When the pandemic struck last year, thousands of workers began working from home for the first time. It’s changed the world of work and this situation could be here to stay.

According to data from the Office for National Statistics, around a quarter of workers are currently working exclusively from home. Many more are mixing work from home with heading to the office. While the shift is in response to the Covid-19 pandemic, businesses globally have announced their intention to make it permanent. Workers at the likes of Adobe, Facebook, and Yahoo may never set foot in the traditional office again. Others, including Nationwide Insurance, have revealed they plan to maintain a blended model in the long term.

Research from Deloitte predicts that homeworking will quintuple by 2025. The prediction was made after 98% of financial directors from Britain’s largest companies said they expect the rise in home working to continue in the coming years.

Working from home could become the norm within some industries, but is that a positive thing?

Employees enjoy the benefits of working from home

Working from home comes with many benefits. From having more free time without the commute to saving money by eating at home, employees are often enjoying the benefits it brings. Some even argue that without the office distractions, they’re far more productive than they are in a traditional place of work.

Research reported in Forbes suggests that while there are challenges to working from home, employees are keen to adopt it long term:

• Eight in ten employees said they agree they enjoy working from home
• 60% said they felt less stressed when working from home
• 66% thought they were more productive.

Employee engagement with their workplace hasn’t declined significantly either. In a survey that questioned more than 500,000 workers, employees scored 79% on an engagement index when in the office. While you may think being physically away from management, colleagues and the office would have a negative impact, it only declined marginally to 77%. The findings suggest that it is possible to maintain company culture and a sense of team spirit even when getting together in the office isn’t possible.

From a business point of view, working from home could provide opportunities to cut costs by getting rid of costly city centre offices or downsizing.

Young workers could be left behind

One of the challenges of remote working is creating a team atmosphere and passing on knowledge and skills effectively. 

If the trend for exclusively home working continued, it could harm the development of young workers. A quarter (24%) of young workers agreed that working from home made them feel less connected when questioned as part of an Aviva survey. Even those that are enjoying working from home could find that it harms their professional development, with far fewer opportunities to connect with more experienced colleagues or engage with other stakeholders.

Introverted personalities were also found to be negatively affected by the move to home working. A third (36%) said they were concerned they weren’t having enough face-to-face contact with colleagues. They were also more likely to be concerned about their firms’ being an enjoyable place to work in the future and worry about job security.

Debbie Bullock, wellbeing lead at Aviva, commented: “A third of employee wellbeing and satisfaction levels are determined by personality types. Personality is fixed but resilience can be developed in employees, and managers are in a great position to ensure their colleagues have the right skills and confidence to grow in their careers during this continued uncertainty.

“A little insight, the right conversations and skill-building can go a long way to help identify when people may need more support.”

Striking the right balance

While homeworking provides plenty of opportunities, businesses and teams must be mindful of the downsides too. Making efforts to ensure that teams stay connected and communicate effectively, as well as facilitating professional development opportunities, are crucial for not only employee wellbeing but for business success. Firms that plan to truly embrace working from home will need to find processes that suit them and their employees to strike the right balance. 

When you look at the headline figures of how investment markets performed in 2020, you may be worried about your finances. The impact of Covid-19, along with other factors, caused volatility within the market globally. Yet, despite this, your portfolio may still have made gains.

FTSE 100 index fell 14.3% in 2020

One of the figures attracting attention is the performance of the FTSE 100. In 2020, it fell 14.3%, reports the BBC, making it the worst performance since 2008 when it slumped 31.3% due to the financial crisis. This time the fall is linked to the ongoing pandemic and Brexit, with a deal only being reached in late December.

The FTSE 100 is an index made up of the largest 100 companies listed on the London Stock Exchange and is often used as an indicator for the performance of UK listed companies. As a result, you may have concerns if you focus on only this figure.

While the FTSE 100 performance may have affected your investments and pensions in some way, looking at the wider picture is just as important.

In fact, according to the Guardian, 2020 saw world stock markets up 13%. As a result, your portfolio may actually have made gains in the last year despite volatility and the, sometimes alarming, headline figures. This is because your portfolio is invested across multiple assets and geographical locations. This creates a diversified portfolio. So, while one area may have suffered a downturn, others help to balance this out.

That’s not to say your portfolio will never fall, investments always carry risk. However, diversification can help limit the amount of volatility experienced.

In addition to this, we use objective-based investment strategies when building portfolios for our clients.

What is objective-based investing?

Objective-based investing is an approach that seeks to align your investment portfolio with your specific needs and objectives. Rather than simply investing in default funds, investments are customised to your needs and goals.

This fits into the wider process of financial planning. Before you start investing, you need to spend some time thinking about why you’re investing. Perhaps you want to build a nest egg for children or want to be able to retire early. This helps tie your investment strategy to your goals, rather than simply focusing on generating the highest possible return or trying to beat the market, which may not align with your risk profile.

For instance, if you’re creating a fund to pay for a child’s education, you may want to take a more conservative approach to investing, even if it potentially means lower returns. Rather than basing performance on investment values against the market, objective-based investment is judged on how it helps you achieve personal goals.

It’s an investment strategy that may change over time. For example, while you’re earning an income, you may focus on growing your investment value. As you retire, and your priorities change, adjustments may be needed so that your strategy now focuses on preserving wealth or creating an income for you. This is part of the reason why regular reviews are important, they help to ensure your investments continue to align with your aspirations as your lifestyle and objectives change.

What does this approach mean for you?

2020 highlighted how quickly things can change in the investment market. At the beginning of 2020, who would have predicted that a global pandemic would affect how businesses operate? Or during the midst of the sharp downturn in March, that markets would bounce back as quickly as they did? 

While it’s difficult to do, tuning out the short-term market movements can help you focus on the bigger picture. You should invest with a long-term goal in mind and your investment strategy should reflect this. Having faith in your investment plan can help you focus on the long-term plan and reduce the urge to tinker with investments, which can have a negative impact. An objective-based investment strategy is built with your goal at the centre, keeping this in mind can help you have more confidence in investments, even amid volatility.

Please contact us to discuss your investments, whether you want to create a strategy or would like to review an existing one.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Following a year of uncertainty, you may be worried about your finances. Covid-19 has had an impact in many ways, from reducing income to affecting investments. Some financial firms have also been affected and this may mean you’re concerned about how secure your assets are. The good news is that there are protective measures in place.

More than 4,000 financial firms are at heightened risk due to the Covid-19 crisis, according to the Financial Conduct Authority (FCA). The FCA added that nearly a third of these businesses could potentially harm consumers if they collapsed. The regulator said insurance intermediaries and brokers, payments and electrotonic money firms, and investment management companies experienced the largest drop in cash and assets. The firms at risk are mostly small and medium-sized.

If you’re worried about the security of your assets, the Financial Services Compensation Scheme (FSCS) can provide peace of mind, but it’s important to understand what it does and does not cover.

What is the Financial Services Compensation Scheme?

The government set up the FSCS in 2001 to protect consumers if a financial firm fails. In 2018/19 the FSCS paid out £473 million to over 425,000 customers who had been affected by a firm collapsing.

How much compensation you’re entitled to is dependent on the financial product you have.

Cash accounts

If you hold money in cash, for example, your current account or a savings account, the FSCS covers up to £85,000 per eligible person, and up to £170,000 for joint accounts. To be eligible, the money must be saved with a UK-authorised bank, building society or credit union.

If you hold more than £85,000 in cash, it’s worth spreading it across several different providers to ensure all of it is protected. It’s important to note that some firms operate under different brand names that use the same banking licence. For instance, Nationwide also operate under the names Derbyshire Building Society and Cheshire Building Society, among others. In the unlikely event of Nationwide collapsing, only £85,000 would be protected, even if it were spread between these different brand names.

As a result, it’s important to check how firms are linked if your assets exceed the £85,000 threshold. The easiest way to do this is by checking the FCA’s financial services register.

In some cases, the threshold is temporarily increased to £1 million for 12 months. This provides you with increased protection if a significant amount is deposited in an account following certain life events, such as selling a property or receiving an inheritance, and means you don’t need to make immediate decisions to ensure your assets are protected.

Pensions

Pensions are likely to be among the largest assets you have and are crucial for security in your later life. The good news is pensions are covered by the FSCS:

• If a pension provider fails, you’d receive 100% compensation, with no upper limit. This will include defined contribution pensions, such as your workplace pension.
• Up to £85,000 per eligible person, per firm if your self-invested personal pension (SIPP) operator fails.

It’s important to note that the FSCS does not provide compensation based on investment performance. It provides cover if your pension provider were to collapse, not if your investments perform poorly. As a result, it’s still important that investment decisions reflect your risk profile and long-term goals.

If you have a defined benefit pension, you’re not covered by the FSCS. Instead, these are covered by the Pension Protection Fund.

Investments

Your investments may also be protected. Some investments come under the FSCS if a firm has failed, with an £85,000 limit per eligible person, per firm.

Again, the FSCS only covers you if a firm fails, not if your investment values fall. You should ensure your investment portfolio aligns with your risk profile and wider financial plan.

Other financial services may be covered by the FSCS too, including debt management, mortgages, and insurance policies. Before you take out a product, open an account, or use a service, it’s worth checking if you’ll be covered by the FSCS. It can provide confidence and peace of mind.

3 things to do to ensure you’re covered by the FSCS

1. Always check firms are regulated. Not all services and financial products offered are FCA regulated and if you took out one of these, you won’t be covered by the FSCS. This may be a bank that isn’t authorised in the UK or unregulated investments. You can use the FCA register to check.
2. Check your existing products. In most cases, your assets will be covered by the FSCS but it’s always worth checking, and ensuring you have not exceeded compensation limits.
3. Get in touch with us. We want you to have confidence in the products and services used as much as you do in your plans. If you have any questions about whether you’re covered and the risk to your assets, you can contact our team.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.

The current 2020/21 tax year will end on 5 April 2021. As a new year starts, many allowances reset. For some, it will be your last opportunity to use them. Using these six allowances before the deadline can help you get the most out of your money.

1. ISA allowance

ISAs are a popular way to save and invest. They are tax-efficient, you don’t need to pay Income Tax or Capital Gains Tax on the interest or returns earned. Maximising your ISA contributions to make use of the annual allowance can reduce your tax bill. The current ISA allowance is £20,000 per tax year.

Remember, you can also use a Junior ISA (JISA) to save or invest for a child. Similar to an adult ISA, they are tax-efficient. You can contribute £9,000 per tax year. Money contributed to a JISA is locked away until the child turns 18.

2. Pension annual allowance

The annual allowance is the amount you can pay into a pension each tax year while still benefitting from tax relief. Tax relief provides an instant boost to your pension savings and is given at the highest rate of Income Tax you pay. As a result, it makes paying into a pension an effective way to save for retirement.

If you’re in a position to do so, increasing pension contributions to take advantage of this can significantly increase your pension and income when you retire. Usually, you can invest up to 100% of your annual earnings, up to £40,000, into your pension and still benefit from tax relief. However, if you’ve already accessed your pension or are a high-earner, your allowance may be lower. Please contact us if you’re not sure what your annual allowance is.

3. Gifting allowance

If your estate may be liable for Inheritance Tax, gifting money or other assets during your lifetime can reduce the bill, as well as allowing you to see the benefits gifts bring to loves ones. However, some assets are still considered part of your estate for Inheritance Tax purposes for up to seven years after they are gifted.

Making use of gifts that are immediately outside of your estate provides one solution. One of these is the annual gifting allowance, which means you can pass up to £3,000 on to a loved one tax-free. This is per individual, so as a couple you can gift £6,000 without worrying about Inheritance Tax each year.

4. Capital Gains Tax allowance

When you sell or dispose of certain assets, you may be liable for Capital Gains Tax (CGT) on the profit made. The current CGT allowance of £12,300 means that most people will not have to pay this tax. However, if you’re likely to exceed the limit, spreading out the sale of assets across several tax years can make sense.

5. Dividends allowance

If you’re invested in dividend-paying companies, the dividend allowance can be a useful way to boost your income without increasing tax liability. For 2020/21, the dividend allowance is £2,000. If you’re a company director, you can also pay yourself in dividends to make use of this allowance.

6. Marriage Allowance

Finally, if you’re married or in a civil partnership, make use of the Marriage Allowance if one of you doesn’t fully use their Personal Allowance.

The Personal Allowance is the amount you can earn in total each tax year before paying Income Tax. Your total income may include your salary, pension benefits, investment returns and more. For the 2020/21 tax year, this is £12,500. If you or your partner don’t exceed the Personal Allowance, you can usually pass on a portion to the other. This can mean reducing your tax bill by up to £250 as a couple. 

Get in touch to discuss your allowances and financial plan

The above list isn’t exhaustive, other allowances may be valuable to you. If you’d like to discuss your financial plan and the allowances, tax reliefs and incentives that could help you get the most out of your money, please get in touch.

While allowances are often discussed as the end of the tax year approaches, putting a medium-term plan in place that considers these can be beneficial. For instance, if you’re investing through an ISA, spreading contributions across the 2021/22 tax year to fully use your allowance over 12 months can make sense. Likewise, spreading pension contributions across a year is preferable to a lump sum for many people. If you want to create a plan for 2021/2022, please contact us.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.

2020 was a year marked by volatility and uncertainty. With everything that was going on, you might think that investors finished the year with losses. Yet, world markets ended the year almost 13% up. It’s a reminder that while short-term volatility does happen, focusing on the long-term and your plans is important.

The Covid-19 pandemic was one of the biggest factors influencing markets throughout 2020. Despite vaccine approvals, it’s set to be an ongoing theme as we move into 2021 too.

UK

The biggest news affecting the UK was Brexit. During the beginning of December when a no deal Brexit looked likely, markets experienced volatility, as did the value of the pound. However, a deal was struck just in time for Christmas and with a week to go before the end of the transition period. The 2,000-page Brexit document details a new arrangement for tariff-free trade and continued cooperation. With more certainty, it’s hoped volatility will ease and businesses will have the confidence to invest.

Following the announcement of the deal, investment bank UBS predicted UK stocks and the pound would rally in 2021. The firm forecasts that the FTSE 100 will rise to around 7,200 points in a year, that’s an increase of around 8% compared to December 2020’s levels.

Of course, while the Brexit deal is good news, the pandemic continues to influence markets and the economy.

December saw stricter social distancing measures brought in with the introduction of Tier 4 in London, followed several days later by most of the country. There are fears of stricter measures and full lockdowns in 2021.

The OECD predicts Britain’s economy will be one of the hardest hit by the pandemic. The thinktank expects the economy to shrink by 11.2% in 2020, followed by growth of 4.2% and 4.1% in 2021 and 2022 respectively. Argentina is the only G20 country forecast to fare worse.

In line with the ongoing Covid-19 crisis, the government has extended the furlough scheme by an additional month. The government will pay 80% of salaries of furloughed workers until April 2021. The Bank of England has also extended the pandemic lending scheme for SMEs, encouraging lenders to offer cheaper loans to businesses affected until October 2021. Both announcements indicate a commitment to ongoing support to businesses and individuals.

Unsurprisingly, retail has been hit hard by the Covid-19 restrictions. Retail sales fell by 3.8% in November as many high street shops were forced to close, according to the Office for National Statistics. December also saw Debenhams enter liquidation as rescue talks failed and the Arcadia Group, which includes Topshop and other well-known names, collapsing, putting 13,000 jobs at risk.

Europe

In Europe, the European Central Bank (ECB) has extended its stimulus programme. The flagship Pandemic Emergency Purchase Programme (PEPP) received an additional €500 billion and has been extended by nine months, taking it to the end of March 2022. Christine Lagarde president of the ECB said she believes the eurozone will achieve herd immunity for Covid-19 by the end of 2021.

US

The jobless figures in the US are often used as a benchmark for the economy. After six months of growth, December saw the figures fall, fuelling concerns the economy is faltering. Just 245,000 new jobs were created in the US, far behind the 440,000 expected.

Joe Biden will be sworn in as president on 20 January 2021 and is set to face challenges from the outset as the country continues to battle Covid-19 and the economic impact of the virus. Markets will no doubt react to the inauguration and be listening closely to his first speeches.

Remember, you should invest with a long-term timeframe and goal in mind. If you’d like to discuss your investments for 2021 and beyond, please get in touch.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Thousands of people have welcomed the shift in working from home. It’s helped us stay safe during the pandemic, as well as saving money and providing more free time. However, one of the negative effects is that the lines between work and personal life have become blurred.

Many employees are struggling with an ‘always on’ culture where they feel like they need to be constantly in work mode. It’s something that’s become even more challenging as work has become part of home life for some.

Almost half of employees say they can’t switch off

Some 44% of employees say they feel like they can never fully switch off from work, according to a survey conducted by Aviva.

Unsurprisingly, an always-on environment affects life outside of work. When asked, 58% of employees said work has led to them neglecting their physical health, while 55% said it’s impacted their mental wellbeing. It’s led to 43% saying they are troubled by how much work interferes with their personal life. 

Working from home has meant it’s harder for many employees to switch off. But the pandemic has likely affected mindsets in other ways too. With competition in the job market high, workers may feel under pressure to appear they are always available.

However, wellbeing plays a crucial role in productivity. Employees who can focus on their home life, the things they enjoy, and stay healthy are more likely to be productive. So, what can you do to switch off from work if you’re working from home

1. Create a dedicated workspace

If you have the space in your home, an office can help to create boundaries. At the end of the day, you’re able to shut the door and step away from work.

However, if a home office is out of the question, creating a dedicated space where you always work from can make the transition to a work mindset easier by creating a routine. Having everything you need throughout the working day close to hand can minimise distractions and procrastination too.

2. Give yourself some time to switch off

One of the challenges of working from home is that you don’t get the downtime between work and personal life that you normally would. Perhaps you used to enjoy reading a book as you commuted on public transport or played your favourite music on the drive home. These little routines can help you split the day up and transition from work to home mode.

We’re not suggesting that you set aside the time you normally would commute but a ten-minute activity at the start and end of each working day can help you separate the two. It could be going for a quick walk, listening to an audiobook, or meditating, for example.

3. Set normal working hours

One of the benefits of working from home is that your working hours may have become more flexible. Without a commute, you may decide to start work earlier, for instance. However, creating a routine can help you separate work and personal life. Set out what your normal working hours will be and stick to them.

It’s important that your working hours are well communicated too. Make sure colleagues, clients and other stakeholders understand when they’ll be able to get in touch with you and when they can expect a delay in responses. It can help limit miscommunication and ensure collaborative tasks stay on track.

4. Establish boundaries between work and home

Setting clear boundaries between work and home can be difficult if your home has become your workspace too. But setting boundaries can help create a clear distinction.

That means when you finish work, you focus on your personal life and give it your full attention, whether that’s meeting up with friends, pursuing a hobby, or simply relaxing with family.

It’s a process that should go the other way too. Taking time out of your working day to do household chores can blur the lines and you may feel like you need to catch up outside of working hours as a result. If you’re not used to working from home or it’s a temporary situation, this can be challenging, especially if you have young children at home. Where possible, try to keep home tasks to set times of the day.

5. Turn off work technology

At the end of the working day, turn off the technology. That includes checking emails on your phone or personal computer. It can be a difficult habit to get into a first. Especially if you’re used to keeping up to date with what’s happening. However, even checking your emails for a few minutes can pull you back into work mode and mean that projects or other tasks are on your mind for the rest of the evening.

There might be times when you must be contactable. Where possible keep these to a minimum and for certain circumstance only, for example when a deadline is approaching.