Taking the time to review your financial plan is a real investment in the health of your wealth – and your peace of mind – so seize the opportunity this summer.
The ending of a year and the chance for contemplation means December is the ideal time to take financial stock. Consider how your situation and aims have evolved in light of the following five ways you can make your wealth work harder in 2019.
There is no doubt that the investment environment is highly changeable, with macroeconomic and geopolitical risks running high. It is telling that Canaccord Genuity’s Wealth Confidence Tracker for 2018 found that one in ten High Net Worth Individuals aren’t confident about their financial futures, compared to 6% in 2017. Fears of not having made adequate provision for the future were dominant among the worries, but some 43% of affluent individuals also believe future generations will have a worse standard of living.
If you want to ensure you can enjoy an attractive standard of living in retirement or that you can give future generations a helping hand tax-efficiently, then you are among the large proportion of our users who require wealth planning as well as investment management help. You may be surprised to find how much of a difference professional advice can make, so please do get in touch with our expert team if you have a specific question.
Pensions are foundational to building wealth long term and offer a range of benefits for both retirement planning and achieving wider tax efficiencies. Your pension contributions represent very generous tax reliefs. Even though the lifetime contribution limit has been progressively lowered, wealthy individuals can still shelter a very substantial amount in their pension. See our Guide to Self-Invested Personal Pensions for more.
Pensions and retirement planning can be complex, particularly as regards balancing the savings and drawdown phases against your evolving lifestyle needs. Your investment strategy must be very intelligent indeed. This is why pensions are one of the key reasons affluent individuals visit our site. Plan carefully with professional advice, while ensuring you get the very most out of your pension savings..
CGWM also found that the property is still the most commonly owned asset class among the UK’s wealthy, 85% holding property versus 80% having investment portfolios and 77% having pensions. Interestingly however, respondents believed that their portfolios would contribute more to their long-term wealth than property (and they are in fact the best performing asset class over time by several measures).
Much of people’s wealth can be tied up in their main residence by necessity, and many will have seen their values increase greatly in recent decades. As the old warning goes, however, ‘past returns are not a guarantee of future returns’ and there is a lot to be said for not adding too much to your property exposure at the expense of proper diversification across asset classes. Optimising asset allocation is your best route to maximising returns and minimising risk.
Some people have a panic at the end of every tax year to use up their ISA allowances, or worse still forget to use those of every member of the family member, every year. ISAs are a key part of the wealth management armoury at all ages, and allow both children and adults to shelter investment and interest gains on their savings; it is perfectly possible to become an ISA millionaire in less than thirty years through investing the maximum allowance each year and achieving the kind of growth all good wealth managers will be targeting.
If you have multiple ISAs, they could likely benefit from consolidation and a unified investment strategy. Likewise, it pays to have two spouses’ ISAs invested in a holistic way. Plan to use your ISAs more intelligently well ahead of the April 5 tax year deadline to avoid the yearly scramble.
Investors need to be looking at their net gains after all costs and fees to get a true sense of the value they are seeing. DIY investors should consider if they are always getting access to the most cost-efficient investment classes on funds, for instance, and whether on a risk-adjusted basis they are doing as well and as consistently as a professional. Those already with a wealth manager should review their fees and whether their investment returns stack up. Our Guide to what to expect from wealth management fees will allow you to better compare like for like.
Also consider tax savings among your gains, since ‘tax alpha’ can make just as much of a difference to your financial health as investment returns – as we explain in our Guide to three key pillars of wealth management.
It pays to examine your finances in the round at least yearly to take account of any change in circumstances or aims and ensure you are happy with the progress being made towards your goals.
If any of these areas represent a weakness in your financial plan, complete this short assessment to connect with a shortlist of wealth managers best matched to your needs.
The investment strategy explanations contained in this piece are for informational purposes only, represent the views of individual institutions, and are not intended in any way as financial or investment advice.
Any comment on specific securities should not be interpreted as investment research or advice, solicitation or recommendations to buy or sell a particular security.
We always advise consultation with a professional before making any investment decisions. Always remember that investing involves risk and the value of investments may fall as well as rise. Past performance should not be seen as a guarantee of future returns.