FAQ Regarding Retirement, Pensions
Is working with a financial adviser right for me?
If you're facing a big decision on which a lot of money depends, advice can be invaluable. Setting up a pension, buying a home or planning for retirement may be rare or even one-off events, so you may have little experience on which to base these crucial choices. Although you may seek guidance from friends, family, or online, neither of those can give you as much confidence as unbiased advice from an experienced professional.
We believe there are three common factors that you should take into consideration when making your own decision on whether you have that capability to manage your own investments without some additional help.
- Expertise - Do you have the knowledge to make critical investment decisions? Are you confident in your ability to carry out your own research? Do you have the conviction to act on your findings?
- Time - Do you physically have the time in your life to dedicate to the management of your portfolio and make those decisions when market conditions suggest so?
- Motivation - If you have the expertise and time to manage your portfolio, do you have the desire?
A financial adviser will do much more than simply just telling you where to put your money. The whole point of advice is to make your money work for you and help you achieve your goals in life. A good adviser will look at your circumstances, right from your current situation to your medium and long-term future, to help you decide upon the best action to take.
For example: If you want advice on how to access your pension, your financial adviser will first take time to discuss your plans for retirement, and assess changing income needs over time. Only then will they start to recommend strategies and products.
Finally, an independent or whole-of-market financial adviser can find the most suitable products for you from all that are available - something no comparison site can do. They will also ensure that the chosen product is the best possible fit for your circumstances.
What are the benefits of maximising my ISA?
If you haven't used up your Individual Savings Account (ISA) allowance for the current tax year, you have until 5th April to do so.
Saving into an ISA is a great way of making your savings work harder. Whether you're looking to supplement your retirement income, build up funds for a property purchase or you simply want a 'rainy day' nest egg, ISAs offer an array of tax-efficient saving options. But with the end of the tax year fast approaching, the clock is ticking for you to use your full ISA Allowance of £20,000. We recommend a stocks and shares ISA over the alternative cash ISA as it allows for investment growth.
Why is it so important to use up your allowance? Let me give you some reasons:
- Your ISA is tax- efficient:
Unlike some other investments, your returns are not subject to tax. That means every extra pound you save (within your allowance) will be sheltered from the taxman. As mentioned, this tax year you can invest up to £20,000 tax-free.
- You can't 'carry over' your ISA allowance:
Unlike pensions, you cannot carry any unused ISA allowance over to the following tax year. That makes it doubly important to invest your full allowance, if you can afford to. You also have the freedom to take money out and put back in later in the same tax year, without losing any of your tax-free entitlement. That means you needn't worry about missing out on lost interest if you need to make a short-term raid on your savings but can afford to replace it later.
- Inheriting an ISA
Before April 2015, any savings held in an ISA automatically lost their tax-free status on the death of the ISA holder. Since April 2015, however, the Additional Permitted Subscription allows your spouse/partner to retain the tax benefits in the form of a one-off ISA allowance equal to the value of the ISA at the date of the holder's death. For example, if your partner had £40,000 in ISA savings, your ISA allowance for that tax year would be £60,000 (the value of your partner's savings on the date of death and your own ISA allowance for the 2018/19 tax year).
Do you have a question? Email us at email@example.com.
It is important that no actions should be taken without first taking advice. Personal circumstances and an individual’s appetite for risk means that the advice for one person may not be the same for everyone. Reeves do not advise on Defined Benefit pension schemes. Reeves do introduce a third party specialists in areas of work we do not cover. Reeves run an advanced investment portfolio management service on an advisory basis only