Straightforward Guide To Financial Planning For The Future

Anthony Vice

Description

This guide to financial planning for the future has been updated to reflect changes to the financial system to 2013 that will affect those who are planning their financial future and who need expert advice on all aspects of the complex area of retirement finance. Many 45+ men and women are now starting to think about pensions and financial security in a retirement that could last 25 years or more. They are also thinking about providing for elderly relatives. This book will show how to strike a balance between savings and investments.

Sujets

• Personal finance
• Retirement

Informations

• Publié par: Straightforward Publishing
• Date de parution: 15 mai 2013
• Nombre de lectures: 0
• EAN13: 9781847164018
• Langue: English

Extrait

FINANCIAL PLANNING FOR THE
FUTURE
FROM 45 TO RETIREMENT
THIRD EDITION
ANTHONY VICE
Straightforward Guides
www.straightforwardco.co.uk
Copyright Anthony Vice 2013
ISBN: 9781847163448 ePub ISBN: 978-1-84716-401-8 Kindle ISBN: 978-1-84716-400-1
The right of Anthony Vice to be identified as author of this work has been asserted by him in accordance with Copyright, Designs and Patents Act 1988
All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with the written permission or in accordance with the provisions of the Copyright Act 1956 (as amended). Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damage.
Whilst every care has been taken to ensure the accuracy of this work, the author or publisher cannot accept responsibility for loss occasioned by any person acting or refraining to act as a result of any statement contained within this book.
CONTENTS
Introduction

Chapter 1. How to make a Million
Two ways to go
Be like Warren Buffet
Or go Traditional
Buy an ISA
Or choose a pension
Tax deductibility counts
Venture capital trusts
Enterprise Investment Schemes
You Go Direct
Deferral unlimited
Newest most generous

Chapter 2. Making Money From Pensions 19
Key facts about pensions
Less at 55
Pension or ISA?
50 a week-a gift
HMRC helps
Maybe think SIPP
Or Stakeholder
Tax money to a non-taxpayer
Maybe draw-down
You can be flexible
But-the big risk
Your income for life
Annuities are fixed
Use the open market option
Income for your partner
Maybe overlap
Fixed, or does it rise?
An escalator costs
Health counts
When to buy?
Women live longer
Rates are low

Chapter 3. ISA s-Goodbye to the Taxman
Use it or lose it
Half could be cash
Monthly may be useful
Change the manager
ISA for a junior
Just one of each
Major types of ISA
Are ISA s really tax free
Bonds are better
But cash may not be

Chapter 4. Manage the Holiday cash
Look at the rate
Watch the spread
Useful buy-back
Last minute costs
Use the net
Taking the currency
ATM costs
Try a loaded card
Check the charges
Avoid the commission
Bigger deals need experts

Chapter 5. Investing For The Next 25 years
How much risk?
Your age in bonds
Maybe retail bonds
Say yes to SAYE
Risk element
Trust or fund
Active or passive?
Leaders list
DOG funds
Contact a discount broker
Cash for the trail

Chapter 6. Think About Re-mortgage
Talk to the lender
Equity needed
Swap facility
Keep up LTV
Redemption quote
To repay or not to repay
House prices ahead
Think offset mortgages
Look every year

Chapter 7. Coping With Income Tax
Keep HMRC up to speed
Read what they send
Be a one-man company
Check with your partner
Think salary exchange
Talk to your employer
Fund a lodger tax-free
Think offshore
But when an inspector calls

Chapter 8. And The Other Big taxes
Capital gains tax
18%/28%
Home free
Use it or lose it
B B up to date
When to look for a loan
You have to take cash
When a Trust closes
CGT on second homes

Chapter 9. Inheritance tax
World wide cover
Exempt to spouse
And for a wedding
Help for charities
Use the nil-rate band
Spouses but not relatives
When you pay no IHT
Make a will
How do you own the house
Debt or giveaway
A gift must be a gift
Trust in trusts?
Two years to change

Chapter 10. Money From The House
Why move?
Older is better
No interest to pay out
Compound interest hits
When you move
Check out costs
Or home reversion
You are a tenant-rent free

Chapter 11. Paying for University
Early start
Use their allowances
200,000 to bring up
9% over 21,000
Now a real rate of interest
Tax on Graduates
Choice for high flyers
How to help
Maybe a let?
It depends where you study
Choose the bank
Stay interest free

Chapter 12. Help From Credit Cards
Get cash-back
Use direct debit
Types of plastic
Shop at 0%
New customers preferred
Transfer balance
Simple to move
New series needed
Card company on the hook
You pay to change
Less to lose

Chapter 13. Think Outside the Box
Growth in Wine
Maybe a wasting asset?
Perhaps philately
Or think trees
Beat the market
Two ways to out-perform
Cash on contract
Or spread betting

Chapter 14. Keep it Safe
Data on the register
Wallet test
Keep saying no!
FSA=FSCS
Know the rules
A Madoff?
Ways to spot
Diversify

Glossary-what financial terms mean
Useful addresses
Index
INTRODUCTION
Now you are 45, you need a financial plan. You have 15 to 20 years of your working life still ahead, when you will reach your peak earning power. One of your major objectives will be to arrange that afterwards you will enjoy a happy retirement - a further 15 to 20 years after you stop work. How far retirement meets your hopes will depend to a large degree on the decisions you take over the next several years.
The outside financial world has become a harsher and less positive place since the first edition of this book appeared only a few years ago - which makes a plan even more necessary. The world has also grown more complex, so the aim of this latest edition is to guide you through the elements you need in order to form your plan. Make use of all the available ways -talking to friends, newspapers, the internet - to help towards your decision-making.
You may be lucky, when one particular step succeeds so well that it sets you onto the right financial path. More likely, your plan will have to stay flexible in order to gain maximum benefit from changes in the laws and outside conditions. Success will probably come from your making a number of positive, possibly unrelated, steps - taking action to cut your income tax bill while helping to arrange the best bank deal for your son or daughter going to university.
To succeed, you do not have to become an instant expert in areas such as tax or pensions, and you may want to take some of these issues to the professionals. When you seek outside help, you will be that much better placed if you know which questions to ask, and fully understand the answers you get in return.
The chapters that follow also aim to set out the decisions which only you can make - what level of risk can you live with, would you rather borrow than move house in order to raise some cash? This book s aim is to help make your decisions easier and that much more effective.
***************
Chapter 1
HOW TO MAKE A MILLION-GENERALLY

So you and your partner want to retire with 1 million in the bank. Great idea - so how do you do it?
Most people would first think of buying premium bonds. They are safe, being backed by the government, they pay out a 1 million prize every month and there is no tax on whatever you win. But the odds against you are huge: around 43 billion to one against your bond hitting the jackpot.
You and your partner can each buy up to 30,000 worth of bonds. These go into a pot, on which the Treasury fixes what amounts to a rate of interest - 0.125% a month or 1.5% a year. This interest is paid out in prizes, ranging from 25 up to the magic 1 million. When you buy a bond, the chances of winning a prize are 24,000 to one. If you do win, the strong chances are that you will get 25.
TWO WAYS TO GO
A wealthy person will buy premium bonds, as one place to invest a small part of his cash resources. At the other end of the financial scale, an average man will buy the 100 minimum, working on the theory that the amount of bank interest is irrelevant - while there is just the chance of a serious win.
Premium bonds have one advantage over a lottery, that you keep your stake. In the UK National Lottery, or any other, when you lose then your capital is gone. When you buy a premium bond, you keep your holding until you cash it in. You just have to reckon on the bank interest which you could have earned - what the experts call the opportunity cost which applies across a whole range of financial decisions.
But you decide that the odds against you are just too great. Over your working life of 40 years there will be nearly 500 monthly drawings of premium bonds which you might think brings the odds of a 1 million win down to 86 million to one. Even on that basis, the chances of a win are just too small. Like most people, the sensible plan is for you to buy the minimum 100 worth of bonds, lock them away and forget them - and one day maybe have a nice surprise.
BE LIKE WARREN BUFFETT
You could make your million by being like a Warren Buffett, the famous US investor - pick a share which will turn a modest stake into 1 million. Apple and Amazon are two recent examples of companies which have transformed shareholders wealth. Over 10 years Apple turned a 100 investment into 3,900, so that a 25,000 initial stake would have reached your 1 million target. Or think about Priceline, one of the world s leading providers of online travel: over five years, their shares rose twice as fast as Apple.
History and hindsight are wonderful, but you have to find the business that will be the Apple/Amazon of the next 10 years. There are no guidelines here - especially as the company may be operating in China, Russia or Brazil. If you go down this route, think hard about risk and remember the great dotcom boom and bust.
OR GO TRADITIONAL
But all this, you say, is pie in the sky - get lucky in premium bonds, choose the right share. The chances are remote, and there are risks: pick the wrong share, you can lose some or all of your original stake. You decide to go down the traditional route, making regular investments which will get you to 1 million with reasonable certainty and with a low level of