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April 2020 update

2nd April 2020

23rd March 2020

We continue to provide our service via telephone, digitally and by post where necessary. Whilst we remain open for business, this is anything but business as usual.  

25th March 2020

A steady procession of emails from product providers and financial platforms announcing that they are scaling back their presence to email and website access only.

30th March 2020

The Financial Conduct Authority clarified our duty to give clients access to their finances. The office remains closed to allow business critical operations to continue with a skeleton staff with adequate social distancing. Most colleagues are working remotely. This means we remain open, but without face to face meetings, should you welcome further advice and assistance.

1st April 2020

It was reported that FTSE 100 investors suffered the worst quarter of -24.8% since October 1987 and its second heaviest fall since this index started in 1984. Even before that date, Jenni advised people that a diversified investment portfolio is worth paying for to mitigate the worst of violent volatility. By employing fund managers, you are hiring them to actively manage and alter the amounts invested in different asset classes with the intention of reducing investment risk. You can read our latest investment commentary here.

This Company is tested daily by clients who seek reassurance that their future financial plans may be fulfilled.  A recent record published by Finalytiq of all the Bull (upward) and Bear (downward) markets since 1926 shows that the average bull market duration has been seven years whereas the average bear market lasted only one year and eight months.

In more recent times, although there was a recession for the whole of 2009, the FTSE 100 bottomed on 6th March 2009 at only 3587.  Further, the FTSE 100 ended higher at the end of 2009 than at the close of the previous year. This does point to the stock market forward pricing mechanism. In other words, you pay today for tomorrow’s profit. If you sell, you are indicating that you believe the stock market is understating the impact of events on future profits.

The reason for this is that it is difficult to time the market. If the investment strategy is altered to allocate a larger proportion of your investment funds to lower risk cash investments, as base rate has been reduced to an historic low of 0.1%, there is a strong chance of missing some of the better or best days in the market. The next decision is at what point should investments be re-purchased?  Whilst past experience illustrates that it is more than likely it will be before the obvious signs of economic recovery, few of us might yet be ready to take a bet against the present Covid 19 threat. 

It is clear that we are facing an entirely new challenge which may now last for several months. Where the situation is changing daily, we have tried to update this edition of our Spring Review as far as possible before releasing here. We know everyone is looking for stability and clarity in these difficult circumstances. In the new Chancellor’s Budget, most attention was paid to the provisions made to tackle Covid-19 for workers and businesses. Other changes were also introduced which we outline in our feature story. We saw a dramatic cut to the entrepreneurs’ relief lifetime limit, while the pensions annual allowance charge saw tapering thresholds altered to meet concerns of higher earners. Rumoured changes to pensions tax rules and inheritance tax were, for the moment, omitted. Other stories for this edition include:

  • Lessons from five years of pensions flexibility. In the five years since pension holders were given the freedom to draw directly from certain pensions savings, what have we learned from people’s behaviours?
  • Too generous by half? Younger family members are increasingly receiving financial assistance from generous grandparents. How can intergenerational gifting be managed to maximise assistance to the recipient, while not impacting negatively on the giver?
  • Shifts in the savings landscape Now the Help to Buy ISA has been withdrawn, the Lifetime ISA is the sole option available for younger investors looking for a savings boost from the government, but there are penalties of which you should be aware.
  • Overcoming the gender pensions gap New research shows that women are saving more than ever for retirement, but a gender gap still leaves them lagging behind men. We talk about ways to maximise your investments to help close this gap.

As ever, if you think you may be affected by any of our stories, do get in touch with us.

6th April 2020

There are new tax year opportunities:

  1. The ISA allowance remains £20,000 for all investors. ISAs are a good way of saving since they offer tax-free income and capital gains tax free growth opportunities. The allowance is no full interchangeable between cash and investment. No spare funds to use the allowance? Usually your existing taxable investments can be switched into the ISA wrapper to benefit from the tax advantages.
  2. £9,000 Junior ISA allowance for those under age 18. Child Trust Funds can be transferred to Junior ISAs since 6/4/2015. Child Trust Funds and Junior ISAs cannot be held together. The first Child Trust Funds mature on 1st September 2020.
  3. Various changes to alloances as identified on page three of the Spring Review entitled 'Budget 2020 - a Budget for strange days'.
  4. £3,000 Annual Inheritance Tax gift exemption remains the same.
  5. £50,000 Premium Bond maximum per person, but prizes reduce from May 2020.

Having cleared the last of the time sensitive end of tax-year transactions, our new tax-year service is underway with our first new tax-year ISA recommendations already written. We look forward to hearing from you to continue your financial planning. Whilst for many no action will be needed because of the pandemic, we can assess what we can control, which are your circumstances and your plans.

Spring Sunset

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Positive Wealth Creation Ltd is authorised and regulated by the Financial Conduct Authority. Financial Services Register No: 481182 http://www.fca.org.uk/register.

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