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Mindfulness – helping you make good decisions

Life is full of making decisions, and over the past 5 months people have had to make many momentous decisions and make them swiftly. This has highlighted the necessity of being able to focus, to separate thoughts from facts and to avoid fear based decisions.

At Reeves Independent, we have held in-house ‘Mindfulness for Business Success’ staff-training sessions and have been excited to see what a powerful tool mindfulness can be, particularly when it comes to making effective decisions.

We wanted to share this insight with our clients and friends who are seeking to develop their own ability to make the best decisions. So, towards the end of July, Reeves Independent, alongside Mark Sidney from Mindful Therapies, held an online evening webinar: Mindfulness for Decision Making. We were pleased to have a sizeable audience for this Webinar and have been encouraged by the feedback from our clients.

We will be holding more of these sessions in the future as we are firmly committed to helping our clients. A video of the session is available or if you think you would like to learn more about mindfulness and meditations please visit: https://www.mindfultherapies.org.uk/about-us/

In case you missed it, here’s a brief report from the session.

Mark gave a definition of mindfulness as: “paying attention in a particular way, on purpose, in the present moment and non-judgementally’’.

He pointed out that the present moment is the only moment in which we can take a decision and yet we spend a lot of time trying to look into the future or brooding on the past.

“Being able to pay attention to what is going on now can really help us to make better and wider decisions,’’ he said.

Apart from that, it can also reduce stress, enhance productivity and improve creativity, and organisations, including Google and Hewlett Packard, have been using it for several years to improve decision making.

There are three elements to mindfulness: intention; attention; and attitude. The intention is to pay attention in the present moment and then it’s a question of how we make use of what we notice or become aware of in that moment, applying a kindly acceptance and being non-judgemental.

“We are observing what we are feeling, we are observing what we are noticing, rather than reacting to it automatically,’’ explained Mark.

To settle and ground yourself for a meditation, to create space to be with yourself, you need to set your intentions, your desire for something to happen and believing that it can. It’s internally generated and is about how you want to be in the world. For example, when planning for a pension, what kind of retirement you want to have.

“So the first part of mindfulness and the first part of decision making is being really clear on your own values and your own beliefs, what you want to happen and what you want to be,’’ said Mark.

To meditate, you should adopt a relaxed sitting position, with the feet flat in the floor, your back fairly upright, with your hands resting by your side or in your lap and maybe allowing the eyes to close. Then observe your breathing and what it feels like to breath in and out, allowing the breaths to deepen slightly and keeping the inward and outward breaths of equal length. It might be useful to count to three or four on the breaths.

Soon the mind will begin to wander and you should acknowledge the thoughts without engaging with them and then, with kindly acceptance, return to the breath and the counting.

“Each time you notice that the mind has wandered, there’s a moment of awareness, a moment of mindfulness, a moment of choice, choosing each time to gently come back to the breath and back to the counting,’’ said Mark.

Next, pay a little more attention to the out-breath and the physical sensations as you release each breath and the body’s natural tendency to relax at the same time. Similarly, as the mind releases involvement with thinking, it begins to settle.

Let go of the counting and allow the breath to return to its usual rhythm and attend to what it feels like to be sitting where you are in the present moment and to any physical sensations within the body, noticing contact with the surfaces supporting you.

“Allow a sense of being held and supported, unconditionally by the chair and the ground beneath you,’’ said Mark. “Nothing to do, nowhere to go, no problems to solve, no issues to fix, right now, just giving yourself absolute permission to just be, mind resting in the body, body resting on the ground, not doing anything.’’

As you rest, bring to mind your intention and motivation, maybe reflecting on your intention for retirement and how you want to be in the world when you retire and how you want to be in the world right now and what values and qualities you want to express to the world.

Then open your awareness to the space around you and to the sounds inside and outside the room and the temperature, before opening your eyes to end the introduction to the meditation process.

“It’s being able to stop and pause and create a space between whatever stimuli there may be and our reaction, to choose our response, rather then just acting on auto-pilot,’’ said Mark.

He explained that operating on auto-pilot is something we do a lot of the time, when we don’t pay attention to what we are doing. It can be useful, allowing us to perform relatively complex activities economically. However, it can mean we miss out on many things and react to things by habit.

Reacting to habit can be due to our negativity bias or our natural tendency to focus on the negative and give it prominence. It developed in humans as a survival mechanism against threat. This instinct doesn’t distinguish between a physical and non-physical threat, it still produces adrenaline, provoking us to run, hide or fight. But, none of those things help when, for example, the stock market crashes. We still, however, make a lot of decisions based on that threat system.

The human brain also has a reward system, when we react to positive things, and a soothe system, which is our rest, repair and digest system. This automatically deals with the huge amount of data we are receiving all the time and processes it. It produces the healing hormones of oxyticin and serotonin, both of which are also produced by mindfulness.

We like to think we make decisions as the result of a logical and rational process but, in fact many of them are a result of subconscious and unconscious biases. Mindfulness enhances our ability to observe our thoughts and emotions and recognise and understand how we feel about our thoughts so we can make better decisions.

Thoughts aren’t facts and, on average, we each have about 20,000 thoughts a day and most are based on things that have already happened that we can do nothing about. We tend to think we are expert in certain things and that can lead to overconfidence, but mindfulness helps us to be aware of that and approach things with a beginner’s mind and be alive to other possibilities. We also become more emotionally intelligent by becoming aware of and recognising our emotions. We can question where a belief or thought comes from and on what facts it is based. For example, when we recognise when we are in the threat mode we can avoid fear based decisions and develop mechanisms for coming out of it.

Another mindful way to make better decisions is to avoid sunk-cost bias, that tendency in people and organisations to persist in a course of action because they have already invested so much time, effort or money in it, even though it may no longer be beneficial.

Our minds and our bodies are intimately connected and we have to listen to our bodies and pay attention to what our heart or our gut has to tell us.

“Listening to your body and noticing your emotional state, as well as your thoughts can help you to make better and wiser decisions,’’ said Mark.

A key element to bring to mindfulness is kindly acceptance of what we are experiencing in the moment, of the reality of the situation, so we can see the bigger picture and make wiser decisions.

Mark also led the webinar through a second mindfulness exercise to help choose between two options. It began with entering the mindfulness state of meditation and bringing to mind the options and then exploring, in turn, your physical and emotional response to choosing each option.

“When I do this exercise, it can often help me make a better decision, one that’s more in tune with my body and more in tune with my core values and beliefs,’’ said Mark.

He added that the more people practice mindfulness techniques the more powerful a tool it would become for them.

Mark concluded: “Mindfulness is about creating that space to just pause, listen to our bodies, notice our thoughts, to be aware of our emotions, so that we can align what we do with our inner core beliefs and values and our authentic selves. Mindfulness isn’t about clearing the mind, it’s about getting clarity in the mind.’’

This article is for information only and should not be construed as advice or a recommendation. The investment strategies mentioned are examples only and may not be suitable for your particular: circumstances, tax position or objectives. Please seek independent financial advice before taking any action.

Investments carry risk, capital invested may go down as well as up and you may not get back the original capital invested.


Covid 19 has been devastating in so many ways, but it has least made people concentrate on the essentials.

This includes our finances, as we’ve realised that some things we felt we couldn’t possibly do without have proved to be dispensable after all: whether that’s the cup of coffee on the way to work or regular takeaway meals.

If you can still live without some of these treats as life returns to normal, it could mean surplus income at the end of the month and it’s important that you think about what use you can put that to.

If you’re under the age of 55, with years of working life left to build on your managed funds, you’re classed at Reeves as an Essential Client, because it’s essential that you save for retirement, with money put aside now achieving so much more for you in later life.

So, it’s important to review your income and expenditure to identify how much you can realistically save.

​Compound interest is the most powerful force in the universe,’’

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Albert Einstein

This is a fundamental truth of saving. Compounding works as interest or dividends earned are added to the capital, increasing the amount on which future income is earned, further growing the pot and always building the momentum of your snowballing savings.

Last month, we identified the Growth Stage, when the foundations of your retirement fund are laid down and this is when you can take full advantage of Einstein’s powerful force - by putting money into a pension or an ISA.

For the majority of clients looking to accumulate wealth through regular savings, there are two tax efficient investment vehicles that we commonly recommend: ISAs and pension funds. Both are capital gains tax free and in both any income generated from investment is tax free. With an ISA all withdrawals are also tax free, whereas with pension, income tax is payable on any withdrawals (after a 25% allowance). However, payments into a pension fund receive a 20% tax relief bonus, with additional tax relief potentially available for higher and additional rate taxpayers. The annual allowance for an ISA is £20,000 for all UK residents; the basic annual allowance for a pension is the lower of gross relevant earnings or £40,000 but this can be affected by personal circumstances.

Let’s take the examples of two clients, Oliver and Margaret, both 45 years old.

Oliver regularly pays £100 a month into an ISA. Assuming a modest annual growth rate of 2.5%, including all fees, after 10 years, this would be worth £14,874 and, after 20 years, £30,933.

Margaret, on the other hand, pays her £100 a month into her pension fund and at the same growth rate, thanks to the tax relief, which boosts her contribution to £125, after 10 years this is worth £17,022 and, after 20 years, £38,872.

So, the returns from pension fund savings are significantly greater than from ISAs and the gap between them widens with time, but that’s not to say there is no place for ISA’s in your savings plans. The accessibility of assets in an ISA could be valuable, if you’re saving for a specific objective, such as a child’s university education.

Another advantage of making regular contributions to a savings plan is that it irons out the fluctuations of the market. Ideally, you would buy on the dips and not the peaks, but that’s extremely difficult to get right even for professionals. By investing regularly, you will take advantage of an effect called Pound Cost Averaging, which means that over time, the value of your investments should rise with the overall average rise in investment values, added, of course, to the value of dividends and interest earned - that powerful compounding force again.

If you think Reeves can help you with a regular savings plan, get in touch and we will arrange a one-to-one interview to get all the facts about your situation so that we can tailor an appropriate solution. This will result in formal recommendations in the form of a Suitability Report which we will also discuss with you.

This way, you’ll be able to control your finances and not let your finances control you.

This article is for information only and should not be construed as advice or a recommendation. The investment strategies mentioned are examples only and may not be suitable for your particular: circumstances, tax position or objectives. Please seek independent financial advice before taking any action.

Investments carry risk, capital invested may go down as well as up and you may not get back the original capital invested.

Your Retirement Story

Your retirement will hopefully be a long one and represent a significant proportion of your life.

But, retirement is a story and, like most good stories, it has a beginning, middle and end. Inevitably, over what can be decades, your lifestyle, level of activity and needs will undergo some profound changes.

It’s important to recognise this because it has big implications for the way in which you make plans for your retirement years. Put simply, most people will want to spend more in the earlier years of their retirement and less as they grow older.

There are many ways in which income needs are reduced as retirement progresses.

Often, people will move into smaller accommodation when they retire. Their children have left home and they don’t want the hassle of the upkeep of a larger property. This reduces outgoings and can often release capital that can used for their retirement planning.

People tend to switch to smaller cars, which are less expensive to run and they probably only feel the need for one family car. Children are usually independent by now and don’t need to draw on the Bank of Mum and Dad. Smaller families and increasing age are likely to lead to lower grocery bills. As you grow older, you are less interested in fashion and spend less on clothing and you go on fewer holidays. On the other hand, many things, from prescription charges to public transport and museum entry, become free or discounted.

Early years of retirement

In the early years of retirement, however, it is likely you’ll want to enjoy life to the full and do those things you didn’t have the time or money to do when you were working. A flexible drawdown pension allows you to take more money in those early years and taper off your requirements as time goes on. Not only that, but once many people recognise that they will need less income towards the end of this time, they realise that they may be able to retire earlier than they had anticipated.

Our clients Paul and Mary Rogers (names changed for the purpose of article) retired when they both reached the age of 63 and between them had built up retirement provisions worth about £500,000 in total. This was held in both Pension and ISA.

For the earlier years of their retirement they calculated that they would need an annual £40,000 net of tax to allow them to fulfil some ambitions, taking about three holidays a year, including a cruise, and to enjoy going out to restaurants and the theatre and playing golf.

When they reached 66, they both qualified for the state pension of £9,000 a year, so the annual withdrawal on their private pension pots was reduced to £22,000 a year. They continued to draw this until they reached the age of 75, by which time they were beginning to slow down, taking fewer holidays, largely confined to the UK, and going out less. Now their income requirement was down to £30,000 a year, meaning they just had to draw £12,000 a year from the pensions.

Five years later, they had given up driving, holidays were largely limited to occasional visits to the children and they hardly dined out. By this time, they only needed £20,000 net a year, which, after the state pension, only had to be topped up by taking an annual £2,000 from the pension fund, which still had a comfortable balance.

Paul and Mary enjoyed their retirement years and were able to fulfil a lot of dreams while they were still fit and healthy. They could do this because recognising that they would need less money in the later years meant they could afford to retire a couple of years early and load more of their spending into the earlier years. At Reeves we will sit down with you and discuss what your likely income levels will be at what stages and what you can afford. The result is often a pleasant surprise.

This article is for information only and should not be construed as advice or a recommendation. The investment strategies mentioned are examples only and may not be suitable for your particular: circumstances, tax position or objectives. Please seek independent financial advice before taking any action.

Investments carry risk, capital invested may go down as well as up and you may not get back the original capital invested.

Pilgrims Progress – A Journey of Changing Priorities

Your financial circumstances, needs and priorities change as you go through life and your investment strategy and retirement planning should reflect that.

At Reeves we classify our clients into three broad categories to mirror three key life stages: Growth; Pre-retirement; and Retirement. To illustrate how these might apply to you, we’ll follow the progress of one client, let’s call him Bob Pilgrim.

The Reeves Independent Growth Stage

The Growth stage typically covers the decades before the age of about 50, when you’re increasing your earning potential, building your wealth, and raising a family. In the early phase of this period, Bob, who is a manager in an engineering company, marries Judith, a marketing consultant. We advise them that, at this stage, they should concentrate on buying their first property and – again with our advice – they take out a Lifetime Isa to save for the deposit.

Once settled in their new home, they start a family and have two children: Daniel and Louise. With these commitments and responsibilities, we advise Bob that he and Judith should put in place income protection in the form of insurance. As Judith takes a couple of years off work to look after Daniel and Louisa, Bob is the sole breadwinner, so we advise him to increase his income protection, so that if he becomes ill, or otherwise incapacitated, their mortgage will still be paid. Also, he takes out life insurance.

We also advise Bob that his savings strategy should take into account both short term and long-term goals. At his stage of life he needs some liquidity in his investments so that he can access funds when necessary. He and Judith are keen, to start saving for their children’s university education. To meet these goals, he takes out a stocks and shares Isa.

For the longer term, we advise Bob to take full advantage of any benefits offered by his employer, in particular, the pension scheme. This is boosted by using a salary sacrifice arrangement. All this is carefully calibrated to take account of what is reasonable and affordable for Bob and his young family.

Reeves Independent manages Bob’s retirement fund for him. The usual long term investment strategy for someone of this age is to adopt a passive strategy, to hold investments through dips in the market, confident that it will recover and that the long term trend will be a rising one. This is suitable for someone with 20 or 30 years to go before retirement and so we manage Bob’s fund as part of our Core Portfolio.

The Reeves Independent Pre-Retirement Stage

The next stage is pre-retirement when somebody is in their late fifties or early sixties. This is an age when you should be making a big push, preparing for your retirement and maximising your pension saving.

At this point in his life, Bob has reached a senior management position and is earning more than he ever has before. Judith has also resumed her career and has been back at work for a few years. On the other hand, their outgoings are significantly reduced: Daniel and Louisa have been through university and are now fully independent and the mortgage has been paid off. This means there’s enough surplus income to allow Bob and Judith to pay additional lump sums into their pensions, boosted by generous tax reliefs, before the end of each tax year. At Reeves we conduct an annual review of their finances to help them judge what is reasonable and affordable. We also advise them in reviewing their insurance provisions, to ensure that their level of protection is keeping up with the value of their assets.

Towards the end of this period we talk through their attitude to risk and they agree that a more active investment strategy is appropriate, so we move their pensions into our Tactical portfolio. We also ensure that their funds include at least one year’s worth of cash to ensure their plans will not be knocked off course by any short-term market fluctuations.

The Reeves Independent Retirement Stage

The third stage is retirement. This is when Bob and Judith can enjoy the fruits of all their hard work and saving. They take the holidays they always dreamed about, spend more time on their hobbies and indulge their love of going out with friends. Again, at Reeves we conduct a full review of their income needs to ensure that their plans are manageable and affordable and we conduct further reviews twice a year to ensure that they remain on course.

Throughout the course of the retirement phase, we advise Bob and Judith on drawing down from their pension pots in a way that means they pay as little tax for as long as possible. We also advise them on their estate planning, helping them to draw up wills and powers of attorney.

At Reeves we are there for them at every stage of the journey, strategically building towards their retirement goals in a way that is affordable and appropriate to their changing circumstances. But, no matter what part of life’s journey you are at, we can help you work towards your retirement dreams.

This article is for information only and should not be construed as advice or a recommendation.  The investment strategies mentioned are examples only and may not be suitable for your particular: circumstances, tax position or objectives.  Please seek independent financial advice before taking any action.

These articles are for information only. These articles are based on specific clients and their situation may be different from yours. No advice should be conferred from the articles. No action should be taken without independent professional financial advice as any actions on your pension may be irrevocable and have a big impact on your income in retirement.

Pension Drawdown: Avoid this costly mistake

For many of us, the introduction of the phased drawdown pension has been a wonderful thing, bringing greater flexibility and freedom to retirement planning.

Used properly, a drawdown pension gives you greater choice over your date of retirement and how you tailor your income to your age during retirement – all in a tax efficient way.

However, as always in life, freedom comes with possible dangers. There are rules surrounding drawdown pensions and, unless you’re aware of them and operate within them, you could pay come costly penalties.

Let’s take the case of two investors: Bill Hodge and Chris Mann (not real client).

Drawdown without professional advice prior to becoming a Reeves Client:

Bill, who was in his late fifties, had previously taken some tax-free cash out of his pension and still had a sum of money on this drawdown pot. About 18 months after this, he needed £3,000 to pay for his son’s honeymoon and, without taking advice, he took the money from his drawdown pot.

This immediately had two bad consequences.

First, Bill incurred an immediate tax liability on that £3,000, as it came from the taxable part of his pension. Second, and more serious, this withdrawal triggered the money purchase annual allowance rules, so that in future, the amount of tax relief Bill can get on his pension contributions is limited to an annual £4,000 gross.

Unfortunately for Bill, he continued to contribute into his pension after this event, he had assumed that he could pay the money back in without consequence. He made a lump sum contribution of £10,000 gross (£8,000 net). Bill had to pay back the tax relief received which equated to £1,200. He also had to pay this from his own pocket.  Bill was 59 and had been hoping to pay £10,000 into his pension for the next six years. This mistake has cost him a further £7,200 in the tax relief he could have earned over those years.

Drawdown with professional advice

Chris Mann, on the other hand, who was in similar circumstances, took advice. As a result, he took part of the money he needed from his ISA and the remaining balance came by withdrawing tax-free cash from his accrual pension. This way, he had no tax liability and did not fall foul of the money purchase annual allowance rules. By the age of 65, he will be £8,400 in tax relief better off than Bill Hodge. This is because he took advice before he acted.

This article is for information only.  Pensions and pension legislation can be complex and if mistakes are made these can be irrevocable and costly.  We always recommend you take independent financial advice before taking any action.

These articles are for information only. These articles are based on specific clients and their situation may be different from yours. No advice should be conferred from the articles. No action should be taken without independent professional financial advice as any actions on your pension may be irrevocable and have a big impact on your income in retirement.

Foresight and Diligent Management

Thanks to the coronavirus epidemic, the UK’s FTSE and the US’s Dow Jones market indices saw their biggest quarterly drops in the first three months of the year since 1987. They both fell by about 35% and, while there has been some recovery, at the time of writing, the FTSE is still down ​significantly.

At Reeves, however, our cautious portfolio ​has pro​vided positive returns. Even our adventurous portfolio performed 13% better than the FTSE as a whole. In large part, this was because for some months prior to coronavirus we had been concerned that markets were overvalued and were overdue for a correction, so, as 2020 opened, we had adopted a defensive stance, with larger holdings in cash and bonds.

Reeves Portfolios = P05, P02, P17, P12, P09, P15              Benchmark = FTSE 100

Having weathered the initial storm, now is a good time to chart a course for – hopefully – calmer waters ahead. Some of the responses to the questionnaire we sent out to clients revealed that it might be appropriate for some to move to a more adventurous investment strategy, perhaps from cautious to balanced or from balanced to adventurous. These are clients who are typically many years away from retirement.

One 45-year-old client contacted us recently as he was concerned by the fall in the value of his balanced portfolio during the crisis. During our discussion, we pointed out to him that, given his circumstances and that he was about 20 to 25 years away from retirement, he could see the current state of the market as a buying opportunity. As a result, he moved to an adventurous portfolio.

It’s important to recognise that circumstances change and what might be appropriate under certain conditions doesn’t necessarily suit your interests at other times.

On your behalf, we study the markets as they evolve and we have developed a sophisticated and proven system for translating our analysis into easily understandable advice. We send our clients an email every eight weeks with our latest investment advice, a recommended course of action and a brief explanation of the reasons behind it. These emails are the result of eight weeks of detailed market research by our external and internal analysts and investment advisers.

This team produces weekly market outlooks discussed at weekly meetings and one analyst looks at every fund and portfolio on a daily basis, so that none goes unmonitored for more than one working day. At every meeting we review whether on that day we would create the same portfolios again and, if we decide that we wouldn’t buy an investment on that day, then we take the view that it shouldn’t be in our portfolios at all.

These weekly meetings are supplemented by a meeting held every four weeks to discuss a report prepared by the analysts. This means that every email with recommended investment decisions is the product of no fewer than 10 meetings.

We also use high level external advice and receive visits and presentations from managers of funds held within our portfolios. We subject them to some tough questioning to gain insights into each fund and to add to our constantly evolving picture of the way the market is moving.

This tried and tested system is structured, but, as the coronavirus crisis has demonstrated, it remains flexible enough to react immediately to extraordinary market conditions. If you have any questions about your investments or want to discuss your appropriate level of risk, get in touch with us

'Investing is a long- term commitment. Your investments can go down as well as up and you may not get back the original capital invested'.

These articles are for information only. These articles are based on specific clients and their situation may be different from yours. No advice should be conferred from the articles. No action should be taken without independent professional financial advice as any actions on your pension may be irrevocable and have a big impact on your income in retirement.