Although the Government has announced that non essential retail shops can start to re-open in the coming weeks, there has been no mention of our type of service, traditionally as an industry we have always worked largely on a face to face basis. Clearly we are all now working from home and continue to offer advice to both new and existing customers. However, we can enhance that service by offering virtual meetings.
For new customers we want to offer you a way of getting access to the independent financial advice you need, while keeping staff and yourself safe.
Zoom, WhatsApp & FaceTime,
Here at Dales we want to continue our great service and are more than happy to use the latest available technology to keep in touch. Whether it be Zoom, WhatsApp or FaceTime, please just let us know and we can arrange a virtual meeting at a convenient time for you.
We will offer virtual reviews for existing clients or virtual independent financial advice, by just removing the physical meeting.
Going forward this may become the new norm, as more and more of us have used such systems over the last 10 or so weeks, to keep in touch with our relatives and loved ones.
Most of the providers have moved increasingly to accepting electronic instructions, and the need for paper has reduced even further, since the lockdown came into force. Long term this will be beneficial from both a transactional point of view and of course for the environment.
We also realise that for many of our clients they may be in strict shielding and again we reach out to them and offer to stay in touch, you are not forgotten and we are here and will facilitate reviews and on going services in a way that suits you.
The dictionary term is: – “an Individual Savings Account (ISA) allows individuals to hold cash, shares and/or unit trusts tax-free on dividends, interest and capital gains.
What does this mean?
Each tax year the Government ‘generously’ gives us a tax-free allowance on savings held within an ISA.
In July 2014, the Government increased this allowance to £15,000. The Government has already announced the new ISA allowance the coming 2015/16-tax year of £15,240.
Growth or income from ISAs is tax-free. You don’t even need to declare the income you receive on your tax return.
provided you have not exceeded your allowance for the tax year.
What’s the difference between the different types of ISAs?
There are two types:
A Cash ISA works pretty much the same as any other savings accounts except the interest earnt is tax-free.
This type of ISA is great for someone that wants to be tax efficient, but may need access to the cash to cover unexpected bills. Within a Cash ISA your cash remains as cash and can therefore be removed at any time. You can add to your ISA but only up to the £15,000 withdrawn
The downside to Cash ISAs is that interest rates are still very low. Cash is an inefficient way to save for long term goals.
STOCKS & SHARES ISA
A Stocks and Shares ISA invests your money in other equities such as Gilts and Bonds to Unit Trusts and Investment Trusts and OEICS a range of stocks and shares from government stocks and bonds to unit trust and holdings in blue-chip companies. It can also hold cash much the same as a Cash ISA.
Compared to a Cash ISA, a Stocks and Shares ISA has a higher potential return but with it comes a greater risk and cash may not be instantly available. The value may experience fluctuations in accordance with the market.
A Equity ISA should be considered as a long-term investment (3-5 years) rather than a short-term cash holding. Most often, this suites people with a little more cash spare or people looking at longer term savings or goals, as their ISA allows them to invest tax-free in the long-term, but still leaves them with liquid assets available in case of an emergency.
Who can open an ISA?
ISAs are open to UK residents only (Crown Employees). Cash ISAs can be opened from the age of 16 with Stocks and Shares ISAs from 18.
There are special Junior ISAs available with some extra rules, if you would like more information about Junior ISAs, please contact us.
It’s important to note that ISAs can only be opened in an individual’s name. They cannot be opened jointly which means that a couple can have two ISA allowances each year.
ISA Golden Rules
1. You can only open one ‘new’ ISA of each type each year.
2. You have one allowance per tax year, per person. You can choose to place this all in a Cash ISA or all in a Stocks and Shares ISA or you can opt to mix and match and spilt your allowance between a Cash ISA or a Stocks and Shares ISA.
3. If you fail to use your ISA allowance before the end of the tax year it cannot be rolled over so once it’s gone it’s gone.
4. If you want to switch providers for any reason, no problem, just remember do not remove or disinvest yourself. Once it has been removed from it’s ISA ‘wrapping’ anything that was within it looses its tax-free status. Your new provider will do the transfer for you, which retains the ISA status and does not effect this years’ allowance.
Should you wish to discuss ISAs or any other element of your financial planning needs, please call us on 01636 870 069.
Inflation: Are we looking at goods times or more bad times?
With inflation sitting at it’s lowest in a decade and half (1.5% below the Bank of England’s target of 2%) and now finally below wage increases; are we set to see an end to the longest economic squeeze since Victorian times? Lets examine the evidence:
We are already seeing a significant fall in oil prices, now approaching their lowest since records began in 1989, and in all likelihood inflation will probably follow. Capital Economics have suggested that the average household is set to benefit around £455 per year just in the fall of oil prices alone.
We are also likely to see a “tax cut” in other areas over the next coming months and with low inflation and rises in wages this means our pockets are going to be a little fuller than they have been over the last couple of years.
But low inflation and falling prices are only good in the short term. Over the long term, Economists have concerns that we may see ‘bad inflation’ similar to that witnessed in the US in the 1930s when inflation continued to fall with wages following shortly afterwards. This kind of ‘bad inflation’ last longer, has weaker growth and therefore takes longer for the economy to recover.
There are already concerns that this is already starting to evidence itself in Europe (not including the fall in oil prices), particularly in Greece. In an attempt to prevent this, European Central Bank is set to begin quantitative easing in the coming months and with this carries risk and unpredictability.
So whilst in the short term we are expecting to see cheaper prices, increases to wages and an overall improvement in the standard of living, in the long term, however, things are still uncertain for the time being.
Most people consider protecting their income if they become unable to work due to their own ill health. However, it is estimated that 3 out of 5 people will become a Carer for a relative at some point in their lives. If this were to happen to you, could your family afford for you to give up work? In most cases, probably not!
Friends Life have recently introduced Family Carer Benefit within their Income Protection policies.
So what does this mean? If a child, spouse or civil partner requires full-time care you could claim up to £1,500 per month for 12 months to help cover the costs of adjusting to your new family life or having to give up your full-time job. You don’t actually even have to give up working if this does not suit you and your family.
To find out more about Income Protection and Family Carer Benefit call us now on 01636 870 069.
Advances in treatments and early diagnoses has led to higher survival rates with 84% of men diagnosed between 2010-2011 predicted to survive for 10 years or more but what if the worse should happen? Does your life insurance cover early diagnoses and low-grade cancers?
More and more frequently life insurance companies are recognising the importance of early diagnoses and tweaking their policies to reflect this and make themselves stand out. A good example is Bright Grey who have just announced an adjustment to their critical illness policy to include low grade prostate cancer.
They have decided that they will pay out 20% of your cover (up to £15,000) should you be diagnosed with a specified stage of prostate cancer. If later, things progress for the worse and you meet their full critical illness definition, they will then pay out the full amount of your cover.
If you would like to discuss life insurance in more detail, call one of our Advisers on 01636 870 069.
According to Cancer Research the number of woman diagnosed with cancer has risen by 43% since 1970. In light of this, Bright Grey has added 2 new early forms of female cancer to their list of additional conditions.
This means that should you be diagnosed with Carcinoma in-situ of the cervix uteri (requiring a hysterectomy), borderline ovarian tumour (requiring the removal of an ovary) or ductal carcinoma (an early form of breast cancer) Bright Grey will pay out 20% of your cover (maximum of £15,000). Should this then lead on to a critical illness, as per their list, you will then receive the full amount of cover.
If you would like more information about critical illness and how it could protection you and your family, contact DALES on 01636 870 069.
Why poor Walt should have seen a Financial Adviser
For those of you who haven’t seen the hit TV series Breaking Bad, the story follows Walt, a chemistry teacher who’s diagnosed with lung cancer and his radical approach to ensuring the financial security of his family on his editable demise.
If you put Walt’s money laundering, corruption, extortion and generally becoming a criminal mastermind aside, would Walt have acted differently if he had known that he would be diagnosed with lung cancer? He probably would have.
Obviously not counting the numerous laws he’s breaking, Walt’s real predicament is that he should have seen a Financial Adviser earlier in life and had simple family income benefit policy put in place. This would mean that whether he was diagnosed with lung cancer or suffered a fatal accident his family would have received a lump sum pay out and/or monthly income for the rest of their dependency and his whole life of crime could have been prevented.
We are a society that is very quick to assume that we will never be diagnosed with a terminal or critical illness or be involved in a fatal accident. But if that were to happen, what would your family do?
Life insurance is not as expensive as you think considering the consequences of not ensuring the financial security of your family, should something happen. Why not speak to a Financial Adviser today?
Why do we use cash so much for our investments? I think the main reasons centre on the fact that it’s a safe investment.
But that’s not entirely the full picture….
Inflation is eating away at your savings or cash investments every single day, inflation can wipe out its value just because its sitting in a bank account.
Why: The Technical bit
The Consumer Prices Index (CPI) is 2.9% the very best Fixed rate Cash ISA is 2.75% (Virgin Money 2.75% for five years fixed). Even with the best Cash ISA you’re losing 0.15% each year. It gets worse if your money isn’t in ISA’s as you’ll pay tax on the interest. The best non ISA savings bond is 3.5% (Skipton 3.5% fixed 7 years) take off tax (20%) you’re down to 2.8%, then inflation and you are down to a loss of 0.1%.
All the above assumes you are using CPI index not the more well known RPI which is higher at 3.3%, use this and the figures look somewhat worse, add in that you could be a higher rate tax payer and the loss per year is quite startling.
From 2002 to 2012 the total rate of inflation has been 37.80%, between 1992 & 2002 its been 27.22% and between 1982 and 1992, 70.74%.
If you invested £50,000 in tax-free cash savings in 2002 and spent the interest (a common situation for older people who need to top up their pensions) in 2012 you would have a sum worth £34,011 in real terms. Interestingly the average interest rates over the same period (source-Association of Building Society’s) is 3.91% so taking into account inflation & interest you would have a miserable £650 extra in real terms, if you hadn’t spent the interest.
Therefore Are Cash Investments & Cash ISA’s. SAFE?
Not against inflation that’s for sure, this demonstrates that we should not use CASH for long-term investments. Short-term cash is ok; foregoing growth or income because we intend to spend the money. But, for longer-term, losing money each year against the costs of those items that you intend to buy seems a little foolhardy to me.
What about for those topping up pension income? There are two major problems facing people at present, inflation we have already discussed, ignore inflation the interest rates themselves are insufficient to maintain the income requirement for most and their lump sum is being eaten away in real and actual terms. The current rates of return on cash investments are simply insufficient.
Is there a solution?
Yes: The facts are longer term investments, such as fixed interests, bonds, gilts and equities and there are more such as property, art, fine wine, cars and antiques, which usually outperform cash. What’s the price of a better return? RISK. I have always felt that it is a simple truism of life: That the more risk one takes, the higher the potential for rewards, but like Newton’s 3rd Law. With the higher potential for reward comes the higher potential for loss. So like many other things in life, Investment Risk is a balance.
Look at these examples:
A house purchased at £50,000 in 2002 would have been valued at £85,000 in 2012 – above inflation growth and it appears a fairly low risk investment. Bricks and Mortar investments & Buy to lets are increasingly common, but there are more risks associated with property than many realise – we can offer buy to let advance and help in setting up your investment portfolio, letting you understand the risks. (Source Nationwide house price index)
A Medium/ cautious risk fund such as the Invesco Perpetual Monthly Income Plus – £50,000 invested in 2002 would now be worth around £120,990. This is the gross amount, but there are many straightforward ways to minimise the affect of tax on your investments, ISA’s for example are not limited to just over £5000 per year currently in equity ISA’s you can invest £12,520. Add this to a capital gains tax allowance each year and there is every chance that the impact of tax would be significantly less than a straightforward savings account. This fund mainly invests in Gilts, fixed interests and bonds with currently 20% invested in equities, the fund is available in a number of formats such as ISA’s and through many platforms. (Source – Morningstar Fund Data)
A Higher risk fund (keeping with the same brand) is the Invesco Perpetual High Income fund managed by the very highly regarded Neil Woodford. If you had invested £50,000 in this fund 10 years ago, this would now be worth – £168,475. With regard to tax and availability the same is true about this fund as above. (Source – Morningstar Fund Data)
I have not taken inflation into account with the above examples of the house, and the two funds for the simple reason that there is no need its fairly clear that the effects of inflation will have some impact, but all three examples out perform either the CPI or the RPI, and therefore you would have kept your money or increased it.
Conclusions – Moderation in all things.
Is cash “A bit rubbish really” well yes it is if your investing for the long term, don’t have any specific goals in mind or just need an income, but cash investments do have a role to play within any portfolio of investments. They give us a safety buffer, they are a safe place for money that’s going to be needed, but for anything else investments of a different type are necessary, investment advice is really worth seeking out to see how you can reduce the impact of inflation on your savings and investments.
Philip Dales Dip PFS Certs CII (MP&ER)
For more information or advice on Investments contact Philip Dales at DALES Independent Financial Advisers: firstname.lastname@example.org or go to our web site www.pndales.co.uk or call our West Bridgford office: 0115 832 0265 or Newark Office: 01636 870 069
The investment returns and any income can fluctuate, and investors may not get back the full amount invested. Past performance is not a guide to future returns. Where Philip Dales has expressed views and opinions these may change and do not constitute a recommendation. For individually tailored advice please contact either our West Bridgford (Nottingham) office 0115 832 0265 or our Newark office on 01636 870 069
Sources: All CPI and RPI data – Office of National Statistics, Fund information – Morningstar, Savings & ISA rates– Moneyfacts. Historical Average Savings rates – Association of Building Societies. House price growth – Nationwide Building Society’s House price Index.
P N DALES LTD are regulated by the Financial Conduct Authority: 496107.
Would you like someone to pay your stamp duty, perhaps you’ve saved up just enough for that nice shiny new house, but now have to set aside even more than you’d bargained for, to pay the tax man.
Currently the rate for Stamp Duty is 1% on Properties valued at £125,001 through to £250,000, it doesn’t end there if the purchase price is higher the percentage increases, but for now lets assume that your buying between £125,001 and £250,000 as a first time buyer.
So need a hand with your Stamp Duty, well Halifax’s new products may just be for you!
On Tuesday the 30th April Halifax will launch an innovative product range, of Stamp Duty paid mortgages for First time Buyers. Halifax will pay 100% of the Stamp Duty Land Tax due on selected products for first time buyers that fall into the 1% bracket (Purchase price between £125,001 and £250,000).
There is a choice of products available, across the core range, Affordable housing, Help to Buy/ First Buy, NewBuy and MI New Home products.
In essence the Stamp Duty Land Tax will be paid via a cash back arrangement, where the cash back is equal to the stamp duty, this will be paid to the conveyancer on completion.
Halifax have a wide range of products to suit most client types, and generally their rates are well placed within the market, criteria is consistent with their main competitors, so this offers a real opportunity to first time buyers, particularly when you consider that this is available on their Affordable housing, Home Buy/ First Buy, New Buy and MI New Homes scheme and their core range.
Full details of the new products are not available until tomorrow, but in the mean time this looks like a very positive step forward for First time borrowers, maybe now is the time to start looking at buying your first house!
Philip Dales Dip PFS Certs CII (MP & ER) Director
For more information or advice on First Time Buyer Mortgages, Standard Purchases & Remortgages and other types of mortgages contact Philip Dales at DALES Independent Financial Advisers: Advice@pndales.co.uk, or go to our web site www.pndales.co.uk. Nottingham office: 0115 832 0265 or Newark Office: 01636 87 00 69.
The information above is for information purposes only, it does not constitute advice, for advice suitable to your personal circumstances please contact us directly and we will be happy to help.
For mortgages, P N DALES Ltd do charge fees, a typical fee for mortgage advice and processing is £350.
DALES Independent Financial Advisers, Nottingham (West Bridgford) & Newark. Authorised and regulated by the Financial Conduct Authority: 496107.