danielashby

The protection products to consider when you take out a mortgage

Taking out a mortgage is likely to be one of the biggest financial commitments you make. As a result, you may be considering taking out a protection product to ensure you can continue to meet payments should the unexpected happen.

It's a common misconception that protection products don't pay out. Figures from ABI show in 2017, a record £5 billion was paid out in protection claims and almost all claims (97.8%) were paid. Insurers pay out nearly £14 million every day to those that may not have otherwise been able to make their mortgage payments or other financial responsibilities.

If you're worried about how you and your family would cope if your income suddenly stopped, a protection product can give you peace of mind.

There are several different types of protection products available to choose from. Which one is right for you will depend on what your concerns are and your circumstances. Among the options available are:

Mortgage Protection

Mortgage Protection is designed to cover the cost of your mortgage for your loved ones should you die.

The policy will pay put a pre-defined lump sum on death. Mortgage protection covers a set term and amount, as a result, you can pick a product that suits your needs and your mortgage. It means that should the worst happen, you know that your family won't have to worry about paying the mortgage, providing them with financial security during what is already a difficult time.

Critical Illness Cover

Again, nobody wants to plan for being too ill to work. But the reality is that it could happen.

Critical Illness Cover will pay out if you're diagnosed with a specific medical condition or injury that's detailed in your policy. ABI estimates that one million workers are unable to work due to illness or injury every year, affecting their financial security. The cover will pay out a lump sum, after which the policy will end.

It's important to be aware that Critical Illness Cover doesn't cover every illness. Always check the terms of any policy before signing up.

Income Protection

Income Protection can provide you will a stable source of income should you no longer be able to work due to illness or injury. They typically cover most illnesses that leave you unable to work, rather than defined illness like Critical Illness Cover.

Payments received from Income Protection products are tax-free and are usually a percentage of your earnings: between 50 and 70% is standard. Income Protection products will usually continue to make monthly payments until you're able to go back to work or, in some cases, until you retire.

Depending on your needs, you may find the ongoing payments of Income Protection are better suited to your circumstances than a lump sum.

Many policies will have a deferred period, sometimes for several months, before they begin to pay out. Therefore, it's important to ensure you have an emergency fund that you can dip into to keep you going until the payment begins. In some cases, the deferred period can be useful. If, for example, your employer pays sick pay, you can opt for an income protection product that will align with this.

Policies can vary between different providers significantly. As a result, it's important to make sure you fully understand what is covered and other key factors, such as fees and the deferred period.

Choosing a protection product can feel overwhelming with so much choice on the market and numerous factors to consider. We can help you make sense of the protection products you could benefit from. Please contact us to start the process.

by danielashby

10 years on from the financial crisis: How has it affected finances?

It's still talked about today and mentioned in the headlines, but the financial crisis happened a decade ago. How has it affected finances? And what can we learn from it?

The 2008 global financial crisis is often referred to as the worst financial crisis since the Great Depression in the 1930s. It began with the subprime mortgage market in the US in 2007 and developed into a banking crisis, with investment bank Lehman Brothers famously collapsing in September 2008. Excessive risk-taking by some banks meant the crisis reached global proportions.

Governments implemented fiscal policies and undertook bail-outs to prevent a possible collapse of the financial system. Here in the UK, the government announced a £37 billion rescue package for Royal Bank of Scotland, Lloyds TSB and HBOS, the economy experienced a recession for five quarters, and an austerity programme was adopted by the government.

In his most recent Budget, Chancellor Philip Hammond may have announced that austerity was over, but some figures suggest the 2008 financial crisis is still having an impact.

What impact did the financial crisis have?

The financial crisis affected many areas of the UK economy. These five may have impacted your personal finances too:

1. Salaries: When you just glance at average wages and salary growth over the last ten years, it often looks like we're better off. However, inflation has eroded buying power and, in many cases, mean people have less income in real terms today than they did before the financial crisis.

In fact, analysis conducted for the BBC found that people's wages are 3% below what they were a decade ago. The research suggests that the average wage in 2008 was £24,100, falling to £23,300 in 2017. The younger generation has been among the hardest hit, with a decline of 5%.

2. Interest rates: In response to the recession, the Bank of England decreased interest rates. At the end of 2008, the base rate was 3%. However, this fell sharply to 0.5% between then and March 2009. The interest rates have been at a historical low ever since and have only begun to climb again in the last 12 months, now sitting at 0.75%.

How this has affected you will depend on your circumstances. If you have cash in savings accounts it's likely it's been decreasing in value in real terms, as inflation has outpaced interest rates. However, the low interest rates have had a positive impact on some. If you've borrowed money, for example, a mortgage or loan, it's likely you've benefitted from rates remaining low.

With two small rises in the last 12 months, it's expected that interest rates will slowly begin to climb again. But they still have some way to go before they reach pre-financial crisis levels.

3. Stock markets: The impact the financial crisis had on stock markets support the long-held wisdom that staying invested throughout volatility is important. Many people that held investments between 2008 and 2009, saw the value of their stocks and shares fall. However, overall the market did recover and, ultimately, delivered returns in the long term.

The FTSE 100, an index that measures the performance of shares of the 100 largest companies listed on the London Stock Exchange, for example, had a share price of 6,202 on 11 January 2008. By the 20 March 2009 it had fallen 3,842.85; a significant fall for investors. But those that continued to hold their shares will have seen the value rise again. As of 9 November 2018, the FTSE 100 price stood at 7,105.34.

With the markets experiencing some volatility recently, the recovery since the financial crisis demonstrates that, in many cases, holding investments long term is the answer.

4. Property: One of the sector's hit by the financial crisis was the property market. Prior to the financial crisis, the UK had experienced a period of rising house prices. However, the trend quickly changed in 2009. Official figures show the 12-month percentage change to February 2009 was -15.6%. It caused concern for many homeowners and even left some with negative equity, especially those with high LTV (loan-to-value) percentage mortgages.

The dip was relatively short-lived, and prices began to climb again later that year. Since then, there have been peaks and troughs, but when you look at the overall trend, they're increasing. As of September 2018, the average house price in the UK is £253,554, according to the UK House Price Index. In September 2009, it was £165,134.

5. Regulation: Perhaps one of the most lasting effects of the financial crisis has been the regulation put in place in an attempt to prevent a similar situation happening in the future. Lending institutions have been forced to take on more responsibility to ensure those they're lending to can afford to meet repayment obligations.

One sector where this is evident is the mortgage industry. When you apply for a mortgage, banks must take steps to 'stress test' your situation to see how likely you are to cope should interest rates begin to increase. You've probably heard that mortgages and other forms of borrowing are harder to access now, this is the reason why, although it is becoming easier.

While the UK has slowly recovered from the financial crisis and continues to do so, there are still some effects being felt in terms of personal finances and the wider economy. When you look at the uncertainties present now, such as Brexit, and consider how your money will be affected it can be a concern. If you're worried about your money, please contact us. We create bespoke strategies with your goals and personal circumstances in mind.

by danielashby

Could some of your retirement savings be lost?

When you think about how often you've moved jobs or home, it's not surprising that it's common to lose the occasional important document. But the number of lost pensions could make a huge difference in achieving retirement aspirations for pensioners who have lost them.

The UK has almost £20 billion in unclaimed pensions, research from the Pensions Policy Institute (PPI) has revealed.

PPI estimates that there are as many as 1.6 million unclaimed pensions from an analysis of the market. The figure could be even higher once public sector pensions are factored in.

With the total value of these unclaimed pensions at £19.2 billion, the average value of an individual lost pension is £12,125. While it's not a huge amount, it could provide a welcome boost to retirement plans. There's likely to be some pots that hold significantly more than the average value too. Lost pension pots could mean you're unable to achieve some of your retirement dreams, despite having the cash to do so.

A growing problem

The issue of lost pensions is likely to grow unless action is taken.

The research found that people typically lose track of their pensions when changing jobs or moving home.

Nearly two-thirds of UK savers have more than one pension. However, the introduction of auto-enrolment and workers moving jobs more frequently means the number of pensions an average person holds is likely to rise. Over their lifetime, the average person has around 11 jobs. If each of these offers a pension, it's a lot of different schemes to keep track of.

On top of this, younger generations are more likely to move home frequently, partly due to the rising trend in renting over owning a home. Forgetting to update the address that a pension provider holds means it's easy to lose touch with your retirement savings.

Dr Yvonne Braun, Director of Long-Term Savings and Protections at the Association of British Insurers (ABI), said: These findings highlight the jaw-dropping scale of the lost pensions problem. Unclaimed pensions can make a real difference to millions of savers who have simply lost touch with their pension providers.

The industry has stepped up its efforts to reconnect savers with their lost nest egg, developing a new framework launched earlier this year to help pension providers trace 'gone-away' customers more consistently. But industry efforts can only go so far; we need a radical digital solution to cope with the way society is changing, or the problem will get worse.

It is important that the government stands by its promises to take forward the Pensions Dashboard.

What is the Pensions Dashboard?

The Pensions Dashboard project aims to make it easier to keep track and understand how your pensions are growing.

Your retirement income rarely comes from one source; making it difficult to keep track of everything. It can also make it challenging to effectively plan your retirement too. The problem comes because we tend to look at each pension separately (or forget about some of them altogether). However, for effective financial and retirement planning, you need to look at the bigger picture.

The proposed Pensions Dashboard will let you see all your pension savings at the same time through an up-to-date online portal. As a result, it will be easier to get a snapshot of how your retirement savings are progressing, as well as the individual pots you've accumulated.

The project is still in the development phase, but it's hoped the Pensions Dashboard will be available from 2019. In the 2018 Autumn Budget, it was revealed that the project will benefit from a £5 million boost.

What to do if you have lost pensions

While the Pensions Dashboard is a positive step, it doesn't help you if you're worried about lost pensions now. Here are some steps you can take to reconnect with lost pensions and remain organised.

1. Contact the pension provider: If you can recall who your pensions are with, this is usually the easiest option. You should receive statements giving an update of your pension regularly. If you haven't received one in a while, it's likely they have an old home address for you. Where possible have details such as your National Insurance number and pension plan number handy to speed up the process.

2. Speak to your employer: If you've been enrolled in a Workplace Pension, you can also contact your employer or former employer directly. If it's run by the firm, they'll be able to provide you with details and update your contact information. If the pension scheme was operated as a personal or stakeholder pension, they'll be able to provide the details of who to speak to next.

3. Use the Pension Tracing Service: If you're struggling to find the necessary details of either your pension provider or employer, the Pension Tracing Service could help. It's free to use and searches a database of pension schemes.

4. Consider consolidating your pensions: If you find you have multiple pensions to keep track of, consolidating them may be the best option. However, there may be fees associated with this and you might also lose other benefits. As a result, it's not the right option for everyone. Contact us today to discuss the structure of your retirement savings.

5. Keep your details up to date: Once you've found 'lost' pension funds, make sure you keep on top of details. Always let your employer and pension provider know if you move home or change your name. It means you're easier to stay in contact with and should make sorting out any future issues much smoother.

Maintaining contact with your pension provider and tracking down any lost savings is just the first step in creating the retirement that you want. With the support of financial planning, you can align your retirement ambitions and finances. Whether you have just reconnected with old pension savings or want to review your retirement provisions, please get in touch with us.

by danielashby

Your guide to writing a will

November marks Will Aid Month. We want to take the opportunity to remind you just how important a will is and explain why it should be considered a crucial part of your financial planning.

You no doubt have an idea of what you'd like to happen to your wealth and assets once you pass away. For many, it will mean leaving it to children or grandchildren. But you might also want to leave something for other family members, friends or charity. A will is crucial for ensuring your wishes are carried out.

Should you die without a will in place, your assets will be distributed according to the Rules of Intestacy. These specify a rigid order of who should benefit from your estate. It's unlikely that these will align with exactly what you want. This is particularly true for modern, often complex, families.

If, for example, you have children from a previous relationship, have since remarried and the value of your estate is worth less than £250,000, all your wealth will pass to your surviving partner. This could effectively disinherit your children.

Despite the importance of a will, it's a step that many in the UK are failing to take. More than half (56%) of parents in the UK with children under 18 have no will, a survey by Will Aid revealed.

Writing a will should be a task you undertake in the context of financial planning too. With the right information, you can understand what inheritance you can leave behind. This allows you to decide how you want different assets distributing.

Thinking about your legacy with wider financial goals in mind can help give you confidence and improve financial security too. Perhaps you're worried about spending too much during your retirement years for fear of not leaving the legacy you want behind. Financial planning can give you an understanding of how lifestyle changes will affect what you leave to loved ones.

With this in mind, these are the steps you should be taking as you prepare and write your will:

1. Value your estate

It's hard to think about the distribution of assets if you don't know the value of them. A good starting point for writing your will is creating an up-to-date list of what your assets are and how much they're worth. This is an area we, as financial professionals, can help you with, as well as providing an insight into how the value might change over the years depending on your retirement decisions.

2. Deciding on beneficiaries and distribution

Next, you should spend some time thinking about who you'd like to inherit your wealth. It's likely there's more than one person you want to leave an inheritance to. Once you have a list of beneficiaries, you'll need to consider how you want your estate to be distributed.

You should be as specific as possible here. While you can allocate each person a portion of your estate, it may be a complicated process to distribute your estate depending on your assets. For example, if three children equally inherit a property, they'll have to come to an agreement as to how they'll proceed. Perhaps you have some jewellery you'd like to go to your granddaughter or a property that will suit a son with a growing family. If you have a specific request for items or assets, make it clear.

3. Assess Inheritance Tax liability

Do you know if your estate will be liable for Inheritance Tax (IHT)? If your estate's value is more than the Nil-Rate Band and Residence Nil-Rate Band for IHT, it may change how you use and distribute your wealth now.

The current Nil-Rate Band is £325,000. If your estate is worth less than this, no IHT will be due. If you're passing on your main home to children or grandchildren, you may also be able to take advantage of the Residence Nil-Rate Band. This is currently set at £125,000, rising to £175,000 in 2020/21.

There are several steps you can take to reduce IHT liability or help your loved ones cover the bill they may face. If you'd like to understand what IHT may be due when you pass away, please contact us.

4. Consider a charitable donation

Many people choose to leave a charitable donation as part of their legacy. If you've been a lifelong supporter of a cause, naming charities in your will can be an excellent way to continue this. As with all beneficiaries, you should be as specific as possible about what you want a charity to receive from your estate.

Leaving a charitable donation can have IHT benefits too. Leaving 10% or more of your estate to charities means your IHT rate will be decreased from 40% to 36% if your estate is liable.

5. Note other wishes

While the main aim of a will is to ensure your estate is distributed in line with your wishes, it can also be used to cover other areas.

If you have dependents, for example, you can name a guardian to care for your children until they're 18, as well as someone to look after their inheritance. You may also choose to make your preferred funeral arrangements known, though this would not be legally binding.

6. Choose executors

Executors are the people who deal with distributing your estate. It's a good idea to choose more than one executor; you can appoint up to four and those chosen can also inherit from your will.

An executor should be someone you trust and who is able to take on the responsibility of the role. It can be a friend or family member. Alternatively, you can appoint a professional executor, such as a solicitor or an accountant. A professional executor will take their fee from your estate and they can be a good choice if your estate is complex.

7. Writing the will

With your legacy plans set out, it's time to write your will. There are several options when doing this.

You can choose to make your own will, but you should keep in mind it's a legal document that needs to be written and signed correctly to be valid. Often, taking advice from a regulated solicitor that specialises in wills and probate is the best course of action.

Whichever option you choose, make sure your will is valid. Your will must be in writing, signed by you and witnessed by two people. Beneficiaries should not act as witnesses, and, where possible, neither should executors.

8. Storing and updating

Once you've written your will, there are two points to remember. The first is to store it in a safe place, this could be in your home, with a solicitor, bank, or a Probate Service, and ensure your executors know where it's kept.

Secondly, don't write a will and forget about it. Circumstances can change considerably; your wishes today can be very different to those you will have in a decade. It's good practice to review your will every five years and after big life events, such as getting divorced, receiving an inheritance or having children.

While you're writing your will, there is another task you should tick off; naming a Lasting Power of Attorney (LPA).

An LPA gives someone you trust the power to make decisions on your behalf should you become too ill to do so. An LPA can only be written while you're sound of mind. As a result, it's an important step to take before it needs to be used. The combination of a will and LPA can help make sure that your wishes are carried out through your later years of retirement and once you pass away.

To discuss your finances and the legacy you leave loved ones, please contact us today. We can help you put the figures in context with your wider aspirations.

by danielashby

Focus On: Pensions Freedom Seminar

On the 27^th September we held our very first 'Focus On' seminar.

Primarily for solicitors and accountants, we took a look at two key problems that have come to the fore since the introduction of the new pension freedom rules in April 2015, and some solutions the we believe can help solve the problems.

Sources: (1) AJBell (2) AJBell (3) Schroders (4) Gov.UK (5) Royal London (6) Retirement Advantage (7) Beaufort Financial/YouGOV (8) FCA (9) The Pensions Regulator

We believe part one of the solution is an educational one, and by highlighting and explaining key things to know, we hope our attendees are now better informed to guide their clients.

To support and compliment the educational piece is our six step planning solution. Here it is in brief:

We received some excellent feedback from those who attended. We work with solicitors and accountants on a regular basis, so if you ever need legal or tax advice, please do ask us, as we are likely to know someone who can help you.

by danielashby

Have you considered the cost of care in retirement?

In the next 20 years, the number of elderly people needing constant care is expected to double. You've probably thought about how long your pension needs to last and whether you're saving enough. But have you factored in the cost of care?

By 2035, it's expected there will be 446,000 adults aged over 85 that need 24-hour care, according to research from Newcastle University. It's a similar picture for those aged over 65 too; it's thought one million will need constant care. The figure represents an increase in demand by more than a third.

It's a figure that's partly driven by a growing population. However, longer life expectancy is playing a role too. Estimates show:

• The number of people aged over 65 will increase by almost 50% in the next 20 years; reaching 14.5 million in 2035
• Life expectancy will increase by three and a half years for men and three years for women

Typically, retirees spend more in the early years of retirement. The first years after giving up work are often marked by a greater level of spending, such as paying off the mortgage or travelling. As people settle into retirement, costs often decrease. Care changes this.

The cost of care varies depending on where you live in the UK. However, the average annual cost of a care home is around £29,270, according to PayingForCare. This rises to £39,300 if nursing is required.

Even if you don't require constant care, it's likely you'll need some level of support at home. If this can't come from loved ones, you could be looking at a cost of £15 per hour. At first glance, that doesn't seem like a big expense. But when you calculate that two hours of help a day will amount to £10,950 a year, it's clear that most people will need to plan ahead for this.

With these sums in mind, it's important to factor the cost of care when planning your pension income.

Making care part of your retirement planning

Nobody wants to think about needing care as they age. But considering what you would like and how you would pay for it can make seeking care easier and less stressful should you ever need to.

Spending in retirement follows a similar pattern for many. When you first enter retirement you're likely to find your essential outgoings are reduced but that your spending on luxuries will increase. It's common to want to enjoy those first years of retirement, whether you plan a few more holidays or increase social activities now you're no longer working.

It's then typical for your spending to settle and perhaps decrease as you enter the next stage of retirement before outgoings increase again as you start paying for care. The differing income needs throughout retirement can make it difficult to ensure your pension lasts throughout your later years.

Considering what you would choose should the need for care arise can help you forecast costs. Among the questions to answer are:

• Do you have any medical conditions that may affect your ability to care for yourself?
• Are your loved ones in a position to offer you support if needed?
• Would your current home be suitable if you were to experience reduced mobility?
• What type of care would you prefer?
• Is there a way to protect some of your assets when paying for care?

Of course, no one can predict what will happen in the future. But having an idea of what level of care may be required and the expenses associated can help you create a realistic financial plan. It's also a good idea to speak to your family about what your preferences would be and how it would be paid for. They may have alternative suggestions, such as how they can provide support, and it could affect their inheritance.

Appointing a Power of Attorney

While we're on the subject of your financial health and care, there's another area where it's important to be proactive; appointing a Power of Attorney.

A Lasting Power of Attorney (LPA) is a legal document that appoints one or more people to make decisions on your behalf. Should you have an accident or illness that means you can't make your own decisions, those appointed will be able to make them for you.

There are two types of LPA, both are important. A health and welfare LPA will make decisions relating to areas such as medical care, moving into a care home, and treatment. A property and financial affairs LPA will allow your loved ones to manage areas such as your bank account, paying bills and selling your home.

It's a common misconception that your partner will be able to take control of your finances. Even if you have a joint account, they may not automatically have access to it. This is because a joint account can only be operated with the agreement of both parties. As a result, appointing an LPA is important, no matter your personal circumstances.

If you'd like to understand how the cost of care could affect your retirement plans or whether your pension would cover the care required, you can contact us today. We'll help you understand what steps you should be taking and how it will affect your income.

by danielashby

Sustainable investment continues to grow: Do ethics affect your investment choices?

Investors are increasingly investing their money with sustainability concerns in mind, figures show. As October marks Good Money Week, we take a closer look at what ethical investing is and how the market's growing.

It's predicted that the UK's ethical investment market will grow by 173% by 2027, according to research from Triodos Bank. With the projected total amounting to £48 billion, ethical investing is slowly moving into the mainstream. But what is it and how does it influence your investment choices?

What is ethical investment?

In simple terms, ethical investing is where you invest your money with other considerations beyond the financial return in mind. You base your investment decisions on the impact your money could have; creating a double bottom line if you will.

When you look at changes in society in general, it's not surprising that ethical investment is growing. Have you already cut down on the amount of plastic you use? Do you purchase Fair Trade items from the supermarket? Or are there some brands you avoid because they test on animals? These are ethical decisions you make as part of your daily routine; ethical investment is an extension of this.

Ethical investment comes in many different forms and there are a lot of terms used to broadly cover the same motives. You may have heard phrases like sustainable investment, responsible investment, SRI (socially responsible investment) or impact investing. ESG (environmental, social and governance) is another commonly used term that breaks down ethical investing into three core areas of consideration:

Environmental: These are investment concerns that cover a range of environmental impacts. Companies developing renewable energy sources, providing alternatives to deforestation or taking steps to improve the local ecosystem can fall into this category in a positive way.

Social: Again, the social segment covers a broad range of issues. Providing safe working environments, paying a living wage and ensuring no children are employed throughout a supply chain, are social issues to consider. It can also cover a company's impact on the communities where it operates.

Governance: Governance issues focus on how the company is run. Funds that cover governance issues may, for example, look at female representation on boards, whether the company avoids paying taxes or remuneration levels of the highest paid executives.

What's the size of the ethical investment market?

When you look at the size of the whole investment market, the number of funds taking ESG factors into consideration is still niche. However, it is growing, and the pace of growth is set to increase.

In 2023, the market will reach a 'tipping point', according to Triodos Bank. This is partly being driven by the next generation of socially conscious investors seeing an increase in their income. As a result, the UK market alone is expected to reach £48 billion by 2027.

The Triodos Bank research found:

• 55% would like their money to support companies which contribute to making a more positive society and sustainable environment
• 61% of investors believe that for the economy to succeed in the long term, investors need to support progressive businesses tackling ESG issues
• A fifth of investors are planning to invest in an SRI fund by 2027
• Ethical investment appeals more to younger generations; 47% of those aged between 18-34 intend to invest in an SRI fund within the next nine years
• Within this group, 56% are motivated to invest in ethical funds because of climate-related disasters in the news; compared to 30% for older counterparts

While there is a growing interest in ethical investment, there is still a limited market, which can make it challenging. 73% of UK investors have never been offered ethical investment opportunities. Furthermore, 61% would not know where to go for more information in SRI.

Despite this there is a demand for more information; 69% of investors would like to have more knowledge and transparency about where their money goes.

The challenge of defining 'ethical'

You may have already spotted one of the biggest challenges with ESG investing; we all have different values and ethics. It's a highly subjective area.

You may consider a company to be ethical because it's taking proactive steps to improve the lives of its employees in the poorest parts of the world. Someone else, on the other hand, may say the company unethical because the firm operates in the oil and gas sector, resulting in environmental degradation. As a result, it's important to define what your personal priorities are, as well as where you're willing to compromise, before you start looking at ethical investment opportunities.

According to Triodos Bank, these are the five biggest issues that would put off investors:

• Manufacturing or selling of arms and weapons (38%)
• Worker/supply chain exploitation (37%)
• Environmental negligence (36%)
• Tobacco (30%)
• Gambling (29%)

So, how do you invest with your values in mind? There are three key ways to do so:

Negative screening: This is where you actively remove companies from your portfolio or avoid investing in them because you don't consider them to be ethical.

Positive screening: Positive screening is where you actively invest in companies that align with your principles, allocating a portion of your investable assets to support these firms.

Engagement: An engagement strategy is where you use your power as a shareholder to promote long term, ethical changes. As it relies on shareholder power, it's a strategy that's more effective for institutional investors, such as pension funds, than the average retail investor.

The above are ways of investing ethically and striving to encourage change but do this in very different ways. In the case of energy and reducing the amount of carbon emissions, for example:

• A negative screening approach would divest from oil and gas companies
• An investor using positive screening would put their money into renewable firms
• While those using the engagement approach would hold shares in oil and gas but vote at Annual General Meetings to invest in sustainable technologies

As with all investments, you do need to balance the risk of your investments potentially decreasing in value. If you'd like to discuss how your ethics and values can be reflected in your investment portfolio and what impact this could have on financial return, please get in touch.

Learn more about Beaufort's ethical portfolios, which combine socially responsible, ethical and environmental considerations with a strategy for capital growth, here.

by danielashby

Four steps young people should take to improve financial resiliency

Whether you're a young person or you have children and grandchildren, it's important to start building financial resiliency early after research revealed 73% of young adults don't have an emergency fund.

Despite many people in their early thirties planning significant life milestones, such as buying a home or starting a family, research suggests they aren't in a position to do so financially. Across the UK, those aged between 30 and 35 have been identified as one of the least financially resilient groups.

A combination of low savings and a lack of confidence in finance is leading to major life events being put off. With many in this generation focusing on the present, research from LV= suggests that the current generation of 30-year olds aren't preparing for risks they may face in the future.

When looking at the Money Advice Service's (MAS) benchmark for financial resilience, it's a target many in their 30s don't meet. MAS recommends that people should hold an emergency fund of three months' income to weather potential obstacles, such as unexpected bills, illness, or redundancy. However, the LV= report revealed that 73% of those in their early thirties fall short of having 90 days' income saved, this compares to the national average of 56%.

Without financial resiliency, life milestones and security are being harmed for those in their early thirties:

• 24% feel worried about the financial impact on life milestones
• 17% put off major life milestones due to a lack of confidence about their finances
• 43% don't feel confident about handling a personal financial crisis
• 22% don't know how long they would be able to cope financially if they became unemployed

According to Dr David Lewis, an Associate Fellow of the British Psychological Society, seven in 10 under 35s don't properly prepare for future risks because they believe their youthfulness will last forever. It's led to him dubbing the current 4.7 million 30-35-year olds in the UK the 'Peter Pan Generation'.

Dr Lewis commented, There are multiple reasons this age group isn't properly preparing for financial risks. A universal emphasis on the importance of 'staying young' means many people are in a state of denial or avoidance when it comes to facing up to the future. We also tend to talk within - rather than across - generation groups, which encourages us to focus inwardly on the present, not the future.

With people in their thirties likely to be taking significant steps towards milestones where finances are important, bridging the conversation between generation groups could be beneficial. From talking to parents and grandparents to seeking the support of an experienced financial adviser, it could help to identify ways to improve financial resiliency that can be tailored to them.

What steps should you be taking to improve financial resiliency?

If you're searching for ways to improve your financial resiliency now, there are steps that you can start taking. With a plan of action to move forward with, you'll be in a better position to achieve the life goals you want, whether that's to take your first step on the property ladder or become more secure financially as you start a family.

1. Consider the long-term milestones you want to achieve

While there are some common milestones that are on the majority of people's agenda, there's no one size fits all approach. That's why it's important to consider what you want to achieve in the next five or 10 years. Thinking about whether buying a property, getting married, or having children are things you want, means you're able to tailor a financial plan to match these goals.

A simple list with realistic timeframes of when you want to achieve each goal by can help you prioritise where your focus should be and the best option financially.

2. Assess existing income and outgoings

Understanding where you're starting from is crucial for improving financial resiliency. Take the time to assess your current income and outgoings, to work out where you're making mistakes and could be saving more. It's a step that's also important for setting practical dates for when you want to achieve each goal by.

Don't forget to account for any debt you have too, from an existing mortgage to credit cards. Depending on your long-term goals, paying off debt may help you achieve them or access better rates of lending. For example, reducing debt can improve your chances of securing a mortgage offer with a competitive interest rate.

3. Find a savings plan that maximises what you put in

Your savings will grow with you by simply adding to them alone but choosing the right saving plan that benefits from 'free cash' can help speed up your plans. Choosing tax-efficient options, accounts with better interest rates, and government schemes designed to help savers can have a big impact.

The savings plan that is right for you will vary depending on what your long-term goals are. For example, if getting on the property ladder is right at the top of your agenda, a Lifetime ISA (LISA) could be a good option. A LISA is a tax-free wrapper that lets you put in up to £4,000 a year, with a 25% bonus annually to help you build a deposit quicker. While a LISA could work for those working towards securing an early retirement too, a Workplace Pension or an alternative savings account may be a better option and provide more flexibility.

4. Plan for retirement now

With everything else you need to think about, retirement might not even be on your radar yet. However, if you're looking to improve your financial resiliency now, you should take steps to carry that on once you stop working. The earlier you start, the better for retirement planning. If you qualify, staying part of your Workplace Pension is a good place to start. Currently, employees pay 3% of their salary into their pension, with employers contributing a minimum of 2%, these percentages will rise to 5% and 3% respectively in April 2019.

On top of that, you may also want to consider a Private Pension, LISA account, or using a stocks and shares ISA to further build wealth.

To get a better understanding of the steps you could be taking to improve your financial resiliency, contact us.

by danielashby