Reality check for graduates
The Independent on Sunday told this summer’s graduates to get on the case in sorting out their finances.
First step is to sort the bank account – some banks automatically shift graduates to a special type of account with an automatic interest-free overdraft, but others don’t, even though all banks do have special accounts for new graduates offering not just interest-free overdrafts but other goodies.
Student loan repayments don’t start until you’re earning over £21,000 but after that they’re automatically collected via the employer’s payroll system.
Steve Clark
Investing for Income
Investing for income isn’t a choice any more, it’s a necessity.
The Daily Mail recently said that with interest rates on deposits below the rate of inflation, traditional savers would have to widen their search to secure a reasonable income.
In the paper the experts quoted said they needed a combination of shares, fixed interest and commercial property to avoid too much risk, and with this could generate an income of 3-5%.
If you are looking for income from your investments give us a call on 0116 380 0133.
Steve Clark
44 Financial Ltd is authorised and regulated by the Financial Conduct Authority. The contents of this brief press comment are not intended to infer that any specific course of action is suitable for you. Specific individual advice is required to make sure that you end up with the most appropriate solution for you.
Long term care misunderstood
A Financial Times reader poll on the government’s proposals for reform of long term care revealed widespread misunderstanding (and that
‘s the FT’s readership!).
Most people thought that costs would start to count towards the cap (above which the state picks up the tab) as soon as someone was assessed as needing care by a local authority. Not so – the clock starts only when someone’s need is assessed as ‘severe’ or ‘substantial’.
Over two-thirds of people believe that accommodation and food costs count towards the £72,000 cap – they don’t, and can account for a third of the total costs of residential care.
Most importantly, many people think the proposals mean they won’t have to sell their home – but that’s not true either, since your home still counts towards the value of your assets, and any capital above £23,250 (in England) has to be spent before the state picks up the bill.
Steve Clark
Trust in trusts
Trusts are sometimes used to distribute assets when someone dies rather than
making specific provisions in a will. This allows the trustees to decide how and who to pass money to and can result in less tax being paid.
The Sunday Telegraph recently reported the case of a family dispute where the trust was set up by a father to benefit his wife and children. His son, a beneficiary and also a trustee, ended up in dispute with his 79-year-old mother and blocked distribution of money due to her.
A costly legal case resulted before she won her share of the money. Lawyers suggested such trusts should have at least one ‘professional’ independent trustee to avoid this type of problem.
Trusts can be useful devices to distribute assets but good legal advice is important when setting them up.
Steve Clark
Building your pension with a SIPP
The Sunday Telegraph recently ran a 2-page feature on building your own pension using a SIPP (Self Invested Personal Pension).
Since most people’s retirement will last 20 or 30 years, an increasingly popular alternative to annuities is to draw an income from a pension pot that remains invested in assets like shares and fixed interest bonds. Experts said that most personal pension schemes will end up offering much the same investment options as SIPPs – shares and funds – with only a small minority choosing to buy assets such as commercial property.
Contact us if you would like more information about your pension investment options.
Steve Clark