Finances can be confusing, so we have created a series of free, educational events, books and online resources to help build your knowledge and confidence.
As we go through life, many of us ‘collect’ a wide array of financial products. Whilst saving for your future is a pivotal step to help you achieve your goals and the lifestyle you want, it can often be counter-productive if you scatter your seeds too wide or if you neglect the plans you’ve cultivated.
So, what should you be reviewing?
As we all know, market fluctuations, tax and a reduction in interest rates can all damage the return on our investments; however, it’s also important to consider how risk can also make an impact. Keeping money in cash may feel like the solution here, but in reality, cash is not riskless, and its value will also fall over time due to inflation, thus reducing your purchasing power and jeopardising your future goals.
So, how can you make your cash work harder and reduce the amount of risk you are exposing your wealth to?
Diversification is key here. Putting all of your eggs in one basket, for example one asset-class, could mean that all of your hard-earned money can be wiped out in one fell swoop. By electing to employ a diversified strategy you may still experience losses on some of your assets, but you could also see gains in other areas, hence your overall performance will be smoothed over time and the impact of losses is greatly reduced. However, it’s crucial to keep your investments continually under review, so that suitable adjustments can be made as required.
When it comes to pensions, having numerous pots strewn here and there can actually be damaging to your overall objectives. Time and time again we hear the same concerns about ‘untended’ and scattered pensions: it’s hard to keep track of performance; it’s an arduous task to monitor or review what’s in place; there are a multitude of fees and charges; the administration is a burden; and it’s unclear if there are sufficient funds for retirement.
So, what should you do if you’re considering pension consolidation? The first step is to seek expert independent guidance. Pensions can be quite complex and are governed by various regulations, come with differing benefits, and can sometimes be subject to exit penalties. It’s important to look at the pros and cons before you commit to any type of transfer, to make sure it’s suitable or the best available for your specific needs. Pension consolidation may not be appropriate for everyone, but if you are considering a ‘spring clean’ of your pensions, we strongly recommend seeking the assistance of an independent expert.
3. Review Your Estate Planning
Whether you have a Will or a Trust, your life will change over time and these elements of your planning will need to be updated. Whether you have experienced the joy of the arrival of new children in your family, or whether you have sadly experienced loss or divorce, the circumstances of our lives are constantly evolving, so it is important to ensure that your estate planning reflects those changes. Afterall, the last thing you may want is for your former partner and their family to walk away with your wealth after you’ve gone.
Wills, Trusts, and even documents such as Lasting Powers of Attorney, are the backbone to ensuring that your wishes are carried out, and Trusts especially can help to protect your wealth from factors such as tax, divorce and care fees, but the effectiveness of these devices will depend on how up to date they are. This area of financial planning is also subject to continual changes in legislation, such as tax laws, so it is crucial that your planning reflects what is legal, what is suitable for your situation and your wishes.
4. Review Your Protection
Very much like estate planning, your protection needs will change over time. Whether you change your career, health complications transpire, or your overall expenditure increases, or indeed decreases, it is important that the protection you have in place covers your unique situation.
You certainly don’t want to find out that the policy won’t pay out when you need it most, or it doesn’t cover the elements you need it to. Equally, you don’t want to be overpaying for a product that is no longer relevant.
Through continually reviewing your protection, you can gain some peace of mind that you have the most suitable cover for your situation, so that if the worst does happen, you and your loved ones can continue to live with security and comfort.
The first step in achieving your goals is to discuss your current concerns with one of our qualified Financial Planners.