Market Outlook – April 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

  • Both the domestic economy & overseas order books are continuing to show improvement
  • UK Small Caps continue to ‘trounce’ the markets biggest shares
  • All reports once again show that this year looks like being another strong one for commercial property in particular

Europe

  • European Central Bank (ECB) kept interest rates at 0.25% as the ‘deflation’ issue continues. However the ECB President Mario Draghi has indicated for the first time the possibility of Quantitive Easing being introduced – certainly something to keep an eye on!
  • Valuations are supportive & corporate competitiveness improving, but fiscal programmes & structural reforms remains constraints while the ECB has not managed to improve credit availability in many sectors
  • Europe looks most exposed to any developing problems in emerging markets
  • The continued geo-political uncertainty in Ukraine is also a worry as previously mentioned

US

  • All reports show the fundamentals in terms of consumer spending, housing & business confidence are improving
  • Fidelity quote “There is simply less to worry about in the US than elsewhere in the world and that makes it stock market a relative port in the storm”

Asia & Emerging Markets

  • Performance is increasing divergent, while some countries are benefiting from strong domestic fundamentals; others are under pressure from politics, current account deficits & tighter monetary policies
  • Although Japan has its problems “it looks fundamentally sound, reasonable value & well supported by government policy” (Fidelity). April sees the introduction of an increased consumption tax so experts are waiting to see the consequences of this on the Japanese economy. Therefore investment should be seen in a medium/long term view
  • China is undergoing a significant growth slowdown, although it is still seen by many as an attractive investment for the long term
  • India’s persistent problems with poor infrastructure & bureaucracy  continues to cloud the outlook longer term
  • The renewed recovery in the US has meant that investors increasingly see no reason to take on the higher risk of investing in developing countries

General

  • It is expected the economic cycle is to continue to be more positive for the rest of 2014 as the recovery broadens out in more countries
  • Equities still look better value than bonds & commodities
  • Increased investor enthusiasm for technology & bio-technology stocks
  • Tom Stevenson (Fidelity) “I am more convinced than ever of the need to manage a balanced portfolio at times like these, to spread ongoing investments over time to the extent that is possible in order to benefit from any short term dips in markets & to keep some powder dry in case there is a more significant downturn”

So what does this mean for our Investors & Portfolios?

  • As previously stated: clients still in cash should consider investing due to increased confidence
  • 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 UKinvestment: especially in UK Small Caps where all data
    is positive
  • Potential to be brave in areas that are struggling i.e. Emerging Markets. Opportunityto buy cheap stocks with a long term view on returns
  • Continue to invest but with caution in an uncertainEurope(not includingUK) until geo-political issues are resolved & and upside in Emerging Markets returns
  • Further opportunities to invest in specialist technology 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.

Budget 2014! Amazing change to pensions that will change your retirement planning!

We don’t normally like to put out a post budget report but after yesterday’s announcements we felt unusually that this impacts significantly on a large number of our clients. The bottom line is that some of the restrictive rules on how you take your pension benefits are about to be relaxed. This is a game changer for clients with pension’s funds that are not being taken.

Yesterday’s budget announced plans that effectively opens up access to pension schemes by removing the need to buy an annuity. This is news that I know many clients will be absolutely delighted about.

It will be an extremely popular decision to the voter, will release millions of pounds into the economy that was otherwise tied up and will also bring in extra tax for the government.

The concern must be that this will open the doors to funds that are supposed to be for the long term security of clients and I would envisage the regulator will be looking very closely at this area of advice.

We see this news as being the most significant in the pension industry in the 23 years that Nigel Reeves has been in it.

Many client scenarios will be affected – we have listed a number of them below

  • People about to retire
  • People with Drawdown
  • People with ISA’s
  • People with funds under 30k
  • People wanting to retire at 55 years of age
  • People that have not used pensions due to lack of access

Are you one of the above?

However like most of these things the devil will be in the detail and one would not be surprised if this is amended greatly during the next few months of consultation period. Anyone seeking to buy annuities may be advised to wait till this is clearer over the next few months.

Rest assured we will make sure we consider all the facts and be up-to-date with regards the opportunities and risks that this news may bring. We will continue to provide bespoke solutions to each individual.

Below are a couple of documents the treasury have released that we thought may be of interest to you

Budget 2014: The New ISA

Budget 2014: Greater choice in pension explained

If you would like to discuss how the Budget could affect please you contact us NOW on 0191 281 9862 or e-mail info@reevesifa.com to arrange an appointment  

Market Outlook – March 2014

 

Here at Reeves Independent we are currently working on our new client Investment Portfolios. Below are a number of key points from experts concerning the next few months investment outlook!!

UK & Europe

  • European Central Bank keeps interest rates at 0.25% & raises its forecast for growth to 1.2% in 2014 & downgraded its inflation estimate to 1%
  • UK interest rates have been held 0.5% for another month to continue to stimulate the UK economy
  • Bank of England upgraded its expectation of growth this year to 3.4% – if this turns out to be correct it will be the biggest growth since 2007
  • The recovery in UK commercial property values gathered pace in the second half of 2013 and this momentum is expected  to continue through 2014
  • Russia/Ukraine crisis will be mean investors should be prepared for further volatility, in the region & across emerging markets. They should be mindful of potential infection for some European banks & other companies with significant business interests in Russia and/or Ukraine
  • Supportive structural measures by Eurozone governments, combined with the successful efforts by companies themselves to become cost-effective are providing positive signals. Global growth & increased consumption in Asia should benefit European countries (Global equities)

US

  • US Growth puzzle falling into place – growing household wealth thanks to rising home & share prices, along with gradually improving labour market, signals higher US consumption ahead

Asia & Emerging Markets

  • Uncertainty about Japan will increase due to tightened fiscal policies & increased taxes
  • China, growth will decelerate cautiously this year, mainly due to reform efforts including a tightening of credit expansion
  • India’s economic slowdown appears to have bottomed out, but there are no signs of vigorous recovery
  • Faster growth ahead in emerging Asia due to exports to the US & Europe & increased intraregional trade (Singapore/Taiwan are expected to benefit the most)
  • Emerging markets are working to resolve the problems caused by high inflation, large current account deficits & political instability
  • Economic trouble spots in Latin America – Brazil/Argentina especially – not help by political unrest in Venezuela

General

  • Quantative Easing talk has fallen into the background over recent months but we must be wary until a firm decision has been made
  • International economic upturn appears increasingly stable
  • Looking ahead, companies in the commodity, engineering & IT sectors are showing the highest earnings growth in 2014
  • The world economy is accelerating – expected global GDP growth is estimated at nearly 4% for the next 2 years.
  • Emerging markets is estimated to grow even quicker at 5% annually for the same period
  • Positive global manufacturing data predicts continued growth in this sector

So what does this mean for our Investors & Portfolios?

  • Reduced cash holdings due to increased confidence
  • Opportunities available in India & emerging Asia
  • Possible switch of focus to US funds
  • Invest in funds that traditionally do well in economic growth periods such as Special Situations, Finance, Small Caps
  • Continue to invest in specialist property related funds & technology funds
  • Potential to be brave in markets that are struggling such as Russia

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.

Is it time to consider your tax saving options?

It’s less than one month to go until the end of the current tax year on April 5th. If you haven’t already done so, now is the perfect time to make the most of your savings (very important in an era of low interest rates) by considering your options when it comes to keeping the amount of tax you pay to a minimum.

For those still to do this, two of the best tax efficient savings options remain ISAs (Individual Savings Accounts) and pensions. The ISA limit for the current tax year is £11,520

Up to half of this money (£5,760) can be invested in cash, so if you haven’t already done so it’s an easy and sensible move to make by April 5. The other half can be invested in a stocks and shares ISA – which includes most authorised unit or investment trusts, open ended investment companies (OEICs) as well as any share quoted on the stock exchange.

Any growth in the value of your savings or investments with an ISA will be free of capital gains tax and there is no liability to tax on any income taken from the fund.

Increasing your pension contributions is another action to consider. Increasing your contributions could help you to maximise the money paid into your pension by your employer. If you’re not asking your employer to do this – and make the maximum contribution to your pension – you’re essentially leaving free money on the table.

If you would like any advice on your ISA or pension contributions or any other investments, please contact us for a free initial consultation on 0191 281 9862 or email info@reeves.com and we promise to respond to your enquiry.

Case Study – Ensuring your kids inherit your full estate!

I recently met a new client who came to Reeves Independent because they wanted some advice on an Inheritance Tax (IHT) issue for himself & his partner.

As a business we have been helping our clients build pensions, manage their investments & ensure their death planning is in order. What we are now starting to focus on is the IHT planning of our clients!

Currently anything over 650k in a joint estate will attract IHT at 40%. An estate valuation is based on cash & property together with the valuation of your pensions, pension death benefits, life assurance, savings, investments, business & property portfolios.

Case Study

Mr & Mrs K are a married couple, both aged 60 & fortunately are of good health. They have a one million pound estate, meaning that 350k would attract IHT at 40%. Therefore 140k of their life time savings would go to the tax man upon second death.

What are Mr & Mrs K’s options?

  1. Gift some of it away
  2. Spend it!
  3. Put into place a life policy that pays on ‘second death’, which affectively provides money to pay the tax bill
  4. Consider other various ‘tricks’ than can be used to reduce the value of their estate

Mr & Mrs K chose number 3 to set up a Joint Life – Second Death Whole of Life Assurance policy in Trust

For as little as £51 per month they can ensure that on the death of the second person the 140k tax bill could be paid & the kids would inherit the full estate!

Does this Case Study sound familiar to you? Do you know anyone who could benefit from some IHT planning? If you think we could help contact Reeves Independent on 0191 281 9862 or email info@reevesifa.com for a FREE introductory chat! 

*The above case study is much simplified & a large number of factors must be taken into consideration when IHT planning!

What do people, approaching retirement, value the most?

The following is a report by AXA Life Invest – It highlights a number of important points that I thought were relevant**

For the second year in a row now, AXA Life Invest has produced a ‘Cost of Living in Retirement’ report, to better understand pensioners’ needs.

The 2013 report examined the effect of current economic conditions on retirees’ standard of living and what the next generation of retirees can learn from the experiences of today’s pensioners.  This year, AXA Life Invest has built on this research, extending it beyond today’s pensioners to people in their 50s and 60s who are approaching retirement. The resounding response is that people value certainty: they want a stable, guaranteed income that they will not outlive.

 

People value certainty: they want a stable, guaranteed income that they will not outlive. But people approaching retirement tend to bury their heads in the sand when it comes to their retirement savings, when in fact, they need to be given the tools to take control of their finances and place themselves firmly in the driver’s seat.*

This year the report shows that certainty is king for those approaching retirement.

  • 73% of those approaching retirement said that what they would value most in a pension is a secure income in retirement
  • 61% of those approaching retirement would find it beneficial to know up to 10 years  n advance of their retirement the minimum amount of pension income they would receive
  • 39% would invest more into their pension if they knew what their retirement income would be

Although the survey focused on UK pensioners who are not reliant on state benefits, the Cost of Living in Retirement report has revealed that people neglected to take professional

Not only do people start late when it comes to preparing for retirement and neglect to take vital financial advice, but many people approaching retirement do not know how their pension is doing:financial advice before retiring. In fact 67% of today’s pensioners surveyed never received advice from a financial adviser and, worryingly, just fewer than 40% of pensioners did not start saving for retirement until they were over 40.

  • Over 7 in 10 do not know how their pension fund is invested; while around the same proportion does not know how their pension pot is performing for them.
  • 40% of 50-65 year olds in employer sponsored DC schemes have never reviewed the investment performance of their pensions.

Delving further into risk, the report showed that those approaching retirement accept the principles of lifestyle investing but don’t know what this means in reality:

  • 69% of those approaching retirement describe themselves as ‘risk averse’.
  • Almost two-thirds (62%) agree that taking on less risk means moving their pension into safer assets such as government bonds
  • But 90% of people in a DC scheme don’t realize the majority of their pension pot is invested in gilts, which are currently delivering very low returns.

Given the above, it will come as no surprise perhaps to hear that a fifth of pensioners were caught out by lower than expected annuity rates. The report showed indeed that for 20% of pensioners, their annuity rate – and therefore their retirement income – was less than they had expected. For a further 10% of pensioners, the rates were a lot less than they expected. Puzzlingly, 27% do not have an opinion about their annuity rate, vividly demonstrating the public’s lack of engagement in this important element of retirement income.

Overall, there is a worrying lack of knowledge and preparedness for retirement by many

Yet, no one should be in the position of being surprised to discover just how little their life savings have actually yielded in terms of retirement income. But this shock to the system is avoidable. It pays – both economically and psychologically – to prepare for retirement in advance and to consider all options.people in the country. Britons are oblivious to how early they need to start saving and how their fund should be performing.

In a world where risk is borne almost entirely by the individual, people are searching for a new defined benefit solution. But the 21st century version of the defined benefit pension already exists in the UK – in the form of the unit-linked guarantee. The unit-linked guarantee is the only retirement solution out there that can tell people exactly how much money they will get each year of their retirement.

Are any of the above points relevant to you? If you think we could help contact Reeves Independent on 0191 281 9862 or email info@reevesifa.com for a FREE introductory chat! 

*AXA Life Invest’s 2013 Cost of Living in Retirement report

** The report has not been edited in anyway

Case Study – Taking full advantage of your pension allowance!

Jeremy has been a client of Reeves Independent for well over 15 years now and has always paid into a personal pension. Over the past few years he has steadily increased his contributions up to his annual allowance.

Recently we have discussed increasing his pension contributions past his annual allowance by taking advantage of carrying forward of pension allowances from previous years. For the past 18 months or so he has had an annual payment agreed at £50,000.

Recent changes in legislation threaten the level of contribution as annual allowances are dropping to £40,000 in the tax year 2014/2015.

Jeremy wanted to know his options.

By looking at the past few years contributions to pensions that Jeremy has made we have provided a number of options for our client to improve his pension situation.

First the basic facts –

Jeremy had made the following contributions:

Tax Year

2010/2011

2011/2012

2012/2013

This year

Annual Allowance available to carry over

£50,000

£50,000

£50,000

£50,000

Contributions made

£33,852

£33,852

£43,271

£50,000

Cumulative allowance remaining

£16,148

£32,296

£39,024

£39,024

Jeremy’s earnings are as follows:

 Annual Salary:                                     £100,000

 Annual Pension Contribution:             £50,000

 Other Personal Allowance:                 Car.

In Jeremy’s case we have advised the following –

Step 1 – A salary sacrifice was the most appealing to Jeremy. Reducing his gross salary by around £16,700 Jeremy would receive a pension contribution which would top it up by £19,024.31 to £69,024 for this tax year. While Jeremy’s gross salary reduces by £16,700 his net take home pay only reduced £9,696.

By doing this we have filled up the current year allowance of £50,000, plus topped up the annual allowance for 2010/2011 and part of 2011/2012 by £19,024.

Step 2 – In April another adjustment would be needed. Back to the original arrangement which would see a salary of £100,000 and an annual payment of £50,000 into the pension.

This again will be an overpayment of £10,000.

We will maintain this for two years and this will top up the two remaining years of under-payments.

Step 3 – In April 2016 we would need to change the arrangement once more. Allowances for annual pension contributions will be £40,000 assuming no changes in legislation and Jeremy will have no carry forward allowance left.

This is far from the simplest option to take when topping up your contributions to take advantage of ‘Carrying forward’, but does show how flexible it can be with employer contributions.

There are a number of other options available to you to maximise your pension contributions without reducing your salary, such as lump sum personal/employer contributions or regular employer/employee contributions.

Do the above case study sound like you? Or do you know anyone who could benefit from receiving advice on this area?

If you think we could help contact Reeves Independent on 0191 281 9862 or email info@reevesifa.com for a FREE introductory chat! 

Generic Financial Planning – Fact Sheet

Our service

With over 20 years of expertise, we provide detailed strategic advice on all aspects of personal and business financial planning. This service is not regulated by the Financial Conduct Authority.

What we offer

Our financial planning service will help you to make strategic decisions with your assets and focuses on:

  • Financial planning for your business
  • Personal financial planning
  • Property investments (buy-to-let)

How we work

Unlike many of our other products, our financial planning service is not regulated by the Financial Conduct Authority.

Clients benefit from over 20 years of expertise and we charge a set fee for our advice

The benefits

Looking ahead and getting your finances in order is paramount – whether it’s your personal finances or your business, the benefits are significant.

  • Set clear financial goals
  • Develop a debt to cash strategy
  • Access expert advice built up over two decades
  • Identify opportunities and solutions for YOU.

What next?

If you think we could help contact Reeves Independent on 0191 281 9862 or email info@reevesifa.com for a FREE introductory chat! 

 

Market Review (7 Oct 2013)

Key Events

  • USA - Quantitative easing decision reversal to stop tapering. Considered to be a temporary move. Unknown impact on the markets when it happens.
  • Latest Us Fiscal Cliff – Deadline in October where they need to agree policy to raise debt level before running out of funds. Sustained uncertainty could mean decline in US markets and others to follow. Be aware.
  • German and Portuguese Elections – uncertainty in Europe.Europe appears to be coming out of recession though.
  • Ireland came out of recession in q2, positive house prices reported and drop in unemployment.
  • Generally upbeat economic news in UK since July.
  • Energy shares tumble due to labour’s attack on energy companies.
  • Governments help to buy scheme will pump up to £130 mill into residential property market. Positive impact expected.
  • post office shares launch

What sectors have been doing well for investors?

  • UK Small company sector is top performer over last 6 months (13.1%). The Small sector dominates the tables with European, Japanese and American small companies making up the top 5 of all sectors.
  • European sector including and excluding the UK Sector make up the top 6.

What sectors have been doing badly for investors?

  • Global emerging markets have been the worst performing sectors over the past 6 months.
  • UK index linked Gilts followed closely behind with a 6% loss which is large considering the safer investment that these asset are meant to be.

What other things should I know? 

Property sector is flat over the past 6 months.

What does this mean for investors?

Small companies have seen excellent investment returns in UK and overseas. This market leading growth will not go on for ever but we feel that as economies grow, confidence grows and banks carry on building their lending then this sector should benefit further.

As shown, European funds generally have been doing well. Recent political uncertainty

means that volatility should be expected but their is an opportunity of continued investment growth.

Traditional safer investments Bonds and Property have not seen great time in past 6 months. We had advised clients to sell bonds and remain with the vie two avoid for the moment. We are positive with regards property investment in the immediate term.

Generally the UK and the world appear to be recovering from the financial problems of the

past 5 years. However, further problems in Europe, political uncertainty, the USA fiscal Cliff and the impact of Quantitative easing on investment returns means that positive returns are not for certain.

What action should I take?

Whilst every investor should have a different strategy (based on age, circumstances and attitude to risk etc) our general view in these circumstances is that:

Call now if you feel you need a review of your portfolio. 

We would urge you to contact us as soon as possible to discuss the impact of this on your own portfolio and make any necessary adjustments.

Yours sincerely

Nigel Reeves

PLEASE NOTE THAT INFORMATION PROVIDED IS FOR INFORMATION ONLY AND NO ACTION IS ADVISED BASED ON THE ABOVE. ADVICE SHOULD BE SOUGHT BEFORE TAKING ANY ACTIONS.

One Life – Fact Sheet

One Life – Fact Sheet

Our service

Ill health and death are a sad but inevitable part of life and often strike with little warning. When this happens, without carefully laid plans, the financial impact on individuals,

families and businesses can be significant. Through our One Life service we aim to help

you understand these issues and mitigate the effects.

What we offer

The Reeves Independent One Life service will help you to:

  • Review any current protection – life assurance
  • Analyse your needs – is your current protection suitable?
  • Provide bespoke recommendations for you and your family
  • Provide a re-brokering service if needed
  • Implement agreed actions with you
  • Liaise with any policy providers
  • Deliver suitability reports
  • Provide a full administrative service and regular email updates direct to you

How we work

We follow a clear path with all of clients to ensure that we only ever provide advice that you need and that our services and fees are transparent.

  • Step 1: Introductory chat to discuss your situation
  • Step 2: Review your current protection – with your permission
  • Step 3: Analyse your current + future needs to check your cover is suitable
  • Step 4: Offer our recommendations; discuss the next step and any fees*.

*You have the option not to proceed at any point until here.

The benefits

Planning ahead offers numerous benefits for both you and your family to give you the peace of mind that, should the worst happen, your family are well protected. Taking action now while you are fit and healthy will also ensure you get the:

  • Best protection you can get
  • Save you money
  • And can IMPROVE the terms of your protection.

What next?

If you think we could help contact Reeves Independent on 0191 281 9862 or email info@reevesifa.com for a FREE introductory chat!