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By Balance team, Jul 14 2017 09:39AM

Earlier this week, we posted the first part of our A – Z guide to investments. We continue to wade through the industry jargon, explaining common phrases to help you gain a better understanding of investment terminology. Our guide continues below, beginning with the letter M…

M is for Market Crash

A Market Crash happens when there is a substantial drop in the total value of a market. This leads to a situation where many investors are trying to escape the market all at the same time, which results in huge losses. At this point, investors may be tempted to fall into panic selling, trying to sell falling stocks to other investors. However, panic selling only adds to this situation, therefore, the market crashes and everyone is affected. Crashes in the stock market tend to be followed by a period of market depression.

N is for Nominations (Death benefits)

Nominations are where you nominate someone to receive money or benefits in the event of your death. Also known as an Expression of Wishes, these are kept by the company that arranges your group life insurance policy (such as a death in service scheme through your employment). They are also used for many types of pension plan where there is a choice of beneficiaries your money could go to. Often forgotten, or not updated after events like a divorce, it’s important to check these nominations are correct from time to time, to make sure your money is passed to the right person, because these sums will not usually fall under the instructions in your will.

O is for Offshore vs Onshore

Offshore simply means any item, company or process based outside of your country or national border. This term is regularly used to describe investments, deposits, corporations and foreign banks. Companies move offshore to avoid tax and complex regulations. Investments are often offshore for tax reasons and are a valuable planning tool for wealthy investors. In comparison, Onshore is where a company is incorporated within the UK with the intent of complying with all tax filing and legal requirements here.

P is for Pensions

Often called a Pension Plan or Pension Scheme, these are a pool of funds set up to provide an income once you retire. The pooled funds are invested and grow over time, ready to pay out an income to you when you retire. An employer may have a work-based pension plan (this could be a ‘final salary’ pension, also known as a Defined Benefit scheme) where their employees make contributions. Recent ‘pension freedoms’ have led to the ability for people to access their pension plan from the age of 55. If you need to review your pension, always talk to a professional.

Q is for Quality of Life

This is a term used in various scenarios – however, in financial services, it measures someone’s happiness when it comes to making important financial decisions. As everyone is different, this is subjective and is usually a combination of family life, job satisfaction, health, and financial security. At Balance: Wealth Planning we strongly believe that professional financial planning can help improve your quality of life. We help by tailoring a plan to suit you. This planning is based not just on your finances but also your goals in life, and the things that are important to you.

R is for Return on Investment

If you’re in business, you will be very familiar with this term - Return on Investment (ROI). Simply put, this is a way of measuring performance. In financial terms, you would use this measure to evaluate the amount of return on an investment in relation to the cost of the investment.

S is for Stocks and Shares

The difference between a Stock and a Share can seem blurred at times. At a basic level, a Stock is a type of security signifying ownership in a company (claiming a part of the company’s earnings and assets). A Share is a unit of ownership in one specific company (or a financial asset) where profits are divided equally from the earnings in the form of dividends.

T is for Trusts

There are many types of Trust with different rules. In simple terms, a Trust is used to decide how property and assets are passed onto beneficiaries at an appointed time, e.g. when someone dies or when a child reaches adulthood. Until such time, the property and assets are looked after by ‘trustees’. It is also a type of investment fund created as a public limited company. Many people use Trusts to secure their wealth and to offset tax in relation to inheritance. If you are interested in finding out more about Trusts, please speak to one of our financial planners.

U is for Unused Personal Allowance

Your Personal Allowance is an amount set by the government whereby any earnings over this level is liable for income tax. For example, for this tax year 2017 – 2018, the Personal Allowance is £11,500. However, for low earners, it is possible to transfer part of the Personal Allowance to a spouse or civil partner, which can affect the rate at which they pay income tax. This Unused Personal Allowance can be a useful tax break for couples.

V is for Volatility

When people describe ‘volatility in the market’ they are describing a measure of when there is a wide range of returns from that market, or investment. In other words, how much it goes up and down in value. Quite simply, the more volatile something is, the greater the risk and the more unpleasant (or thrilling, depending on your view) the experience.

W is for Wills

An important part of estate planning, a Will (or Last Will and Testament) is observed by law as a declaration, recording the wishes of an individual once they have passed away. Without a Will in place, a person’s estate may not be passed to the people they had expected, i.e. complex family situations (where people have remarried and have children with another partner) can result in disinheritance. A Will must be updated regularly and kept in a safe storage location.

We hope you have found the above guide to investments useful. Investing can seem like a minefield, especially if you have a variety of different investments. Overall, investing relies on your attitude to risk; we always advise spreading your risk and diversifying your investment strategy as much as possible.

Do you have a sound investment strategy? Whether you’re new to investing or you would like to explore more options, please get in touch and speak to one of our financial planners.

By Balance team, Jul 12 2017 10:25AM

Over the next couple of weeks, we’re talking investments. There’s a lot of industry jargon used by firms and in the financial papers, which you may or may not be familiar with, so we have put together an A - Z guide to understanding investment terminology. This is part one - we will post the rest of the investment ‘alphabet’ next week:

A is for Assets

Assets come in many forms but, essentially, an asset is a valuable item or resource where you can expect to see a future financial benefit due to its economic worth. Consider an asset as something which could generate cash flow at some stage – for example, it could be a Fixed Asset such as equipment and property, or a Financial Asset such as investments in assets and securities in other institutions.

B is for Bonds

Bonds are effectively loans, either to large corporations or to governments. They borrow the funds for a defined period. In return for this loan, a fixed or variable interest rate will be paid. Once the bond reaches the end of the defined period (matures) the original sum or loan will also be returned.

C is for Commodities

A commodity is a universally used economic product or material. Whilst examples include copper, gold, grain, beef, oil and natural gas the term now includes technology, e.g. mobile phone minutes and bandwidth. Commodities are traded in recognised contracts on international exchanges and goods must meet certain standards (called a ‘basis grade’). You can think of commodities as the building blocks for economic development and their prices will fluctuate with demand.

D is for Diversification

Diversification is a way of managing risk by using a variety of investments within a portfolio. The aim of diversification is to spread your investments so that you are not over exposed to one particular area. Concentrating your investments in one particular asset type, such as property or stocks and shares, is a risky strategy. By diversifying your investment strategy, your portfolio will have a lower associated risk. Long term investment strategies will benefit greatly from diversification, as over time, you will gain the benefits of a broad range of performance.

E is for ETF

ETF stands for Exchange-Traded Fund. There lots of ETFs which normally track an index, a commodity, bonds, or a group of assets like an Index Fund (see below). They can be bought and sold like a stock, and can often be a cheaper way of investing rather than putting money into an investment fund. Speak to a financial planner if this is something you are considering.

F is for Fund

A fund is a sum or source of money which is available or saved for a specific purpose. A fund could be set aside by a business, the government or an individual. Investors can place their money into different types of investment funds with the main aim of earning money. Funds come in all shapes and sizes and will offer various levels of risk for an investor. Some funds will specialise in a particular area, perhaps specific geographies or the size of company they will look to invest in. We will explore different types of funds throughout both parts of this blog article.

G is for Gilt

Gilts are bonds issued by the government (UK) and is denominated in British Pounds. Usually considered low-risk, there are two types: conventional gilts and index-linked gilts (indexed to inflation).

H is for Hedge Fund

A Hedge Fund consists of a variety of investments using pooled funds that use various strategies to earn a return for their investors. Hedge funds are usually set up as private investment limited partnerships to take advantage of specific market opportunities. Usually only available to accredited investors, hedge funds may be managed in domestic and international markets. Hedge funds are at the more complex end of the investment spectrum and we suggest they should only be considered by experienced investors

I is for Index Fund

An Index Fund is a type of fund (managed portfolio of stocks and/or bonds) with a portfolio that tracks a specific market index, e.g. the FTSE 100. Index funds will adhere to certain rules regardless of how the markets perform. Index Funds are a way to track an index and are usually much cheaper than active funds. We believe that this ‘passive’ style of investing is perfect for the majority of people looking to invest over the long-term. Talk to one of our financial planners for more information.

J is for Junior ISA

Junior ISAs are a tax-free savings account for children under the age of 18. They work the same way as normal adult ISAs, but the amount you can save for your children is £4,128. Under the scheme you can invest in either a Junior Cash ISA or a Junior Stocks & Shares ISA. Once the child turns 18 the JISAs converts into an adult ISA.

L is for Lifetime Cashflow Forecasting

Lifetime Cashflow Forecasting is a method by which incoming and outgoing cash projections are modelled around a person’s lifetime. This is effectively a way of simplifying the profile of your wealth to your very own personal circumstances. This would be an all-encompassing profile of you projected wealth tailored to feature everything from your current salary, to pension payments to perhaps a nice holiday for your 70th birthday. Lifetime cashflow forecasting really helps in making sense of how things will look later in life and allows you to plan more effectively Not just to ensure that you are financially stable but also able to feel confident about enjoying your money throughout your lifetime. It’s key aspect of what we do at Balance so please contact us if you would like to hear more.

We will continue with our A – Z guide to investments next week. In the meantime, if you have investments, or you’re looking to invest, then we hope the above information proves useful.

If you have any questions relating to this article or investing in general, please get in touch to speak to one of our financial planners.

By Balance team, Jun 29 2017 12:27PM

6 Top Tips for Children’s Savings

We all want our children to do well in life - to succeed and be happy. And because money is such an important part of life, it’s important they learn what it’s for, where it comes from and to have a healthy respect for it. Studies have shown that children who understand about money and learn to save at an early age are much more likely to successfully manage their finances as adults. This week, we explore the different savings products available for children, with a step-by-step guide.

“My philosophy is I'm raising future adults, not children.”’


1. Piggy banks

Most children have a piggy bank to save their pennies. Young children enjoy the ‘clink’ as the coins drop into the money box and counting the money over and over again, long before they understand what it’s worth. This is a really easy way for them to learn more about the look and feel of money. As they get older you can show them the value of their savings by looking at what that money can actually be used for and perhaps having a coin purse. Children are great at spending parents’ money but can be surprisingly frugal when spending their own.

2. Children’s savings accounts

If you are thinking about saving for your children and want to keep your money in cash so it’s easily accessible, consider children’s savings accounts. There are some poor interest rates on the high street so our recommendation is to compare different accounts thoroughly - look for any ‘catches’. You will probably find some banks attempt to lure children into opening accounts by offering freebies or toys, but these accounts may not offer a good interest rate. What’s often most important is ease of use and convenience because children’s accounts often have to be managed in-branch rather than online, so you’ll want to pick a bank that’s close to you.

3. Online – Children’s savings apps

Thinking about older children, did you know there’s a variety of apps out there to help your children save and spend wisely? Our top favourite is goHenry, which is targeted at teenage children and can help you as a parent to easily transfer money into their account then keep an eye on what they’re spending. Accessible from a smart phone or tablet, the account can be topped up with pocket money every week, and each time your child spends, you receive a text alert on your phone. The app also allows your child to set goals and targets, such as saving for a friend’s birthday.

4. Junior ISAs and Child Trust Funds

If you are saving more for your children over the long-term and want to invest to get returns greater than the bank, you could consider investing through a Junior ISA until they are 18. Junior ISAs, just like the normal adult ISAs are protected from tax, so income and investment gains are tax free. And when they get to 18, the Junior ISA just matures into a normal ISA.

During this tax year, they can save up to £4,128. There are two types of Junior ISA – a Cash ISA and a Stocks & Shares ISA, so consider what’s best for your situation. Obviously, a Junior Stocks & Shares ISA will perform depending on the stocks or shares you've invested in.

If your child was born between 1 September 2002 and 2 January 2011, a Child Trust Fund would have been opened automatically by the government. However, since 2015, you can convert these now ‘defunct’ trusts into Junior ISAs. You can read more about Child Trust Funds in our previous blog on Children’s Savings.

5. Money management and motivation

Get your child involved from the very start. Older children can learn about interest rates or investment returns themselves so they begin to understand how the financial world works.

For older children who have perhaps left school or university and are starting to go out to work, why not agree to top up their savings by way of an incentive? For example, if your child agrees to pay £20 into their ISA each month, you can either match this by an additional £20 or a greater amount. This savings ‘agreement’ between you could extend well into their twenties, to start good habits and to build up a pot to draw from for big spends like new cars without having to turn to borrowing on credit cards or taking out a loan. Those savings can also be put towards house deposits or big travelling trips in the future.

Bear in mind, if you are adding to your child’s savings and this amounts to more than £100 of interest per year, savings will be taxed at your tax rate (this is a measure put in place to prevent parents earning ‘extra income’). If you are concerned about this, please speak to one of our financial planners for advice.

6. Saving for property – Help to Buy ISA

The Help to Buy ISA can provide a useful means to secure your child’s home. The government will top up savings by 25% to help towards a mortgage deposit - e.g. for every £200 your child saves, the government will pay out £50, up until the maximum savings amount of £12,000. This scheme will continue until 30 November 2019 (bonuses must be claimed by 1 December 2030). The Help to Buy ISA must be opened in your child’s name, they must be over 16 years of age and they must be a first-time buyer. The amount you will save each year is generally less than a standard ISA, but obviously the 25% bonus makes up for lower interest rates. Speak to one of our financial planners for more information on the Help to Buy ISA.

To conclude, helping your child to save and learn the true value of money is a vital lesson for successful financial management in the future.

For more tips on helping your child to save, please see our previous blog, Children’s Savings: Investing for their future.

If you’re looking at savings and investments for your children, please get in touch and speak to one of our financial planners. We would be happy to discuss all of the options available to you.

By Balance team, Jun 28 2017 09:32AM

As we move towards the end of June, summer is now upon us. You may have preplanned your summer break or you might be looking to take advantage of last minute offers. Whatever you have planned, how do you make the most of your holiday spending? Before you take flight or go on that luxury cruise, we have a few helpful tips to make your money go even further:

“Summer is very precious.”

Dylan Lauren

Whether you’re an intrepid explorer or a sun worshipper, personalised holidays are on the increase. Nowadays, there are many companies who can create tailor-made excursions for couples and families, and this can be a cost-effective and seamless, worry-free way to go on holiday. Everything is organised for you, removing any stress in terms of transfers and connecting flights. Often such tours include a flavour of everything from cuisine, culture and couture to temples, treks and even tigers!

Here are a few exciting holiday ideas you may not have considered:

South-East Asia – although Thailand is the number one destination for holidaymakers, there are various travel companies who now provide tours across Vietnam and Cambodia. Suitable for couples and families, there are various beaches, city tours and the famous Angkor Wat temple complex, one of the last Ancient Wonders of the World. The great news is that your money will go a very long way in this area, with a choice of fine restaurants to dine in, various clothing boutiques and superb resort options: standards are very high.

• Africa – if you’ve never seen an elephant, giraffe or a lion in the wild, a safari really is the holiday of a lifetime. Usually, these excursions are all-inclusive, so you will know exactly how much to spend before you step off the plane. Why not brace the hot savanna, brave the beasts and then cool off in an infinity pool facing stunning scenery?

• Central America – fancy visiting coffee plantations, volcanoes and tropical beaches? Costa Rica is a rising holiday destination with direct flights now available from the UK. Travelzoo has some great options for this area and other global destinations.

• Europe – thought about glamping? There are a growing number of luxury camping locations across the continent including tree houses to staying in a yurt. Experience nature in luxurious comfort, and spend your money on sightseeing, fine dining and beautiful ornaments to bring home with you. If camping isn’t for you, then check out Mr and Mrs Smith for boutique resorts and villas.

• UK – our country has so much to offer; stay within our fair isles and you may just be surprised how rewarding a holiday in the UK can be. The main benefits include the fact you won’t have to tackle airport queues or deal with fluctuating exchange rates. There are various exclusive online promotions for luxury hotels and spas available when you sign up with Secret Escapes.

If you’re really organised, you might spread your vacations across the year, say every three months, and have set a budget to account for weekend breaks, mini-breaks and overseas holidays. If you have school-age children, the likelihood is that July and August are going to be your main holiday months. Although holiday companies charge more at this time of year, with some resourcefulness, you can ensure next year’s holiday allows for relaxed spending by planning well ahead.

“Summer means happy times and good sunshine. It means going to the beach, going to

Disneyland, having fun.”

Brian Wilson

Plan, plan, plan. With sensible financial planning, you can take advantage of holiday promotions, hotel and airline rewards and upgrades, and cheaper flights to faraway destinations. Unfortunately, long gone are the days when you could book last minute flights and recoup some cash – this just isn’t how airfares work nowadays. If you want cheaper flights, you need to book at least three months in advance.

“It will not always be summer; build barns.”


Here are a few useful steps when it comes to planning your holiday spending:

Step 1 – set a realistic budget and agree this with your partner or spouse.

• Step 2 - plan your holiday as far in advance as possible to take advantage of exciting offers and promotions.

• Step 3 – use a savings account with a good interest rate or a Cash ISA and set up a standing order to transfer funds into this account every month.

• Step 4 – consider investing; monitor your savings and decide whether you can place a sensible amount into stocks and shares. Your chosen level of risk will affect this investment and we recommend a diverse range of fund options.

• Step 5 – review your ‘holiday cash pot’ throughout the year, so you can either top it up or use it to pay off holiday costs well in advance.

Whether you choose to laze away happily on a tropical beach or you plan to climb a mountain, wise financial planning will allow you to kick-back and relax this summer. Why not make your money go that extra mile?

“Deep summer is when laziness finds respectability.”

Sam Keen

If you’re looking at ways to save and invest for future holidays, please get in touch and speak to one of our financial planners.

By Balance team, Jun 12 2017 01:28PM

The results of the General Election are out – we are facing a hung parliament. Prime Minister Theresa May’s gamble did not go as planned, with the Conservatives winning 318 seats (they needed 326 for a majority) and Labour’s Jeremy Corbyn winning 262 seats. Over the weekend, the Conservative party have been discussing a deal with the controversial Democratic Unionist Party, who have 10 MPs, to create a minority government. So, what does this mean for your business and your investments?

How has the pound fared?

As the news unfolded with the exit poll predicting a hung parliament, the pound plunged by 2.34% overnight, trading at $1.2635 against the US dollar, which is a seven-month low. However, the following morning it had climbed, and is now trading at $1.27320. Despite heavy losses on Friday for housebuilders and mid-caps (who derive a large proportion of earnings from the UK), international, blue-chip exporters experienced a boost due to the weaker pound.

What about the FTSE 100?

The FTSE 100 gained 1.1%, surging above 7,500. Major housebuilders such as Barratt, Persimmon and Taylor Wimpey fell from 2.4 to 3.5%. Bovis Homes also dropped by 3.1%. The energy sector saw Centrica breathe a sigh of relief as they jumped up by 3.2% due to the possibility that the Conservative’s previous plan to cap energy prices may not happen.

What about our credit rating?

Standard & Poor Global has warned that the UK’s credit rating could be downgraded. This happened last year following the vote to leave the EU. When a credit rating changes unexpectedly, it can affect investor confidence. However, it is of more importance to check the companies you are investing in to see how creditworthy they are.

Expect market volatility

Due to the uncertain political landscape ahead, we can expect great volatility in financial markets. To manage your level of risk, review your investment strategy and consider diversifying across stocks and shares including assets, commodities and currencies. Wise investing relies on sensible risk management. If a company finds themselves directly affected by the results of the general election, e.g. the housebuilders mentioned above, or by new policies affecting their cash flow, this will affect their share price. With Labour winning a sizeable proportion of seats in last week’s General Election, they are now challenging the Conservative’s position on securing a minority government. At this stage, it is still very unclear whether the UK will be looking at a soft or hard Brexit in the future; both approaches will have a direct effect on investor attitudes.

Save, save, save

While the political shaking of our nation continues, it is more important than ever to make sure you have a robust, long-term financial plan in place. In the short-term, there may be potential investing opportunities, but short-term trading can be a risky strategy to take, with many investors who attempt it being left licking their wounds afterwards. It’s easy to face losses due to sudden changes in financial markets. Most importantly of all, it is vital that you have a strong savings strategy in place to provide you with a solid financial buffer for the unchartered waters that lie ahead.

If you are worried about how last week’s General Election results may affect your business or investment strategy, please get in touch and 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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