A case for Income Protection ……..

A recent report from the Association of British Insurers (ABI) on the possible role of income protection insurance in 21st century welfare reform has produced some quite alarming figures!

  • Each year one million people have to stop work for more than four weeks due to illness or injury
  • Each year a quarter of a million workers (around 1% of the UK workforce) leave employment due to ill health
  • Only 3.2 million individuals are covered by either corporate income protection cover (2 million) or via an individual income protection plan (1.2 million)

What is Income protection?

Income protection insurance will pay a tax-free monthly income while you are unable to work due to illness, injury and / or suffer a reduction in salary for a prolonged period. It can be taken out individually or through your employer as a group policy.

Income protection policies can cover

  • a proportion of your lost earnings after an agreed period (usually three or six months)
  • until you are able to go back to work or the policy ends or for a limited period of time (such as two, three or five years)
  • your expenses for home support, such as carers

Next steps

If you have a policy, want to buy some cover, or just want more information:

  • check whether your employer offers group income protection
  • read through your policy and / or talk to your insurer
  • talk to Reeves Independent

If you would like to discuss your protection needs then please contact us NOW on 0191 281 9862 or e-mail info@reevesifa.com to arrange a FREE initial appointment

Additionally please have a look at our core services document or visit our website www.reevesifa.com for further information

Market Review – Quarter 4

Hello from Reeves Independent

Here at Reeves Independent we are always striving to keep up-to-date with investment opinions to ensure our clients get the best possible returns for their portfolios! Below is what the experts are saying about the 4th Quarter Investment Outlook

General

  • Global economic growth is diverging, as the US and UK speed ahead of a struggling Eurozone while the economic performance within emerging markets is mixed
  • Ongoing geopolitical issues, uncertainty over the direction of monetary policy & global growth concerns continue to linger, resulting in a notable pick-up in volatility in financial markets as we enter the final quarter of 2014 (Smith & Williamson)
  • Equities still look better value than bonds & commodities although we are looking to put Bonds in our new Portfolios, which we are currently working on.

UK

  • The UK economy is growing well above trend, with most measures of labour underutilisation declining rapidly. Importantly, business investment is on a strong upward trend, which bodes well for longer-term potential growth. At the same time, inflation pressures remain very subdued
  • The possibility of Scottish Independence represented a significant overhang for the continued recovery of the UK economy. With uncertainty now removed the Bank of England is free to move forward with its monetary policy.
  • In terms of property the improving growth environment is expected to bolster prices in the near term, and yields remain attractive compared to other assets, suggesting strong returns over a three-year holding period.

Europe

  • The Eurozone economy continues to splutter along, with the region’s core countries, Germany, France & Italy falling further into the deflationary spiral that plagues the region.
  • It is suspected market pressure will force the arm of the European Central Bank (ECB) to commit to a full blown Quantative Easing programme to stimulate the European Economy. This is something that we will of course be keeping an eye on.

US

  • The US economy like the UK is growing well above trend (see bullet point 1 in the UK section)
  • Markets are watching the Federal Reserve (Fed) most closely of all the central banks. When will the Fed tighten its monetary policy? Jeremy Lawson (Standard Life’s Chief Economist) doesn’t believe this will take place until June 2015 & will be done in a way to ensure that the economy isn’t disrupted greatly. He therefore believes US remains a strong source of support to global growth for some time yet

Asia & Emerging Markets

  • Japan’s structural reforms remain outstanding but growing management focus on return on equity and plans to cut corporation tax are supportive, while the Bank of Japan should eventually take more action to reach its inflation target. (Standard Life – House View)
  • The Chinese economy is likely to experience a ‘bumpy ride’ over the coming months, says Catherine Yeung, an investment director at Fidelity Worldwide. But she says that a reform agenda recently put in place by the government and stimulus measures will have a positive effect
  • With respect to Emerging Markets the performance is increasingly divergent; while some countries benefit from strong domestic fundamentals, others are under pressure from politics, current account deficits and tighter monetary policy.
  • India’s new Prime Minister Narendra Modi’s budget was seen as expansive, however it will require time to see the effects on this. However it is believed over the next year or so economic growth should be supported by the recovering U.S. economy that would provide a market for Indian merchandise and service exports.

So what does this mean for our Investors & Portfolios?

  • As previously stated: clients still in cash should consider investing due to increased confidence in the economy
  • Cautious clients who don’t want full exposure to equities should think about investing in our chosen commercial property funds
  • Heavier focus in the US & maintain UK investment. It may however be the time to move out of recovery funds. An area we are currently looking at as we set up our new portfolios.
  • Potential to be brave in areas that are struggling i.e. Emerging Markets.  Opportunity to buy cheap stocks with a long term view on returns
  • Continue to invest but with caution in an uncertain Europe (not including UK) until geo-political issues are resolved & and upside in Emerging Markets returns
  • Further opportunities to invest in specialist technology funds. Although it must be stressed some technology funds have done better than others and it may be a time to review your current funds.
  • Possible diversification opportunity in China/Japan for long term growth (for the brave!)

If you would like to discuss your portfolio please contact us now on 0191 281 9862 or e-mail info@reevesifa.com to arrange an appointment

Disclaimer: This email is not intended as advice and no investment decisions should be made solely on the back of this email. Past performance is no guide to the future. All investments carry the risk that you will not get back what you have put in.

September’s most read articles!

Hello from Reeves Independent

We hope you are well

There has been a number of events & announcements throughout September that will have an effect on people’s investments & retirement plan.

Throughout the month we have posted a large number of articles in our Linked In Group, on Facebook & on Twitter

Below are the most read links from September;

Who benefits from abolition of 55% tax on pensions?

This may apply to some of my contacts! NHS staff could retire early to avoid pensions tax hit!

Is it possible to carry forward unused allowances?

DIY pensions: the six alternatives to an annuity

Auto Enrolment – why you should seek advice!

Avoidance or evasion: Legal and illegal ways to minimise tax Having a second child? Five financial considerations

Seven ways in which the Scotland No vote will affect the UK economy and markets

We hope that you find some of the above useful. If there are any areas that you would like more articles on please let us know as we welcome any feedback

If you would like to discuss any of the above articles & how they may affect you then please contact us NOW on 0191 281 9862 or e-mail info@reevesifa.com to arrange a FREE initial appointment

Additionally please have a look at our core services document or visit our website www.reevesifa.com for further information

The Scottish Referendum & your Investment Portfolio?

We have had a number of clients contact us this week asking how the upcoming referendum will affect their investments in the short term. Reports yesterday stated that the Scottish referendum outcome is “too close to call” as both sides enter the final days of the vote campaign.

Therefore we felt it was appropriate to do a Blog to give our views on this!

There is certainly reason to be wary as Reuters reported last night that the FTSE 100 had dropped for the 3rd day in a row due to the uncertainly of the vote. However markets certainly haven’t shuddered. There has been a slight drop but nothing too significant – in fact as off 11.30am this morning the markets were actually up 0.2%* for the day.

We certainly expect volatility in the short term but as Tom Stevenson, investment director for Fidelity Personal Investing says

“The outcome of the referendum was ‘so uncertain that investors will struggle to position themselves effectively ahead of the vote”

It is something we will of course be keeping an eye on for our clients but we see no reason for anyone to sell their investments & move to cash at the moment.

For any clients wanting to know more then please read Citywire’s article from yesterday – How independent Scotland could impact your portfolio

If you would like to discuss your portfolio please contact us now on 0191 281 9862 or e-mail info@reevesifa.com to arrange an appointment!

Please Note – Any clients wanting to switch their funds to cash will accrue transactional charges to change their funds

Disclaimer: This email is not intended as advice and no investment decisions should be made solely on the back of this email. Past performance is no guide to the future. All investments carry the risk that you will not get back what you have put in.

* The FTSE 100 actually ended the day slightly up at 0.02%

August’s most read articles!

I hope everyone has had a good holiday period

We apologise for the lack of articles on our social media mediums over the holiday period. Hopefully we will be back to normal for the rest of the year

As you know we like to regularly provide our clients & prospective clients with information on the most important financial planning areas. We frequently post articles within our Linked In Group, on Facebook & on Twitter

Below are the most read links from August;

Inheritance tax checklist

Women hitting state pension age before April 2016 can boost their pension pot by 20% if they defer

PENSION REFORMS Free to choose

Pension loopholes: five ways to get money for nothing

Five financial perils of self-employment

Nine in 10 Britons risk financial future by not having a lasting power of attorney

Tax loophole: boost your pension by 88pc a year
How to get the best life insurance policy

‘We have taken out insurance cover to safeguard our legacy’: Six ways to spare your heirs from paying inheritance tax

Pensions clinic: your questions answered

We hope that you find some of the above useful. If there are any areas that you would like more articles on please let us know as we welcome any feedback

If you would like to discuss any of the above articles & how they may affect you then please contact us NOW on 0191 281 9862 or e-mail info@reevesifa.com to arrange a FREE initial appointment

Additionally please have a look at our core services document or visit our website www.reevesifa.com for further information

The importance of Mortgage Protection! Do you have cover in place?

Yesterday I received a marketing e-mail from Zurich promoting mortgage protection, which had a number of facts within it that I found quite eye-opening. Therefore I thought I would share them with you to get thinking about your own personal cover provisions!

  • You are 4.6 million times more likely to get cancer than win a jackpot lottery payout.
  • 4 in 5 people with cancer are affected financially.
  • On average, over 1,558 people die each day in the UK.

As I’m sure you agree these are quite hard hitting facts, which in my opinion really highlight the importance of making sure you have cover in place. Furthermore Zurich’s e-mail went on to say/ask the following;

“Buying a new home is one of life’s biggest and most exciting events. It’s also a big financial commitment – one that could be with you for 25 years or even more.

One of the things you’ll discuss with your adviser is how much you can afford to pay now. But equally important is making sure you can continue to make your mortgage payments in the future, whatever happens.

Your ability to pay your mortgage is based on your income. So stop and think for a moment – what would happen if your income were reduced in the future? Could you continue to make your mortgage payments?”

There are a number of questions above for you to consider if you don’t have cover in place!

Additionally I must stress it is also important to review your protection (if you have it) on a regular basis as circumstances can change – therefore meaning cover needs to be increased or in cases decreased

If you want to review your protection needs please contact Reeves Independent on 0191 281 9862 or email liam@reevesifa.com for a FREE initial discussion!

Market Outlook – June 2014

Here at Reeves Independent we are always striving to keep up-to-date with investment opinions to ensure our clients get the best possible returns for their portfolios! Below is what the experts are saying about the next few months investment outlook

UK 

  • Continuation of positive news as latest official figures show that the UK economy grew by 0.8% in the first three months of 2014. Additionally recent business surveys have also indicated that the economy is continuing to enjoy strong growth, and the unemployment rate has fallen to a five-year low of 6.8%
  • UK industrial output rises at fastest annual pace since 2011
  • Interest rates we kept at 0.5% as expected & reiterated in last month’s outlook
  • On a more negative foot the International Monetary Fund (IMF) has warned the government that accelerating house prices and low productivity pose the greatest threat to the UK’s economic recover – something we will of course keep an eye on
  • Commercial property markets once again had a positive month continuing the upward trend in this market

Europe

  • As widely expected, the ECB president Mario Draghi announced an interest rate cut to stimulate the recent unconvincing economic performance & to alleviate the risks of deflation
  • The Eurozone’s rate of economic growth decelerated during the first quarter of 2014. As a whole, the bloc expanded by a relatively lacklustre quarterly rate of 0.2%, unchanged from the previous quarter. Germany’s economy grew by 0.8% while, in comparison, France’s economy stagnated during the period, dampened by weak domestic demand
  • News flow in Europe was dominated during May by the European Parliamentary elections and the strengthening support for anti-establishment parties. However financial markets have in the whole remained resilient

US

  • US jobs show strong growth in May. This highlights the emergence from the winter slump & experts expect it to strengthen its recovery throughout the year
  • The S&P 500 index ended higher for the fourth month in succession, having returned 2.35% (in US$ total return terms) for May
  • US equity markets rallied in the latter part of May on comments from the Fed, which suggested that monetary policy was likely to remain loose for some time to come, and that the pace of interest rate rises was likely to be slow

Emerging Markets & Asia

  • The World Bank has revised down its forecast for economic growth in the developing world this year – from 5.3% down to 4.8%.
  • The Chinese economy grew 7.4 percent in the first quarter of 2014 versus a year earlier, and was up 1.4 percent from the previous quarter. This slower growth was a continuation of the slowdown that has afflicted China during the past year, although growth remained in a range that the government has targeted. The big question is whether China can simultaneously sustain growth while reducing its dependence on credit expansion?
  • In Japan the central bank refrained from economic stimulus despite the immediate negative impact of the consumption tax hike. “Looking ahead, output will surely shrink this quarter as consumers rein in spending after the consumption tax hike,” Marcel Thieliant, Japan economist at Capital Economics, said. However he further added “that business confidence had been improving in the country “which suggests that any weakness should prove short-lived”
  • In India, an historic win for Narendra Modi & his party have paved the way for much needed economic reforms. Indian equity markets have rallied around 30% since September in anticipation of Modi’s victory. However experts believe the markets have yet to consider the enormity of the challenge the new government faces.

General

  • The world’s major equity markets generally ended May in positive territory, buoyed by some favourable economic data and by the news Petro Poroshenko had won a solid victory in Ukraine’s presidential elections
  • Arne Hassel, Head of Investments at Coutts, said “We believe the global growth recovery is still on track, with the recent US soft patch mainly weather-related and the Chinese slowdown inevitable but manageable. We also believe that geopolitical concerns over Ukraine will have little market impact. But when assets are no longer cheap, even small changes in the backdrop can have a material impact on prices”

So what does this mean for our Investors & Portfolios?

  • Preserve UK investment due to continued positive economic data
  • As previously stated cautious clients should consider commercial property investment as an alternative to cash
  • Maintain focus in the US
  • Continue to remain cautious in Europe (we will be reviewing our funds in this area over the next few weeks)
  • Japan continues to be remain a good long term bet in expert opinion – possible diversification opportunity
  • Emerging markets feeling seem to be improving. This coupled with good stock value for high potential returns in the long term maybe attractive to some investors – it must be stressed this is for the brave
  • India is potentially a further area for the braver investor in the long term due to the above mentioned government change & expected reforms (we will be keeping an eye on this area)

If you would like to discuss your portfolio please contact us now on 0191 281 9862 or e-mail info@reevesifa.com to arrange an appointment!

Disclaimer: This email is not intended as advice and no investment decisions should be made solely on the back of this email. Past performance is no guide to the future. All investments carry the risk that you will not get back what you have put in.

Case Study – Retirement Options – Please seek advice before informing your Employer!

Last week I saw a client who unfortunately suffered a serious sudden illness last year. The outcome at the time was unclear as they were unsure if they would make a full recovery or whether they would be capable enough to go back to work.

They had come to me for advice on their financial position & look at the options available 12 months ago. Throughout this period I have been in regular contact with them as they didn’t want to make a decision due to the uncertainty of their future.

Client H was 57 & the member of a good Final Salary Scheme

What were their options?

  • Carry on working
  • Stop work & defer taking their pensions
  • Stop work & take early retirement
  • Stop work & take early retirement due to ill health
  • Take the Transfer Value & use one of the personal retirement options on the open market

Firstly the client entered talks with their organisation to seek options whilst we did investigations on the open market options

What open market options did we investigate?

  • Annuities
  • Enhanced Life Annuities
  • Switching the fund to a Personal Pension to maximise death benefits
  • Switch the fund to Drawdown – this would give her a 25% tax free lump & potentially a higher income than the current scheme would give. Additionally in the event of death it would leave money for her husband & family, which was seen as their main priority due to their current health condition

So what happened next?

Unfortunately this is where the problem started. The client as stated above had asked their employee for the facts about their pension plan. Their employer however has taken this request as the instruction that my client wanted to retire & has forced her down a route without explaining the other options she has available.

Therefore the client can’t now look at the open market options that we investigated, which in turn means they maybe missing out on a significantly better option that would meet their desired priorities in a more appropriate manner.

This case study scenario is about someone with ill health but this is the case for anyone wanting to look at their retirement options!

The moral of this case study is that you must tread carefully when looking at your retirement options! Please do seek advice before contacting your employer!

If you would are you thinking of retiring then contact us NOW on 0191 281 9862 or e-mail info@reevesifa.com to arrange an FREE initial appointment

 

Market Outlook – May 2014

Here at Reeves Independent we are always striving to keep up-to-date with investment opinions to ensure our clients get the best possible returns for their portfolios! Below is what the experts are saying about the next few months investment outlook

UK

  • Continuation of positive headlines – increased manufacturing output, jobless rate at its lowest for 5 years
  • FTSE 100 index neared its best finish since late 1999 (13/05/2014),
  • Bank of England (BoE) has upgraded its growth forecasts for next year, saying the economy “has started to head back towards normal”
  • UK interest rates have been held at the record low of 0.5% for another month by the Bank of England to continue to stimulate the economy. However “with the UK economy growing stronger than pretty much every rich country, markets expect the BoE to raise its policy rate in the first quarter of next year” (Robert Peston, BBC economics editor)
  • Commercial Property reports continue to be positive with upturn spreading through the regions due to the recovery of the UK economy

Europe

  • European Central Bank (ECB) held interest rates, whilst President Mario Draghi hinted the bank’s policymakers may act soon to reverse the Eurozone’s prolonged low inflation. This is something that as previously stated needs to be kept an eye on!
  • The gradual economic recovery remains on track, as consumer & business confidence indicators continue to be positive despite the ongoing unrest in Ukraine

US

  • Returns have been muted so far this year in comparison to 2013. US equities are now underperforming many other global markets, nevertheless US equities are still seen to be very attractive, as the economic backdrop remains very supportive
  • The US experienced an extremely cold winter & this did take a bite out of the US economic growth. However as the weather has improved, so has the economy, manufacturing performance have reaccelerated, job growth has bounced back & even retails sales have picked up
  • Furthermore a continuing healthy housing market, a much clearer Fiscal outlook & a stable but low inflation environment also provide a favourable framework for equities.

Asia & Emerging Markets

  • First quarter Chinese data showed that the economy continues to ease back again raising concerns whether growth will meet the government’s target level – therefore highlighting China may not be a short term investment option
  • Experts believe that although Japan’s economic & growth drivers have lost momentum recently, further Bank of Japan (BoJ) easing remains likely therefore driving equities higher
  • Within Emerging Markets there a continued concerns over politics, economic growth and reduced liquidity from the US tapering of Quantative Easing
  • Reduced demand from China is a further concern to emerging markets within the Pacific zone
  • India stock markets rose to record high following exit polls suggested the Bharatiya Janata Party (BJP) would be coming into Government. Will this reverse the slowdown of India’s economy?

General

  • Patrick Schowitz (JP Morgan) “we continue to look for an acceleration in global growth, led by stronger activity in the US & Europe
  • Fundamentals remain supportive of equities even though valuations are no longer attractive

So what does this mean for our Investors & Portfolios?

  • Preserve UK investment – especially as previously stated in Small Caps
  • Cautious clients should think about the continued positive reports regarding commercial property investment
  • Maintain focus in the US
  • Continue to remain cautious in Europe whilst the ongoing political issue rumbles on within Ukraine
  • Potential for the brave in Japan as expert opinion points towards attractive prices to bring positive returns
  • Unfavourable Emerging markets also give good value for high potential returns – once again for the brave

If you would like to discuss your portfolio please contact us now on 0191 281 9862 or e-mail info@reevesifa.com to arrange an appointment! 

Case Study! The Budget – How has it changed people’s retirement plans?

This week I spoke with a client about the implications of the recent budget announcement on their retirement planning. It highlighted to me the importance of reviewing how you use your full assets in retirement. Below is a brief explanation of my client’s current position

Client B is 57, has no mortgage & has approximately the following:
•       100k Transfer Value from her Final Salary Scheme
•       50k of savings
•       100k in a Personal Pension

She wanted 15k a year NET income to maintain her lifestyle

How could she achieve her desired income?

1.      Take her Final Salary Scheme now, which would give her a 25% tax free lump sum of 25k.
2.      This would leave her 75k to spend as she liked. This she can take at 7.5k for the next 10 years leaving her with 7.5k to find each year for the next 10 years.
3.      She could use her tax free lump sum of 25k for 10 years at 2.5k per year topping this 7.5k up to 10k.
4.      She could then use her 50k savings over the 10 year period to give her the remaining 5k to provide the 15k a year she desired.
5.      At 67 she would then start to receive her state pension of 7.5k
6.      She would then take the 25% tax free lump sum from her personal pension & put the remaining in drawdown, which would give her the remaining 7.5k for just over 13 years. This would take her to 80 years of age

Points to note

1.      If she was to run out of money she could use equity release on her home to cover the shortfall.
2.      She is also expecting inheritances ranging from 50-100k.
3.      The above plan does ignore inflation, which potentially would be counteracted by investment return pre & post drawdown.
4.      It was beneficial for the above client to access her Final Salary Scheme early as the death benefits were poor. This will vary from scheme to scheme of course.
5.      This client preserved her Personal Pension
6.      The above plan assumes you need more money as an earlier pensioner than an older one & that you are happy to use value from your home.

My client has now decided to retire immediately with her desired income, which she certainly could not have been able to do pre budget!

This case highlights the concept of ‘sweating your assets’ to allow you to potentially retire earlier than you had previously thought

Everyone, as a result of the budget, should reconsider their retirement plans & look at all the options available to them!

If you would like to discuss how the Budget has affected you retirement plans then contact us NOW on 0191 281 9862 or e-mail info@reevesifa.com to arrange an initial appointment