Our ...July 2020 Newsletter
Since our last newsletter, life in the UK (and indeed, around the world) has changed immeasurably and I hope you have all been keeping safe and well during these difficult times. At JJFS, we were able to transition to home working relatively quickly, enabling us to continue servicing our clients without too much disruption and avoiding the need to apply any of the Government’s financial support packages. We are now beginning our return to working from the offices and will continue the process during the summer. Although we do not envisage face to face meetings for some time yet, the use of email, phone and video conferencing has enabled us to maintain contact with our clients and carry out regular reviews.
Our articles in this newsletter include a commentary on the markets, a warning of the various scams that continue to surface and an interesting take on the Seven Deadly Sins (getting in the way of your financial success).
We hope you find the articles useful.
In this issue:-
- Market Commentary
- Beware of the Scammer
- Seven Sins Stopping Your Financial Success
- Up to £1m Free of IHT via the Residence Nil Rate Band
- Is The Pension Triple Lock About To Be Suspended?<
- JJFS 10th Anniversary Almost Over….<
Watching global equity markets and fund performances over the last few weeks could fool you into thinking that the worst effects of this terrible pandemic is over and everything is returning to normal. Of course, we all know that’s not the case and with spikes of second wave infections occurring in various places (particularly the US and Brazil at the moment) it is clear we still have a long way to go. However, the recent increases in portfolio valuations are good to see and hopefully instils a little confidence in us all that a recovery will eventually come.
Because of the expected second wave spikes in Covid-19 and the inevitable economic pressures to follow, stock market volatility will continue and we should not be surprised to see some bumps along the way. Listening to various fund managers, they are still confident in eventual recovery and are actively seeking opportunities in the equity markets where they become available. Equally they are keen to stress that they are maintaining discipline and are keeping to core long term strategies and that remains our advice too.
Some strategic fine tuning can be considered, especially if you are preparing for future income streams or planned withdrawals from investments, but otherwise the basics remain the same.
While face to face reviews are of course still some way off, we are continuing to provide phone and video contact and will encourage anyone to get in touch with us, even if it is simply for a reassuring chat and confirmation that their current strategy remains appropriate.
We thought this commentary from Albert E Sharp would be an interesting read.
Please get in touch with us if you have any questions or concerns.
Beware of the Scammer
According to Action Fraud, the UK’s Fraud and Cyber Crime Reporting Centre, coronavirus-related fraud reports have increased by 400% in recent months and the number of pension scams has soared.
Recently, a number of well-known investment companies have been impersonated by fraudsters imitating their companies and products, particularly investment bonds. In some cases, the criminals are even setting up email addresses using the names of genuine staff members in order to trick investors into believing they are dealing with a trusted firm. These fraudulent products are promoted through sponsored Google and Facebook links which appear when users are browsing the internet or social media.
However, if you are aware of the classic warning signs and ways to protect yourself, then you can avoid becoming a statistic.
How to Spot a Scam
- The website or email address is a derivative of a genuine firm’s URL, displaying the firm’s name but with additional wording such as ‘assetholdings’ ‘investmentsuk’ as part of the address.
- You receive an unsolicited approach by phone call, text message, email or in person.
- The firm won’t allow you to call them back.
- You’re being pressured to make a quick decision or encouraged to transfer your money quickly and send documents by courier.
- The contact details provided are mobile phone numbers or a PO box address.
- They offer high rates of return on your investment whilst claiming it is low risk.
- They promise extra tax savings or little-known tax loopholes.
- They are claiming to help you or a relative unlock a pension before the age of 55. This is only possible in very rare cases, such as ill health.
- Be wary of online adverts when you are browsing the internet or using social media and double-check the website URL displayed.
- Always check with the FCA register of regulated companies to make sure the organisation is registered. You can also check the FCA Warning List of unauthorised firms and individuals.
- The FCA ScamSmart website has a tool to help you check if an investment or pension opportunity is a scam. There is also a lot of information the latest scams and how to avoid them.
- Reject any unsolicited calls, emails, text messages or visitors to your door. Legitimate companies will not cold call or contact you out of the blue.
- Beware of unsolicited calls and browser pop-ups offering tech support – never install any software, or grant remote access to your computer, as a result of a cold call.
- If you are considering an opportunity, then we strongly suggest you seek professional advice.
We are available to all our clients as a sounding board if you are unsure, but keep in mind the old adage, if it’s too good to be true, then it usually is.
Seven Sins Stopping Your Financial Success
The following article was written by a senior investment manager at 7 Investment Management with an interesting take on the Seven Deadly Sins in relation to financial planning. Some of this may well strike a chord.
Seven Sins Stopping your Financial Success
Seven is a remarkable number. It crops up throughout human history. There are seven days in a week, seven colours in the rainbow and there are (or were) Seven Wonders of the Ancient World. You can watch the Magnificent Seven or sail the seven seas between the seven continents. Or you could commit one of the seven deadly sins.
The seven deadly sins can guide your spiritual health, but they can be adapted to the seven deadly investment sins to your investment wealth. I should say here that I have sinned, both spiritually and investment wise, as I am sure we all have. But there is always hope!
The first sin is one of sloth or not thinking or planning for your financial future. Many people who think that saving is boring don’t bother to set up a savings account or a pension account until it’s far too late. A little time spent planning can help create a more prosperous future.
Pride comes in many forms but most often shows itself in overconfidence in our own abilities and a refusal to take good advice. We tend to ignore all the times our overconfidence got it wrong, and focus only on the area we get right – like someone who’s had a day at the races only boasting about their winning bets.
Envy can lead us down some big financial holes. We fear missing out on the gains that others seem to be making, and so we chase fads or even fraudulent schemes. It is far better in the long term to avoid the outsized returns we read about and accept lower, more realistic returns.
This leads into gluttony. When we chase fads it often lead to us feasting on one particular area of the market and we lose sight of the need for diversification. This is particularly ironic as diversification is the only free meal in finance that gluttons can feast on.
Wrath is what we feel when we lose money. We know that markets go down as well as up, but there is a temptation to blame our portfolio losses on someone else and many wrathful investors often sell their investment after a drop and miss out on the rebound.
Greed is the desire to possess more than you need. Greed while investing can lead us to abandoning our financial plans. A carefully constructed plan should be robust through the ups and the downs of the market, and enable us to live the life we want. But greed sometimes leads us to chase higher returns, and take more risk – putting the whole plan in peril.
The final sin is lust, not the carnal kind, but the pure love of money which makes us forget about other things that we do actually value in our day-to-day lives. For example, we should also incorporate into our plans things like ESG (Environmental, Social and Governance) factors or charitable giving; very long-term investments. These things are now easy to incorporate into your thinking if you speak to your Financial Planner.
If you are religious, you can confess your sins and seek redemption. This is not the case for the investment world. Your investment mistakes will be a permanent stain on your financials hereafter. We all are guilty of committing investment sins, so be sure to seek regular and sound advice from your friendly local Financial Planner, who will help keep you on the straight and narrow path to financial happiness – maybe even leading you to seventh heaven.
Up to £1m Free of IHT via the Residence Nil Rate Band
The Residence Nil Rate Band (RNRB) was introduced in 2017 and provides the potential for parents to pass up to £1m to their children, free of IHT.
The RNRB has been phased in over several years and now allows up to £175,000 of the net value of a property to be exempt from IHT if it is passed to a direct descendant (i.e. children, grandchildren, step-children and foster or adopted children).
This relief is in addition to the existing nil rate band of £325,000 and, like the nil rate band, is transferable on death to a spouse. Therefore, when one half of a married couple dies, up to £500,000 IHT relief is transferred to the surviving spouse, who in turn, will generate up to another £500,000 relief on death, for the benefit of their children.
To qualify, the property must be the main residence of the deceased and if there is more than one property, the RNRB can apply to only one. If the total estate exceeds £2million the RNRB will be tapered by £1 for every £2 the estate is valued over £2m.
So the full £1m nil rate band becomes a reality in the following circumstances:
- the survivor of a married couple leaves their entire estate to their direct descendant(s)
- the estate benefits from the full £325,000 nil rate band and £175,000 from both deceased partners, totalling a maximum of £1m
- the value of the property in question exceeds £350,000
- the value of the estate is less than £2m.
The RNRB will not apply to property held in certain trust structures even where the sole beneficiaries of the trust are your children.
For more information or to discuss how the RNRB may affect your own circumstances, please get in touch with your usual JJFS contact or email firstname.lastname@example.org.
Is the Pension Triple Lock About to be Suspended?
Speculation and calls for reform of the pension ‘triple lock’ have made headlines since HM Treasury published its forecasts for the UK economy back in May. The latest and not least important has come from Mel Stride, Chair of the Treasury Committee, who called for a temporary suspension of the wages element of the triple lock on State pension increases.
The triple lock delivers the greatest of earnings growth, CPI inflation and 2.5% and since it was introduced in 2010 each of these elements have had their turn in driving the increase to state pensions. But nowhere near as much as what could happen for the April 2022 increase where it is quite possible that the earnings growth element could be well into double-digits, as a result of workers seeing their 2021 earnings back on track after the drastic Covid-19 induced fall this year.
In addition, current falling earnings along with the rapid tail off in inflation could also result in the 2021 increase in state pensions being set at 2.5%.
The prospect of this extraordinary increase in state pensions in April 2022, could be the cue for the Government to announce next month the suspension of the triple lock measure. However, an Act of Parliament will be required to decouple state pension increases from the growth in earnings.
With State pensions predicted by some to increase by around 20% over the next two years due to the triple lock’s ratcheting effect, while wages increase by less than 10%, and prices increase by much less, it is no surprise that there are so many calls for the triple lock to be suspended. The intergenerational fairness debate continues.
JJFS 10th Anniversary Almost Over….
It’s hard to believe that we are at the end of our 10th trading year. At the beginning of the year we were making plans to celebrate this milestone with a variety of ideas including ways to benefit our staff, clients and the local community. Sadly, these were never realised as we focused simply on maintaining our services to clients and keeping our staff healthy and safe.
We have all tried to maintain our personal fitness with home-based and virtual class exercises. The good weather has enabled much cycling and running. We even managed to support a friendly Personal Trainer with an extreme fitness event aimed at raising funds for our local Hospice (50 hill sprints and 1000 push ups!).
The staff have remained very positive and upbeat throughout, especially during the transition to home working, and we were able to continue servicing our clients with minimal disruption. We are especially pleased that we did not need to use any of the Government’s financial assistance schemes.
We are very much hoping that our 11th year will see us all returning to more normal activities.
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