Author: Touchstone UK

Wealth Accumulation

Valuable insights that can impact an investment strategy

With the ever-evolving landscape of investment, it’s not hard to see why it might appear daunting. The investment world is equivalent to a living, breathing entity constantly evolving and changing. It’s a landscape that never remains static, mirroring the dynamic nature of global economies and financial markets. Continue reading “Wealth Accumulation”

Navigating through divorce

Safeguarding your future financial stability and preserving your wealth

Entering into marriage isn’t done with the expectation of it ending in divorce, yet this distressing and strenuous event can be a reality for some. Managing finances may not be your immediate concern during such an emotional upheaval. However, obtaining professional financial advice can aid in safeguarding your future financial stability and preserving your wealth. Continue reading “Navigating through divorce”

Protecting yourself from investment scams

If something sounds too good to be true, it probably is

Investment scams are a rising concern, promising potential investors the allure of making a significant amount of money swiftly and effortlessly. These scams often involve minimal to no risk investments in various areas such as financial markets, property, cryptocurrencies, and precious metals and coins. Continue reading “Protecting yourself from investment scams”

Managing Your Finances As A Couple

Discussing finances may feel uncomfortable, but it is crucial to maintain a healthy relationship

Transparency is the foundation of any strong relationship, which holds true regarding financial matters. It is easy to fall into the trap of assuming that you and your partner have similar financial habits and attitudes.

Stay on track and work together

Open conversations about finance can help set expectations, resolve issues, formulate a budgeting plan that suits both partners and construct a robust financial plan. Aim to establish mutual goals. Having individual life objectives is commendable, but it might be easier to stay on track if you feel you’re working together. Setting one or two shared goals provides a tangible target for you as a couple. The significance of setting goals cannot be overstated. It helps determine how much money needs to be saved and where it should be invested. For instance, placing this fund in a low-risk cash savings account would be prudent if the goal is to upgrade to a larger property in three years. This strategy eliminates the risk of the savings plummeting in value right before they are needed. However, if appropriate, consider investing funds in the stock market for long-term goals spanning ten or more years. This approach allows your money to grow over time, helping you achieve your goals faster.

Tax-efficient income and growth

Tax planning might not be the most appealing topic, but it offers several opportunities that could help your money stretch further. For example, Individual Savings Accounts (ISAs) allow each partner to invest up to £20,000 a year (2023/24), offering the advantage of tax-efficient income and growth. If both partners open an ISA, a combined £40,000 is shielded annually from Income and Capital Gains Tax (CGT). If your ISA allowances are exhausted, the CGT exemption permits each partner to realise tax-free investment gains of up to £6,000 in the 2023/24 tax year. Married couples or those in a registered civil partnership can transfer investments between one another tax-free, effectively doubling the CGT exemption to £12,000. Remember that the CGT exemption will be reduced to £3,000 from 6 April 2024. The personal savings allowance provides an amount of interest that can be earned without tax. This is £1,000 for basic rate taxpayers, £500 for higher rate taxpayers and nil for additional rate taxpayers. Married couples or those in a registered civil partnership could consider transferring savings between each other to maximise each partner’s personal savings allowance.

Avoiding substantial financial hardship

Discussing life’s darker aspects, such as death and illness, may not seem ideal for a romantic evening, but it’s crucial to ponder how your finances would fare if the worst were to happen. As partners, your financial lives are likely deeply entwined; a serious illness or demise of one could lead to substantial financial hardship for the other. We’re here to help you navigate these difficult conversations and decisions. We can assist you in selecting the right protection policies and levels of cover tailored to your unique circumstances.

Wealth and assets allocated according to your wishes

This is also an opportune time to consider drafting a Will. Creating a Will ensures that your wealth and assets are allocated according to your wishes. This vital document guarantees that your money and other possessions go to the intended recipients, fulfilling your wishes. Having a Will becomes even more crucial if you’re not married or in a registered civil partnership. Even after living together for years, without a Will you have no legal rights to your partner’s estate if they pass away. THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE. THE VALUE OF YOUR INVESTMENTS CAN GO DOWN AS WELL AS UP, AND YOU MAY GET BACK LESS THAN YOU INVESTED. THE TAX TREATMENT IS DEPENDENT ON INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN FUTURE.

Time To Consider Your Financial Resolutions?

Plan your financial blueprint for 2024 and beyond

As we usher in 2024, it’s time to consider our financial resolutions. Many of us set New Year’s objectives, yet how many of us actually attain these goals? We all harbour unique financial dreams and aspirations, which may sometimes feel unattainable. In the intricate world of finance, the path to your financial objectives might not be as straightforward as you’d like. This is where the essence of financial planning comes into play. Continue reading “Time To Consider Your Financial Resolutions?”

£32 Billion Hole In UK Savings Pots

Rise in living costs forcing many people to dip into their financial reserves

The average cost of housing, food, and energy bills have increased by nearly £500 per month as of September last year compared to August 2022, according to statistics regarding the cost of living in the country[1]. This rise in living costs has forced many people to dip into their financial reserves. Continue reading “£32 Billion Hole In UK Savings Pots”

Bridging The Pension Generation Gap

Urgency for younger generations to access improved financial education

The chasm between generations regarding retirement prospects is glaringly apparent, as 78% of individuals believe their predecessors had more favourable pension plans or brighter retirement futures. According to recent research, this data highlights a stark revelation that underscores the urgency for younger generations to access improved financial education[1]. Continue reading “Bridging The Pension Generation Gap”

The Power Of Prevention

An effective financial plan acts as your protective shield

In the realm of financial well-being, an old adage rings particularly true: ‘Prevention is better than cure.’ An effective financial plan acts as your protective shield, specially designed to weather any economic storm that may come your way. It offers comfort and control, ensuring that you are steering the ship of your finances, not vice versa. Continue reading “The Power Of Prevention”

Gender Pension Gap

The potential barrier to reaching the same savings levels as men

The gender pension gap is an issue that extends beyond just the disparity in earnings between men and women. It also encompasses other aspects such as financial confidence, engagement with financial products, and socio-economic factors. According to new research, women are 33% more likely than men to say they do not understand how their pension works, indicating a lack of financial confidence[1]. This lack of confidence may explain why some women are less likely to engage with financial products. For instance, women are 38% less likely than men to have a Stocks & Shares ISA and 32% less likely to have a private pension.

Career breaks for childcare

This engagement gap, along with other factors like the gender pay gap, could result in young women in the UK (aged 22 to 32) having just £12,873 per year by the time they retire in the 2060s1. In contrast, young men are projected to have nearly a third more, receiving an average of £19,803 in annual income. The research highlights the gender pay gap also contributes significantly to the gender pensions gap. By the age of 27, women already earn £10,000 less than men of the same age. Other factors impacting women’s pension savings include being less likely to hold senior leadership positions and being more likely to take career breaks for childcare.

Reaching the same savings levels

According to the research, young women are currently projected to have £300k less in their pension pots than their male counterparts by the time they reach the current state pension age. Women are also more likely to work part-time or on reduced hours, take career breaks for childcare, act as unpaid carers, or need time off work for medical reasons, such as menopause. In addition, women often self-identify as having lower confidence regarding savings and investments. This presents another potential barrier to reaching the same savings levels as men. Addressing this issue requires a multi-faceted approach that includes promoting financial literacy among women, creating policies that support women during career breaks, and addressing the gender pay gap. Source data: [1] Analysis based on the following research and assumptions for Legal & General by Opinium Research conducted 2,000 online interviews of people aged 22-32 between the 15th and 29th August 2023 – CPI = 3% • Salary premium = 1% – Salary increase = 4% p.a. (this assumes that salary increases on an annual basis up to retirement at 68) – Median male salary at age 27 = 35,000 – Median female salary at age 27 = 25,000 – Start saving into a workplace pension at age 22, retiring at age 68 -Investment return on pension pot, assuming broad 60/40 asset split, (7% p.a., 4% real) – Qualifying earnings – Currently (£6,240 to £50,270), Historical years (actual LEL and UEL), Future years (increased annually by CPI assumption) – Income based on current Legal & General annuity – fixed rate, single person annuity at age 68, with a 10-year GMPP. Women are 33% more likely than men to say they do not understand how their pension works – 320 (men) – 425 (women) = 105. 105 / 320 = 32.8125% (33%) Women are 38% less likely than men to have a stocks and shares ISA – 324 (men) – 201 (women) = 123. 123 / 324 = 37.962962962963% (38%) Women are 32% less likely to have a private pension -324 (men) – 221 (women) = 103. 103 / 324 = 31.79012345679% (32%) THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE. A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE). 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.