Election result boosts May’s markets

Small and medium-sized UK companies generally outpaced their larger counterparts during May, boosted by the Conservative Party’s narrow victory in the General Election. Investors had expected another hung parliament, so an outright majority removed an element of uncertainty and helped to lift share prices among these businesses, which tend to be particularly exposed to domestic economic developments. The FTSE 250 index achieved new highs in the wake of the election result.

The Conservative majority also lifted share prices in the banking, energy and housebuilding sectors, which had all been expected to fare badly under Labour’s plans for tighter regulation. Later in the month, house builder Barratt Developments increased its forecast for the number of housing completions this year, citing an improved mortgage market and a benign environment for borrowers.

Over the whole month the FTSE 250 rose 3.9%, while the FTSE SmallCap index climbed 2.9%. By way of comparison, the FTSE 100 index edged 0.3% higher during the month. Among the blue-chip companies, ongoing uncertainty over the outlook for Greece helped to curb demand for banking shares during May. Also in the banking sector, the UK government cut its stake in Lloyds Banking Group to 19.93% following the sale of another tranche of shares. Elsewhere, a cut in China’s key interest rate proved positive for the UK’s mining sector.

All in all, the outlook remains favorable and our clients will hopefully benefit from the upbeat outlook.

If you would like to discuss the current outlook, or have any queries or concerns regarding your own situation, please do not hesitate to get in touch with Platinum as always.

Auto-Enrolment – A Lot More Work!

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The government has estimated that 7 million people will not have enough savings once they retire, so proper planning is essential.

In 2012 one of the cornerstones of the government’s pensions reform was implemented with the establishment of the National Employment Savings Trust (NEST). This marked the start of both auto-enrolment and compulsory employer contributions to pensions.

All employers will ultimately have to provide a ‘work place’ pension for their staff.  This is different to previous rules regarding Stakeholder pensions and is being enforced more rigorously with significant fines being levied for non compliance.

The workplace pension could be an existing company pension scheme, a personal pension or a stakeholder scheme. Alternatively it could be the new NEST scheme, which is effectively a cheap, no frills pension plan.

The major difference between these changes and previous reforms is the compulsory element.  For almost every member of staff, an employer will have to:

    • automatically enroll their employees into the workplace pension
    • contribute to that employees pension scheme as a legal requirement.
    • deduct employee contributions from salaries to make sure the minimum savings are made.

 

There are three main ways how the minimum contributions can be calculated. However as most employers will probably choose the route with the least paperwork, that means a total pension contribution of up to 9% of pensionable earnings – and a minimum of 4% must be from the employer and any remaining contribution to be taken from each staff member.

The changes are huge and will become increasingly complex as employers, employees and salaries are rarely static.  It is essential you do not underestimate the administrative impact and financial costs of the upcoming changes.

As an employer it is vital that you plan for the changes ahead and you find out your staging dates. Although the rules change this coming October, every employer will be given a date when they will need to ensure they comply with the rules.  These staging dates are spread up until 2017.

For employees it is important that you take the new rules into account when considering your own retirement planning and that you know how your employer is planning to embrace the new rules.

If this all sounds a little confusing – call Platinum and we’ll guide you through it!

A Clear Path Through The Mortgage Maze

Since those heady days nearly ten years ago when house prices peaked after an impressive growth rate, the UK housing market has been very unpredictable, proving that it is not the ‘get-rich-quick’ strategy some believed. However property remains a sensible long-term investment if certain rules are followed but expectations about possible profits are realistic.

In this slow market, location is still a strong factor but you also need to manage your budget carefully. Choosing the right mortgage is essential, with an adviser helping to assess your individual circumstances and recommend borrowing that offers sustained value for the long term.

Aside from your own home, the buy-to-let market is also a possibility. However defaults amongst buy-to-let borrowers have made it much harder now to find a buy-to-let mortgage with lenders now generally insisting on a deposit of at least 25%.

Most financial experts believe the property market still offers long-term growth potential although returns are likely to be lower than they have been in the past. As demand for housing continues to grow there are compelling reasons for getting involved in buying property, assuming you are settled and know what you want. The challenge is to make sure that you can afford the repayments and upkeep, particularly if interest rates rise in the future.

For first time buyers there seems to be a constant stream of incentives designed to help with getting on the housing ladder.  If someone needs help working out whether they could take advantage of these incentives then they need to get in touch with us at Platinum.

We’ll help put a new roof over your head with mortgage advice you can count on – call to arrange an appointment.

Market Update – Maintaining The Market Bounce…

There is good news for investors as financial markets continue bouncing through the Spring season.

Despite the perceived uncertainty of a general election, UK financial markets have taken the current economic data as positive news of a global recovery.  In fact, the past quarter saw the FTSE 100 break the 7000 point glass ceiling, achieving a new high and hold onto much of the gain.

Economies in other countries seem to be stabilising and building a platform from which growth is possible. There are some setbacks and concerns – such as Europe and Greece – but these seem to be under control as the European Central Bank continues its stimulus plan.

Looking ahead at our investment approach, little has changed since the start of the year.  We know the election will probably cause some short-term fluctuations but longer term, whichever party takes control, and the overall outlook has to be the same balance between austerity and growth.

We think that in the immediate future the largest external influence to client’s investments will be from currency, as Sterling will hopefully strengthen against both the dollar and the Euro.

On the whole we are fairly ‘bullish’, which is finance jargon for being positive, about what lies ahead.  We certainly feel it is worth taking advantage of the global economic recovery although we would always encourage a balanced approach and ensure any of our clients portfolios have a wide spread of investment assets to hopefully cover any unforeseen market fluctuations.

Platinum encourages all our clients to contact us to discuss their plans at any time.  We can then ensure your investments are still in line with your goals and invested appropriately.

Keep it in the Family – Help each other out

There are key times in our lives when we can all benefit from getting an expert to help us with our financial situation. You may have received  a recommendation from a friend or family member the first time you went to see a financial advisor, and that might or might not have worked out, but it will have opened up the door to you and enabled you to find a reliable adviser that now suits you and your family’s needs.

Finding a Financial adviser without any connections can be a daunting task – some people don’t act or get advice because they’re unsure of how it all works… What is a financial advisor? When would I need to use one? How much does financial advice cost and how do I find someone I can trust?

In our new initiative at Platinum we know how important it is to get good financial advice and we know how hard we work to ensure our clients get the best service and advice possible. We pride ourselves on building lasting relationships and we keep communications clear and to the point. We listen and respect your needs and never bombard you with unnecessary amounts of information.  We offer our clients clear advice and consistently work towards providing a service that caters for your specific needs.

So we want to encourage you to share your Platinum connection with your family members, both young and old – why not make it easy for them to find a reliable financial adviser and share the benefits of your knowledge and experience. Ensure your family members get the same trusted financial advice that you get, at every stage of their life.

Whether you have aging parents in need of support or younger family members starting out in the world – you can help them by sharing your experience and supporting their journey.

You can also benefit from reviewing your own finances. Get answers to questions related to changes in your life.

For our valued clients, we want to offer …

  1. A Family review meeting for your elderly parents to discuss their financial needs as they get older.
  2. A Consultation for younger family members – Pass on an invite to help as they consider their financial future and options for planning ahead.
  3. A Personal review meeting for YOU – get peace of mind and reassurance that you’re making the right financial decisions for now and for your future.

 

All you need to do is call the Platinum Team to arrange a meeting for you or a family member and we’ll take care of the rest – 0161 718 8328

“From austerity to prosperity”?

With the General Election a matter of weeks away, the recent Budget managed to hail economic recovery, gloss over spending cuts and serve up a raft of measures designed, among other things, to support savers and first-time house-buyers.

Chancellor of the Exchequer George Osborne announced the launch of a new ‘Personal Savings Allowance’ that will enable basic-rate taxpayers to earn up to £1,000 each year in savings interest, free of tax. He also introduced new flexibility for Individual Savings Accounts (ISAs) that will allow savers to withdraw money and replace it – in the same tax year – without losing any of their tax-free allowance. At the moment this provision will apply only to cash ISAs. Elsewhere, Osborne revealed measures designed to help first-time house-buyers with a deposit – through a new ‘help-to-buy’ ISA; the government will add a bonus of 25% to the saver’s contribution, to a maximum of £3,000 on £12,000-worth of savings.

Further reforms to the pensions system elicited a mixed response. From April next year, pensioners who have already purchased an annuity will be able to sell that income to a third party in exchange for a lump sum that will be taxed at their marginal rate instead of the “punitive” 55% rate. Meanwhile, the Lifetime Allowance for pension contributions will be cut at the same time from £1.25m to £1m, saving the Treasury £600m a year.

The personal tax-free allowance will rise from £10,600 in 2014/15 to £10,800 in 2015/16 and to £11,000 in 2016/17. The Treasury calculates this will cut income tax for 27 million people. The threshold at which individuals begin paying higher-rate tax will rise from £42,385 to £43,300 by 2017/18. Elsewhere, schemes to avoid inheritance tax via deeds of variation will be reviewed.

On balance the announcements are positive news for the majority of Platinum’s clients and we look forward to bringing you more details on each point over the coming months.

On a broader economic outlook, the UK economy expanded more quickly than any other major advanced economy during last year, registering growth of 2.6%, which is somewhat lower than the 3% growth forecast in December 2014. The Office for Budget Responsibility’s forecasts for economic growth in 2015 and 2016 were raised to 2.5% and 2.3% respectively, while its forecast for 2017 was cut to 2.3%. Debt as a share of GDP is falling more quickly than previously forecast, and the Chancellor therefore intends to end the squeeze on public spending earlier than expected. From 2019/20, public spending is set to rise in line with economic growth.

As many people are aware the recovery is still underway and there is a long way to go before the UK economy can be said to be operating in the ‘black’.  Whilst there will likely be further budgetary cuts, there are signs that our economy is building and hopefully the impact of any cuts will be lessened.

As always we welcome the opportunity to discuss the overall market situation with our clients as well as their individual plans.  We would urge any concerned clients to get in touch with the team at Platinum.

Have You Lost Your Money?

Did you know about the hundreds of millions of pounds sat quietly in ‘lost’ bank accounts and ‘lost’ pension savings?

Over the years people can hold different bank accounts or savings accounts, which are rarely fully closed and can often have funds still in them.

Back in 2008, a website was launched to help everyone find any lost bank or building accounts and National Savings products, such as premium bonds.  The ‘My Lost Account’ website offered a FREE search facility to connect people to their lost savings.

Despite more than 300,000 people using the service and it returning £645 million to their original owners, this great service still remains unknown.  If you, or anyone you know, may have an old lost account then simply follow the link to the website and use the FREE facility to reclaim your money and savings.

In a similar fashion, it is possible to trace pensions using the Department of Work and Pensions website.

It is important though to be wary when tracing important information as there are many sharks and predatory sites looking to prey on those searching for lost moneys.  Therefore I would recommend only using the DWP pension tracing site which can be found by clicking here…   https://www2.dwp.gov.uk/tps-directgov/en/contact-tps/pension-tracing-form.asp

Ultimately the government and insurance companies will use any unclaimed funds as they try to tap into the billions of these ‘orphaned’ assets, so it is important that everyone reclaims their savings.

Once you have done so, contact Platinum and we’ll advise you what to do with your windfall!

Voting For Uncertainty

“Sell in May and go away’” runs the old stock market adage – but what happens when May involves a UK General Election?

It’s scheduled for 7th May this year but the result of the election – whether an outright victory for one party or some shade of coalition – is far from inevitable and uncertainty remains the sworn enemy of investors.

We do suspect that the outcome will be close and as voting day approaches, investor sentiment is likely to be affected by a mounting uncertainty. Nevertheless, it is worth remembering the UK equity market tends to rise in election years. With seven General Elections held since the beginning of the 1980s, the stock market has ended that calendar year higher in six cases – falling only in 2001.

There are still many unanswered questions about the country’s future. Will we end up with another coalition? What can companies expect from the next government? What will happen to the housing market? Should the banking sector brace itself for further punishment? And what role will the UK play within the broader EU?

Recent news has focused on geopolitical issues, from the terrorist attacks in Paris to ongoing developments in the Middle East and Russia. Meanwhile, the outlook for the Eurozone’s faltering economy and the future path of oil prices have continued to create headlines.

Looking at the next few months, speculation about the outcome of the General Election and the UK’s future prospects is likely to gain momentum.

For most of our clients who are investing for the longer term, the constant news flow may be disconcerting but is unlikely to make a huge difference to their portfolio.  Once the dust settles, it’s likely little will have changed.  The financial markets and investors are much more focused on worldwide trends, less on the varying colour of our own political leadership.

In short, I would calm any fears and encourage all clients and investors to continue their current investment strategy.  If you have any specific concerns, then Platinum are always here for you.

Use It Or Lose IT

Both Individual Savings Accounts (ISAs) and pensions provide an opportunity for UK investors to shelter their money from the taxman.  It is something everyone should consider.

Within an ISA you pay no tax on any capital gains or income earned and you do not have to declare your ISA’s existence on your tax return.

With pension savings you immediately receive income tax relief on any personal contributions, and the monies grow free of income tax or capital gains tax.  On encashment you could be liable to some income tax on the proceeds but at least 25% is tax free before you reach 75 years of age.  The new legislation has made pensions an irresistible way of saving and planning with no restrictions on access past the age of 55.

As an added bonus, pension savings can be seen as an exceptionally efficient tool to avoid inheritance tax.

At present, you can invest up to £15,000 in this tax year and you can choose to invest this in cash, stocks and shares, or a combination of the two.

For the majority of savers pensions contributions are limited only by your earnings or a cap of  £40,000. For some people it is up to £190,000, depending upon previous contributions.

You might already have ideas about the assets in which you want to invest. Perhaps you are considering equities, fixed income, cash or a mix of asset classes. It may be worth considering a collective investment scheme that will provide exposure to a more diverse range of investments.

Since time flies by, you should consider taking action as early as possible. The end of the current tax year is fast approaching and you don’t want to lose this year’s allowances for good. Whatever you choose to do, you should plan ahead in order to make the most of the long-term benefits offered by an ISA.

Of course, you do not have to use the whole allowance but if you can take advantage of it, or if you have investments elsewhere that could be transferred, ISAs and pensions provide a more tax-efficient way to invest.

Contact us at Platinum if you would like to review how you can maximise your allowances and plan to grow more tax efficiently.

ISA Benefits for Spouses

isa

Last year’s Autumn Statement provided another opportunity for George Osborne to make Individual Savings Accounts (ISAs) more attractive to investors and he duly obliged.

Previously a range of welcome changes has included broadening the scope of allowable investments – to incorporate retail bonds, peer-to-peer lending and Alternative Investment Market shares – and a significant increase in the annual allowance.

Now partners will be able to inherit a deceased spouse’s ISA account or accounts.

Prior to this, ISAs lost all their tax benefits on the death of the holder and formed part of their estate for inheritance tax purposes.  The new rules mean spouses can preserve any tax-free income stream their partner had received.

The new structure is complicated – technically, the ISA wrapper and its tax benefits still disappear on death and the investments are still theoretically part of the estate for inheritance tax purposes. This means that if the ISA is assigned to anyone but the spouse, it will be taxed as before. It is only because there is no tax on inter-spouse transfers that it escapes under the new rules and it is only through the additional one-off allowance to the surviving spouse that – from 6 April 2015 – the ISA retains its tax-sheltering benefits.

From this tax year, surviving spouses will receive a one off contribution allowance for their own ISA equal to the value of the ISAs held by their recently deceased partner.  This allows a transfer of funds from their deceased partners ISA into their own ISA.

The goal is for the surviving spouse to be better able to secure their financial future and enjoy the tax advantages they previously shared as a married couple.

The ISA limit is also set to increase in April to £15,240.  After the significant rise announced last year, this year’s rise is linked to the September inflation figure, as will be the case in future.

If you would like to discuss how you may benefit from the ISA rules changes please get in touch with Platinum and one of our team will be happy to explain the new rules.