle goals or outside factors, such as rising inflation.

Inflation is high – it was 9.9% in the 12 months to August 2022. Retirees that didn’t consider how they’d cope if the cost of living increased may find they’re struggling or are depleting assets faster than expected. 

4. Check you’re making the most of tax-efficient allowances

Tax efficiency can help you get the most out of your income and assets when you retire. 

Do you know how to spread pension withdrawals to minimise the Income Tax you will be liable for? Or what tax you could be liable for if you dispose of some assets? A financial planner can help you understand the taxes that affect you and the allowances you could make use of.

If your estate could be liable for Inheritance Tax, being proactive could ensure you leave more for your family. 

5. Consider your long-term security 

Even when you carefully create a retirement plan, some things can go awry. 

A financial planner will help you identify what could happen and put things in place to provide you with security if they do. This could be steps like ensuring you have an emergency fund.

It may also cover life changes, for instance, what would happen if an accident or illness meant you couldn’t make decisions on your own? A robust financial plan may include naming a Lasting Power of Attorney (LPA) to make decisions on your behalf if you’re unable to.

While it’s hoped you won’t need to use an LPA, having it in place could provide you with long-term security if something happens. Despite this, a survey from Canada Life revealed that 77% of over-55s have not registered an LPA.

6. Create a retirement plan that considers other goals 

When you retire, creating a stable income to achieve the lifestyle you want will usually be a priority. However, you may have other goals that are important to you too.

Perhaps you want to help grandchildren get on the property ladder or ensure you leave behind a legacy for your children. Whatever your goals are, a financial planner can help you understand how to reach them. By making them part of your retirement plan, you’re far more likely to achieve these goals. 

7. An effective plan can provide peace of mind

Finally, creating your retirement plan with the support of a professional can provide you with peace of mind.

Regular reviews can also mean you feel confident that your plans will remain on track. Knowing that you have someone to ask questions when things change means you can focus on enjoying your retirement.

Are you ready to start planning your retirement?

Whether you’re ready to retire now or it’s still a few years away, it’s never too soon to put a plan in place. Contact us to talk about what you want to get out of retirement and how we could help you achieve it. 

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.

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

If your child will be going to university this year or is planning to further their education in the future, you undoubtedly feel proud. However, you may also worry about what it means for your child financially.

As a parent, it is important to understand what expenses students face, how they will repay student loans in the future, and how you could offer support. This could put your mind at ease and mean you could take steps that will allow your child to focus on their studies. 

In this guide, read more about:

  • The cost of going to university, including tuition fees and living costs
  • How student loans work
  • How students can fund postgraduate education
  • What to consider if you want to make your child’s education part of your financial plan
  • And more…

Download your copy of “The parents’ guide to paying for university and student loans” to learn more.

If you’d like to talk about how you can make education part of your financial plan and support your child while they study, please contact us.