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A chance to paint yourself a new future

Amanda Brewer turned 62 this year. She was a senior manager for a pub chain, for which she had worked for twenty years.

She enjoyed her job, relishing its fast pace and particularly enjoyed navigating the inevitable crises that the trade threw at her. A long-standing Reeves client, she had always planned to retire at the age 65, but she was ambivalent about this, fearing that she would miss her work and the adrenaline rush.

In the event, the covid 19 epidemic gave her a taste of what a slower pace would mean as she was furloughed twice in 2020. She has expected that this would be highly stressful and that she wouldn’t be able to turn off and would be bored to distraction.

However, to her own great surprise, she found herself enjoying her enforced leisure. In her youth she had been a keen amateur painter, so she dug her easel and brushes out of the loft and took it up again. The old skills only returned gradually, but her love of applying watercolour to canvass came back with a rush. Soon she wasn’t giving work a second thought and, when her second furlough did end, she found it hard to summon up her old enthusiasm for the job.

She raised this with us during her annual review and we suggested we take a look at her options. She had recently paid off her mortgage, which significantly reduced her monthly outgoings and, taking into account her likely lifestyle in retirement and remaining core household expenditure, we presented her with some figures. To her surprise and delight, she found that she didn’t need to continue working and, from April 2021, she is going to retire and devote herself seriously to her painting.

Amanda is by no means the only person for whom 2020 has prompted a radical reappraisal.

Many like her, have discovered that – for them – there’s more to life than work. Some have found that the various covid-related restrictions, which have meant fewer opportunities for spending money, have made them realise how much unnecessary expenditure they have and how some permanent cutting back makes retirement possible. Others, who had their own businesses, have just found that enforced shutdown has prompted the decision to call it a day and enjoy retirement.

Of course, it doesn’t take an event as dramatic as a global pandemic to justify a reassessment of your life and retirement plans. In fact, at Reeves, we encourage this as a regular exercise, which is why, for all our clients, we sit down with them and conduct a review of their situation and ambitions.

But, remember, we’re here for you all the time. If you want to take a fresh look at things, even if you’re not entirely clear in your own mind yet what you want to do, get in touch with your Reeves adviser, who will be only too happy to talk things through with you. Many people are pleasantly surprised to find just what unexpected options are open to them.

Perhaps, like Amanda, you’ll discover that your future is a blank canvas.

Investing is a balancing act

Diversification is key to investment success and a good portfolio is always a balanced portfolio.

This is not some obscure or complicated financial technique. It merely means achieving a spread of investments – in other words, not betting the ranch on one asset class, or not putting all your nest eggs in one basket.

The reasons underpinning this principle are straightforward. If you were to put all your money into one industry, or sector, or geographical region, you would be giving a hostage to fortune. If they do badly for any reason, then so will the value of your whole portfolio.

But, if you’ve put together a carefully chosen and balanced range of investments, then, not only will your exposure to one type of asset be limited, but often, falls in the value of one, will be compensated by rises in another, as other investors shun the poorly performing and drive up demand for alternatives.

At Reeves, diversification across various geographical areas allows us to reduce our portfolios’ exposure to region specific risks, such as, for example, Brexit. This means we can benefit from the growth potential of different regions, without fully exposing ourselves to the market risks that come with them. Alongside managing risk, looking at various regions gives us different opportunities, such as emerging/frontier markets, which might have a higher growth potential compared with more developed regions, albeit with higher risk and volatility.

As well as diversifying regionally, Reeves portfolios are also diversified across several asset classes. As different asset types act differently and carry different levels of risk it allows us the manage the risk of portfolios by changing our allocation to reflect our stance on the market. We see each asset type as a tool to manage our portfolios, each has its own merits which we use together to craft balanced portfolios to reflect each risk level

To further diversify and reduce the correlation of our portfolios we use different types of funds within the asset types. For example, a smaller companies equity fund will perform differently compared with an equity fund focused on larger cap companies. The aim is to add value through our fund selection, while further spreading the risk of the portfolio with funds which won’t necessarily react to global events in the same way.

It’s all a question of balance.

Do your Tax Planning for a prosperous New Year

On the threshold of a new year, it’s always worth looking back to see what lessons we can take from the one that’s just ended.

Well, if 2020 taught us one thing, it’s that you never really know what’s just around the corner.

However, some things always stay the same. As Benjamin Franklin said: “In this world nothing can be said to be certain, except death and taxes.’’

So, at Reeves, as we do every year, we’re launching our end of year tax planning campaign to remind our clients of the importance of making the best use of available tax allowances before the end of the tax year on April 5.

This can make an enormous difference to the value of your retirement savings. Tax planning is one of the most significant steps you can take to boost your savings and it’s also one of the easiest - and it’s risk free.

This year, it could be especially important. Thanks to the Covid pandemic, the government has had to spend eye-watering sums of money and this has resulted in our national debt topping £2 trillion.

At some point, the books will have to be balanced and that will probably mean tax rises, which could well come in the form of reduced allowances. There have already been suggestions of dropping the annual tax free amount for Capital Gains Tax to as little as £1,000, and double-taxing heirs on both CGT and Inheritance Tax. There is also speculation on the removal or reduction of relief on pension contributions by higher rate tax payers.

So, depending on individual circumstances, this year could be the time to take full advantage of the available allowances while you still can.

Personal contributions to your pension fund are limited to the amount of your annual salary, to a maximum of £40,000. A non tax payer or basic rate tax payer will have 20% added to the pension in tax relief and a higher rate tax payer will get the 20% relief and can claim back another 20%. An additional rate tax payer, can claim back 25%, in addition to the 20% added to the pension.

Employer contributions – which you can make if you are self-employed and have your own limited company – aren’t restricted by the salary limit, but are still limited to the annual allowance and there are carry forward rules. Even if you no longer have any earnings, you can still contribute £2,880, to which the taxman will add £720 in relief.

Also, if you haven’t used your allowances for up to the previous three years, this is your last chance to take advantage of them. If you haven’t paid in anything this year, or for the previous three years, you could pay in up to £160,000. This means that if you make a contribution of £128,000, the taxman will top it up with another £32,000.

You also have a personal annual ISA allowance of £20,000. Within the shelter of an ISA, any dividends, interest or capital growth are income tax and capital gains tax free.

Nor should you forget your personal income tax allowance of £12,500. If you’re drawing down your pension, make sure you have made full use of this year’s allowance and – as with all allowances – don’t forget to ensure your spouse makes full use of their allowance too.

The tax year ends on April 5, but don’t leave it until then to take advantage of these allowances. At Reeves, we will be happy to advise you, but do try to get in touch with us before March 19.

Meanwhile, as part of our end of year tax planning campaign, we will be holding the following webinars in the New Year.

  • End of tax year planning for directors of own company, hosted by Jack Ford - January 12th at 6:30pm and Sunday 17th at 6:30pm;
  • End of tax year planning for employees, hosted by Ollie Gibbs – January 26th at 6:30pm and Sunday 31st at 6:30pm;
  • End of tax year planning for the retired, hosted by Chris Lockerbie – February 9th at 6:30pm and Sunday 14th at 6:30pm.

2020 Vision: Looking Back

In January, when the year was just starting, at Reeves we had no more idea than anybody else what a tumultuous 12 months was in store.

In fact, the general market sentiment was positive and leaned towards the view that it would not pay to be cautious. However, while we increased our exposure to global and UK equities and bonds, we were unwilling to make rash decisions on the back of short- term sentiment and we remained overweight in our cash holdings.

This paid off in March when, as the pandemic took hold, markets across the world fell. We were able to use the cash we had held onto to buy certain equities at a much lower price than they we before the fall.

As we moved into the second quarter in April, markets began to recover and, at Reeves, we sold a portion of our top performing equities in sectors such as technology. Despite the markets picking up, we remained wary of increased volatility as Covid-hit businesses would inevitably have to announce poor earnings and reduced dividends.

Although we had certainly not foreseen the pandemic, for a couple of years we had been anticipating a recession in some form, so we were relatively well-placed for the market fall. We were in a good position relative to the rest of the market and we performed well against benchmark.

Going into May, we sold slightly more equity for our more cautious clients and retained much of our exposure to US markets. Our balanced tactical portfolios were defensive with limited exposure to global and domestic equities. By June, Reeves could announce that in the year-to-date, its model portfolios were beating the FTSE All Share and the benchmark.

As the summer progressed and we moved into July, we made no changes to the portfolios. In that month, the S&P 500, which tracks the largest US stocks, reached positive returns, on a year-to-date basis, for the first time since the March collapse. But, in our August investment committee meeting, we agreed that we expected the markets to return to volatility. The factors behind this were the looming US election, with all its attendant uncertainty, Brexit’s fast approaching deadline with little signs of progress towards an agreement, a return to rising Covid cases in Europe, the threat of the UK going back into lockdown, and a historic trend for October volatility.

Sure enough, September brought a second Covid wave to the UK, hitting businesses again and, in the US, rising uncertainty in the markets brought the S&P down by nearly 8%.

In October, we made no change to our portfolios, but, while markets were largely treading water, our portfolios returned modest growth.

We are satisfied with our current asset allocation which reflects our caution in the face of continued market uncertainty, remaining overweight in cash and bonds with our primary focus in November being on possible investor opportunities in global government bonds.

At the time of writing, we are planning for news of a successful vaccine rollout with our portfolios on standby to have higher levels of equity for large market rallies.

Now we look forward to a peaceful Christmas and a less turbulent New Year.

This article represents the opinion of Reeves Independent Limited and is for information only. No action should be taken based on this information alone. Remember that investments can go down as well as up and past performance is no indicator of future performance.

Taking off against the wind.

It has been a tough old year and few of us will be sorry to see the back of it.

Individuals have lost loved ones; businesses have gone under – or been lucky to survive – lives have been disrupted and savings have been badly hit.

However, as the year draws towards its close, and at the time of writing, there is light at the and the tunnel. The US election has been fought and, while there are still disputes, it is hoped that political stability will return. Meanwhile, on this side of the Atlantic, Brexit will soon be finally resolved, allowing businesses to undertake long-term planning again. But, perhaps most important, it seems that, in the first quarter of next year, an effective Covid 19 vaccine will become available and life – and business – can begin to return to normal.

It has, however, been a hard slog and all investors and savers have been battling against a strong headwind, which means, at Reeves, we have redoubled our efforts in 2020 to serve our clients.

During this year’s tax planning campaign, for example, we contacted more clients than ever and around double the previous year’s total. Also, so far this year, we have helped 19 clients to fulfil their retirement dreams.

Obviously, we have had to adapt to the demands of dealing with the pandemic, with staff working from home and greater use of Zoom and other software. Essential core team members have still been in the office, with all possible steps being taken to secure their safety. With these measures, we have been able to provide our full range of services and support, with clients able to get in touch with our team and seek our advice. For the client, it has been business as usual.

We have conducted an impressive 17 webinars, and these have proved to be such a success that we have recruited an events manager who is already scheduling next year’s webinar programme. October alone saw us hosting no fewer than eight online workshops, on subjects ranging from the pros and cons of pension consolidation to a workshop on top tips for reducing your tax bill.

One of the most popular webinars that month was our live question and answer workshop, a 35-minute session covering a range of topics, including: how our process works, how our investment portfolios have been performing in the recent months and key timelines that we work towards when onboarding our clients.

Another popular event was our insurance workshop, where we invited a selection of our clients five or more years away from retirement, to learn about available insurance options and how they could protect their families.

Many of our events are open to all: including those who want a short introduction to Reeves, those who are becoming a Reeves client and, of course, to our existing Reeves clients.

Apart from recruiting an events manager, Reeves has taken on 17 new staff members this year, including two new qualified advisers, an experienced head of finance and an experienced assistant accountant. We have also recruited two experienced marketing personnel to create a dedicated marketing team. In addition, we have launched a new graduate scheme.

All this work has been recognised by us being placed in the FT Adviser list, Top 100 Advisers, for the second year running. The FT Adviser Top 100 list reflects data compiled by research partners, using their financial clarity product to provide a snapshot of some of the very best advice companies working in the UK today.

But, for us, the main focus remains you, the client. Whatever this current crisis throws at us, we will continue to monitor investment portfolios, advising accordingly, managing client income and dealing with all personal financial matters as and when required.

Yes, it has certainly been a tough old year, but, as they say, “when the going gets tough, the tough get going’’.

This article represents the opinion of Reeves Independent Limited and is for information only. No action should be taken based on this information alone. Remember that investments can go down as well as up and past performance is no indicator of future performance.

Reeves workshops a great success.

Here at Reeves Independent we pride ourselves on not only offering a bespoke service to our valued clients, but to also help them every step of the way with our ongoing and engaging resources, crafted by our talented team.

Last month we launched our dynamic and jam-packed online event calendar, offering both existing and prospective clients alike the change to join our free and educational workshops.

Whilst the world is changing, and social distancing measure remain in place all over the country, we thought what better time to take our expert advice to the comfort of our clients homes, by hosting several online workshops, via video hosting software zoom.

October saw us host an impressive eight workshops, ranging from an educational pros and cons of pension consolidation to a workshop based around top tips to reduce your tax bill, giving our attendees valuable advice and expertise, for free.

Many of our events are open to all; those who want a short introduction to Reeves, those who are beginning to onboard to become a Reeves client and of course to our expansive bank of existing Reeves clients who we love to go the extra mile for.

On Tuesday 13th October we hosted one of our most popular webinars of the month, our live question and answer workshop, which boasted an impressive panel of team members on hand to answer your most frequently asked questions.

In the thirty-minute presentation we covered many topics, including how our process works, how our investment portfolios have been performing in the recent months and key timelines that we work towards when onboarding our clients. We ended the event with an open forum giving our attendees the chance to ask our skilled panel their questions. The panel consisted of CEO and founder Nigel Reeves, commercial manager Bill Brown, our investments service lead Rachael Simms and client advisor Rebecca Lawson.

Exclusive to our clients only, another popular event of the month was our insurance workshop. We invited a selection of our client database that were all five or more years away from retirement. During this webinar, we guided our attendees through the insurance options available to them and how they could easily plan to protect their families in times of need.

The feedback we’ve had from attendees over the course of the last month has been nothing short of impressive. We know that for many it is a tough time at the moment to not be able to see friends and family as much as we like, and at Reeves we are delighted to be able to offer our personal service to all, whilst remaining safe and adhering to current guidelines.

Although there are many uncertainties in the world right now, there is one thing you can be certain of, and that is our ongoing service to you.

Don’t miss out on our upcoming events by making sure you are connected with us on social media and are keeping a close eye on your inbox for you exclusive invites to our next exciting webinar.

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