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MONEY MATTER; Financial planning - it's all about you.

Byline: John Bruce

THERE will always be a million and one things going on around the world, which affect your life as well as everyone else's. Just as the economies and stock markets have highs and lows so will you. Your financial planning is all about your life. It's about protecting and increasing your net worth assets, insuring that you have sufficient income to live on when you retire. It's also about saving capital to provide for those occurrences which are not part of your everyday life. It could be a holiday home, university or school fee planning or maybe just creating a capital sum of money that allows you to choose to do those activities that may pop up from time to time. If you were building your own home, you wouldn't dream of building it without the foundations (the protection). Although the foundations can't be seen, they provide the house with a solid base on which to stand. We do this in order that we can live comfortably within our home without the fear that the whole thing will collapse around us. It costs a little more than a shanty house but there again it provides a lot more.

We seem to have learnt from the story of the three little pigs and the big bad wolf when it comes to our houses, but somehow this principle has not extended to our financial planning. Perhaps this is because we can see our house but we can't see our intangible home. We know the stats; we know that the vast majority are building a shanty house. We also know many advisors are still happy to sell the products to carry on propping up the shanty house and every time the wolf blows, the house wobbles and sometimes even collapses. Your financial planning needs to be built on a solid foundation that can cope with life's changes, with the ups and downs of your cycle and the economic cycle going on around you. You need an Independent financial planner who maintains an ongoing relationship with you to orchestrate the development and maintenance of your financial house. Never before has it been so important to plan for your financial future. If you do not make provision for yourself, you are very likely to be disappointed with the provisions that will be available to you in the future. Start now, get a financial planner in place to protect and increase your net worth assets. Call John Bruce on (0191) 230-8084.

Investing now can seriously increase your wealth WITH the base rate at 0.5%, the lowest levels seen in the history of the Bank of England, it is going to be a miserable time for savers in the coming months. The average savings rate is just 0.83% and some accounts are paying just 0.01%, which equates to just pounds 1 of interest per year for each pounds 10,000 saved! This is a massive blow to savers. So what can you do to achieve a better return for your money? You have to take some risk. If you want to earn a return in excess of cash then Government and corporate bonds are your answer. Corporate bonds are flavour of the month with investors at present. They involve lending money to a company in return for a fixed rate of interest, which they agree to return on a set maturity date. How much interest is paid out depends on the risk of the company going bust and not being able to repay the sum.

There is a chance that the bond may be worth less when it matures than when it was bought. However, high-risk bonds also known as junk bonds can generate higher incomes (if they pay off) than low risk or investment grade bonds. Those who consider taking on a slightly higher risk should consider UK equity income funds. We have to be very positive about equity income funds as they have already suffered severe falls and with so much bad news, this has been priced into their values today. With falling interest rates, high yield equities should become a very attractive source of income. Income yields of 5% today are quite common. You should always remember that the value and dividend income can go up as well as down and past performance is not necessary a guide to future performance. Should you wish to discuss any investment, please contact Alok Dhanda of Dhanda Financial on (0191) 255-8960, e-mail: alok@dhandafinancial.com or visit the website: www.dhandafinancial.com.

Alok Dhanda Why should you invest in an ISA? THE tax advantages of ISAs are the main reason why most people want to invest into them. There are two main components to an ISA; either cash or stocks and shares. Cash ISAs are just like having a savings account with your bank or building society, but interest you receive is paid gross and therefore not taxed, even if you are a higher rate tax payer. The stocks and shares component is where the money is invested in "qualifying investments" consisting of any combination of stock market equity investments including public debt securities (government or corporate bonds) and even cash. Most people in stocks and shares ISAs invest via unit trusts/OEICS.

This allows the money to be spread very widely across a number of investments even if a small amount of money is being invested. Due to the above, a stocks and shares ISA can be anything from a low to high risk investment, whereas a cash ISA is low risk. As far as subscription limits go, you have to be 18 (16 for a cash ISA) and you can pay pounds 3,600 into a cash ISA or pounds 7,200 into a stocks and shares ISA. However, from October 6, 2009, anyone who is aged 50 and over can invest up to pounds 10,200 into a stocks and shares ISA or pounds 5,100 into a cash ISA. From April 6, 2010, everyone's limits will be raised to these amounts. One point worth noting (that a lot of people don't realise) is that once you have an ISA you can transfer them from one company to another and even transfer from a cash ISA into a stocks and shares ISA. At HRC Group we use certain companies for our clients ISAs who can offer in excess of 1,100 different funds, from low risk through to adventurous, therefore offering something for everybody. Advice definitely needs to be sought before taking out an ISA, especially as there are so many fund options available.

A lot of HRC Group's clients are currently taking advantage of the fact they can transfer their cash ISAs into a stocks and shares ISA and thus benefit from current market conditions (i.e. buying in at a low price). If you have an ISA that hasn't been reviewed for a while or you are interested in starting one or adding to an existing ISA, call HRC Group on (0191) 488-8445. Colin Heseltine
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Publication:The Journal (Newcastle, England)
Date:Sep 12, 2009
Words:1179
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