Why making a will matters
Making a will might not be at the front of your mind. Nevertheless, if making sure your finances are properly managed, then ensuring you have one in place is a crucial aspect of good financial health.
Wills can be a tricky subject matter. They force us to confront one of the most difficult issues in life – what to do with your worldly possessions when you’re gone. However, it is an essential matter to take care of, especially to give your loved ones peace of mind should the worst happen. It will also ultimately provide your family with clarity over inheritance and your wishes. A will can prevent messy issues and even disputes over what happens to your estate.
If you die intestate, there are rules that govern how an estate can be allocated, which can lead to suboptimal outcomes depending on what you want to happen. This particularly matters for couples that are unmarried, as the partner could conceivably be left in the cold without a will to provide for them. There are also potential tax implications if an estate is not managed properly after death.
If you don’t draft a will, your spouse or civil partner (if you have one) will inherit your personal possessions and the first £250,000 of your estate, plus half of whatever is left after that. If you have children, they will then be entitled to the rest. If you don’t have a spouse but do have children, the estate will be divided equally among them. If you don’t have children, whoever are your nearest relations will inherit instead.
How to make a will
A will is a legal document, so ultimately writing what you want down on a piece of paper and signing it won’t be enough. However, making a list of your wishes is a good place to start. It isn’t an obligation to use a solicitor to draw up a will. To do so can be as simple as writing your wishes up and having two people witness you sign it. This must be done voluntarily and without pressure from a third party.
You can also use professional will writing services, charities such as Will Aid or your bank (although not all offer such a service). The costs of this will vary depending on the service offered. Beneficiaries, including partners or children, should not act as witnesses as this can lead to disputes down the line. You will also need to nominate executors to carry out your wishes. This can be a spouse, child or children or another trusted friend or relation.
It is a good idea to keep your will up to date as well. This should be done every five years, or any time there is a significant change in your financial or lifestyle circumstances. Alterations should not be made to the original document. You can add supplements, called a ‘codicil’ for minor changes which should be signed and witnessed in the same manner as the original will. Big changes however, such as divorce or remarriage, generally require a new will to be drafted in toto.
Once your will is drafted it is important to keep it somewhere safe, and ensure that the executors of the will know where it is located and how to access it (if it is in a place such as a secure lock box or safe).
How a financial adviser can help
A DIY will might seem simple, but depending on the complexities of your wealth and possessions, it is advisable to consult with a professional, be they a solicitor or a financial adviser. A financial adviser can help you to make a list of the wealth that sits within your estate, what should or should not be included in the will and how it should be apportioned. This is particularly relevant when considering the implications of inheritance tax. An adviser can help to assess the best way to share your estate that reduces IHT liabilities. They can also advise you on important exemptions such as gifting throughout your lifetime or giving money away to charity, plus the rules around ‘potentially exempt transfers.’
A financial adviser can also help you to structure your wealth in a way that minimises IHT liabilities and will be able to advise you on limits relating to property wealth and other allowances. Tax wrappers such as pensions can help to mitigate some of the liability, but come with rules that need to be carefully followed.
The complexities of getting a will right make it a potentially crucial document in your financial planning. For this reason, it is essential to consult a financial adviser to ensure your will is drawn up with the most careful consideration possible.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 13th February 2023.
Government to accelerate State Pension age uplift - could you be affected?
The Government is looking to bring forward the date at which the State Pension age increases, according to a report from Money Week.
Under current plans the State Pension age is set to rise from 66 to 67 by 2028. The next increase is currently set for 2046, when the limit will rise to 68. However, under plans being considered by the Government, the next increase could be brought forward by over a decade to as early as 2035. This means anyone aged under 55 now could face waiting longer to receive their State Pension, depending on what year the Government brings forward the age uplift to. Those born after April 1971 will already have to wait till age 68 under current rules.
Why is the State Pension age under review again?
The State Pension is one of the largest single costs the Government faces in its annual budgets. This is why in recent years it has pushed up the State Pension age to save on costs, particularly as life expectancy has soared for men and women in the years since it was introduced. Birth rates have also fallen, leaving less people to pay the taxes to fund an ageing population.
Conversely, critics of the Government’s new plans have highlighted that life expectancy levels have in fact reversed in the past few years, meaning the projected future costs are lower than anticipated. The Government has a life expectancy calculator you can check here.
With recent economic events the Government is finding it hard to plug shortfalls in its budget, with a combination of low growth and high debt costs squeezing its spending power. While politically difficult, increasing the State Pension age is one way for it to save money. The Government is now set to publish its State Pension age review in May.
What should I do?
While many people see the State Pension as a right they accrue through a lifetime of work and paying taxes, there is no ‘pot’ of money being saved into. The Government pays for the State Pension with taxes it rakes in each year from those in work. This is why it doesn’t have the funds to meet commitments it previously made, and why it is backtracking on those historic pledges.
The message here is that you should not rely on receiving a good State Pension income in retirement. While it can help, there are things you can do now to plan to build your wealth so as not to be dependent on the benefit in old age. This includes saving into pensions, ISAs and other tools for building long-term wealth.
If you would like to discuss your options, don’t hesitate to get in touch.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 13th February 2023.
The World In A Week - Are we there yet?
Written by Chris Ayton.
After a robust start to the year, global equity markets paused for breath last week with the MSCI All Country World Index down -0.2% in local currency terms. Sterling’s continued strength reduced that to -1.5% for GBP based investors. In fixed income, the Barclays Global Aggregate Index was up +0.2% for the week in GBP Hedged terms.
The FTSE All Share Index dropped -0.9% over the week but remains up over 4% in January so far. UK retail sales volumes were down for a second consecutive month as the increased cost of living continued to take hold on consumers. Forecasts had been for a small rise. However, UK inflation remained sticky at 10.5% in December 2022 which, although down from the 11.1% October high, remains elevated and way above target. It was also notable that UK food inflation increased by 16.9% over the month, the largest rise since records began in 1977. This data is unlikely to ease the pressure on the Bank of England to raise interest rates when it meets again on 2nd February.
In the US, the S&P 500 Index was down -1.9% for the week in Sterling terms. The market reacted negatively to US retail sales and industrial production both declining in December by more than expected, prompting fears of a US recession to rise. At the same time, prominent US companies such as Microsoft and Google’s parent, Alphabet, joined other tech firms by announcing they will be laying off tens of thousands of workers. Whether this will push the Federal Reserve to slow rate rises remains to be seen.
In Europe, the European Central Bank (ECB) president, Christine Lagarde, warned that rate rises in Europe still had much further to go in order to tackle inflation. She encouraged financial markets to “revise their position” that the ECB would soon slow down. MSCI Europe ex-UK finished the week down -1.4% although this index is still up +5.5% for January so far. Bank of America data suggests this is partially down to investors cutting allocations to the US stock market to their lowest level for 17 years, instead of favouring perceived cheaper opportunities in Europe. Assets have also been flowing into Emerging Market equities, which are also collectively up over 5% this year.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 23rd January 2023.
© 2023 YOU Asset Management. All rights reserved.
The World In A Week - A sparkle of hope
Written by Ilaria Massei.
Last Friday, we saw a positive UK GDP reading with the UK economy growing by 0.1% as services activity strengthened. Moreover, the Office for National Statistics data published last Friday showed that a recent fall in gas prices helped household finances and boosted savings. This data is certainly encouraging as it could suggest that the UK has avoided a recession (defined as two consecutive quarters of negative GDP growth). However, this might also suggest that the Bank of England will be forced to raise interest rates again, given that the positive GDP could lead to inflationary pressure. On a separate note, Rishi Sunak and his government rejected the request coming from businesses to reopen immigration. This is to especially help the hospitality sector, which is suffering from labour shortages, and is arguably holding back the UK economy from growing. The Prime Minister will re-address this and his plan will be one of the main points of the Budget in March.
In Japan, the Yen and the long-term Japanese government bond yields surged, raising uncertainties over the Bank of Japan’s policy board meeting this week. The Bank of Japan reviewed its long end yield curve policy measures by widening its 10y JGB yield target to +/- 0.5% (previously +/- 0.25%) in December. This measure was supposed to restore order in the Japanese bond market, distorted by the central bank’s ultra-loosing policy. However, the measure increased volatility, suggesting that the Bank of Japan might need to provide forward guidance to the market.
Elsewhere, Emerging Market stocks have seen a great rebound with the MSCI Emerging Market Index up +2.9% last week in local currency terms. This is the result of two forces both influencing the balance of trade in Emerging Markets, in a positive way. On one hand, we have seen signals of easing inflationary pressures globally that might suggest that the Federal Reserve will slow its interest rate rises. Conversely, China since lifting its Zero-COVID policy restrictions, is suggesting a recovery in the economy this year. An increase in activity in China will likely lead to a rally in Emerging Markets as Emerging Market countries are beneficiaries of higher demand for commodities and other services that serve the Chinese population.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 16th January 2023.
© 2023 YOU Asset Management. All rights reserved.
Get your finances in shape before the end of the tax year 2022/23
A new year has dawned, and there are just a matter of weeks left before the end of the tax year.
As usual, that means you need to familiarise yourself with a range of new rules, limits, and allowances. It’s really essential to be aware of this as now is the time to take advantage of left-over allowances that you have yet to use, or to prepare for new, higher taxes coming down the line. So, what is there to expect? We already know a good deal of what is coming but the Government is set to publish a Spring Budget which will take place on 15 March. While this won’t necessarily contain immediate measures, it could present some last-minute challenges for our finances.
With that in mind, here’s what we know is coming, and how to be prepared.
Things that are changing from 6 April
Capital gains tax
The Chancellor Jeremy Hunt announced a big change to the Capital Gains Tax (CGT) allowance in his Autumn Statement in November last year. The allowance has been slashed from £12,300 to £6,000 and is set to be slashed again in 2024 to just £3,000. The first cut will take effect from the new tax year, which means maximising what is left of the higher CGT allowance now is essential.
Dividend allowance
The Chancellor has also slashed the dividend allowance from £2,000 to £1,000, which will take effect from the new tax year. It will be slashed again in 2024 to just £500.
Other thresholds
The Treasury is freezing most other thresholds at their current levels for longer, including income tax and inheritance tax (IHT). This means that, while you won’t see a headline tax increase, if you receive a pay rise it will be worth less than it would have, had the thresholds moved up in line with inflation or average earnings. Jeremy Hunt also announced that the 45% additional rate of income tax will have a new lower threshold of £125,140 from 6 April. This means if you’re earning above that level, you’ll pay more in tax than you were before.
Things you can do to prepare
There are a number of straightforward mitigating measures you can take to shield your wealth and income from these changes. Here are some ideas to get you started.
ISAs
ISAs are something of a miracle product, shielding you from any tax liability for things such as dividends or capital gains tax (CGT) that you would normally have to pay if you invested using a standard account. The annual £20,000 ISA limit is extremely valuable for wealth growth and preservation, and so it’s sensible to make as much use of it as you can, be it cash or investment ISAs. ISAs are the single best way to avoid the punishing implications of dividend and capital gains tax (CGT) allowance cuts as the tax wrapper on the account protects you from any tax implications whatsoever.
Pensions
Before you get to your ISA, you’ll want to make sure you’re contributing as much as possible into your pension. The annual allowance is £40,000 and comes with extremely valuable tax relief. This tax relief makes contributing to a pension more attractive than an ISA in the first instance as upfront extra money will help grow your savings pot larger over time. However, pensions do have implications when you begin looking to draw down wealth, including when you can access the money, how much you can get tax free and the size of the pot, making them somewhat of a more complicated vehicle than the ISA.
JISAs
Junior ISAs or JISAs are often overlooked but are also an extremely valuable allowance you can call upon. Ultimately, when we think about building wealth over a lifetime, a big consideration in that is what we leave behind for our children. Before getting into inheritance tax (IHT) considerations, contributing to a JISA for a child under 18 can be a great way to begin passing some of this wealth on as early as possible, while setting up your child for a prosperous future at an early age. The current annual JISA allowance is £9,000 and this will remain unchanged in the new tax year.
Inheritance tax allowances
Inheritance – or so-called ‘Death tax’ – is the most hated of all Government levies. However, there are various allowances and carve-outs available allowing you to limit your potential liability. The main one is the annual gifting allowance. You can gift up to £3,000 tax-free to anyone each tax year, which resets each 6 April. There is also a seven-year rule on giving away wealth, so the earlier you begin to prepare that process, if it’s something you’re considering, the better. As a parent you can also make a £5,000 wedding gift, or £2,500 if you’re a grandparent – although this is contingent on when your child/grandchild gets married rather than the tax year in particular!
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 12th January 2023.
Bank account switching bonuses are on the rise again – is it worth it?
Bank account switching is back on the cards if you’re looking to earn some easy extra cash. But is it worth it?
The number of switching offers – where a bank will pay you cash to change your main current account to them – saw a big drop off during and even before the pandemic. However, banks are once again competing hard for current account customers, meaning deals for switching are popping up like mushrooms. The deals however do come and go quickly, depending on how successful they are for the bank looking to attract new customers, so you’ll often have to move quickly.
The best deals right now
At the time of writing, the best deal on the market comes from first direct, which is offering a £175 cash bonus if you switch your account to them. Until recently Nationwide offered £200, NatWest offered £175, and Lloyds Bank was offering £150 – but all of these deals have now expired. However, it is highly likely that new deals will come around again in short order, so it is worth keeping an eye out for when they do.
How to switch
For the first direct switching offer, there are a series of caveats in order to obtain the £175 cash. You’ll need to open a 1st Account and use the current account switching service (CASS) to move from your old account within three months of opening. To make the switch you’ll just have to fill out a request on the first direct website. You’ll need to pay in over £1,000 to get the bonus, which will be paid within 28 days once this is done.
Is switching worth it?
Switching bank accounts might seem like a big hassle, but the process comes with guarantees to make it as simple as possible. The CASS guarantees to switch over all your direct debits and ensure your money is moved over to the new account within seven days and promises to make the process as seamless as possible. CASS will even ensure your salary goes into the new account without you needing to do anything. This doesn’t however extend to regular card payments such as a Netflix or Spotify subscription. You’ll need to update these details with the providers yourself.
With regards to first direct in particular, the bank is owned by HSBC but operates independently. It has routinely come near or top of customer satisfaction ratings which the Government commissions. The bank is only bested by digital-only providers Monzo and Starling. Neither offer a switching bonus but come with an array of other benefits which might be more tempting than a simple cash offer. It’s worth remembering first direct is also a branchless bank, so if you need access to a local bank, this won’t be the one for you. It is also worth considering the other benefits that come with the account. For instance, first direct offers an interest-free overdraft up to £250, with anything above that charged at 39.9% EAR variable.
There are other considerations such as savings accounts on offer and other packaged benefits you might get with a current account. But if you principally just use your current account as a place to keep your spending money, then an extra £175 could be just the ticket.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 12th January 2023.
Inheritance tax at record-breaking levels
The Government earned £4.8 billion in inheritance tax (IHT) receipts between April and November 2022, according to the most recent figures. This represents a £600 million increase on the same period a year earlier and sets another record in the upward trend for the tax.
Inheritance Tax (IHT) is by no means the biggest earner for the Government – of the £490.8 billion it took in tax between April and November 2022, Income Tax and National Insurance Contributions accounted for £251.4 billion combined. However, the tax has risen steadily for over a decade and is becoming an increasing issue for many middle-class families.
Who pays IHT and why is the Government attracting more money?
Inheritance Tax (IHT) receipts have risen significantly in the past 10 years, chiefly because the Government has frozen the threshold at which families become liable to pay the tax for consecutive years. The current threshold of £325,000 has been in place since April 2009. As asset prices for wealth such as property and investments have grown, more and more estates have been pushed over the line. With the average property price standing at £296,000 in October 2022, it doesn’t take much to reach that threshold if you’re a homeowner. Chancellor Jeremy Hunt committed to keeping this threshold in place until at least 2028, meaning this trend is only set to continue.
How to mitigate IHT liability
Inheritance Tax (IHT) comes with a series of rules and extra thresholds that makes liability for paying the tax more complicated than the simple £325,000 level, however. Married couples benefit from a transferable nil rate band. This means the combined wealth of a married couple can reach £650,000 before becoming liable.
Estates which contain a main residence property also enjoy a residence nil rate band. This means the primary family home enjoys a residence nil rate band of £175,000. If a married couple combines this, the total estate can be valued up to £1 million before incurring IHT liabilities, assuming they own a home.
Pensions are also free from IHT liability, but this only applies to lump sums that are a discretionary payment from the pension provider. This does not apply for specific products such as annuities where the estate is entitled to a guaranteed payment.
Inheritance Tax (IHT) also contains exemptions when it comes to gifting. The seven-year rule stipulates that any wealth given away to others is tax free, assuming the person who is giving away money survives for seven years after it is given. There are also annual gifts that can be given tax free. Gifts of up to £3,000 can be made each tax year without incurring any liability, while a wedding gift allowance of £5,000 is also applicable for parents. Grandparents or great grandparents can gift £2,500 towards a wedding.
The exemptions don’t end there – business owner exemptions, putting assets into a trust, and certain investments also carry tax breaks with regards to IHT. However, such methods are best discussed with a financial adviser in order to ensure that IHT liability mitigation is being done in the right way.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 12th January 2023.
Top tips for saving money on holidays in 2023
For many a holiday might seem like something of an expensive luxury at the moment. But there are still ways to save on holidays in 2023.
A falling pound, rising costs and hotspot congestion – these are just some of the factors which might make you think a holiday abroad is out of reach this year. By following a few simple money tips and tricks, jetting away on a well-deserved holiday is absolutely possible for most people.
Here are some ideas to get you started in 2023.
Go where the pound is strong
The pound had a miserable year in 2022. This was compounded by a series of calamitous policy decisions taken by the Government towards the end of the year which sent the value of the currency sliding. While the value of sterling has recovered somewhat from nearly reaching parity with the dollar, it is still much weaker than it was at the start of last year, meaning some destinations remain pricey for British holidaymakers. This is particularly true in locations where the US dollar is king – mainly the US, but lots of other countries use dollars as their main currency, such as Puerto Rico and Panama, too.
However, there are still some top global holiday destinations where the pound has maintained its relative value, or even become stronger. For instance, the South African rand has remained at broadly the same level over two years compared to sterling, while Egyptian pounds have in fact become weaker versus the UK pound. Other countries such as Argentina, Hungary, India, Israel, Japan, Norway and Sweden have all seen their currencies weaken versus GBP, making the relative cost of travelling there cheaper.
If you want to see where the best rates are for your foreign exchange, then XE.com’s currency charts are a really good place to start. Of course, some of these destinations are on the more adventurous side, and others require big long-haul travel, so savings are only really worth it if you can still get a good deal on flights and other aspects.
Use price comparison
This is where making good use of price comparison comes in. We’re all reasonably accustomed to using price comparison websites to get deals for our insurance, broadband and other home services. However, travel comparison is no different, with a big selection of services that will find you the best deals out there. Price comparison isn’t just for flights – you can get quotes for hotels, car rentals and even package deals too.
Good websites to get started include Kayak, Google Flights, Momondo and Skyscanner. One thing to watch out for with price comparison though – and this is particularly the case for flights – is added extras that aren’t in the headline price. This is a common tactic used by airlines to mask the “true” cost of the flight in order to make it look attractive. Airlines will offer cheap fares, but then pile on costs from adding baggage, picking seats, and other amenities that once upon a time were inclusive of the price, but these days rarely are.
Get a good deal on foreign currency
Exchanging your pounds for the local currency can be one of the most deceptively expensive aspects of travelling abroad. We all know that buying foreign currency at the airport is expensive, as you’ll pay fees and won’t get the true exchange rate, leaving you with significantly less for your money. Even well-established high street institutions such as the Post Office don’t offer the best rates. The trick to see where this is the case is if the exchange offers ‘fee free’ currency. If you don’t pay headline fees, you’re most likely paying through a worse exchange rate.
It is much better these days to just use a bank card abroad that offers no fees and the Mastercard real exchange rate. Far and away the best for this is Starling Bank, where you’ll get the live exchange rate for your currency and there are no limits on spending.
Get a local sim card
Since the UK left the EU, roaming charges have bounced back into our lives when travelling to Europe. Some UK providers do still offer decent terms when travelling, but this is usually only the case within the EU. At the time of writing those include Asda Mobile, BT Mobile, iD Mobile, Lebara, O2, Plusnet, Sainsbury’s, Smarty and Virgin. If you use EE, Three or Vodafone then charges now apply when you use your minutes or data abroad. However, there is another way to secure a cheaper deal when you travel and that is to get a local sim card. Many modern phones will allow you to pop in a second physical or digital sim card, meaning you don’t have to use your UK minutes and data abroad.
The best thing to do when you arrive at the airport of your destination is go straight to one of the local providers’ shops to ask for a sim data deal – the airport arrivals is usually packed with them offering deals to tourists. Do your research on the destination before arriving though to ensure you pick a reputable carrier.
Come to the airport prepared
It can be really easy to find yourself spending large sums unwittingly in the airport before you’ve even left the UK. From expensive sandwiches to extortionate water bottles – the products on offer are usually very expensive compared to normal. It pays then to come prepared. Bring an empty water bottle to fill up once you’ve passed security and pack sandwiches if you think you’ll get hungry.
This also extends to other things like buying a neck pillow for your flight – you’ll get ripped off if you can’t live without one on the plane but forget it at home. This is also a salient point if you think you’ll struggle to stay within the baggage limit. Leave behind basic items like shower gel and toothpaste – ubiquitous products you can buy locally at your destination when you arrive.
Make sure you’re insured
While this isn’t a direct saving per se – failing to get good travel insurance can be extremely costly for you and your family. It’s easy to pick up good value travel insurance these days using price comparison sites to find the deal that suits you. The cost of healthcare in countries such as the US can be extraordinarily high and will be crippling if you don’t have insurance to protect you if you get injured or fall ill abroad.
With the UK leaving the EU, the old European Health Insurance Card (EHIC) is now expiring too, so make sure you apply for the new GHIC. But also remember this won’t preclude you from paying any costs, it just gives you right of access to state healthcare in EU countries and Switzerland and is not a replacement for insurance. It is also a really good way to save on rental insurance costs. Instead of paying over the odds for the premium insurance direct from the car hire firm, get car hire excess insurance instead, which will cover the premium you have to pay if you have an accident abroad with a hire car.
Be flexible
Ultimately, the deciding factor on how much your holiday is going to cost will be the destination you pick. If prices in popular destinations such as Spain, France or Italy are looking high, consider alternative up and coming destinations such as Albania, Hungary, Morocco, or even at home in the UK. You can often find staying closer to home or venturing further afield can reward you with the same top-quality experiences at much more competitive prices.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 12th January 2023.
The World In A Week - The smell of stagflation
Written by Millan Chauhan.
We saw some promising news on the inflation front as the Eurozone’s consumer prices rose by 9.2% year-on-year in December 2022 which was down from 10.1% in November. The reading was well below preliminary estimates of 9.7% and was the lowest point for four months. This was attributed mainly to a short-term decline in energy prices which still remain elevated. However, the core inflation print (which excludes energy, food, alcohol, and tobacco prices) increased slightly to 5.2% in December from 5.0% in November on a year-on-year basis which remains above the European Central Bank’s target of 2%. This could be a sign that inflation has started to peak in the region, European markets reacted well to signs of inflation slowing with the MSCI Europe ex-UK Index closing +4.1% last week.
In the US, the Institute for Supply Management (ISM) Services PMI print came in at 49.6 for December which was lower than initial forecasts of 55.0 and which compared to 56.5 for November. This was the first contraction in the services sector data since the height of the COVID-19 pandemic in May 2020. The report combines monthly question responses from over 370 purchasing and supply executives in the US. A reading below 50 generally indicates that the economy is contracting.
Finally, we saw further evidence of weakness in the UK Housing market as house prices fell -1.5% on a month-on-month basis in December which brought the annual house price increase to 2.0% on a year-on-year basis. Households are currently grappling with significantly higher mortgage rates following a series of interest rate hikes by the Bank of England. Households are having to contend with a higher variable rate or lock in a higher fixed rate as they re-finance their mortgage, both scenarios result in higher monthly payments, which many have not been accustomed to.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 9th January 2023.
© 2023 YOU Asset Management. All rights reserved.
The World In A Week - Central banks tighten… but markets get looser
Written by Cormac Nevin.
Last week markets continued on their positive trajectory for the year , spurred on by a flurry of central bank interest rate decisions and press conferences from the Bank of England, US Federal Reserve and the European Central Bank (ECB). Growth equities led the way last week, with the MSCI All Country World Growth Index up +4.2% in GBP terms. The more value-orientated FTSE All Share Index of UK stocks was up +1.9%, while Emerging Markets (as measured by the MSCI EM Index) were one of the weakest performers but still up +0.9%. Fixed Income markets also had a strong week, with the Bloomberg Global High Yield Corporate Index up +1.0% and even the safest government bonds (measured by the Bloomberg Global Treasury Index) rallying +0.4% (both in GBP Hedged terms).
As mentioned, this price action in markets was largely viewed as the result of the market’s continued game of chicken with global central banks. All central banks raised their policy interest rates in their ongoing fight against inflation, however market participants appeared to be of the view that each policymaker was approaching the end of their rate hiking cycle and responded with a touch of exuberance to the prospect of the end of rate increases (or indeed the commencement of rate cuts). The Bank of England increased rates from 3.5% to 4.0%, the US Federal Reserve moved from 4.5% to 4.75% and the ECB moved from 2.5% to 3.0%.
If you are struck by the paradox of central banks tightening policy (via raising interest rates) but markets responding with looser monetary conditions (via increased equity prices, tighter credit spreads etc.), then you are not alone! We think it is an illustrative reminder of the forward-looking nature of markets as they look through the proximate actions of policymakers and to where “terminal rates” might settle.
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