16

Mar

In recent times we have witnessed volatile markets which have dramatically impacted the values of investments. Uncertainties over global events such as the Coronavirus can cause markets to behave in an extremely volatile manner. Naturally, our first thoughts are with those impacted by this illness. However, we also understand that volatility in investment markets can be unsettling for our clients.

By way of a reminder, our investment process is always geared towards the medium to long term. Above all else, financial markets dislike uncertainty. Yet markets are also prone to over-react to events that cloud the short-term outlook, both on the upside and downside. When markets are volatile, it can be tempting to exit the market or switch to cash in an attempt to reduce further expected losses. However, it is impossible to time these movements with any degree of certainty, so not only would you be potentially crystallising a loss but being out of the market by just a few days can have a devastating impact on the overall returns of a portfolio once markets start to recover. Historically investments of this nature have over the medium to long term outperformed less volatile forms of investment, such as cash.

26

Sep

MPT states that portfolios which do not lie on the Efficient Frontier are inefficient (as otherwise you can get higher returns for the same risk). Hence, the asset allocation process should first establish the level of risk to which clients are prepared to expose their investment, and determine a portfolio that lies on the Efficient Frontier.

Efficient Frontier

– See more at: http://www2.skandia.co.uk/Adviser/investment-and-funds/Investment/Risk-profiling-and-asset-allocation-tools/Optimised-asset-allocation/Modern-portfolio-theory–building-a-portfolio-unique-to-your-circumstances/#sthash.UJmLMAQY.dpuf

9

Oct

Annuities rates are changing following ban on annuity gender discrimination

If you are a man approaching retirement you should beware of the following information.

Following a ruling by the European Court of Justice, with effect from 21 December 2012, insurers will no longer be able to take gender into account when pricing insurance policies and annuities. A Lifetime Annuity is one of a few types of income you can take from your pension fund. Once set up, it cannot be changed.

Currently, due to life expectancy, Lifetime Annuity rates for men are better than for women. This will change in December when annuity rates will be equalised for new contracts. The impact will be that men will get less annuity income than at present and women will get more.

The judgement applies to ‘insurance and pensions which are private, voluntary and separate from the employment relationship’. This means it will affect anyone who has a Personal Pension, SIPP or Stakeholder, who has yet to draw benefits from their plan. Members of occupational schemes will not be affected – bearing in mind that a Group Personal Pension is NOT classed as an Occupational Scheme in this context.

Currently a £100,000 pension pot will purchase a Lifetime Annuity of approximately £5,663 for a man on a single life basis with a 5 year guarantee and £5,459 for a woman when issued on standard terms, subject to change (source Money Advice Service 9th October 2012).

However, an increasing number of individuals choose not to buy an annuity now, but to draw their pension income direct from their fund; in this instance the maximum rate of withdrawal will reduce for men, and whilst one would like to think that females may see an improvement in terms, this is by no means certain.

Please do not take this as a recommendation of any kind since a lot will depend on your individual circumstances and obviously it is impossible to predict the outlook for annuity rates in the future.

If you have any questions in respect of the above please do not hesitate to contact us.

Stiles & Company Financial Services (Petersfield) Limited is a firm of Independent Financial Advisors dedicated to providing a highly professional service to our clients, spread predominately across Hampshire, Sussex & Surrey.

8

Apr

From 6th April 2010 the following points maybe of concern to Higher Rate Taxpayers:-

  • No increase to the £6,475 personal allowance and the basic rate tax threshold of £37,400.
  • Up to 60% effective tax rate on adjusted net income between £100,000 and £112,950, as individuals at these levels of income will lose part or all of their personal allowance.
  • A special annual allowance tax charge on pension contributions/accrual in excess of £20,000 or in certain cases £30,000 for people with relevant income of at least £130,000 in the 2010/2011 tax year or in either of the previous 2 tax years.
  • 42½% tax rate on dividend income and 50% tax rate on other income over £150,000.
  • From 6th April 2010 an effective restriction to higher rate tax relief on pension contributions/accrual for individuals with gross income of at least £150,000, or pre-tax income of £130,000 where the addition of employer pension contributions takes their gross income up to £150,000.

The main things to consider in order to potentially reduce your income tax liability are listed below:-

  1. Review your level and method of pension contributions.
  2. Invest in non-income producing investments.
  3. Make gift aid donations.

 Stiles & Company Financial Services (Petersfield) Limited is a firm of Independent Financial Advisers dedicated to providing a highly professional service to our clients, spread predominately across Hampshire, Sussex & Surrey.

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10

Mar

In some circumstances it may be possible for a company to create a trading loss by making a pension contribution and to obtain additional tax relief against years prior to the immediately preceding accounting year. Provided the company either paid corporation tax in the previous three accounting periods or will be paying it in subsequent periods, tax relief will be applied to the pension contributions as long as they are made ‘wholly and exclusively’ for the purposes of the trade. Pension contributions need to be paid before the end of the accounting period for this planning to be effective.

If you would like to discuss this matter further please do not hesitate to contact us.

Stiles & Company Financial Services (Petersfield) Limited is a firm of Independent Financial Advisers dedicated to providing a highly professional service to our clients, spread predominately across Hampshire, Sussex & Surrey.

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