Flat rate of pension relief?!

The lovely Chancellor, in all of his wisdom, is considering implementing a flat rate of tax relief for pensions. Therefore rather than the current system of 20% tax relief if you are a basic rate tax payer, 40% if you are a higher rate taxpayer and 45% if you are an additional rate taxpayer, everyone will get the same rate. No prizes for guessing that it will not be beneficial for higher rate taxpayers.

Who knows whether he will actually do it, but the rumours are that it will be implemented in his Budget, which is due on Wednesday 16th March and that it will be implemented straight away, leaving no time for a rush to fill your pensions before the rate of relief drops.

So, if you are considering putting any money into your pension and you are a higher rate or additional rate taxpayer, I would suggest that you looked at this sooner rather than later.

Now, the Chancellor may not make any changes, but he might, so I’m just pre-warning you. We will have to wait and see what he does on Budget Day. He hasn’t messed around with pensions for a few months now, so it must be time for another change!!

The Stock Market Is Going Crazy – What Shall I Do??

I have heard that 2016 is going to be a bad year for investment. We are going to spiral into another recession, possibly worse than the one in 2008, with the Chinese stock market continuing to drop like a stone and oil prices staying ridiculously low. But am I worried? No. Why, I hear you say?

People are always trying to predict what is going to happen with investments and a recent study showed that a monkey has just as much chance of guessing what is going to happen as a so called investment expert!

For the US, 22 strategists polled by the Wall Street Journal estimated an average increase for the S&P 500 of 8.2% for 2015. Their forecasts ranged from 2 to 14%. No-one picked a fall. As it turned out, the benchmark ended marginally lower for the year, so they were all wrong!

In the UK, a poll of 49 fund managers, traders and strategists published in early January 2015 forecast the FTSE 100 would be at 6,800 by mid-year and 7,000 points by year-end. As it turned out, the FTSE surpassed that year-end target by late April to hit a record high of 7103, before retracing to 6242 by year-end. Another fail for the ‘experts’!

It shouldn’t be a surprise that if economists can’t get the broad variables right, it must be tough for stock analysts to pick winners. Even a stock like Apple, which for so many years kept going up as more and more people bought iPhones and iPads, disappointed some forecasters last year with a 4.6% decline.

In Australia, among the “Top Picks for 2015” published by one media outlet a year ago were such names as Woodside Petroleum, BHP Billiton, Origin Energy and Slater & Gordon, all of which suffered double-digit losses in the past year. Oops!

Setting your investment course based on someone’s stock picks or expectations for interest rates, the economy or currencies is not a viable way of building wealth in the long term. Markets have a way of confounding your expectations. So the better option is stay broadly diversified and, with the help of an adviser, set an asset allocation that matches your own risk appetite, goals and circumstances, and stick with it, which is exactly what I do for my clients.

Of course, this doesn’t stop you or anyone else having or expressing an opinion about the future. We are all free to speculate about what might happen in the economy and markets. The danger is when you base your investment strategy on an opinion.

Brown bear in trees web

If you really want some predictions, then here’s 10 that really will come true in 2016:

  1. Markets will go up some of the time and down some of the time.
  2. There will be unexpected news. Some of this will move prices.
  3. Acres of newsprint will be devoted to the likely path of interest rates.
  4. Acres more will speculate on China’s growth outlook.
  5. TV pundits will frequently and loudly debate short-term market direction.
  6. Some economies will strengthen. Others will weaken. These change year to year.
  7. Some companies will prosper. Others will falter. These change year to year.
  8. Parts of your portfolio will do better than other parts. We don’t know which.
  9. A new book will say the rules no longer work and everything has changed.
  10. Another new book will say nothing has really changed and the old rules still apply.

Start With What You Know

Proof that investment decisions can go either way, is always yelling at us from the pages of our papers as well as from the TV or radio. Indeed, just in the last few months, we’ve witnessed the financial downturn in China as well as oil, VW and Glencore hitting the headlines with unexpected and alarmingly dramatic changes in price. It’s probably fair to assume investors with exposure to assets such as these might well be licking their wounds and cherishing regrets. Not that regrets ever recoup losses, and of course we’d all be a lot better off, wouldn’t we, with hindsight?

Many investors follow a strategy that relies on their own (or someone else’s) assessment of the present, alongside forecasts for the future. However, in doing this, they’re taking a completely blank drawing sheet onto which they’re creating and building, from scratch, a portfolio of assets they believe, or have been told, will do better than the alternatives. Sometimes this goes well, sometimes it doesn’t.

We work from a different starting point. Our investment philosophy is based on what we know rather than what we don’t. For example, we know financial markets do a good job of setting prices so we see no mileage in trying to second-guess them. We believe investors will, on average and over time, receive a fair return, given access to broadly diversified, low-cost portfolios of assets that aim to beat the market average. The portfolios achieve this by utilising past facts to provide information about a security’s characteristics and its expected future returns.

Decisions we make about which assets to hold are based on decades of academic research rather than on short-term hunches. This means we comfortably focus on meeting long-term goals rather than becoming absorbed or distracted by short-term market movements. As a rule, investment decisions are not easy to make, but if, like us, you build on solid current information, securely backed by decades of evidence, we believe you can improve your chances of successful investment.

Nothing demonstrates this quite as clearly or simply as Carl Richard’s diagram:


Is property really a ‘guaranteed’ investment?

Isn’t it an annoying fact, that nothing in life is ever completely straightforward? There are always two sides to every coin. And it’s so important, when setting up your financial planning, that you take a good hard look at both sides of the coin, so you can make the best decisions on what’s going to work for you, and what isn’t.

Property ownership is a prime example of what I mean. Many of us have the largest part of our net worth in property – our own home. And how many of us are tempted by the idea of having an additional rental property, or have already acquired one? Certainly, many of us have grown up within a culture that has always smiled on property and ownership, how many times have we been assured of the security of bricks and mortar?

Property can be a great investment and certainly prices, in and around Ascot, have continued to steadily rise – and rise. They didn’t get knocked for too long in the credit crisis, did they? But we shouldn’t forget the pain, strain and uncertainty while that was going on, when we didn’t have a crystal ball and couldn’t be sure if things would hold or fall. We also only have to look across the Atlantic to see the mess in the US, that’s still reverberating today, caused by blissfully and blindly lending money for mortgages that didn’t have a hope of ever being paid off or even kept up.

Here are a couple of my thoughts – casting light on both sides of the coin:


  • Increasing property prices: According to the Nationwide House Price Index – which has been data collecting and recording since 1952 – for the 30 years since 1985, house prices have increased on average by 6.6% per year.
  • Rental income: This could cover any mortgage you may have on your rental property, or if you don’t have a mortgage, the rental will provide an income.
  • A home for your children: You may, like me, wonder whether your children will ever be able to afford to buy a house (unless they’re prepared to completely relocate, taking them away from friends and family). If this is something you’ve mulled over, then maybe buying a rental property could be a solution. The property could be given to the children at a later date or could be sold, providing a lump sum for a deposit. This would give you the comfort of knowing, when the time is right, you’d be able to set your children on the first few steps of the property ladder. 


  • Dealing with tenants and or managing agents: Renting out a property, isn’t always a smooth or untroubled run.
  • Property maintenance: Keeping a property in a consistently good state of repair, can be costly.
  • When you sell: You will pay CGT (Capital Gains Tax) on any growth. For example, if you bought a property for £200K and sold it for £300K, you would have £100K of growth that would be liable for CGT. Final tax liability is dependent on your status as a basic or higher rate taxpayer and on whether you bought the property as a couple what the CGT allowance at the time of selling is etc but could be somewhere from £14,000 – £22,000. That obviously cuts into your profit.
  • If you’d opted for other investments: You could have structured it so that potentially no CGT was payable, thus putting more money in your pocket.

So you’ll see, there’s no hard and fast rule, no absolute right or wrong, It’s all about making sure you consider all options open to you and being confident, when you make your decisions, that they are right for you and your family.


This month I’ve got several things to say (shout!) to the Government and indeed to everyone and anyone at Westminster, who has a finger in the increasingly complicated Pensions Pie. So, here are my thoughts for politicians of whichever party, because whilst governments can come and go, common sense should always apply!  

  1. Stop messing with pensions. Whilst it’s sweet of you to continue making things more and more complicated, so more and more people are getting information-overload headaches and needing to consult financial advisers like me; the fact is, you’re not just messing with people’s minds but with their lives. So, stop it!
  1. For goodness sake, why not get better advice before putting things in place. You’re all very busy making everyone else get advice, before even thinking of utilising the new pension freedoms. Why not take a leaf out of your own book?

The way things stand now, if someone wants to access their pension, whether taking it all out in one go as cash or in stages, they need the advice of a good financial adviser. This is so all of the implications can be considered, not least of which, is what will the withdrawal mean tax-wise. Laying hands on all your money in one go sounds attractive for many reasons but it’s not always as sunny as it sounds. It could mean losing a fair bit in tax payments that may not apply if the withdrawal was staged. Obviously, it makes sense for most people that tax liabilities should be minimised as much as possible.

So, my point to Government is why don’t you also get some sound advice on board before implementing changes and why not take this advice from people who understand the full implications of what you‘re thinking of doing? Once you’ve got that very expert advice and input – Listen to it!

  1. Stop moving money from one place to another. The Government have made the decision to increase the inheritance tax allowance for houses, so it’s now going to be up to £1 million for a couple. Naturally, this increase is costing the Government money that needs to then be recovered from somewhere else.

Well, pensions hadn’t had any changes for a whole few weeks, so it was decided to decrease the lifetime allowance (how much you’re allowed in total in all of your pensions) to £1 million. That’s a sum that may sound substantial, but by the time you reach retirement and want to buy yourself a decent income, it isn’t necessarily quite as substantial as it sounds. A lot more people now need to think about whether they should stop saving into pensions, before being hit over the head with a lifetime allowance charge. Isn’t there a saying, ‘You shouldn’t borrow from Peter to pay Paul’?  

4. Once you have made a policy decision, get everything in place well before it becomes law. In that way, everyone can get everything in order too in good time and with no panic. I mean, that’s just plain, simple common sense, isn’t it?

Healthier Wealthier and Wiser!

It’s not often I begin my blog by telling you what I’m wearing, but today I’m going to make an exception, because I’m currently rather delighted to be sporting my new purple Fitbit. This is in a tasteful shade of purple and I’m only a little hurt that, although it perfectly matches my bridesmaid dress, my sister has put her foot down firmly and says I’m not allowed to wear it to her wedding.

My trusty new gadget is all about putting a foot down firmly, at the same time as making me far fitter by measuring and telling me how many steps I’ve taken in a day. I’m confident it’s going to give me the motivation to hugely improve my health and well-being, and the additional upside to all of that is it will substantially decrease my private medical insurance (PMI).

Contemplating the potential long-term financial effects in relation to my PMI, made me stop and think about how so many of the people I talk to, think PMI is synonymous with BUPA. It does seem to be the name that springs to mind first, whenever the subject comes up for discussion. This is most probably because they did seem have the market pretty tied up for a good number of years. But it’s always worth looking farther afield, particularly when it comes to an important and on-going expense, which is going to continue through the years. It’s always worth seeing if you can get the same or improved benefits at the same time as a better deal. The big benefit, naturally, is that the healthier you are, the lower your monthly premiums, so it’s an indisputable win, win situation as you move forward!

An example of a PMI provider, perhaps not quite so high profile as Bupa, is Vitality Health, which used to be Pru Health. They know, the better your health, the less likely you are to make claims on your policy, so their policy is to offer you every opportunity for health improvement. It makes both practical and commercial sense that the less money paid out, the more there is available for them to offer further options, discounts and benefits.

I happen to know about Vitality Health because, after shopping around, I found they provided the best insurance for my personal needs. With Vitality Health, you start off on Bronze Status, with no points and then gain them as you complete their online health questionnaire. You gain additional points when you go for a health screening to check on things such as, blood pressure, height, weight, glucose levels etc. You also gain when you prove you’re a non-smoker and can add to your total by achieving a certain number of steps per day or if you spend time in the gym. The more points you build up, the more your premiums go down and you find there are more benefits available to you.

Just to give you an idea of how it works for me, by doing just a little bit of exercise, I can not only get a free weekly drink from Starbucks, but a complimentary weekly cinema ticket and some monthly iTunes vouchers. I also get half price gym membership at Virgin Active, which for me is worth over £70 per month! But in case you’re thinking that this is all me, me, me – I’d like to mention that my husband’s pretty happy too. He purchased the bike he wanted from Evans Cycles and received £250 cashback from Vitality. The list goes on, with holiday deals, half price trainers and discounts on Champneys Spa Breaks. Obviously, this is just one of the policies that are out there, but I’m always more than delighted to look at your personal PMI requirements and preferences, so we can isolate the best possible one for you.

My new Fitbit has certainly changed the way I look at a lot of things and I like the feeling of achievement at the end of a busy day, when you can look back and see, not only have you done all your allotted tasks but you’ve totted up a nice number of steps at the same time.

However, I should say that at this precise moment of writing, I’m only on 7,208 steps and I need 12,500 for my maximum daily point allowance, so I know you’ll excuse me if I dash . . .

Lazy Hazy Days of Summer

Wasn’t there a song about the Lazy, Hazy Days of Summer? Mind you, I sometimes think of it as the Lazy, Hazy, Daze of Summer because by the time it gets to August, that’s often how I feel. Certainly the first part of this year has been an even busier time than usual for me and now, with the natural break August provides and the kids on holiday, there’s a chance to take things at a slightly slower pace, review what’s been achieved over the last few months and put plans in place for the next few.

It’s a good idea to use this natural break to focus, not so much on the material aspects of things but on the things money can’t buy – quality time with each other, with family and friends as well as time spent at the numerous free attractions we can all take advantage of in our local areas.  This is important to all of us. It is especially important to those who are at a certain stage in their working lives, because it’s a great opportunity to cast your mind forward to exactly what shape you might like your retirement to take.

My thought is, why not use August as a ‘practise run’? See what you enjoy, what you don’t and explore different avenues, ideas and plans you might like to put into action. Everyone has a different idea of what makes life fun, rewarding and enjoyable and of course will have different thoughts about what makes for a happy retirement. I spotted a recent survey carried out by Aegon Retirement Readiness that found, of the people questioned:

  • 62% wanted to travel
  • 59% saw themselves spending more time with family
  • 49% looked forward to taking up new hobbies
  • 25% saw themselves doing voluntary work
  • 15% planned to continue working
  • 13% wanted to live abroad
  • 12% were going to start a new business
  • 12% saw the opportunity to study

That’s a huge variation in different directions and aspirations isn’t it?. So maybe this month, whilst you’re taking some time off and hopefully relaxing, it’s worth thinking about a future when you’ll have a lot more time for doing what you want. After all, it seems to me, It’s far better to think about it now than get to retirement day and then wonder ‘What next?’

Making the Most of Things

One of the things I love most about the career I’ve chosen is the opportunity it gives me to spend time with so many different people of all ages and from all walks of life. I enjoy finding out about them; their families; their ambitions; their concerns and best of all, their triumphs and celebrations. And because of the intimate nature of our discussions – after all, finances are a pretty personal issue – relationships have grown which I hope will continue for many years, as I help them sort out issues that inevitably arise as circumstances (and Chancellors!) evolve and change.

Perhaps the most important thing about my financial adviser role is the continuity I’m able to offer and I know, for many of my clients, there’s a lot of comfort and security in this. It’s always a relief when something hits the doormat and you’re really not sure which way to go with it, to have someone who you know will probably have the answers you need. The fact they also know all about your financial background, so will be able to take into account all your personal priorities and preferences when making suggestions, is an added bonus. And let’s face it a bonus is never a bad thing.

I had rather an interesting discussion with one of my clients, the other day. “Can you,” he asked, “With all of these new changes, use your pension in a similar way to a bank account?”  To which my answer, as with so much else in life, was, “Yes and no!”

Let me tell you what I told him and remember, much depends on how often or how quickly you might need access to the money we’re talking about. But imagine, for the sake of argument, you have £10,000 you want to save/invest. If you put your £10,000 into a NISA/bank account, you still have £10,000. If you put your £10,000 into a pension and you’re a basic rate taxpayer you immediately have £12,500. This is because you get tax relief of £2,500 added to your pension. I like to call this ‘free money’.

Even if there’s no further growth on that sum. Let’s say that you then decided to take it all out: you can have 25% as tax-free cash ie: £3,125, with the remaining £9,375 subject to income tax. If you’re still a basic rate tax-payer you could withdraw £10,625 after tax – not a bad result. Of course it is possible, depending on the period of investment that your original sum might have grown too – better still!

Caveats: Please remember that you need to be 55 years old to take money out of a pension, and what you get back depends on fees, charges, the growth of your investment and the legislation at the time, so you do need to get sound financial advice before making any decisions to make sure that the decision is the right one for you.

Have a good month and let’s hope the weather stays kind!

Of course a course matters!

The world’s divided into two sorts of people – there are those who, at the first mention of a new course or training day, feel their eyelids drooping and a creeping sense of impending doom.  And then there are those who are immediately enthused, excited and invigorated and just can’t wait to get there and get stuck in. I’m afraid I have to admit I’m in the second category – nothing perks me up more than a new course – I know, I know, what does that say about me? Maybe I need to get out more.

I’ve just worked my way through a great one-day course to help me prepare my case study for my Certified Financial Planner qualification and yes indeed, I thoroughly enjoyed it. Mind you, whilst it gave me some really great input on preparation and presentation, I did stagger out at the end of the day, a bit the worse for wear and wanting nothing so much as a can of full fat coke and a bit of a lie down!

The reason it’s so intense is that, unlike working opposite a real life client, where you can talk them through their planning journey, for the case study you have to write down absolutely anything and everything you’re thinking. These are thoughts you probably wouldn’t even pass on to your client, after all they don’t necessarily need to hear every one of the numerous options you’re considering and discarding if they’re not right, neither do they need to have listed every single financial criteria.

happy money_elizabeth dunn michael nortonJust to give you an example of what I mean, take inflation. This is a fact of life which comes into most things I do, I take it for granted, know exactly what it is, how much I assume it will change in both the short and the long term, and am always looking at how it will impact on what we’re talking about now and how much on future planning. But when presenting a case study, I need to put all my knowledge and automatic calculations and assumptions into words – backed by evidence! An average report for this exam is around 50 typed pages of A4 although I suspect, if I were to present you with something that size at the end of one of our discussions, you’d also feel the need for a coke and a long lie down (or maybe something stronger!).

But I don’t want you thinking this last month’s been all work and no play making Madeleine a dull girl! For relaxation I’ve been reading a truly amazing book Happy Money by Elizabeth Dunn and Michael Norton. It’s one of those books full of such brilliantly sensible common sense, you have to kick yourself for not reading it sooner, and even more for not thinking all these things through yourself. For example: “By consistently asking yourself how a purchase will affect your time, your dominant mind-set should shift, pushing you towards happier choices“.

Think about the must-have, must-buy, can’t manage without, sky-high priced appliances on the market and then ask yourself one very simple question. “Will all the extra features offered by this deluxe appliance alter how I spend my time?” If the answer is “It probably won’t.” Then why not go for the basic economy version? Because if you’re not going to save yourself time, you might as well save yourself money!

Enjoy the rest of your month.

No Sexism Here!

I’m an equal opportunities sort of a person and certainly work as well with my male colleagues as I do with my female ones. However, I’m prepared to stand up and be counted when it comes to counting the cost of being a woman. And that cost can often be counted in £’s – lots of them. But I do maintain that’s not something for which we should be blamed.

There’s no doubt there’s a difference between the expenses of men and women. Take your average chap – up in the morning, pop in the shower, shave, after-shave, get dressed and who cares (notices) if the same suit’s worn several days in a row? And hey ho, he’s ready to face the day.

Most mornings, we women are concerned with a few additional things. Why? Well, when was the last time you picked up a newspaper and saw a man criticised because his jacket was too tight, too short, too young for his years or too staid for his youth? Not that often, I bet. It’s a fact of life that women are judged so frequently on how they look and it doesn’t matter how elevated your position, the same rules seem to apply. Nobody has much to say about how Barack Obama’s wearing his hair this week but I bet there’ll be plenty of comment on how Hillary Clinton’s wearing hers.

Beyond our appearance, there are of course an additional number of things for which we tend to take responsibility and on which we spend money.  If we have children and they’re living at home we usually buy their clothes, not to mention, wash their clothes and sort their uniform for school. If we have older children we just tend to get huge bags of washing, which regularly travel back from university with them. We’re more often than not in charge of buying cards and gifts for family, friends and our children’s friends. Do we begrudge the time or financial outlay, probably not at all.

But as women we do often feel guilty about what we spend on ourselves, even though we know it’s important and never more so than if we’re in the workplace or running our own business. Because we’re Samantha Cameron and not David, we can’t afford not to worry about our appearance because we know how much of that goes towards how we’re judged.

Chipped nails won’t do, so we spend on nail varnish or manicures. The natural no-make-up look only works with flawless glowing skin (no me neither!) and bad hair days happen to all of us, so we need a great hairdresser to make sure they don’t happen too often. Flip-flops won’t wash at a business meeting, so shoes aren’t just an indulgence (OK, well probably some of them are!) but you get my drift.  As women, our expenses mount up, my point is, that’s force of circumstance and society. I rest my case.