We caught up with Lyndsay Wolfe, our community partner and Tooting Financial Adviser, to discuss the benefits of getting your personal finances into shape before the end of the tax year on 5th April 2017.
The last time we met, we talked about getting your finances in order in the New Year. Why is it now important before the end of the tax year?
As the end of the tax year approaches, making sure your finances are both on track and that savings are working as efficiently as possible is a really good idea. Tax allowances and exemptions usually come with a deadline attached, and so as 5 April is quickly approaching, it’s now a good time to review your finances. An ISA is one of the most useful allowances available to individuals, and the flexibility it provides can be beneficial even if you’re only saving a small amount.
What is an ISA?
An ISA, or Individual Savings Account, is a tax-free way to save or invest. Anyone over the age of 16 can have a cash ISA and if you’re over 18 years of age you can also invest in a Stocks and Shares ISA, as long as you’re a UK resident. If you’re saving funds on a regular basis, it’s worth looking at using an ISA to make that money work a little harder.
What are the advantages?
All investments within an ISA build up without any further tax to pay on income and capital gains. Everyone has their own allowance – £15,240 in the current tax year – which means that couples can shelter £30,480 between them. There is also a Junior ISA annual allowance of £4,080 for children under the age of 18. Anyone – family or friend – can contribute to the fund, which cannot be accessed until the child reaches 18, when they will get full control over the money. The ISA allowance will rise to £20,000 from April, but any unused allowance from this tax year will be lost. So now is the time to start reviewing your finances, particularly if you have cash sat in the bank earning a small amount of interest.
What’s the best way to invest?
Whilst interest rates remain historically low, it’s becoming more and more important to make sure that your savings are working hard for you. On top of low interest rates, we’re now seeing an increase in inflation, with recent figures showing prices over the last year increasing by 1.8%. This means that if you’re not receiving the same interest rate on your cash savings, you’re effectively losing money, year on year.
An ISA allows you to save in cash, or in stocks and shares. The best way to save really depends on how long you intend to save for and the risk you wish to take. If you need to access your money and don’t have an emergency fund to rely on (usually 3 months expenditure), then putting your money into a Cash ISA may be the best option for you. However, if you’re keen to save for the longer term (usually between at least 5 and 10 years) then it may be worth looking at other options.
If you are considering investing for the longer term, then it’s worth talking to a Financial Adviser who’ll be able to explain in detail how this could work for you and what it would entail.
Is the market heading for a fall with Brexit looming? If so, how can people keep their money safe?
No-one likes uncertainty, and stock markets generally react in the same way. However, no-one exactly knows how Brexit will affect the market and there’s still some time before article 50 is triggered. Even then, there’ll likely be a two year transition period. At the beginning of 2016, Ladbrokes had offered 5/1 odds on the UK voting to leave the European Union and 150/1 odds on the US electing Donald Trump as president (football fans will note that it had also offered 5,000/1 odds on Leicester City winning the Premier League in 2016). Markets were taken by surprise too but, despite plenty of grim forecasts, no doomsday scenario materialised. Instead, equity investors enjoyed a stellar year, thanks in no small part to how politics moved the markets.
Recent events underline the importance of constructing a well-diversified portfolio. Not only does it enable you to pick up on growth across more markets and asset classes, but it also limits the impact of falls in any one holding.
Keeping your money safe should be a priority of any bank or financial institution and most will be covered by the Financial Services Compensation Scheme, which offers protection in certain circumstances. Ensuring you know and understand how your money is managed should be an important part of any relationship you have with a Financial Adviser. Making sure solutions are tailored to your needs will allow for any unexpected events and will allow you to sleep easy at night, knowing your money is being looked after.
To receive a complimentary guide covering Wealth Management, Retirement planning or Inheritance Tax planning, produced by St. James’s Place Wealth Management, contact Lyndsay Wolfe of St. James’s Place Wealth Management on 07810 888361 or email Lyndsay.firstname.lastname@example.org
We are proud to have local Financial Adviser, Lyndsay Wolfe, as one of our valued Community Partners. To find out more about our Community Partners, please click here.
The Partner represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the Group’s wealth management products and services, more of which are available on the Group’s website www.sjp.co.uk/products. The ‘St. James’s Place Partnership’ and ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives.
The value of an investment with St. James Place will be directly linked to the performance of funds you select and the value therefore can go down as well as up. You may get back less than you invested. Equities do not have the security of capital which is characteristic of a deposit with a bank or building society, as the value of income can fall as well as rise.
The levels and basis of taxation and reliefs from taxation can change at any time. The value of tax relief is generally dependent on individual circumstances.