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By Balance team, Oct 17 2017 08:36AM

Pension scams have hit the headlines again this week. In recent years, “pension freedoms” have enabled more and more people to get caught up with suspect ‘investments’, where bogus companies persuade you to part with your pension pots. Even for people under the age of 55, many are enticed into scams where the intention is to see their money go a bit further, so they can enjoy a comfortable retirement. However, in reality, some people lose every penny they have ever worked for.


Our motto is: if it sounds too good to be true, it probably is... So, this week, we have listed a few typical pension scams and phrases to watch out for:


“Pension liberation”

If someone calls you, or writes to you out of the blue, using the above phrase, this should set off alarm bells. “Pension liberation” scams are where people are persuaded to either cash in their pension pots or transfer their money into certain investments. Typically, you would receive a cold call and then be sent a letter or a brochure. You are likely to be presented with some ‘interesting’ ways for you to invest your pension money. You may be told that you can take money out of your pension before the age of 55 (you usually can’t unless you fall seriously ill). Remember, if you have made provision in your pension for withdrawal before 55, you could be liable for a huge tax charge and transfer fees from your provider (up to 55%). Other words to watch out for are ‘loan’, ’loophole’ and ‘one-off investment’.


“Overseas investment”

One of the most common types of pension scam involves being persuaded to handover money to go into an “overseas investment”. For obvious reasons, different countries are governed by different rules and, therefore, your money is unlikely to be protected by UK law.

Typical overseas investments include the following:


Foreign property – some of which will either not exist or will never be built…

Foreign businesses – covering all sorts of industries including hotels, vineyards and plantations, you could be enticed by phrases such as ‘new industry’, environmentally friendly’ and ‘unique’ – these days, there’s rarely a truly unique offering in any business sector...

Foreign charitable projects – although there are some genuine overseas charities who do some great work, there are many unscrupulous people who will pull on your heart strings and manipulate your emotions by trying to persuade you to give money to a project that will ‘better someone’s life’, usually a young person or a child. In reality, the project may not even exist and your money could be going into an unknown bank account…

“Self-Storage Units”

Earlier this year, the Serious Fraud Squad issued a warning relating to people who have been persuaded to invest their pensions into self-storage units or storage pod investment schemes. Thousands of investors have been affected by this particular type of pension scam – read more about this in our blog article, Worried about the £120m Pension Scam?


Warning: Whether it’s cash, a pension or any other type of savings, never invest unless you are 100% confident that you are dealing with a reputable, fully insured company. Never ever agree to take out a lump sum or your whole pension before carrying out thorough security checks on the company offering you the investment.


Please, if something like this has caught your eye, please speak to one of our professional advisers who will happy to give their expert view.


On the subject of pensions, if you have a final salary/defined benefit pension scheme and you need to know what your options are, then why not download our pension guide?


For a general guide to retirement planning, please visit our Big Life Events – Retirement page.


If you have been offered an investment opportunity, which you think may be a pension scam, please get in touch to speak to one of our financial planners for advice. We would be more than happy to review your existing pensions and help you plan for a safer retirement.



By Balance team, Oct 4 2017 10:22AM

You’ve worked hard to acquire your wealth, so have you thought about how you could spend your money? In this article, we look at some fun and interesting purchases to help you enjoy the finer things in life…


“Whoever said money can't buy happiness simply didn't know

where to go shopping.”

Bo Derek


1. Classic cars to supercars

Have you ever wanted to own that car? Whether it’s an old classic or a supercar, buying a beautiful vehicle could be something you pass down to the next generation. One thing to note – you will need to consider where you will keep your car as luxury models such as Ferrari, Aston Martin, etc. may need air-conditioned, temperature-controlled garages to reduce the risk of deterioration to bodywork, etc.


2. Designer labels and haute couture

Whether it’s the archetypal ‘little black dress’ or a pair of Jimmy Choos, why not consider treating yourself to a designer item for your wardrobe? This could be a reliable ‘go to’ for special occasions or simply because you just have to have it! We all need to spoil ourselves once in a while…


3. Jewellery and watches

With so many luxury brands out there, the world really is your oyster. Tiffanys are still a firm favourite for many people, especially when it comes to special items such as engagement rings. Again, a beautiful piece of jewellery can be handed down to your children, becoming a lovely sentimental family item. There’s also an entire market for expensive watches, such as Cartier, Hublot, Rolex, etc., many of which will increase in value over time, so make sure you arrange adequate insurance cover for this type of purchase.


4. Luxury travel and cruises

Always wanted to travel more? These days, you don’t need to wait until retirement to take a luxury cruise. Many companies offer shorter cruises around the Mediterranean, offering gorgeous views and stop-offs at various Greek islands. If you have the money, you could consider chartering your own yacht to take your partner or family on a tailor-made cruise. If you’re not keen on cruises, you could use a boutique travel agent to design a bespoke itinerary for you that includes World Heritage Sites across Europe, the USA or Asia. Choose your activities and level of accommodation, and they should be able to arrange all your flights and transfers, so all you have to do is sit back and relax.


5. Second homes and holiday property

Are you drawn to a particular place? Perhaps you find yourself revisiting the same holiday destination year-after-year? Have you considered buying a holiday property in this location? We always advise fully researching any foreign property and the country’s laws before you commit to any purchase. However, if you have found a gem to invest in, you may even create a second income from letting the property out to holidaymakers while you’re not there. A holiday or second home doesn’t need to be outside of the UK; you may have decided on a beautiful location closer to home for your retirement. It might be worth investing into a property simply to give you much-needed weekends away from a busy work schedule. Always seek professional advice before using your savings to make a large purchase in case there are any tax liabilities.


6. Speedboats to superyachts

If you have a holiday property near the ocean or a lake, owning your own boat can be a wonderful way to unwind. This could be a classic speedboat or a sailing boat to take the family on fun outings. Some activity centres offer ‘powerboating’ courses which will enable you to gain a licence to man your own luxury powerboat. Sailing is a fun activity, which could result in you taking up a new hobby too. Perhaps you have always wanted to own a yacht? Bear in mind this could cost anywhere upwards of £100,000 and you will need to consider insurance and mooring fees. If you have ever been to Monaco, you may have watched the superyachts winding their way into the harbour – one of the most expensive superyachts ever built is the History Supreme, costing $4.5 billion!


7. Art and antiques

You don’t have to be an expert when it comes to buying art and antiques – always buy items you genuinely like without considering whether they will increase in value (they may not). A beautiful painting or sculpture can be a great addition to your home, and something to pass onto family members in the future. Antique furniture is another lovely way to finish off a room and could be an individual item to match your existing home furnishings.


8. Interior design and furnishings

Why not consider professional interior design when it comes to your home? There are many luxurious wallpapers, finishings and furnishings available these days, but most of us are simply too busy - or not trained - to be able to match fabrics, patterns and colours despite our best efforts. A professional interior designer should be able to create spaces that reflect how specific rooms are to be used, whether it’s for dining, socialising or unwinding.


9. Home cinemas and entertainment

There is an increasing trend whereby people are redeveloping their homes to create unusual spaces, such as home cinema rooms. This doesn’t necessarily need to be a large space – some people install limited seating for family and friends. Plus, you could consider having a dual-use room by having a pull-down projector screen fitted to the ceiling. There are some excellent home entertainment systems available which will give your room a full surround sound experience, so you will feel as if you are in a real cinema.


10. Smart tech and home automation

Another increasingly popular trend is to connect your home to apps on mobile devices such as smart phones. You can control everything from heating, lighting, curtains and blinds to switching the oven on to warm up before you get home. This has an added security benefit because you can control your home remotely, giving the impression to outsiders that you are there when you may be away sunning yourself on holiday!


If you are interested in other ways to make the most of your savings, please get in touch to speak to one of our financial planners, who will be able to carry out a full strategic review.



By Balance team, Sep 18 2017 09:02AM

If you’re a business owner or leader, no doubt you will now be back in the swing of things business-wise. September can be a good time to assess where you are with your business and to set goals for the rest of the financial year and for the future.


Earlier this year, we wrote an article on personal goal setting to help you focus on your future objectives, especially when it comes to retirement planning. The same applies when you run your own business. Do you have a 5 or 10-year plan? Do you have an exit strategy? Do you plan to sell your business in the future? We have put together a step-by-step guide below aimed at business owners to help you assess whether your business objectives are aligned with your personal objectives.


1. Why is it important to align your business and personal goals?

When you run your own business, it has a significant impact on your personal life, especially in the early days. Most business owners work very long hours to achieve their targets. When a business gets to a certain stage, you may be able to take on employees to help you manage day-to-day operations and/or expand. At this stage, it is important to take time out and reflect on your business to understand the following:


a. Why did you create your business in the first place?

b. Does your business run in the way you intended it to?

c. How does your business impact on your personal life?


If you are unhappy with any of the above points, then it’s worth carrying out a business review. For example, if you feel that your business is impacting greatly on your personal life, you may need to find extra resource to help you manage your business. You may have started your business to get a good work-life balance, but you may be unable to achieve this at present. This could have repercussions in the future, especially in relation to your retirement planning. If you work yourself into the ground, you may not be able to do the things you plan to do in the future. Therefore, your personal goals need to align with your business goals.


2. Where is your business right now?

You may be happy with the way your business is running, which is great. However, if you do have certain aspirations or personal goals, you may feel that you need to increase your profit margin, so you have enough funds to support a comfortable retirement. Consider the following questions:


a. Do you know the value of your business?

It is important to understand how much your business is worth and this should be done on an annual basis, or after a period of growth or expansion. Understanding how much your business is worth could determine your plans for the future.


b. Does the business rely on you alone?

If you’re essential to the running of your business, what happens when you’re not there? Do you have trusted people you can rely on to manage your operations? If you are aiming for a better work-life balance, so you can achieve your personal goals now or in the future, then it might be time to consider delegating some responsibilities to others. Do you have the capital to employ people or outsource certain tasks?


c. Do you have an exit strategy?

Every business needs to have an exit strategy in place. Even if you don’t plan to retire, unfortunately, none of us live forever, so you may need to write your business interests into your Will. Planning your exit strategy all depends on your long-term objectives for your business and your retirement – we explore this further below.


3. Where do you want your business to be in 5, 10 or 15 years’ time?

Depending on your age and your future plans, you may have already decided where you want your business to be in 5, 10 or 15 years. Ask yourself the following questions:


a. Do you intend on selling the business?

You might be considering expansion; scaling up your business to increase its value and make it more attractive for future sale. Therefore, a business review and correct valuation is crucial to forecast an accurate figure when you come to sell your business. Read more about selling your business.


b. Do you have someone in mind to take over the business?

You may be in the process of training an employee or a family member to take over your business in the future, so you can retire with full peace of mind. Make sure this is legally recognised and added to your Will, should the worst happen.


c. Are you deliberately scaling down your business?

You may be in the process of downsizing your business, so you can run it at a level which enables you to achieve your personal goals. This is an option for many over-55’s due to the ‘pension freedoms’ which allow people to draw from their pensions before they retire. Remember that taxes will apply to early pension benefits, so always speak to a professional for advice before drawing from your pension.


If you enjoy what you do, you may not want to retire just yet. One consideration here is to review your overheads – for example, look at the current cost of leases and rent on any commercial premises. Could you streamline your operations? By reducing your overheads, you will increase your profit margin, which will help you to create a secure financial buffer for the future.


Plan, plan, plan!

If you haven’t yet set a 5 or 10-year plan, then we strongly advise you to do so. Without a solid business plan in place, it is easy to drift and lose sight of your long-term objectives. Make sure your personal goals are always in line with your business goals to move you comfortably towards retirement. And if you don’t plan to retire, then create a secure strategy to keep your business operating for the long-term. None of us know what the future holds, so advance and effective business planning will alleviate any worries for the future.


If you would like a business review, or you would to align your business goals with your personal goals, then please get in touch to speak to one of our financial planners.



By Balance team, Sep 11 2017 10:29AM

It seems that most days there’s something happening in the news that catches our attention. From North Korean missile tests, to extreme weather patterns in the southern states of America and the Caribbean, to the ongoing uncertainty over Brexit, the list is endless. What effect do such events have on investments? We have looked at different scenarios and how they can have an impact an investment strategy.


Foreign policy and foreign exchange

The foreign exchange market is the largest active financial market in the world. In today’s globalised economy a political event like an election or a shift in foreign policy can have a significant impact on exchange rates around the world. For example, immediately after the EU referendum vote result last year, the pound plunged against the Euro as fears amounted over the UK’s ability to prosper as an independent nation. Whilst some economists predict that the pound will eventually return to pre-referendum levels, others think that we are trending towards parity; which would mean 1 pound to 1 Euro. In the current situation, a weaker pound can actually be beneficial for some UK businesses, like exporters and manufacturers, as their goods are more attractive overseas to foreign buyers who have more buying power with their stronger currency. Conversely, this obviously means that it’s now more expensive for UK firms to import Euro denominated goods.


Usually, the level of confidence in a country’s governing system has a direct effect on financial markets, as well as how traders view an isolated event of instability or potential change, like an election or a referendum on a key issue. A incoming government’s new ideas might have implications for businesses in terms of their tax treatment and rules and regulations relating to the industries they operate in. These in turn could have an impact on company share prices. That said, there are many other factors and variables to consider including the relationships between businesses, suppliers and customers - both inside and outside of the country.


President Trump and North Korea

The current hostilities between the USA and North Korea amount to a crisis the world has not witnessed for quite some time. When President Trump issued a warning to the North Korean leader, Kim Jong-un, this had an instant effect on the financial markets. The price of gold rose to its highest level for the past two months. This is significant as it is often viewed as a defensive investment or a ‘safe haven’ when markets are volatile. In the currency markets the Swiss franc also strengthened against the US dollar as this currency is seen as a safer option due to Switzerland’s political neutrality and its robust banking system.


The price of war

When North Korea responded to President Trump threatening a nuclear strike, the main Asian and European indices dropped. This included the Nikkei index in Japan, a country directly affected by North Koreas displays of aggression. Due to the globalised nature of economics and politics, such international disputes and events have a domino effect across financial markets.


The cost of bad weather

The 2017 hurricane season is currently wreaking havoc across the Caribbean and Southern states of North America. Lives have been lost, and homes and businesses destroyed. Damage to factories, distribution centres and transport links has a direct effect on the supply chain and infrastructure of a country’s economy. The damage caused in Houston, and now the Caribbean Islands, is already amounting to billions. Houston is responsible for one fifth of oil production for the US, as well as half of the country’s oil refining capacity. Experts estimate that Hurricane Harvey is set to be one of the costliest natural disasters in US history, with the final bill expected to be as much as $40-50bn (£30-£38bn).


Diversify, always spread your level of risk

As we’ve explained, politics and natural disasters can have a dramatic effect on financial markets. Therefore, a sound investment strategy is essential in order weather any market conditions. No strategy is guaranteed but the most sensible approach is to spread your level of risk by diversifying your investments across asset classes. A portfolio containing a wide variety of investments is more likely to be less volatile and create steadier returns. With stock market valuations also at historical high levels, it’s also worth considering drip feeding investments in steadily over a period of time. This increases the likelihood of a smoother entry into your investments.


If you would like to review your investment strategy or just want ensure that your money is working for you in the best and safest way, please get in touch with us to speak to one of our financial planners.




By Balance team, Aug 29 2017 07:44AM

When it comes to planning for your retirement, everyone is different. We all have individual dreams and goals - therefore, a retirement plan for you will differ from somebody else. Ultimately, you need to tailor your retirement plan to how you wish to live your life as you grow older. We have written various articles on retirement and goal setting, so we have compiled a simple 3-point checklist for you to consider below:


1. Do you have a goal, plan or simply a vision of how you would like to live when you retire?


Most of us daydream about what it would be like when we stop working, or where money is no object to living your life exactly how you choose. It’s important to align your retirement plans with your spouse or partner and, obviously, if you have any dependants who may require your ongoing support (i.e. carer responsibilities). Some people create a ‘mood’ or ‘vision’ board comprising of the things they want to do or achieve. Or, you could simply write a list. Often known as a ‘bucket list’, this could include learning, training, activities, as well as travel and relocation.


For example, there are an increasing number of people aged 60+ who return to education to gain a degree or retrain in an area they enjoy. Recent reports in the media have shown that the over-50s are now the new ‘business start-up’ generation. This age group are leaving long-term careers to start their own businesses in the areas they enjoy. Recent pension freedoms, allowing access to funds and benefits from the age of 55, can provide a financial buffer for those wishing to create new business ventures later on in life. For many people these days, life begins at 60, which means there are an infinite number of opportunities for you to follow your own interests, whether it’s for business or leisure.


2. Do you know the total value of your pension, savings, investments or other assets, such as property?


Once you have created a vision or list exploring how you would like to live when you retire, the next step is to check whether you can actually achieve your goals. You may have money tied up in various places – pensions, savings accounts, ISAs, investments, and you may have some business interests too. It’s worthwhile gaining an accurate valuation of all your assets, especially the value of your pension, so you can begin to plan for your future. Ideally, you should be aiming for financial freedom as early as you can, so you can enjoy your life to the full. Read our recent guide to trusts and estate planning for helpful advice or speak to one of our financial planners.


3. Do you know how much you will need as a baseline for a comfortable retirement?


This all depends on your goals. Consumer association, Which, suggests that retired couples currently spend around £26,000 per year to live comfortably – i.e. spending around £4.5k on holidays and around £3.9k on groceries. However, to enjoy a luxurious retirement, Which suggests that retired couples are spending around £39,000 per year – i.e. £11.8k on holidays and, interestingly the same amount on groceries (£3.9k) – see the full Which article for the full breakdown.


Whether you are currently living a comfortable or luxurious lifestyle, to continue in this vein when you retire, you will need to take into consideration future interest rates, inflation and other potential economic downturns that could affect the price of goods and the cost of living. Seek professional financial planning advice if you are trying to assess how much you are likely to need when you retire.


“I see retirement as just another of these reinventions, another chance

to do new things and be a new version of myself.”

Walt Mossberg


Read our Guide to Retirement on our Big Life Events page.


If you need advice when it comes to planning for your retirement, please get in touch to speak to one of our financial planners.

Regular news and views from the Balance team. You'll find our thoughts about pensions, investments, ways to save tax, facts about finances and plenty more.

 

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