Efficient Wealth Update May 2018

Efficient Wealth Update May 2018

Date : 23 May 2018
posted By : Charlotte

Don’t Forget the Marriage Allowance

The Marriage Allowance allows you to transfer £1,190 of your Personal Allowance to your husband, wife or civil partner, which can reduce their tax by up to £238 every tax year (6 April to 5 April the following year).

To be eligible to benefit as a couple, you need to earn less than your partner and have an income of £11,850 or less. Your partner’s income must be between £11,851 and £46,350 (£43,430 in Scotland).
You can backdate your claim to include any tax year since 5 April 2015 for which you were eligible for the Marriage Allowance. You can still claim even if your partner has sadly died since then.
To start the process simply follow this link: https://www.gov.uk/apply-marriage-allowance.


Inheritance Tax Could Be Simpler in the Future

The Chancellor has announced that a review of the UK’s Inheritance Tax (IHT) rules will be held in the Autumn of this year … and it’s about time.

IHT was first introduced in 1986 and, since then, has been subject to many modifications to keep up with changes in society and economics. More and more people are becoming liable for IHT charges because of the increases in property prices over recent years and, as we mentioned in last month’s Efficient Wealth Update, the government are certainly benefiting from this.

This review will highlight areas of administration and technical tax standpoints with a view to recommending how these can be simplified, including things such as:

 IHT returns and how the tax is paid
 Gifting rules (annual gifts, small gifts and normal expenditure gifts)
 The probate procedure

We will have discussed some form of IHT planning for almost all of you, so you will know how complex this area of estate planning can be, therefore any simplification will be welcomed by us all. If you have also had to go through the probate procedure you will know how complex this can be at such a difficult time.

We are also interested in any simplification regarding gifting, as this will hopefully prompt a review of the gifting allowances and lead to some potential increases. These allowances have not been raised in quite some time, so would benefit from an increase to match the changes that have occurred in the economy.

Watch this space. We will report the outcome when it is released.

The Pitfalls of Managing Your Own Investments

Managing your own investments is becoming easier as time goes on. There are many online apps that help you to move your stocks and shares around at the click of a button and while you are on the go. You have full control of how, when, where and in what you invest, and you are fully responsible for how well your portfolio of investments performs. For some people this is a positive and for others it sounds like a nightmare.

Obviously, there are many downsides to managing your own investments, otherwise we might be out of business!

• You could be taking too much risk. This is one of the most dangerous aspects of investing. Without knowledge of risk profiling and the tools to define what risk is appropriate for you, you could be taking far too much risk for the gains you receive.
• You might be putting all your eggs in one basket. Investing in just one company, one sector or in one particular asset is never a good idea. Should this area take a tumble, your whole investments will follow. It will take time for them to struggle back to where they were at their high point.
• How do you choose? There are an indefinable number of funds in which it is possible to invest. In addition, there are about a million ways to hold each one. Without the tools and knowledge to make a decision on which is right for you, you might end up with completely the wrong investment.
• Tax control. Tax is a tricky subject and one that usually needs expert advice. Without such advice you may not be using your relevant allowances, or you may be paying too much tax that could be avoided.
• Charges. This is one of the biggest culprits for eroding investments. Through utilising platforms and expert Discretionary Investment Managers, companies such as ourselves get big discounts for our clients. As a sole investor, charges are likely to be much higher and your scope of access can be significantly impaired. And how do you know whether you are getting a good deal?

This is not an exhaustive list, but it does give an overview of the considerations that should be made when self-investing. In our opinion (typical, I know), investing should be done by professionals who have the time and resources to manage and monitor the investments properly, to get the best returns possible whilst not putting the investments at risk.


Retirement Income Warning

What is people’s biggest fear when it comes to retirement?

60% of ‘Baby Boomers’ are more worried about running out of money than dying! The new pension freedoms mean that buying a guaranteed income is becoming less popular. Consequently, increasing numbers of retirees are at the mercy of the markets – raising anxiety that they might not have enough to see them through, or that they might suffer large and unrecoverable losses.

The important thing is to be realistic when saving for retirement – you can’t save next to nothing and expect to retire on a tidy sum, that’s just not how it works. Think about what you want your retirement to look like, work out how much you will need to achieve it and get saving towards that goal.

Remember, in retirement you’re supposed to spend your pensions and savings! So, make sure you have enough to be able to enjoy it, rather than worry about it running out. Leave yourself sufficient time to make sure you get the retirement you want and deserve.

If you are already in retirement, you must make sure your funds are protected. We develop our investment strategy for protection as well as growth, especially in later life and throughout retirement, when risk is reduced considerably. Retirement is usually the time to step away from focusing on growing your savings as much as possible – that should have already been achieved. The focus now should be on protection and enjoyment!

This is why we use a Lifetime Cash-Flow Forecast to make sure our clients can see into their financial future, to give them the peace of mind to enjoy their money, so if you already invest with us, then you are likely on the right track. If this is something you are worried about, or think you might need help with, then let us know. We want to make sure that everyone gets the retirement they have worked so hard for.


Notes on Brexit

The European Union (Withdrawal) Bill 2017–2019, designed to transfer powers from Brussels to the UK, has been overturned by the House of Lords because it was an attempt to give ministers the power to make changes to EU laws based on what they “considered appropriate”, rather than on what was necessary. This has caused a not-unexpected uproar from staunch Brexiteers, who claim the Lords are being needlessly obstructive, and yet another petition calling for the abolition of the second House.

As this Bill would set a precedent for other legislation resulting from Brexit, we hope there would be a more robust consideration given to the laws being changed. I imagine that everyone, on both sides of the Brexit fence, expects “taking back control” to mean “under the sovereignty of parliament” rather than passing power to ministers willy-nilly (with the possible exception of those ministers themselves!). The government can continue to expect more challenges to the content of the Bill in the coming days, from the Lords as well as from the devolved Scottish Parliament in Holyrood.

Stage Three of the negotiations with the EU is due to begin shortly, with the next update due at the June Summit. New framework guidelines were published on 19th April, outlining that avoiding a hard Irish border will be top of the agenda for this session, along with progress on how the economic relationship between us will look after the withdrawal. Mrs May rejected any “off the shelf” options in her Mansion House speech last month, so all we can say for now is that things will definitely be different and unlike anything else out there.

Book of the Month

This month’s book recommendations is Fire and Fury, Inside the Trump White House by Michael Wolff. Whilst I am not sure it is a book I enjoyed, I do think it is a book you must read. Assuming what Wolff says is true, you will not believe what happened in the first nine months of the Trump Presidency. You will gain an understanding of why there have been three Chiefs of Staff (the Chief of Staff effectively runs everything) and two Heads of Communication in nine months, and why Trump expects his daughter to be the first woman President.

It is, of course, inevitable that there will be inaccuracies in the book, and there is a fair bit of ‘tittle tattle’, but it certainly gives you a flavour of things. I didn’t like the man before I started reading it, and I definitely like him less as a result!



Over the last few weeks I’m sure that you have been bombarded with requests to ‘opt in’ from a plethora of companies. This may have felt like an arduous admin task, but in fact it’s a blessing in disguise.

On the 25th May GDPR will come into force, whereby anyone who holds your data must obtain your consent and disclose how they collect and process your information. For you this will mean that you can be more selective about who sends you emails, direct mail and other forms of correspondence, so your mailbox will only be full of the valuable and beneficial information you want.

You can read more about how we collect and process your data here.

If you’ve not already received it, we too will be sending you an email to obtain your consent very soon. Opting in to this means that you can continue to receive useful information, such as this newsletter, plus invitations to our numerous events, such as the golf day, our launch party and future charity balls. It’s a quick and simple process and you can of course change your mind at any point.


Office Move

After months in the making, it is with a huge sense of pride, relief and excitement that I can tell you that I’m writing this month’s update from my brand-new office in Oakham!

As you may already be aware, early last year Efficient Portfolio took ownership of the impressive Grade II Listed ‘White Lion’; nearly eighteen months later, the renovations are complete, and we can now call the historic-market town of Oakham our home.

Taking our place on the bustling high street of Oakham feels like an exciting new adventure for us at Efficient Portfolio, but one that we relish. As it stands, we are the only Chartered, independent Financial Planning firm in the county, so moving to Rutland’s main town feels like a natural progression for us. The new setting will also give us the much-needed to room to grow as a firm and widen the range of services that we are able to offer.

You can view some pictures of the new office on our Facebook page by clicking here.

I can’t wait to show you our stunning new location! You should have received a ‘Moving Card’ in the post, but if not, please note that our new address will be Portfolian House, 30 Melton Road, Oakham, Rutland, LE15 6AY.


Is Now the Right Time to Consider Remortaging?

In recent months we have seen ups and downs in the financial markets, a plethora of changing economic factors and just recently a strong expectation of an interest rate rise. Stagnating Brexit negotiations have also added further uncertainty into the mix.

Although an increase in the Bank of England base rate was put off at the most recent Monetary Policy Committee meeting, there is no doubt that we are moving into a new upward trend of interest rates as lenders can no longer sustain the increased cost of funds – this is not helped by these market uncertainties.

When the previous Bank of England base rate changed at the end of 2017, Scottish Widows Bank reported around 15% more remortgage activity in the week of the move than the preceding week. Current mortgage search trends are already showing activity at similar levels here at Efficient Portfolio, as clients became concerned over the likely hood of the effects of a rate rise.

In 2017, Scottish Widows Bank saw an increase in mortgage applications of 143%, with customers looking towards longer 5-year fixed offset deals, giving them security, but with the flexibility needed with offset. These trends are continuing this year, too.

With this in mind, I would urge those with a mortgage(s) to look at ‘locking in’ a completive rate before further rate rises begin to take hold and push costs up further.

Here at Efficient Portfolio we offer an independent mortgage service, helping to ensure you are on the best rate available to you. For a chat regarding your needs please contact our mortgage team, Eric & Daniel, on 01572 898 060.


Foreign Exchange

We are always looking for ways that we can save our clients money. Recently I met a firm at legal conference where I was speaking, who provide foreign exchange services. There are loads of these, but Moneycorp seemed to be more transparent and forward thinking than most I had met. So I referred them to a few clients to see if they could indeed get them a better deal than their research could get them elsewhere, and they did. These were both businesses that had a need to move money to and from sterling, and also individuals doing the same. On every occasion, they managed to secure them a much better rate.

If you are looking to transfer a significant sum of money to or from a foreign currency, please drop us a line and we will introduce you to them.


Charlie’s Mini Blog

Yesterday I was asked to speak at a Personal Finance Society PFS regional event for financial advisers. A senior board member of the PFS got hold of a copy of The Dream Retirement, and after reading it 3 times, yes that is correct, 3 times, he got in contact with me and asked if I would speak at some of their events.

My job yesterday I was to inspire more traditional financial advisers to taker a bigger step towards financial planning. As I speak, I ask questions, so I was able to learn a little about my audience. Out of around 100 Norfolk- based financial advisers, around 1/3 described themselves as financial planners. This is not a true reflection of financial advisers in general, as people that attend a PFS event tend to be slightly more forward thinking than most. Also, around 1/3 were using Lifetime Cash-Flow Forecasting, again a higher percentage than I expected.

What was interesting though was 2 things: When I asked who uses Lifetime Cash-Flow Forecasting for all clients, we fell back to only a handful. When I asked how many regularly write down goals for their future, we dropped to 3 people. I would question if someone calls them self a financial planner but only does financial planning (Lifetime Cash-Flow Forecasting) for some clients, are they doing the rest a disservice? Also, if they are trying to help people achieve what’s important to them in the future, would it not make sense to have a written down plan of their own future?

Whilst the term ‘financial planning’ is being used more and more in corporate branding, it would seem that for many companies, it is still in name only.

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