A bucket list should be personal, fun and help you accomplish the things you want in life. We often talk about things that are on bucket lists, whether it’s travelling to a new destination or trying your hand at something different, but have you ever written down your ideas? Putting together a bucket list can give you some direction and inspiration when you’re looking for something to do.
But with so many different options, what should you put on your bucket list? Here are some steps and things to keep in mind to help you start building a bucket list you look forward to completing.
Set out your priorities
The first thing to do is consider what your priorities are. It may be that travelling is at the top of the list or that hobbies take preference. When you start out, don’t limit yourself to a few areas, but all the different goals you have in your life. You may already have some items that come to mind instantly when you start a bucket list, which is great. But searching for inspiration can help flesh out ideas and broaden your horizons too. From a Google search to leafing through magazines, there are lots of sources of inspiration. Don’t just focus on the big things either, sometimes smaller goals can be just as fun and rewarding.
Look back at what you’ve already achieved
As you plan future adventures, looking back at those already completed can give you a boost. Take some time to think about the experiences you’ve already had; which did you enjoy the most? Is there anything you’d do differently? Are there some you remember more often than others? Looking back can help you see where to focus your attention and create a bucket list that suits you. Whilst bucket lists are often filled with travel destinations, if you look back on activities more fondly, focus on these, for example. You should be excited to get to work on your bucket list, so don’t be afraid to put down something a bit different.
Don’t get distracted by numbers
When you’re looking for inspiration, you’ll no doubt come across plenty of examples to browse. From ‘50 things to do before you’re 50’ to ‘101 must-have experiences, the numbers are often large and deemed significant. But don’t get distracted by how many things are on your bucket list. It’s far better to have a shortlist that’s filled with things you’re excited to tick off than one where experiences have been added to fill slots. Focusing on the numbers can take some of the enjoyment out of putting together your own bucket list. Remember, you can always go back and add to the list as you think of new things too.
Remember to keep it realistic
You might want to spend the summer months on a yacht, but how realistic is it? Having unattainable experiences on your bucket list can be disheartening and put you off planning others. Whilst your bucket list should be ambitious, remember to take a look at how realistic each item is. If you’ve had dreams of spending months on a yacht but that’s out of reach, what are the alternatives? Shortening your stay could be an option, or you could look at alternative ways to spend some time out on the water.
Set yourself some goals
Creating a bucket list is just the first step. Plenty of people set out what they want to achieve, only for them to be forgotten about or put off. Giving yourself some measurable goals can help you keep working through your bucket list. When you’re writing it, giving some time frames for when you might do them is a good idea. Remember some will need far longer to plan and others will be affected by seasons or other factors. Where you’ve got bigger goals, breaking them down into smaller chunks can make them seem more manageable. Ticking off the steps as you progress towards a bigger goal can be just as satisfying.
Many people write a bucket list and then never go back to it. Keeping track of where you are is a great way to ensure you’re working your way through it. Whether you have your list written down and tick off completed items or use an app, find a way of marking the progress that suits you. Planning to go back and review your bucket list from time to time is an excellent idea too. You’ll find inspiration in everyday life, perhaps a TV series will spark a desire to visit a new city, and your priorities will inevitably change too. Reviewing your bucket list is a great chance to reflect on those things you’ve already achieved as well.
Taking out a mortgage is a big step. Whether it’s for your first home or as you’re moving up the property ladder. With the length of mortgage increasing and house prices rising considerably over the last few decades, getting the right mortgage is essential. It could save you money and come with other benefits.
You may be thinking of going down the DIY route when choosing a mortgage. But there are reasons why choosing to work with a mortgage adviser can be a good idea.
1. Searching the market
There are hundreds of mortgage providers to choose from, many of which aren’t well-known or don’t have a presence on the high street. This can make searching the market a daunting and time-consuming task. The expertise and experience of a mortgage adviser can be useful here. Whilst mortgage comparison sites can help, they will not include all the options open to you.
If this is a key reason for seeking the help of a mortgage adviser, it’s important to check if they’re ‘restricted’ or ‘independent’. A restricted adviser will only be able to recommend certain products or providers.
2. Understanding lending criteria
It’s not just identifying potential lenders that’s important but understanding how likely they are to accept you. Each lender will have their own set of criteria. Understanding what each lender is looking for can be challenging, a mortgage adviser will help you identify which lenders are most likely to approve your application.
This can be particularly useful if you’re not a ‘typical’ applicant. For example, if you’re self-employed, have only a small deposit or want to purchase an unusual property. Whilst some lenders will turn down applicants for these reasons, others specifically cater to them. Applying to lenders and being rejected can harm your credit rating. As a result, considering the criteria is important.
3. Securing the right rate for you
Interest rates have an impact on how much you pay each month. When you look at the interest paid over the full length of a mortgage, even a small difference can have a big impact. Taking some time to find lenders that are offering competitive rates can pay off now and in the future. However, it can be difficult to understand which rate is right for you. Lenders will advertise their best deals, but how likely are you to receive this? A mortgage adviser can help you to secure the right rate for you.
4. Explaining the pros and cons of different options
Whilst the interest rate is often what we focus on when looking for a mortgage, it shouldn’t be the only aspect. Your mortgage adviser can clearly explain the pros and cons of different deals with your situation in mind. For instance, if you’re hoping to reduce mortgage debt quicker, the ability to overpay when you choose could be valuable to you.
One important thing to note is when a deal would come to an end. Figures suggest that homeowners that fail to switch their mortgage at the end of the deal could be overpaying by as much as £4,500. This is because you’ll normally be moved to the standard variable rate (SVR), which often isn’t as competitive.
5. Help organising the mortgage application
The mortgage application process can be lengthy. There are documents to organise and lenders may need extra details from you. Going back and forth can be time-consuming, a mortgage adviser is able to check over the documents for you first, highlighting where issues may be caused. Purchasing a house can be a slow process, a mortgage adviser can help keep things moving for you during the initial phase and be on hand to answer questions.
6. Support in choosing insurance policies where necessary
Purchasing a home is often the catalyst for thinking about insurance policies. Could you still make the mortgage payments if you experienced long-term or critical illness? If you are your partner passed away, would the other be able to cope financially?
Insurance policies can offer a safety net and some form of protection. However, figures from Legal & General indicate that over a third of consumers who purchased a mortgage direct from a lender have no protection policy in place. Just over half had chosen to take out life insurance, potentially leaving their family in a vulnerable position should something happen to them.
The research also found that borrowers who used a mortgage adviser were overwhelmingly in favour of doing so again. Some 98% said they found the support of a mortgage adviser ‘valuable’. If you’d like support when seeking a mortgage product, please get in touch.
Children born today have a one in four chance of celebrating their 100th birthday. It’s progress that should certainly be celebrated but one that also leads to financial questions. How do you prepare for a life that could span ten decades?
Many parents choose to put some money aside for children to give them a helping hand when they reach adulthood. Whether you’ll be making regular payments or adding money on Christmas and birthdays, you’ll want to ensure you get the most out of your deposits. But choosing how to build up a nest egg for a child can feel more complex than making decisions about your own financial future.
One question to answer first is: Should you place the money in a cash account or invest?
Why consider investing your child’s savings?
It’s natural to want to protect the money you’re putting aside for your child’s future by choosing a cash account with little debate. However, there are reasons why investing may prove to be more efficient.
Even on a competitive child current account, interest rates are low. This means once you factor in inflation, savings lose value in real terms over the long term. If you begin saving whilst your child is very young, this can have a significant impact on the spending power of the money.
Investing provides an alternative, with returns potentially higher than interest rates. However, it’s not as simple as that. Investing does come with some risks, as there’s no guarantee how investments rise and fall. But investing is something you should consider when you’re planning for your child’s future.
If you’re unsure whether a cash account or investing is right for your goals and circumstances, please get in touch.
Should you decide to invest money earmarked for your child’s future, there are some questions that can help you pick out the right vehicle and investment opportunities.
1. How long will it be invested for?
When you start saving, it’s important to have a deadline in mind. If this deadline is below five years, it’s usually advisable that you choose a cash account. This is because investments typically experience volatility in the short term and, as a result, values can fall. This may be an issue if you’re investing for a short period of time.
However, should you have a time frame that is longer than five years, investments may provide you with a way to potentially achieve returns that outpace inflation. This is one of the factors that link to investment risk. As a general rule of thumb, the longer you’re investing for, the higher the level of risk you can take. Of course, other factors influence appropriate risk levels too.
2. What is the money intended for?
You probably have an idea of what the money will be used for. Perhaps you hope it will be used to purchase their first car or support them through further education. You may be looking even further ahead to your child purchasing their first home. What the money is intended for will have an impact on the time frame. But it will also influence how comfortable you are with taking investment risk.
It’s important to remember that if you’re saving the money in the name of the child, they may be able to take control of the account when they reach 16. Whilst you might have an idea of what you’re saving for, they could have very different goals. As a result, speaking with them about the savings and how it might be used can help align your views.
3. How comfortable are you with investment risk?
It’s also important to think about how comfortable you are with investment risks when it comes to your child’s savings. This may be very different to your views on taking investment risks for your own nest egg.
Whilst you need to feel comfortable with risk and the level of volatility you can expect investments to experience, you also need to ensure it’s a measured decision. Our bias can mean we take too much or too little risk when financial circumstances are factored in. Speaking to a financial planner can help you understand what your risk tolerance is. Getting to grips with what level of risk is appropriate can boost your confidence.
4. Do you have other savings for your child?
Do you have multiple saving accounts for your child? Or are other loved ones also building up a nest egg for their future?
Assessing what other nest eggs they will receive when they reach adulthood may mean you’re more comfortable taking investment risk. If, for example, you know grandparents are adding to a cash savings account, this may balance out the risk associated with investments. Answering this question can work in the same way as assessing your other assets when you consider your own investment portfolio.
5. How hands-on do you want to be?
Finally, do you want to select which companies the money will be invested in? Or would you prefer to take a hands-off approach? There’s no right or wrong answer here, but thinking about it can help ensure you pick the right investment vehicle for you.
If you want to take steps to improve the financial future of your child, please get in touch. Whether investing is the right option or not, we’ll work with you to create a plan that you can have confidence in.
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.
When you first think of seeking financial advice, it might be the calculations that you focus on. The figures are an important part of understanding your financial situation and what you can achieve. However, it’s just a small part of what financial planning is about and where it adds value.
Financial Planning Week was celebrated earlier this month, aiming to encourage more people to consider the benefits of working with a financial planner. It’s the ideal time to step back and consider what you get from working with a financial planner, it should be far more than simply working out what your pension will be worth in ten years’ time.
Financial advice vs financial planning
You may think financial advice and financial planning are essentially the same thing or that the two terms can be used interchangeably. However, they’re actually two different ways of working. They both have benefits, and which is the right option for you will depend on your needs and circumstances.
Financial advice can be useful if you have a certain question you want answering. For example:
- How can I mitigate Inheritance Tax?
- How much will my pension be worth at the point of retirement?
- How should I invest savings?
Financial advice can help you answer these and give you a clear picture of your financial situation now and in the future.
In contrast, financial planning takes a more holistic approach. The aim is to create a comprehensive financial plan that puts you at the centre. This means considering your long-term aspirations and any concerns you may have. This can help you align financial decisions with your lifestyle and goals.
For instance, whilst financial advice can offer you guidance on pension values and the most efficient way to withdraw money at retirement, financial planning will look at the bigger picture. During the process, for example, it may ask questions like:
- Can you afford to retire early, would you want to if it were an option?
- What is the right level of retirement income to achieve your goals?
- How can retirement income be used to address other concerns, such as wanting to help family financially?
As you can see, it’s about more than calculations. Instead, financial planning focuses on helping you use your assets to meet goals. There will be different points in your life where you can benefit from both financial advice and financial planning. When deciding between the two, it’s important to look at the value each can offer in terms of your needs.
The value of financial planning
Where financial planning adds value to you, will depend on your circumstance but here are some points to keep in mind:
Understanding finances in the context of personal goals: Whilst we often have goals that require money to achieve, it can be difficult to understand if you’re on the right track. You may, for instance, hope to retire five years early, but is this possible with your current pension contributions or other assets? Financial planning can help you see your financial decisions in the context of what you want to achieve. It’s a benefit that can help you proceed towards goals and set realistic expectations.
Highlight where mistakes are being made: Finances can be complicated, and we’ve all made a few mistakes along the way. Having another pair of eyes look over your finances can highlight where mistakes have been made. Perhaps your savings account isn’t offering the best returns available or your investments haven’t been reviewed to reflect life changes. Regular meetings with a financial planner can help reduce the chance of mistakes happening.
Planning for the long term: We often know we should plan financially for the long term, but it can be difficult to understand how decisions now will have an impact. If you’re employed, you’re probably paying into a pension, what kind of lifestyle will this afford you in retirement? You might see the contributions leaving your payslip each month, but understanding the full impact of these sometimes passes us by. Using tools such as cash flow modelling, financial planning can help you visualise how steps taken now will influence your financial future.
Consider the unexpected: Much like the above, we know we should plan for the unexpected. You might already have an emergency fund set to one side but it’s important to consider a range of scenarios to improve your financial resilience. A financial planner will ask questions, such as what would happen if you or your partner passed away or would your retirement income be affected if investment values fall, and help you put safeguards in place where appropriate.
Confidence: Money can often seem complex and be a worry in day-to-day life. Financial planning aims to give you the confidence to enjoy life, without worrying about finances. One milestone where this is often evident is at retirement. Retirees may be concerned that they’re spending too much, too soon or will have little to leave behind for loved ones. Financial planning can help them understand their income and what it means in the long term.
Ongoing advice: Whilst sometimes a one-off meeting with a financial adviser is enough, ongoing advice has benefits too. Your situation, priorities and financial circumstances can change dramatically over time. Ongoing advice gives you a regular opportunity to discuss concerns and how your financial plan can change to suit your lifestyle.
If you’d like to chat with one of our financial planners about your goals, please get in touch.
The amount of assets that are invested whilst considering the impact it will have has increased. More investors than ever before are taking ESG (environmental, social and governance) factors into consideration to align their portfolio with their values. But what investment strategies are there that allow you to reflect this?
The 5th – 11th October marked Good Money Week, an awareness week that aims to showcase the sustainable and ethical options when it comes to banking, pension, savings and investments. If ethical investing is something you’ve been thinking about and you want to incorporate your values into financial decisions, now could be the perfect time to do so.
Choosing investments for reasons other than financial gain has been a trend that’s gradually gaining traction. Of course, this doesn’t mean that you disregard returns, it’s about taking multiple factors into account. As a result, ethical investing is sometimes referred to as having a ‘double bottom line’; the return it delivers to you and the positive benefit.
According to research:
- Just three in ten men with investments only care if they make money, this figure drops to 15% for women
- However, there is a lack of awareness, just 69% said they had no idea they can request investments that have a ‘positive social impact’
So, if you do want to invest with ethics in mind, what are your options? There are three key strategies to be aware of:
1. Negative screening
When people talk about ethical investing, this is often the first strategy that springs to mind. It involves divesting and avoiding investing in companies that don’t align with your values.
For example, if you’re seeking to ensure your portfolio has a positive impact on climate change efforts, you may decide to no longer want to invest in companies with activities in fossil fuels. Alternatively, if human rights are a key concern, you may decide to avoid retailers that have exploitative practices within their supply chain.
When you see ‘ethical funds’ this is usually the top strategy they’ll use, although the criteria can vary significantly between funds. One of the issues with this strategy is that large, multinational companies will often derive profits from multiple industries, particularly when you consider subsidiaries. As a result, funds will often allocate some leeway, for instance, avoiding companies that derive more than 5% of their profits for certain activities.
In terms of your investment and returns, negative screening will potentially mean cutting out entire industries. As always, it’s important to keep in mind how balanced your portfolio is and how it aligns with your financial goals.
2. Positive screening
In contrast to the above, you don’t avoid investing in certain companies when using a positive screening strategy, but actively seek to invest in certain firms. It means investing in businesses that are championing the values you have.
Going back to the climate change example, with a positive screening strategy, it may mean investing in companies that are operating in renewables or researching new technologies that could help. Often, investors will allocate a portion of their investment portfolio to supporting their values.
This has both pros and cons. One advantage is that it means you don’t miss out on potential investment opportunities, as you may with a negative screening process. On the other hand, it may mean investing in companies that don’t align with your values.
Finally, an engagement strategy is about using shareholder power to encourage change within a company. Due to needing significant shareholder power to influence, this strategy is more commonly used by institutional investors, such as pension funds. However, that doesn’t mean it’s irrelevant to you. It’s still possible to engage with your pension provider, for example, to encourage them to use their influence.
Which strategy is right for you?
It’s important to keep in mind that there’s no right or wrong answer here.
You may have a preference about which strategy you’d prefer, or maybe you want to blend them. However, it’s just as important to look at your wider financial circumstances and how investment decisions will affect your goals. This is an area we can help with. Looking at your existing assets and how these can be adapted to reflect ethical views, can lead to a portfolio that supports both your ethics and aspirations.
Setting out your values
If you’re beginning to consider incorporating ethical investing in some way, the first step is to consider your values. What’s important to you?
One of the challenges with ethical investing is that it’s a highly subjective area. What you may consider unethical, may be acceptable to others. This can make it difficult to find funds that align with your views. Setting out what your priorities are can give you a starting point. According to research from Triodos Bank, the top five industries investors would want to avoid are:
- Manufacturing or selling of arms and weapons (38%)
- Worker/supply chain exploitation (37%)
- Environmental negligence (36%)
- Tobacco (30%)
- Gambling (29%)
Do you agree with these? Before investing your money through an ethical fund, take some time to look at the criteria. There may be instances where you need to compromise, so you should also think about how comfortable you’ll be with this.
If you’d like to discuss your current investment portfolio, please get in touch. We’ll help you understand how it’s currently invested and potential changes that could be made, reflecting your views and financial position.
Please note: The value of your investments 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.
Research suggests thousands could be missing out on investment returns in their pension because they haven’t updated their retirement age. Remaining engaged with your pension can help you create a retirement income that meets expectations. So, what should you review when looking at your pension?
1. What fund are you invested in?
Typically, a Defined Contribution pension will offer several different fund options for you to choose from. When you first join the scheme, you’ll automatically be enrolled into one and this will remain so unless you change it.
There are a few reasons why you may want to change which fund your pension is invested in. Often, they will have varying levels of risk, allowing you to choose one that suits your attitude and goals. In addition, many pension providers also offer an ‘ethical’ fund if you want your pension to be invested in a way that reflects your values.
It’s usually easy to change which fund your pension is invested in, either by updating it through an online portal or contacting the pension provider.
2. What does it assume your age of retirement is?
Pensions are usually invested. Traditionally, the level of risk these investments take decreases as you approach retirement age automatically. However, if the assumed retirement age doesn’t align with your plans, you could miss out on returns.
According to analysis from Aviva, an average earner in an automatic enrolment scheme could miss out on more than £4,000 in their person by sticking with a default retirement age of 65, when they intend to retire at 68. If the default retirement age is set at 60, this rises to almost £10,000. With retirements becoming more flexible, this could be a growing issue.
It’s also worth noting that, depending on your assets and retirement plans, de-risking investments as retirement approaches may not be the best option.
3. Are you receiving the correct level of tax relief?
Tax relief is one of the aspects that makes saving into a pension valuable. It’s a helpful way to boost your contributions. The amount of tax relief you receive on pension contributions is linked to the highest rate of Income Tax you pay.
The basic-rate of 20% tax relief is automatically applied. However, if you’re a higher or additional-rate taxpayer, you will need to claim the additional tax relief through tax returns. It can seem like a chore, but it’s one that’s well worth doing. To increase your pension by £100, you’d need to add £80 if you’re a basic-rate taxpayer. However, this falls to just £60 and £55 for higher and additional-rate taxpayers respectively.
4. How much are you contributing?
If you’re not sure, it’s a good idea to look at how much you’re paying into your pension each month. Under auto-enrolment, this will be a minimum of 5% of pensionable earnings. However, you can increase this. Even a small increase can have a big impact over the long term, particularly when you factor in tax relief and investment returns.
5. What is your employer contributing?
Your employer will also be making contributions to your pension. As a minimum, this will be 3% of pensionable earnings. However, some employers do pay in more or will increase their contributions if you do. It’s worth checking what your company policy is on this as employer contributions are essentially ‘free money’ that could boost your future income.
6. What returns are investments delivering?
As stated above, pensions are usually invested. The returns these investments deliver can help your contributions grow over your working life. As a result, taking a look at how investments are performing at part of a regular review can help you see whether the investments are right for your goals.
It’s important to look at the bigger picture here. Investments are often volatile when looking at just a snapshot of figures. Instead, you should look at how your investments have performed over the long term to gain a more accurate understanding.
In addition to returns, take some time to look at the fees you’re paying, as these will eat into the returns.
7. What is the projected value at retirement?
Finally, how much will your pension be worth when you want to access it? Your pension provider should give you an estimate of this figure, although it’s important to keep in mind that this can’t be guaranteed.
Understanding what your pension is projected to be worth gives you an opportunity to see if expectations align with reality. If there’s a shortfall, the earlier you spot it, the better the position you’re in to make necessary changes. Alternatively, you may find you’re in a position to retire earlier than expected if you want to.
If you have any questions about your pension or other assets that will be used to fund retirement, please get in touch. Our goal is to help you get the most out of your finances and have confidence in your financial future.
Please note: A pension is a long-term investment. The fund value may fluctuate and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Your pension income could also be affected by the interest rates at the time you take your benefits. Levels, bases of and reliefs from taxation may be subject to change in the future.