Want to improve your financial knowledge in 2020? Reading these titles can help you become more financially savvy and you could pick up a few tips that will boost your own finances. But don’t worry, these aren’t dull books filled with endless jargon that you’ll have to force yourself to read; they’ll inform and entertain.
1. How to Own the World: A Plain English Speaking Guide to Thinking Globally and Investing Wisely, Andrew Craig
Do you want to grow your wealth? Then this could be the right book for you. Rather than looking at where your money comes from, Andrew Craig focuses on how to make money from money. The answer is investing assets to create returns and taking advantage of compound growth.
Arguing that anyone can use compound growth to their advantage and take control of their wealth, it’s a title that can help you get to grips with the basics of investing and how it can help you achieve goals.
2. The Mandibles: A Family, 2029-2047, Lionel Shriver
If you tend to steer towards fiction over fact, this novel from award-winning author Lionel Shriver could be right up your street. Set in the near future, The Mandibles is humorous whilst being a frighteningly plausible dystopia.
With a focus on the economy and global markets, Shriver looks at what would happen if the dollar collapsed and civilisation begins to break down. With the family patriarch having built up a family fortune, four generations live comfortably and expect financial security. But it quickly falls apart. Whilst fiction, the book uses complex economic theories to give it realism mixed with black humour.
3. Invest in the Best: How to Build a Substantial Long-Term Capital by Investing Only in the Best Companies, Keith Ashworth-Lord
Warren Buffett is known as one of the most successful investors ever. So, how did he make his fortune? Invest in the Best looks at the investment style of Buffet, known as business perspective investing. From assessing the quality of business to determining its values, Ashworth-Lord explores how to identify businesses that could deliver the returns you hope for.
Throughout, the emphasis is placed on the methodology used by Buffett. Invest in the Best is a great read for serious investors that want to take a more active role in portfolio management and discover how stocks and shares are picked.
4. Red Notice: A True Story of Corruption, Murder and One Man’s Fight for Justice, Bill Browder
Red Notice is a shocking true story that reads like a thriller. It follows the successes, challenges and eventual political conflict experienced by Bill Browder, the CEO and co-founder of Hermitage Capital Management.
Making his fortune through investing, Bill was at one time the largest foreign portfolio investor in Russia and in 1997 his fund was the best performing in the world, returning 238%. But by taking on oligarchs to achieve these returns, Browder and his team became embroiled in a world of fraud, bribery, corruption and torture. Red Notice offers an incredible insight into Russia during the post-Soviet Union years and investing in this world.
5. Your Retirement Salary: How to use your lifetime of pension savings to pay yourself an income in your retirement, Richard Dyson
Approaching retirement can be a daunting experience. You’ve spent the last few decades saving up for retirement. But once it’s here, how do you start taking an income from pensions and what can you do to make sure you don’t run out of money?
This personal finance book answers some of the questions you may have as you approach retirement, helping you to set out finances when you reach the milestone. It covers a variety of key areas, such as what Annuities are, tax rules around accessing your pension and the role of the State Pension.
6. Spare Change: How to Save More, Budget and be Happy with Your Finances, Iona Bain
Packed with practical tips, Spare Change is an easy to read book on personal finances on how to make your money go further. Covering a wide range of areas, from building a budget to working out your relationship with money. Dubbed the ‘first millennial money handbook’, it could make a great gift for younger generations getting to grips with their finances too.
Complete with colourful images, quizzes and handy checklists, Spare Change isn’t your usual ‘how to’ money book. If you want to get back to the basics of money management, this is a great place to start.
7. The Little Book of Behavioural Investing: How not to be your own worst enemy, James Montier
Bias affects decisions we make every day, including those relating to money and wealth. Behavioural traits can mean you lose money or achieve lower returns when investing, whether it’s through overconfidence or letting emotions play a role in decisions. This book takes a look at the psychological element of investing to help you recognise and overcome bias.
As you go through this book, you’ll probably recognise a few of your own behaviours on the pages. Luckily, it offers tested ways for avoiding the common pitfalls to make the most out of your investments. More than helping your finances, it offers an interesting insight into the way our minds work and human nature.
Whilst reading finance books can be valuable, remember individual circumstances are key to creating an appropriate financial plan. If you’d like to discuss your current finances and future, please get in touch with us.
If you’re trying to get over the winter blues, planning your next holiday can be the perfect way to escape. Whether you’re looking for relaxation or adventure, there’s plenty to choose from. This year’s list of top ten counties to visit from Lonely Planet could be just the inspiration you need.
So, without further ado, here are the top destinations for 2020.
Until recently, Bhutan was rarely visited or talked about among tourists. But that’s slowly changing. Even now, the Himalayan country carefully restricts the number of tourists. It results in an exceptional experience for those that make the journey. You can expect to walk mountain trails, visit monasteries and take in the culture without the crowds you’d expect in other destinations. With strict rules around preserving nature and the way of life, the beauty of Bhutan is set to remain. It’s a unique destination that really does give you an opportunity to escape.
You don’t even have to set foot on a plane to see amazing sights. Taking spot two this year is England. It’s easy to overlook what our own country offers tourists but from stunning landscapes to historical buildings, England’s got a lot to offer and a staycation could be perfect for 2020. One of the key reasons England makes it on to Lonely Planet’s list is the coastline. The England Coast Path continues to open this year, which will create the longest continuous trail of its kind in the world at 3,000 miles. Why not make plans to explore part of it in 2020?
3. North Macedonia
The tiny nation of North Macedonia in the Balkans is ideal if you’re looking for natural beauty. The stunning Lake Ohrid and the historic town on its shores has already made a stamp on the map for tourists. But there’s plenty more if you stray off the usual track. The national parks offering quiet walking trails and beautiful views. The country has a rich and fascinating Greek, Roman and Ottoman heritage to explore if you’re a keen history and culture buff too.
Keen to head to an island paradise this year? Aruba might be just what you’re looking for. Located in the southern Caribbean Sea, it has, as you’d expect, pristine beaches and palm trees. For relaxation, it’s perfect. For when you’re ready to get off the sun lounger, there are plenty of activities to try, such as diving and snorkelling, whilst the towns can provide a festival atmosphere to enjoy day or night, particularly in the unique city of San Nicolas, which is just a short trip away from the compact capital of Oranjestad.
Formally known as Swaziland, eSwatini is packed with culture and adventure. However, one of the biggest draws to visiting this country in 2020 is the impressive wildlife. Visit one of the wildlife reserves and you have a chance to encounter all the big five – elephants, rhinoceros, leopards, buffaloes and lions. If a safari is on your bucket list, eSwatini is an excellent place to plan a holiday. For those looking for an adrenaline rush, there’s plenty on offer, such as rafting and ziplining, whilst the lively local culture will completely immerse you during your stay here.
6. Costa Rica
Another top destination for wildlife is Costa Rica. For a small country, Costa Rica has incredible diversity that can be explored across its rainforest waterways and palm-lined beaches. If you’re looking for a laid-back trip, the beaches, spas and towns are ideal. If you’re hoping to get active, the lively town of San Jose can provide a great base, plus you can walk up volcanoes and take part in adrenaline-filled activities too. Whatever your holiday style, be sure to plan some time exploring this slice of tropical paradise.
7. The Netherlands
Not too far from home, the Netherlands is a great destination if you’re looking for a short break but there’s enough to do across the country if you’re hoping to get away for longer. Amsterdam, of course, has long been a vibrant city on the list of many travel lovers. Mixing the traditional and the new, the Netherlands is an excellent destination to explore, especially by bike. Boasting more than 35,000 km of cycling paths, you can get out of the city and find lesser-known attractions without having to worry about public transport or hiring a car too.
Situated in West Africa, Liberia is still a little-known tourist destination but there are two big reasons to visit here. First, there are beaches that are perfect for relaxing and surfing. Then there are the lush, dense forests that are home to an abundance of wildlife. The Sapo National Park is known as one of the best in South Africa and is home to chimpanzees, forest elephants and the famous pygmy hippos. If you’re a fan of shopping, the bustling markets are the place to head for souvenirs to take home with you.
Morocco is known as the gateway to Africa and it’s steeped in history to explore. It’s an excellent choice if you’re a fan of delving into a new culture and the history of a destination. Ancient Medinas, think historic city centres, are places where you can spend hours exploring, sampling the food and sipping coffee in a street café as you watch the world go by. Marrakesh, which is Africa’s first Capital of Culture in 2020, is a vibrant place to consider but so too are other cities, including Fez, Tetouan and Essaouira.
Finally, we head to South America with Uruguay. Located between Brazil and Argentina, it’s the continents smallest country. You can choose between cosmopolitan areas with plenty of attractions for tourists, picturesque coasts and vibrant areas to party in the evenings. But don’t forget to take a step off the beaten track to go wildlife watching and view the natural beauty of Uruguay too.
Are you planning to give children and grandchildren a helping hand to get on the property ladder this year? If so, you’re not alone. As younger generations are struggling to purchase their first home, thousands of parents and grandparents are putting their hand into their pocket. But what does it mean for your long-term financial security?
Research from Legal and General suggests that family members offered gifts and loans to the tune of £6.3 billion in 2019. This generosity was estimated to support property purchases totalling £70 billion. Compared to last year, the total amount lent has increased by 10% despite the number of transactions falling.
Whilst gifting or lending loved ones the money to act as a deposit on their first home can be rewarding in itself, you do need to look at the long-term picture. The sums being handed over can be significant. In fact, the average amount passed down now stands at £24,100. In order to do so:
- 15% of over-55s have accepted a lower standard of living after helping family buy a home
- 21% dipped into ISA savings, 7% used their pension drawdown and 6% used income delivered from Annuities
- 16% unlocked housing wealth through a lifetime mortgage to provide financial support
In many cases, these steps won’t present an issue. But, worryingly, over a quarter (26%) of Bank of Mum and Dad lenders are not confident they now have enough money to last throughout retirement. 10% also said they no longer feel financially secure.
So, how can you financially help your family and still be confident in your own future?
Using cashflow modelling to understand the impact of a financial gift
Let’s say you’d like to give £20,000 to a grandchild to help them purchase their first home. It’s a sum you might have stashed away in a savings account or investment portfolio. It’s not something you need to use now to maintain your lifestyle.
But will giving that money away now mean you struggle financially in ten or 20 years’ time? Could it mean that the care you’d prefer if it were required is out of reach?
It’s not unusual to worry about the long-term impact of a lump-sum gift. Yet, it can be difficult to understand what that impact may be. This is where financial planning and using cashflow modelling as a tool can give you peace of mind. Cashflow modelling is a visual way to show how your wealth may change over time, demonstrating the consequences of different decisions. You can see how withdrawing a lump sum now could affect your income and assets over the short, medium and long term.
Often clients find they’re in a position to help their loved ones with a financial gift, and the financial planning process means they can do so with confidence in their future as well as their families.
Providing support if a financial gift isn’t an option
Should you find a financial gift isn’t an option for you, there may still be a way you can offer support. There are other ways in which you can help children or grandchildren make that first step on to the property ladder.
- Provide a loan: Four in ten of those providing financial support to family members, require some form of repayment. If, after assessing your finances, you find you need the money at a later date, a loan can work well. Low-interest rates on mortgages mean family members that have been renting will often find outgoings reduce when they buy their own home, allowing them to pay you back. If this is the route you want to go down, be sure to take legal advice.
- Look into offset mortgages: An offset mortgage is linked to a savings account. When money is placed in the savings account, it can reduce the amount of deposit needed and reduce interest rates. It allows you to provide support whilst still retaining control over your savings. You usually won’t continue to receive interest on your savings, however, will not be paying interest on the equivalent mortgage amount. Your money may also be tied up for a defined period of time. You should research the different options to see how they fit in with your pla,s
- Use a family mortgage: A family mortgage allows children or grandchildren to borrow more or reduce the deposit needed by using your home or savings as security. You’ll usually have to own your home outright, or owe relatively little on a mortgage, for this to be an option. If you use your savings, you will continue to receive interest on them so won’t lose out there. Again, there are some important considerations here. If your child or grandchild defaults on their mortgage, you’ll be responsible too and could lose your own home as a result. Make sure those you’re helping can afford the mortgage and understand the implications it could have on you.
- Reduce inheritance: If you have money earmarked for an inheritance, it may be worth looking at whether it would have a greater impact now or in the future. In some cases, your generosity could lead to loved ones having a financially secure future if it’s given now.
If you’d like to explore your options to help younger family members get on the property ladder, please get in touch. We’ll help you understand how a gift could impact your financial wellbeing, as well as what your other options are.
As we enter a new decade, you may be looking back on the last ten years. Hopefully, you’ve reached a few goals and taken steps towards them. But, if you have a look at how your savings accounts have performed throughout the 2010s, you could be a little disappointed.
Since the 2008 financial crisis, interest rates have been historically low in a bid to encourage spending and get the economy going. If you’ve had debt, whether a loan or a mortgage, it’s been good news as borrowing has been cheaper. However, if you’ve been saving over the last decade, you probably haven’t seen much return for your efforts.
For the first five years of the last decade, the Bank of England held interest rates at just 0.5%, far below the historical average. Then in August 2016, it dipped even further to 0.25%. Since then, two increases, in November 2017 and August 2018, has taken it to 0.75%, where it remains today.
There are suggestions that the Bank of England could make another increase in the coming months. But the economy continues to be sluggish and Brexit uncertainty is having an impact, so we could see low interest rates continue into the future too.
What impact do low interest rates have?
Prior to the financial crisis, savers were accustomed to earning 5% or more on their savings. It means your savings would have grown at a much faster pace in the 90s and early 00s.
That’s frustrating enough. But the real impact of low interest rates isn’t evident until you start looking at inflation over the same period.
The Consumer Price Index (CPI) measures inflation (the cost of living) in the UK. The table below highlights how the cost of living has increased.
Whilst there have been points where your savings may have benefitted from interest rates higher than inflation, most notably 2015, for the most part, inflation has outpaced the Bank of England’s base rate.
But what does this mean on your savings? Where the interest rate of your savings matches inflation, the value of your money has effectively stayed the same. This means it holds the same spending power. However, where inflation is higher, your money has lost value in real terms.
It can be difficult to fully understand the effects of inflation, especially when you look over a relatively short period of time. The Bank of England’s inflation calculator demonstrates how the cost of living rises.
Let’s say you had £10,000 in 2010. To have the same spending power in 2018, you’d have to find an extra £2,595.53, something saving accounts are unlikely to have delivered due to the low-interest rates.
That sum may not seem like much on the face of it. But the effects of inflation become clearer when you look at the long term. A £10,000 lump sum in 1990 would need to have grown to £22,327.64 by 2018 to be worth the same in real terms, for example.
So, with interest rates still low, how can you grow your wealth in the 2020s? Investing may be an option worth exploring.
Should you consider investing?
First, investing isn’t the right option for everyone looking to grow their savings.
You should only invest with a long-term timeframe in mind. If you’re likely to want access to your savings within the next five years, investing probably isn’t the right option for you. It also means investing isn’t right for savings such as your emergency fund.
Yet, there is certainly an argument for investing if you want to grow your wealth over the long term.
Historically, stock markets have outpaced inflation. As a result, this gives you an opportunity to not only maintain your spending power but see it increase over the long term. For individuals that have the capital to invest, it could help your money grow at a quicker pace and provide you with security in the future.
Keep in mind that all investments come with risk. There is a chance that your initial investment will go down in value. You should carefully consider your risk profile before you start investing. This should take several factors into consideration, including your current assets, capacity for loss and goals.
You all need to be comfortable with volatility within the investment market. Values of stocks and shares fluctuate, it’s important that you stick to your long-term investment plan and carefully assess changes rather than making knee-jerk reactions should values fall.
If you’d like to discuss your wealth and what steps you can take to grow it over the next decade, please get in touch.
Please note: The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Whilst it can be tempting to save and manage money by taking a DIY approach to finances, it could end up costing you money. Research suggests that eight in ten people overestimate their own financial capability and could be making decisions that aren’t right for them as a result.
Failing to seek financial advice when it could prove valuable may not be an issue for you. But it could be a mistake that your children and grandchildren are making. Knowing when financial advice could be beneficial can be difficult to understand, especially if you haven’t received advice in the past. Understanding how financial advice works and when it’s useful is important.
According to Aegon, taking a DIY approach to money matters costs savers in the long run. The research found that the most common reason for people not asking for expert help is self-belief in their own ability. However, whilst many were confident when dealing with savings and general insurance products, just one in ten were sure of their ability to make more complex decisions about pensions and investments. When you consider that both these areas are long term and can have a significant impact on future lifestyle, it’s crucial that savers feel confident in the decisions they’re making.
For example, just 29% of those that haven’t sought financial advice are confident in making a decision about when they will retire. This compares to 54% of advised individuals.
Steve Cameron, Pensions Director at Aegon, commented: “Managing your own finances can be rewarding, but there’s a lot to consider and it’s worth remembering that the financial decisions you make can have lasting implications for the rest of your life. That’s why working with a financial adviser often makes huge sense.
“Financial planning isn’t a one-size-fits-all approach. It’s designed around the individual to meet their personal needs and circumstances and can be invaluable in providing peace of mind, helping individuals make the right choices for their future wealth. There’s a real danger that poor decisions can mean plans unravel, putting people’s financial future in jeopardy. Having a professional by your side helps make sense of your options, many of which you might not know you even had.”
The financial benefit of advice
Whilst the above focuses on how confident people are about their financial decisions, past research has highlighted the monetary impact of not seeking advice too.
The International Longevity Centre has tracked how asset values have changed for individuals receiving advice and those opting for a DIY approach. The findings highlight how financial advice can help wealth grow:
- Whilst not having enough wealth is often a common reason for not seeking financial advice, the research indicates it can have an even greater impact. The individuals defined as ‘just getting by’ saw a 24% boost to their pension wealth compared to the 11% experienced by ‘affluent’ individuals
- Building an ongoing relationship with a financial adviser was also found to be beneficial; those that received advice at both points in the analysis had nearly 50% higher average pension wealth than those only advised at the start
When can financial advice help you?
So, when should you seek financial advice? The International Longevity Centre report indicates that there is a benefit for working with a financial adviser on an ongoing basis. However, there are points in your life when one-off financial advice can be invaluable. This will, of course, depend on your personal circumstance, but could include:
- At retirement, you may have many financial decisions to make that will affect the rest of your life. Working with a financial adviser can help you understand what your options are and the income you can expect throughout retirement.
- Estate planning can be complex. Part of this will include understanding your current wealth, how it will change, and how this can be distributed among loved ones. It may also include taking steps to reduce Inheritance Tax if this is a concern.
- Following children, you may want to take steps to ensure you can provide financial support in the future. This may include supporting them through university or a deposit to get on the property ladder. Laying out plans and choosing the right products soon rather than later can help.
- After a divorce, your priorities and goals may have shifted significantly. Taking financial advice at this point gives you a chance to reassess your current situation and whether you’re on track to achieve the future you want.
If you’d like to understand how financial advice could help you or your loved ones, whether on an ongoing basis or as a one-off, please contact us. We’d be happy to discuss your circumstances and where we can add value to your life.
Please note: A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.