Millions of people in the UK are now self-employed. Whether you work for yourself or are part of an industry where contracting is commonplace, it can place pressure on your finances. You need to manage your financial situation and potentially plan for periods where you’re not earning an income. Working with a financial planner can give you confidence in your career and future security.

There’s been rapid growth in self-employment in the UK in recent years. According to official statistics:

• 3.3 million people (12% of the labour force) were self-employed in 2001
• By 2017, this had increased to 4.8 million people (15.1% of the workforce)

There are many benefits to being self-employed, but it often means you need to take greater control of finances in order to ensure you meet goals. So, how can a financial planner help you?

1. Paying into and managing a pension

The majority of UK employers will now benefit from a Workplace Pension. However, if you’re self-employed, you’ll need to set up and manage your own pension. Whilst you won’t benefit from employer contributions, you’re still entitled to tax relief. For many self-employed individuals, a pension will be the most efficient way to save for retirement.

There are a variety of ways of setting up your own pension and you may have many questions.

• Should you invest through a fund or select your own investments?
• How much should you aim to put away each month?
• What kind of income will your contributions afford you?

A financial planner can help create a long-term financial plan that considers your lifestyle now and the one you want to achieve in retirement.

2. Creating a financial safety net

When you’re self-employed, there is a chance that your income will stop or reduce. As a result, it’s important to create a financial safety net that you can fall back on should something happen. This could be a period of illness, meaning your income stops in the short term or a contract coming to an end.

Financial planning should give you confidence that you’re financially secure even if these ‘what if’ scenarios did happen. The right solution will depend on you and your priorities. It may involve building up an emergency fund and taking out an appropriate insurance policy, for example.

3. Building suitable savings and investments

We all know we should be putting some of our income aside. But it can be challenging to know what to do with it. Should you hold in cash or invest? There’s no right or wrong answer to this. It’ll depend on your personal situation and attitude to risk.

With so many different providers and products on the market for both cash savings and investments, it can be just as daunting to decide where to put it. Again, this will depend on you and what you’re saving for. If you’re saving for a goal that’s a year away, you’ll need a very different product if you plan to save for 15 years. Our goal is to help clients pick out the right products for them.

4. Getting to grips with tax liability

As you’ll be responsible for organising your own Income Tax, it’s worth spending some time understanding it. There are often steps you can take to reduce your liability depending on your circumstances. However, there are other areas of tax to be aware of too; could your income from investments be liable for tax, for example?

Knowing your tax responsibilities enables you to avoid potentially hefty penalties and set realistic expectations. Tax regulations can often be complex and difficult to apply to your situation. This is where working with a financial planner comes in useful. We’re here to help you get to grips with tax and make the most out of your money.

5. Understanding your long-term goals

Financial planning isn’t just about looking at figures though. It helps you to see how your money habits can help you achieve short, medium and long-term aspirations. People often know what they want in the short term, but planning further ahead can be difficult.

If you’re self-employed, it’s worth thinking about whether you ever want to return to traditional employment, when you’d like to retire, and what the future holds. Talking with a financial planner about your wider goals can help put in place a plan that sets you on the right path.

If you have any questions about the above issues or any other financial matter, please get in touch. We aim to work with all clients, including those that are self-employed, to have confidence in their future.

Please note: 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 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.

The Financial Conduct Authority does not regulate Tax and Estate Planning.

November marks Talk Money week, an initiative that aims to encourage more people to talk about their finances. In the UK, personal finances can be something of a taboo subject. It’s not something we widely discuss. But whether it’s chatting with your partner or your financial planner, there are a lot of reasons why we should all make an effort to talk about money.

1. Look at your finances from another perspective

As the saying goes, two pairs of eyes are better than one. Keeping money worries or concerns to yourself means you only see solutions from your perspective. Sharing, whether with a loved one or professional, can give you a fresh viewpoint. If you’re not sure which way to go or feel as though you’re stuck in a rut, chatting about your options can be just what you need to spark some inspiration.

2. Alleviate stress

Money can be one of the biggest causes of stress. Whether you’re worried about what would happen if your income were to stop, or whether you’ll outlive your pension, it can be a cause for concern. Financial stress can affect other parts of life too, including your overall wellbeing. Sharing worries can feel like a weight has been lifted off your shoulders and may lead to a solution that you hadn’t thought of. However, it’s important to keep in mind that what has worked for one person, won’t necessarily be right for you. Our goal is to provide each client with peace of mind when they think about their finances. 

3. Pass on your knowledge

Over the years, you’ve probably picked up a few tips of your own. Why not share what you’ve learnt with others? It could help them achieve their goals and improve their financial situation. Whether it’s just a gentle reminder to set money aside for a rainy day or insights you’ve picked up when building up your own investment portfolio, it could be useful. It’s also an opportunity to debate different options and maybe pick up something new from others too.

4. Share your experiences with loved ones

The challenges facing younger generations are often featured in the news, including struggles getting on the property ladder, saving for a longer retirement and stagnant wages. Talking about money with children or grandchildren can help you understand the challenges they’re facing and how you may be able to help. Sharing your experiences can offer some insight and encourage them to come to you when they’re in need of advice.

5. Take the opportunity to consider the long term

When you think of money, it’s often short-term factors that we focus on. Perhaps you focus on where your savings are going each paycheque or what you’re putting away for grandchildren. Talking about money is an opportunity to start thinking further ahead; what would you like to achieve in ten or 20 years’ time? It could be becoming mortgage-free as quickly as possible or enjoying the retirement lifestyle you’ve been looking forward to. By setting out aspirations, you’re able to create a plan that enables you to take steps towards them.

Children born today have a one in four chance of celebrating their 100^th birthday. It’s progress that should certainly be celebrated but one that also leads to financial questions. How do you prepare for a life that could span ten decades?

Many parents choose to put some money aside for children to give them a helping hand when they reach adulthood. Whether you’ll be making regular payments or adding money on Christmas and birthdays, you’ll want to ensure you get the most out of your deposits. But choosing how to build up a nest egg for a child can feel more complex than making decisions about your own financial future.

One question to answer first is: Should you place the money in a cash account or invest?

Why consider investing your child’s savings?

It’s natural to want to protect the money you’re putting aside for your child’s future by choosing a cash account with little debate. However, there are reasons why investing may prove to be more efficient.

Even on a competitive child current account, interest rates are low. This means once you factor in inflation, savings lose value in real terms over the long term. If you begin saving whilst your child is very young, this can have a significant impact on the spending power of the money.

Investing provides an alternative, with returns potentially higher than interest rates. However, it’s not as simple as that. Investing does come with some risks, as there’s no guarantee how investments rise and fall. But investing is something you should consider when you’re planning for your child’s future.

If you’re unsure whether a cash account or investing is right for your goals and circumstances, please get in touch.

Should you decide to invest money earmarked for your child’s future, there are some questions that can help you pick out the right vehicle and investment opportunities.

1. How long will it be invested for?

When you start saving, it’s important to have a deadline in mind. If this deadline is below five years, it’s usually advisable that you choose a cash account. This is because investments typically experience volatility in the short term and, as a result, values can fall. This may be an issue if you’re investing for a short period of time.

However, should you have a time frame that is longer than five years, investments may provide you with a way to potentially achieve returns that outpace inflation. This is one of the factors that link to investment risk. As a general rule of thumb, the longer you’re investing for, the higher the level of risk you can take. Of course, other factors influence appropriate risk levels too.

2. What is the money intended for?

You probably have an idea of what the money will be used for. Perhaps you hope it will be used to purchase their first car or support them through further education. You may be looking even further ahead to your child purchasing their first home. What the money is intended for will have an impact on the time frame. But it will also influence how comfortable you are with taking investment risk.

It’s important to remember that if you’re saving the money in the name of the child, they may be able to take control of the account when they reach 16. Whilst you might have an idea of what you’re saving for, they could have very different goals. As a result, speaking with them about the savings and how it might be used can help align your views.

3. How comfortable are you with investment risk?

It’s also important to think about how comfortable you are with investment risks when it comes to your child’s savings. This may be very different to your views on taking investment risks for your own nest egg.

Whilst you need to feel comfortable with risk and the level of volatility you can expect investments to experience, you also need to ensure it’s a measured decision. Our bias can mean we take too much or too little risk when financial circumstances are factored in. Speaking to a financial planner can help you understand what your risk tolerance is. Getting to grips with what level of risk is appropriate can boost your confidence.

4. Do you have other savings for your child?

Do you have multiple saving accounts for your child? Or are other loved ones also building up a nest egg for their future?

Assessing what other nest eggs they will receive when they reach adulthood may mean you’re more comfortable taking investment risk. If, for example, you know grandparents are adding to a cash savings account, this may balance out the risk associated with investments. Answering this question can work in the same way as assessing your other assets when you consider your own investment portfolio.

5. How hands-on do you want to be?

Finally, do you want to select which companies the money will be invested in? Or would you prefer to take a hands-off approach? There’s no right or wrong answer here, but thinking about it can help ensure you pick the right investment vehicle for you.

If you want to take steps to improve the financial future of your child, please get in touch. Whether investing is the right option or not, we’ll work with you to create a plan that you can have confidence in.

Please note: 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.

Welcome to our latest update of the investment market. We take a quick look at some of the key factors that influenced the stock market in September and could continue to do so over the coming months.

In September, escalating trade tensions have continued to have an impact on the global economy. It’s led to the OECD cutting its global forecast for 2019. The forecast has been cut from 3.2% to 2.9%, which would make 2019 the weakest annual performance since the recession a decade ago. The negative outlook is expected to continue into 2020, with the OECD cutting the forecast from 3.4% to 3%.

UK

The good news is that concerns of the UK slipping into a recession have eased. The economy posted its strongest monthly growth since January at 0.3%.

However, Britain’s manufacturers recorded the sharpest drop in factory output in seven years, according to the latest PMI. Worryingly, it also suggested that supply chains are rerouting away from the UK.

When it comes to company focused news, it’s Thomas Cook that dominated headlines in September. The 178-year-old tour operator collapsed into liquidation, with around 9,000 UK staff facing redundancy. It also left thousands of holidaymakers stranded abroad and many more potentially missing out on holidays they’d booked in advance. The firm struggled with significant debts and rescue talks failed to produce a solution.

It’s not just Thomas Cook that’s been struggling either:

• Next shares fell after it warned an unseasonably warm September will affect trading. The firm also states prices will go down in the event of a no-deal Brexit, but this is not its preferred outcome.
• The UK’s biggest car dealer, Pendragon, also announced it will close 22 of its 35 sores, with 300 job losses. Its auditors blamed Brexit.

As highlighted above, Brexit remains a key issue. The deadline day of 31^st October is now looming and whether the UK will leave without a deal, or leave the EU at all, is still in question.

The big news in September was the ruling on the proroguing of parliament. Prime Minister Boris Johnson’s decision to prorogue parliament for five weeks in order to avoid Brexit scrutiny earned criticism, including that it was unlawful. The UK Supreme Court upheld this view in September, with MPs then returning to work. The outcome means a no-deal Brexit is less likely, but it’s still not off the table. 

Bank of England Governor Mark Carney also commented on Brexit. He revealed that 75% of companies think they’re as ready as they can be for Brexit. The bank has also scaled back its forecasts for worse case Brexit but continued to warn that a disorderly Brexit is likely to be a big shock.

Of course, the ongoing uncertainty around Brexit continues to have an effect. However, many businesses are taking steps to prepare. Shares in JD Sports jumped after it opened a warehouse in Belgium, whilst BMW revealed it will close its Oxford factory for two days as part of the firm’s preparations.

Europe

Looking out to Europe, manufacturing statistics continue to be negative too. There was a stark slump in Germany, often seen as the stalwart of the bloc. But there was also falling output in Spain, Italy, Ireland and Austria. This, along with many other factors, played a role in the European Central Bank (ECB) decision to back easing again.

The ECB cut its deposit rate and announced plans to restart its asset purchase program. The move comes just a year after the central bank stopped its quantitative easing program and suggested it would begin increasing interest rates again.

US

After months of President Donald Trump urging the Federal Reserve to cut interest rates in a bid to boost lending and the economy, the Fed reacted with a 0.25% cut. However, Trump still isn’t satisfied with the action taken, stating it doesn’t go far enough. He went as far to say in a tweet that the Fed had ‘no guts, no sense, no vision’.

Figures from the Institute of Supply Management reported US manufacturing shrank in August, joining a wider global slowdown. National factory activity decreased to 49.1, where a reading below 50 indicates a contraction in manufacturing, which accounts for about 12% of the US economy. The slowdown has been linked to the ongoing trade war with China.

Asia

Despite the overall gloomy economic outlook, Asia does have some bright spots.

Protests in Hong Kong have had a significant impact on China over the last few months. The extradition law that sparked the mass protests has now been canned, leading to Hong Kong shares rising more than 4% early on in the month.

Another ongoing issue affecting China has been the trade war with the US. Whilst nothing has yet been agreed, comments from China’s commerce ministry stated that talks have gone ‘very well’ and indicated progress was being made ahead of October’s visit to the US. Shortly after the comments were made, Trump announced he’s delaying a planned tariff hike on $250 billion Chinese goods for two weeks as a ‘gesture of goodwill’. For those affected by the trade war, it could signal that a solution can be found.

It’s not all good news in Asia though. Inflation in South Korea hit zero for the first time ever. It indicates weakening global demand and tensions, with investors deterred.

Middle East

The big news in the Middle East in September was the Saudi oil attack. It was suggested that the attack could disrupt the global supply of crude oil in the short and medium term. Brent crude ended the day up 14.6%, the biggest move since the Brent crude contract was created in the 80s. However, oil prices normalised faster than first anticipated once the full extent of the damage had been assessed.

The attack did highlight the influence of global supply chains. Cruise operator Carnival, for example, dropped 3% in trading as it was expected outgoings would rise whilst demand would fall as households faced greater financial pressure.

Keep an eye on our blog for more investment updates.

If you have any concerns about your investment portfolio in light of recent events, please get in touch.

Please note: 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.  

Figures suggest retirees are shunning downsizing. Moving to a cheaper home used to be a common way to unlock wealth tied up in property to fund retirement. However, a new trend means that over 55s are more likely to plan to remain in their current home.

According to research from Nationwide:

• Only a third (36%) of over 55-year olds plan to move to a small home
• One in five say if they move, they’d want the property to be the same size or larger
• 43% say they never plan to move again

Even among those that do plan to retire, it isn’t a decision that’s without conflict. Whilst 56% recognised a smaller home may be easier for them to manage in old age, 73% said they would stay in their current home if they could.

Jason Hurwood, Nationwide’s Director of Home Propositions, said: “The perception that all older people want to downsize to much smaller properties is outdated and cliched. As the research shows, people aged 55 and above are putting off the traditional downsizing house move, with space being very much in demand for a range of reasons – from entertaining friends and family to allowing them to keep and store valuable keepsakes and belongings.”

If you’ve decided you don’t want to move out of your home in the future, it could be for a variety of reasons.

The location of your home

According to the poll, this was one of the most popular reasons for deciding to stay put. In fact, 43% said location was the reason they wanted to keep their current property. In addition, 18% said that being close to family was important to them. When you’re moving home, you not only have to think about the property but how the location suits your lifestyle and needs. This may be the proximity to amenities, good transport links and having family and friends close by. If your current home ticks all the boxes, moving can seem like an unfavourable step.

You need the space of your current property

Whilst moving to a smaller  property may have some benefits, it may not be suited to your lifestyle. Almost half (49%) said their reasons for staying put was that a smaller home wouldn’t be suitable. This was also emphasised by other responses:

• 22% said they wanted room to host family
• 18% didn’t want to get rid of possessions they’d accumulated
• 10% use additional space to enjoy their hobbies

As young people are finding it difficult to step onto the property ladder, more are choosing to live with family whilst saving a deposit. As a result, it’s reasonable to expect that some over 55s will still have children or grandchildren living with them too. Therefore, a family home might be essential well into retirement.

Property adapted to suit your style and needs

You probably have specific tastes when it comes to your home. Whilst you could unlock money by moving to a smaller home, how much would you need to spend to make it suit you? If you’ve invested significant amounts into your current home, it’s easy to see why you might be reluctant to leave it behind. It’s not just the money either, even small renovating projects can take up a lot of your time.

The cost of moving home

On top of these reasons is the cost of moving home. From conveyancing fees to the money paid out to estate agents, the figures can mount up. Assuming your home is sold for more than £125,000, you’ll also need to factor in Stamp Duty Land Tax (SDLT). The SDLT rate is based on the value of the property but it could mean losing thousands of pounds you’d hoped to release through downsizing.

5 things to consider if you don’t want to downsize

When you think about your future, are you still living in the same property? If have no plans to retire, there are some areas to consider, among them:

1. Do you have enough retirement income without accessing property wealth?
2. Are alternatives for accessing property wealth, such as Equity Release, suitable for you?
3. Does your current property need to be adapted to suit changing needs?
4. Can you afford the costs associated with maintaining the property with your retirement income?
5. How will you pass the property on to loved ones and will your estate be liable to Inheritance Tax?

If you’re thinking about how decisions relating to property will affect your lifestyle, please get in touch. Whether you hope to release capital by downsizing or want to remain in your home, we’ll help you get to grips with your financial situation.

Banks scams are on the rise and becoming more sophisticated. Every year, thousands of people are duped into authorising payments to fraudsters that they may not be able to receive compensation for. Understanding how criminals operate could help protect your money.

According to figures from Finance UK, more than £616 million was stolen by criminals using a variety of methods in the first half of 2019 alone. Authorised push payments (APP), where customers are tricked into authorising a payment to an account controlled by a criminal, accounted for £208 million. It’s a crime that’s rising due to data breaches that compromise personal data, allowing fraudsters to gain the trust of their victims.

Other types of fraud reported include unauthorised card used, remote banking, cheque fraud and sophisticated digital skimming, where card data is stolen.

The good news is that the finance industry is often preventing fraud from taking place. During the first half of 2019, it stopped £820 million of unauthorised payments; the equivalent to £2 in every £3 of attempted fraud being stopped. This accounts for £4.5 million each day. However, that’s of little consolation if you’re among those that have lost your savings. Remaining vigilant against fraud is critical for protecting your money.

Katy Worobec, Managing Director of Economic Crime at UK Finance, said: “A new voluntary code was introduced in May that has significantly improved consumer protections from authorised push payment fraud, with signatory firms committed to reimbursing victims providing they have met certain standards.

“However, criminals are continuing to exploit vulnerabilities outside the financial sector to obtain customers’ data that is then used to commit fraud.”

What is APP and when can you receive compensation?

The first step to reducing the risk of being affected by APP is to understand what it is.

It usually starts with fraudsters gaining access to your personal information. This may be through hacking into an email account or purchasing stolen data. With this information, they’ll attempt to present themselves as a company you recognise, such as your bank or an online business you purchase from.

The fraudster will ask victims to transfer money into an account. Whilst this would normally set alarm bells ringing, they often carefully pick their time, so it doesn’t appear out of the blue. For example, you may have organised some building work on your property through email communication. If fraudsters are able to see this, they’ll contact you at a time you’d be expecting to receive an invoice. As payments are often now made in real-time, criminals are able to quickly transfer money, making it difficult to track.

In the past, it has been incredibly difficult for victims of APP fraud to recover their money. However, a voluntary code now offers some protection. The Contingent Reimbursement Model Code launched in May. So far, eight payment service providers have adopted the code, including Barclays, HSBC, Lloyds Banking Group and RBS.

Banking with a provider that has signed the code doesn’t mean you’re guaranteed to get your money bank. They can still choose not to reimburse you in some circumstances. For example, if it’s deemed you made a payment without a ‘reasonable basis’ for believing you were paying for genuine goods and services or if you ignore warnings when updating payee information.

7 ways to reduce the risk of APP

Even with the finance industry stopping two-thirds of fraudulent activity, APP could still leave you financially struggling if you’re affected. Keeping these seven reminders in mind when you’re approached to make a payment can reduce the risk of fraudsters catching you out.

1. Don’t give out any personal details to unverified people
2. Use a strong password for accounts with personal details, such as your email address or online shopping accounts
3. Remember a genuine bank or organisation will never contact you out of the blue to ask for your PIN or password in full
4. Don’t click on links within emails or texts if you’re unsure of the origin
5. Be cautious of unsolicited contact; genuine firms will understand if you have security concerns
6. If in doubt, hang up the phone and try to contact the individual or company directly using a known email address or phone number
7. Don’t be rushed into making a payment if you feel unsure about the communication, take the time to verify the payment

If you believe you’ve been a victim of APP, the first step should be to contact your bank or building society. They may be able to halt the payment and freeze your account to prevent more losses. You can also report the problem to Action Fraud.