INVESTMENT – BE GUIDED BY THE RISK YOU ARE WILLING TO TAKE!

The various Stock Markets are providing something of a roller-coaster ride with their ups and downs. While generally there has been a recovery over the last 6 months or so, the main problems of creating growth and repaying large national debts are likely to be with us for some time to come. Those investing in the Stock Markets should make sure they are comfortable with the risks and also understand that they should be investing for the medium to long term. Those approaching retirement in the next year or two, and who still have investments in managed funds through their pension funds, should consider moving to lower risk options, even Deposit Funds, to avoid being caught out by a sudden drop in the market just at the time when they want to take their pension benefits. If you are still interested in seeking a better return on your money even after considering the risks, and with 10 years plus until your expected retirement, then you should consider investing, or staying invested, in the Markets. There are a variety of Managed Funds that allow you to spread your investments both as regards types of businesses and geographical sectors. The Markets generally tend to take their lead from the United States but it remains our view that any meaningful growth is still likely to come from what are called Emerging Economies. In the past this has included China and India as well as other countries like Brazil and Russia and some Asian countries. Because of currency exchange rates and questions about political stability, such investments have to be considered higher risk. So do make sure the risk is one you are willing to take. Contact us if you would like to discuss your options – 01342 313302.

PENSION NOTES!

1. The usual minimum age to take pension benefits is 55 – male or female.


2. Normally you can take up to 25% of your pension fund as Tax Free Cash.

3. You do not have to retire in order to be able to take your pension benefits.

4. If the total of your pension funds is less than £18,000, from age 60 you can take it all as cash (25% Tax Free and the balance taxed as earned income).

5. If you have a couple of very small pension pots (less than £2000 in each pot), from age 60 you can take those as cash (25% Tax Free and the rest taxed as income).

6. You have various options when you take your pension benefits including:

a) An enhanced annuity if you have serious medical issues;

b) Taking your Tax Free Cash and leaving the balance invested until later with the option to draw income each year;

c) Taking an annuity that guarantees an income for as long as you live – level or increasing.

We can help advise on all of your choices so as to customise your pension benefits to meet your circumstances. Give us a ring on 01342 313302.

DON’T BE CAUGHT OUT BY MORTGAGE RATE INCREASES

A number of lenders including the Halifax and the Bank of Scotland are taking the opportunity to raise their Standard Variable Rates. They can make these changes even though the Bank of England Base Rate has not changed. This will mean an extra 0.25% to 0.5% added to the mortgage rate. The solution for the borrowers affected is either to switch to a Tracker Rate which can only move when the Bank of England rate changes, or a Fixed Rate which cannot move at all during the period over which the rate is fixed. We are of the view that a 3 to 5 year fix is a good strategy, with 5 year fixed rates below 4.0% for those with a low loan to value mortgage. For a review of your options, do contact us now on 01342 313302!

HOW MUCH IS A MUM OR DAD WORTH?

While on the subject of life assurance, it is interesting to look at some research done last year on the value of a Mum or Dad – just on the cost of replacing their work at home and in looking after the children, should one parent die or be ill and unable to work. The value of a Mum works out at £30,032 and a Dad at £21,306! The same research showed that only 53% of parents in the UK had life assurance and only 24% had Critical Illness cover. Both of these have gone down by 4% in the last two years. We would like to assist you to ensure you have the cover that you need and want. Just give us a ring on 01342 313302 now!

UNISEX INSURANCES!?

A European Court Directive (the EU Gender Directive!) is coming into effect later this year which will require all insurance companies to treat men and women equally as regards what they are charged for insurances. This goes against common sense when life assurance has always been cheaper for women because statistically they live longer than men. On the other side of the coin, men taking their pension benefits have always benefited from a higher income from their annuity because men will not live as long and the pension provider therefore does not have to pay out the income for as long as for a woman of the same age. Common sense, however, has not been much of a feature of European Court Decisions. This does open a window of opportunity for men to take their annuities before the end of the year and for ladies to secure their life assurance now before the costs go up. There is a further matter that is likely to drive up the cost of life assurance in the coming year. A new tax arrangement being imposed on insurers will require them to keep more in reserves to safeguard their financial position. This will translate for the average person into higher costs for their insurances. We may never again see life assurance costs as low as they are now. Do contact us to discuss how this could affect you and what you might or might not be able to do to take advantage of this "Buy Now" – 01342 313302.

FIDDLING WITH THE ODDS

Please note that 2012 may be a good time for men in their 60s to take their annuities as some European legislation is changing the odds come the end of the year. The statistics have always shown that women, on average, live longer then men and annuity rates have reflected this. In December of this year, however, the European Court of Justice in its wisdom has dictated that both sexes must be treated equally in the matter of insurances. As regards annuities, this is likely to mean that men will get slightly worse annuities and women slightly better ones. So for those men who are in their mid to late 60s or older, it is probably a good time to get their annuity.

ANNUITY OPTIONS

The above is the simple concept. However, there are many different annuity options that are available to choose from. Husbands and wives can decide to take out an annuity that will pay as long as they both live. You can decide to take an annuity where the money paid starts lower and increases each year, or you can take a higher payment, which stays the same. Those who have been heavy smokers or have serious medical issues can get Enhanced Annuities. Those are simply higher payments taking into account the odds that such a person is not going to live as long as the average person. We will be happy to cover all of the options for you but we wanted to help you understand the basic principle that underlies what you are likely to be involved with when you cash in your Pension Box.