If you have ever been fortunate enough to swim in the azure tropical waters of the Caribbean, or on Bondi Beach amongst the surfers, or in the chilly waters of Cape May (where the film ‘Jaws’ that scared the 1970s generation out of the water was filmed) in the back of your mind may have lurked the thought that a large shark might just be out there looking for lunch. What was that shadow?

Yet most of us don’t think twice about the risks of sitting under a coconut tree, which urban myth suggests is far more likely to kill you from a falling coconut than a shark attack, as is the malaria-carrying mosquito that lands on bare flesh as the sun sets in paradise.  Nor did we consider the risk of a deep vein thrombosis from the long-haul flight to get there.  We fixate on the shark.

Humans are irrational and find it hard to place risks in perspective, in part because they involve numbers (which many people hate), are influenced by fear or recent news and often depend on the way in which they are framed, to name just a few of the challenges. 

We have a very clear recent example of our confusion with the extremely rare possible side effects of some of the Covid-19 vaccinations.  Latest estimates, suggest that the risk of dying from the vaccine due to blood clots is 1 in 1 million, which is similar to the chance of being murdered next month (nasty) or dying in a road accident on a 250-mile road trip [1].   And that, is the point. 

Life is full of risks and those that we deem to be everyday consequences of modern life, we take, usually without batting an eyelid, such as: driving, using ladders, drinking alcohol, climbing mountains, and walking through fields of cows (nearly 100 people were killed by cows between 2000 to 2020) [2].  Yet other exceptionally low risks we deem ‘too big’ to take. 

It is similar with investing.  Investors tend to worry about equity market crashes, perhaps not surprisingly, as equity markets can and have fallen by more than 50% in the past. Yet owners of equities should not be looking to sell them in the next few years but relying on fixed income assets to meet liquidity needs. 

In most cases, markets recover relatively quickly over say 3-5 years, sometimes more slowly.  With horizons well beyond these falls and recoveries, investors who stay the course should be rewarded - as they have been in the past – with strong returns above inflation.  The latter is the real (excuse the pun) risk to long-term investors. 

Avoiding equity market risk and putting money on deposit is actually the risky strategy.  Over the past 10-years, those holding cash have lost around 1/5, or 20%, or £20 in every £100 of purchasing power [3], however you want to describe it.  That is risky.  Managing risk in our lives is summed up well by Professor Dame Glynis Breakwell who wrote a book titled The Psychology of Risk [4].

‘Risk surrounds and envelops us.  Without understanding it, we risk everything and without capitalising on it, we gain nothing.’

Go on, get the vaccine, take that long haul flight (once you can) back to the azure waters, brave the sharks and stick with your equities.  The risks will be worth it.

[1]    https://www.bbc.co.uk/news/explainers-56665396

[2]    UK Health and Safety Executive (HSE) https://www.hse.gov.uk/

[3]    Bank of England – 1 month Treasury bills

[4] This is not for the faint-hearted – it is an academic tome. If you are interested in how to use and understand statistics in a statistics-laden world, an enjoyable and accessible read is Tim Harford’s new book ‘How To Make The World Add Up’

Risk warnings

This article is distributed for educational purposes and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy, or investment product.  Information contained herein has been obtained from sources believed to be reliable but is not guaranteed. 

Past performance is not indicative of future results and no representation is made that the stated results will be replicated.

As an investor one is always learning. Our perception of investing is guided by our experiences: those old enough to have been investing in the 1970s will retain uncomfortable memories of rampant inflation and the impact that had on cash, bonds, and the general travails of life when prices spiral upwards.

Others who lived through the birth of the internet and the boom and subsequent bust of the ‘dot.com’ era of the late 1990s and early 2000s, may also be living through a sense of déjà vu.

For most investors, interest rates have been on a steady long-term decline making mortgages cheaper and supporting bond and equity prices. In the past twelve months, we have been reminded of some useful lessons that can – hopefully – make us all better investors. Several key lessons stand out for us:

1. Markets go down as well as up. In the decade following the Global Financial Crisis, investors were treated to a long and almost interrupted run of rising equity, bond, and property markets. It seemed as if everything always went up. The first quarter of 2020 reminded us that this is not always the case. Some equity markets fell in excess of one third of their value. It could have been much worse. A useful rule of thumb is that the equity content of a portfolio could easily fall by 50%, as it has in the past on several occasions. Equity investors get rewarded for taking on this uncertainty and pain, eventually.

2. Short-term pain does not become long-term pain unless you sell. Those who needs their money in under a year should not own any equities at all. In reality, most investors have very long-term horizons; after all, if you are 60 you should be planning to be invested for at least another 40 years! Yet it is a sad fact that some investors panic and sell out when markets nosedive, even though they don’t need their money that year or probably for many years. Broad global markets have recouped all of their losses (and more) since the start of 2020 to the start of March 2021. Bailing out of a long-term strategy can be costly. Most investors who need to withdraw money from their portfolios own high quality bonds that they can sell to meet expenses, leaving their equities intact.

3. High yielding bonds have equity-like characteristics. During painful sell offs, investors need to be able to rely on their bonds to help ease the pain. Unfortunately, high-quality bonds (i.e. bonds from the most credit-worthy issuers) pay low yields. Yet, high yielding bonds – from lower quality corporate and emerging market borrowers – are not the solution as they act far more like equities, just when you do not want them to. Sticking with high quality bonds is an insurance policy. Owning the right level of insurance coverage is important.

4. Fads, trends, and social media tips are dangerous to your wealth. In the past few months, we have seen extraordinary share price rises of many growth-oriented companies, particularly in the US. For example, Tesla’s stock price rose from US$121 a year ago to a high of $883 on 25th January 2021. Social media pumping of stocks like GameStop and the ‘enthusiasm’ of online retail investors pushed some stocks ‘to the moon’🚀🌙 (symbols used on social media to signify a ‘great’ stock!). Yet most turned out – or will turn out - to be meteorites falling back to earth. Tesla’s stock price has fallen by around a third since then. Owning stocks is for the long run. Owning them for short-term gains is gambling with costly consequences for most. Let others take the losses. Remember that owning a diversified portfolio means that you already own many of tomorrow’s winners. Be happy with that.

5. Inflation may not be dead. We have been living for some time in a relatively benign inflation environment. Yet, the huge levels of government stimulus and consequent growth of the money supply – not least the US$1.9 trillion (i.e. $1,900,000,000,000) package in the US – risks fanning inflation. Inflation is a form of unlegislated, invidious taxation.

6. Bonds do not always go up. Inflation – or the fear of inflation - is bad for bonds. Bond yields - that incorporate the market’s view on future inflation - have risen of late as a consequence, pushing bond prices down. Bond yields have been falling for around 40 years to historic lows, so this is new to many investors. Owning shorter-dated bonds helps lessen the pain and investors benefit more quickly from the rise in yields.

7. Gold is not a good short-term hedge of inflation. Although the salaries of comparably ranked army officers from Roman times to today – a mere 2,000 years - are almost identical in gold terms (1) (i.e. the price of gold has kept up with inflation), just as we are potentially experiencing a rise in inflation, gold prices have been slumping from above GBP2,050 per ounce in August 2020 to below GBP1,700 per ounce today. In fact, gold’s inflation-busting myth relates to the 1970s when inflation was rampant and gold prices rose dramatically. Correlation does not imply causation.

8. It is always darkest before dawn. The last 12-month period has seen some tough times for everyone, both in terms of our personal lives and in the markets. It is always easy to see the doom and gloom, but there is light at the end of the tunnel. Keep positive. This too, shall pass.

These lessons lead us to some obvious conclusions about portfolios. Own a sensible balance between bonds and equities and understand that owning high-quality bonds is an expensive, but necessary insurance policy for most and allows you to meet your nearer-term liabilities.

Own a globally diversified equity portfolio. A few US technology stocks cannot continue to out-run markets for ever. Keep the faith in your long-term portfolio strategy and turn your eyes away from market temptations!

At the end of the day, building wealth from investing is a long, boring process interspersed with years like the one we have just had. We survived what the markets threw at us and will survive whatever comes our way again. Stick with it.

(1) Erb, Claude B. and Harvey, Campbell R., The Golden Dilemma (May 4, 2013). Available at SSRN: http://ssrn.com/abstract=2078535 or http://dx.doi.org/10.2139/ssrn.2078535.

Risk warnings

This article is distributed for educational purposes and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy, or investment product.  Information contained herein has been obtained from sources believed to be reliable but is not guaranteed. 

Past performance is not indicative of future results and no representation is made that the stated results will be replicated.

In the past few months, it might appear – at least to some – that making money in markets is easy – just buy Tesla or Bitcoin and you are sure to double your money! That is to confuse gambling with investing, and these are certainly not recommendations by the way.

Bitcoin - boom, bubble or bust?

In October 2008, a mysterious white paper was published by an unknown author titled “Bitcoin: A Peer-to-Peer Electronic Cash System”[1] and the world had been introduced to its first ‘cryptocurrency’. Driven by blockchain technology, the main attraction compared to traditional currency was clear – Bitcoin provides a decentralised way for two parties to exchange value. In other words, Bitcoin has no need for a governing body, no central bank and is merely a digital ledger that facilitates and records transactions. Without getting too granular about how exactly this works, the complicated mathematical procedures in place make falsifying Bitcoin transactions unlikely with today’s technology[2] (although never say never!).

Twelve years down the line the cryptocurrency space has seen thousands of alternatives, or ‘altcoins’, come to market, all of which attempt to improve upon the blueprint pioneered by Bitcoin. One challenge is scalability – Bitcoin can handle a paltry 350,000 daily transactions[3] compared with VISA who executed ≈500m per day in 2019[4]. Furthermore, in a society that is ever more focused on sustainability, a currency that requires enormous warehouses full of energy-hungry computer equipment to keep it going, feels like a square peg in a round hole. A useful tool built by the University of Cambridge estimates that the Bitcoin network currently consumes around 110 TWh of energy per year, roughly the same as the Netherlands[5]!  

Despite the implementation issues, the value of Bitcoin – and many of the ‘altcoins’ mentioned previously - have skyrocketed of late leading to a lot of excitement for investors (or rather gamblers). The only thing we know for certain about investing in cryptocurrency is that it is highly speculative. The extraordinary volatility of most ‘coins’ makes them an unreliable store of value. Going to sleep and waking up 10% richer (or poorer) is commonplace. Furthermore, Bitcoin is not a capital asset - it does not pay dividends, nor does it have a positive expected return. Positive outcomes are simply the result of demand outstripping supply, although investors are quick to forget that the future expectation of demand is already factored into the current price. There are 18.6 million Bitcoins in existence, yet recently the sale of 150 Bitcoins resulted in a price drop of 10%[6] demonstrating no depth or liquidity to the Bitcoin market.

It is possible that we may one day transition to a world where cryptocurrency is adopted by the masses. Who knows if that is even remotely likely, and better yet who knows which cryptocurrency will be the one that ticks all the boxes? As an investment today, cryptocurrency plays no role in portfolios and any investor (gambler) should be willing to accept a maximum loss of 100%.

Here is another example of gambling masquerading as investing:

GameStop – reddit vs Wall Street

In what is a fast-moving situation, a group of amateur investors using discussion website reddit as a platform, have banded together to take on the professional hedge fund space in the US. The group has focused their conversation on a few stocks of late, the most recent of which is an American consumer electronics firm, GameStop. On the one side we have the hedge fund managers, who are engaged in a process known as ‘shorting’, essentially betting that the share price of GameStop will go down over time. A successful short involves borrowing stock from a third party, selling it on the marketplace and then buying it back later when the price has fallen. This allows the short seller to return the stock to the third party and cash in the difference in price. The danger of this is that if prices were to rise, purchasing the stock back becomes more and more expensive for the short seller and they cannot afford to return their borrowed stock. Professional investors are aware of these risks more than anyone.

The companies featured recently on the forum are heavily shorted and include GameStop, AMC Entertainment, Koss Corp and Blackberry (throwback). By purchasing shares in these firms, investors are bidding up prices creating huge losses for some of the hedge fund managers. These are not small market movements either. As of the 27th of January, the share price of GameStop closed nearly 2000% up since the start of the year[7]. Yet in the time it has taken to write this article, on 28th January the price fell by almost a half! A quick glance at the forum shows that the motivation for some is to ‘stick it to the man’, whereas others are perhaps looking to make a quick buck. As the situation progresses it has certainly caught the eye of the regulator on suspicion of market manipulation, as well as the newly appointed US Treasury Secretary, Janet Yellen, whose team are “monitoring the situation”[8].

Either way, it is difficult to see how this will have any sort of happy ending. Other than the handful of investors (gamblers) who might sell at the right time, the only guaranteed beneficiaries to all this are the market makers and middlemen. If you want excitement, just follow the stories, and enjoy the schadenfreude that follows. This is just gambling and best avoided.

[1] Bitcoin.org (2008) Bitcoin: A Peer-to-Peer Electronic Cash System. https://bitcoin.org/bitcoin.pdf

[2] Forbes (2020) Can All of Bitcoin Be Hacked? https://www.forbes.com/sites/baldwin/2020/02...

[3] Research Affiliates (2021) Bitcoin: Magic Internet Money.

[4] Statista (2019) Number of purchase transactions on payment cards worldwide in 2019.

[5] University of Cambridge (2021) Bitcoin Electricity Consumption Index https://www.cbeci.org/

[6] Jemma Kelly (07 Jan 2021), No, bitcoin is not “the ninth-most-valuable asset in the world” Time for some realism. FT.com 

[7] Google Finance (2021) GameStop Corp. Share price.

[8] BBC News (2021) GameStop: Amateur investors continue to outwit Wall Street. https://www.bbc.co.uk/...

Risk warnings

This article is distributed for educational purposes and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy, or investment product.  Information contained herein has been obtained from sources believed to be reliable but is not guaranteed. 

Past performance is not indicative of future results and no representation is made that the stated results will be replicated.

RMail is an encrypted email service that we have been using to send emails that contains personal details within the body of the email or any attachments (regular review documents, reports, valuations, etc.). This is the only service we will use going forward, unless we notify you otherwise. We are no longer using SharePoint so please do not open anything with links to Onedrive or SharePoint that appear to be from a member of the team. If you are ever unsure of any document you receive, please do get in touch to check. We take cybersecurity very seriously and would welcome your call/email even if there was only the smallest of doubt!

We have dedicated a lot of time into improving our online security, as we believe it is paramount to take action in preventing cybercrime proactively. By encrypting the email, it significantly reduces the chances of information being intercepted in a cyberattack, whilst still ensuring the email is easily accessible.  

---

So what does RMail look like?

When we send an email encrypted it will appear in your inbox, like the test example below. Please note that these encrypted emails sometimes end up in junk/spam folders, so if you are expecting a document from us and have not received it please check your junk folder. You will be able to view the body of text from the sender and there will be notification of the file name sent.

If you click to download the attachment we have sent, the following screen will appear for you to input the password shown in the original email. In this case EA6QIubAvA

You will also be able to reply to provide personal details using the same encrypted service (labelled in the picture above). When you reply it will look like the below. Just type your message and/or add any attachments and click ‘send encrypted’.

I hope this helps demonstrate how to use RMail and why we use it. We have had a number of our clients report that emails sent via RMail are sometimes received in their junk folder. We would recommend that you mark our emails as ‘not spam/ junk’ to prevent this regularly occurring. If you have any questions or problems using this encrypted service, please just get in touch and one of the team will be happy to help.

A final word of warning to stay vigilant, not just with what Ifamax is sending, but any email that lands in your inbox. In the last week alone we have heard of the following and I have attached print screens to show what a phishing scam can look like:

• A Text message, requesting bank details that appear to be from the NHS in relation to the vaccine.

• An email asking us to download a statement on SharePoint.

• A Zoom meeting link, asking to click to ‘Review meeting’.

• A notification to delete emails to make room for storage, from our own email address.

It is really important that you never click on a link in an email like the below examples.

Nothing contained in this article constitutes or should be construed to constitute investment, legal, tax or other advice. The information contained in this article shall in no way be construed to constitute a recommendation with respect to the purchase or sale of any investment.

Capital Gains Tax (CGT) is paid by an individual when they have either sold or ‘disposed’ of an asset and made a gain on the original price they paid for it. The potential tax is only paid on the gain and not on the total sale value.

For example, if you bought some shares in Company X for £10,000, and then later sold these for £25,000, your total gain on which you would potentially pay capital gains tax would be £15,000.

However, each individual is entitled to an annual capital gains tax allowance, of £12,300 for the 2020/21 tax year, on which all gains within this amount are free of tax. So, on our above example of £15,000 gain, only £2,700 of this would be taxed (£15,000 minus £12,300).

One important rule that is often overlooked and could potentially be a powerful tax planning tool, is that you do not normally pay Capital Gains Tax on assets you transfer to your husband, wife or civil partner. ​This can be really useful where one party has utilised their full allowance and the other has not, as you can potentially double your annual allowance.

​You can also use losses to reduce any gain. When you report a loss, the amount is deducted from the gains you made in the same tax year.​ If your total taxable gain is still above the tax-free allowance, you can deduct unused losses from previous tax years. If they reduce your gain to the tax-free allowance, you can carry forward the remaining losses to a future tax year.

Nothing contained in this article constitutes or should be construed to constitute investment, legal, tax or other advice. The information contained in this article shall in no way be construed to constitute a recommendation with respect to the purchase or sale of any investment.

Limits

There are limits to the amount of gift aid that can be claimed by the charity and you could face a tax charge if the Gift Aid relief exceeds the UK tax you have paid during the tax year. You will need to have paid sufficient income or capital gains tax in the UK for a charity to claim the additional 25% of the donation. ​A simple rule to confirm your donations will qualify is to ensure they are not more than 4 times what you have paid in tax in that tax year (income or capital gains).​

Example: Dave will pay income tax of £2,500 for the 2020/21 tax year. He can, therefore, be comfortable that following a gift of £10,000 to Cancer Research UK the charity can claim full gift aid on his contribution. Anything over this gift amount can not be claimed as gift aid.

Benefits for higher and additional rate tax payers

​An additional benefit to individuals who pay tax at the higher and additional rate, is that you can claim further tax relief against your own income tax liabilities through your self assessment return. This is the difference between the respective rate of tax at 40% or 45% and the basic rate at 20%.

Nothing contained in this article constitutes or should be construed to constitute investment, legal, tax or other advice. The information contained in this article shall in no way be construed to constitute a recommendation with respect to the purchase or sale of any investment.

The ability to support  charity  is one that is extremely important for  many of our clients and indeed for people all around the UK. 

The  Charities Aid Foundation calculate that around £10 billion is gifted to  charity in the UK each year.​ With the events of 2020 and effects of Covid-19, the need for charitable  gifting is one that has been highlighted even more so, both with  individuals wanting to make donations, and also  the necessity for  donations for charities to survive and continue with their respective  works. 

Gift Aid​ 

The most popular, and often easiest, way to gift to charity in the UK is  through cash donations though the government’s Gift Aid scheme. Gift  Aid is a tax relief allowing UK charities to reclaim an extra 25% in tax on  every eligible donation made by a UK taxpayer.  ​Or put simply for every £1 you  donate , the charity can claim back an  extra 25p from the government.​ 

The basic premise for this is that as you are donating utilising money  you have already paid tax on the government agree to forward this tax paid (up to the basic rate of 20%) onto the charity. 

Nothing contained in this article constitutes or should be construed to constitute investment, legal, tax or other advice. The information contained in this article shall in no way be construed to constitute a recommendation with respect to the purchase or sale of any investment.

In the current environment of historically low rates, efficient cash management can be an effective planning tool that is often overlooked.

Personal Savings Allowance

Savings interest is paid tax-free and most will not pay any tax on it at all. Basic-rate taxpayers can earn £1,000 per annum tax-free and higher-rate tax payers £500, so it is only those with much larger amounts of savings who would need to worry about this.

Financial Services Compensation Scheme (FSCS) protection​

As long as the bank institution you use is fully regulated in the UK, you get up to £85,000 of your money protected in the event of the bank going bust. It is important that you look to manage this effectively so you are not putting your cash at unnecessary risk.

Emergency Cash

We always recommend that individuals hold at least six months worth of expenditure in cash in an instant access account. This avoids being caught short in the event of a sudden need for cash; this could be for unforeseen expenditure or income shock.

Nothing contained in this article constitutes or should be construed to constitute investment, legal, tax or other advice. The information contained in this article shall in no way be construed to constitute a recommendation with respect to the purchase or sale of any investment.

Whilst most are familiar with the relatively well-known cash or stocks and shares ISAs, the ‘newer ISAs on the block’; Innovative and Lifetime, may need a bit more of an introduction.

Innovative ISA

This allows you to invest in peer to peer (P2P) lending within an ISA wrapper. P2P is the process of lending your money to other individuals for a set period of time for a set rate of return. By removing the middle man of the bank, lenders can get better rates of return on their cash and borrowers can pay a lower rate of interest. ​In theory, the process should lead to a better outcome for both lenders and borrowers. However, they clearly come with their own risks in that the borrower may default and you could be left with nothing.

Lifetime ISA

The LISA was introduced in the 2017/18 tax year and designed to be used by either first-time house buyers or saved for later life income. ​You can put in up to £4,000 each year until you are 50 and can be opened from age 18-39. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year. ​You can withdraw funds from a LISA any time, but if you do this before the age of 60 and it does not relate to a qualifying house purchase, you could be hit with a penalty.

​Broadly speaking, for the majority of people saving, a LISA is most efficient for first-time house buyers, so this could be an option for yourself or those seeking to help children/grandchildren onto the property ladder.

Nothing contained in this article constitutes or should be construed to constitute investment, legal, tax or other advice. The information contained in this article shall in no way be construed to constitute a recommendation with respect to the purchase or sale of any investment.

All asset classes are important to us, and cash is just one of them. To enhance our service model, Ifamax has partnered with Insignis. ​Insignis Cash Solutions is an innovative cash management solution that complements your asset portfolio by looking after your cash.

​Cash is different to your other assets due to its liquidity and return potential. This service allows you to get a better return than you would at a traditional high street bank, while still allowing you to determine what liquidity requirements suit you. ​The great benefit of using this service is that it is done with a single sign in procedure, making it as easy for you as possible. ​Insignis use a number of secure UK-based financial banks to invest your cash.

All the banks used have FSCS protection, which is currently £85,000 per bank, per individual. This gives our clients a variety of options, depending on the capital amount and term requirements. ​The service is aimed towards those that typically hold high cash balances as the minimum account size is £50,000.

How could you benefit:​

-Client remains the beneficial owner at all times​

-A single sign-up procedure, giving you access to multiple bank accounts​

-Interest rate monitoring and cash account management​

-The ability for Ifamax to manage the service on your behalf (if required)​

-View your live cash portfolio online​

-Their assets being safe and secure ​

-Individuals, Companies, Trusts or Charities​​

Nothing contained in this article constitutes or should be construed to constitute investment, legal, tax or other advice. The information contained in this article shall in no way be construed to constitute a recommendation with respect to the purchase or sale of any investment.

The ISA allowance is something that can strangely be both under and over appreciated by people, dependent on their perception of it. Understanding the rules and advantages of the various ISAs available inline with your own personal situation is something that can be a powerful planning tool.​ The ISA allowance for the 2020/21 tax year has remained the same as last year at £20,000 and this can be spread across each of the four types of ISA available to you.

The four types of ISAs are:

The basic premise of any ISA is that you do not pay tax on ​ interest on cash in an ISA ​ income or capital gains from investments in an ISA. ​This can be especially useful for those who have large investment or cash holdings outside of any tax-advantaged wrappers. By ‘sheltering’ as many of these assets as possible in ISAs, you are potentially reducing ongoing tax bills.​ However, with the respective allowances we all have for both interest and dividend income and capital gains, striving to get everything into ISA where possible isn’t always required.

Nothing contained in this article constitutes or should be construed to constitute investment, legal, tax or other advice. The information contained in this article shall in no way be construed to constitute a recommendation with respect to the purchase or sale of any investment.

Junior ISAs are long term tax free savings accounts for children. In order to open a JISA, a child must be under the age of 18 and be living in the UK. The current limit for JISAs is £9,000 a year. Like the standard adult ISA, children can have either a cash or stocks and shares JISA. ​Parents or guardians can open and manage a JISA on behalf of a child, however, the money belongs to the child. It is important to remember that whilst children can take control of their own JISA at age 16, they will not be able to access any of the proceeds until they are at least 18. Equally important to remember, is that children are entitled to their JISAs at 18 and can do as they wish with the funds.

Whilst some providers may offer what look like attractive interest rates on cash JISAs, you must be careful to remember that if the child has a number of years before they can access the fund, it may be better off being invested into stocks and shares. Given time, this would be expected to give returns beyond any cash JISAs.​ Anyone can add money to a JISA for a child, so parents and grandparents could see this as a good opportunity to build savings for a child in a protected ‘environment’.

Nothing contained in this article constitutes or should be construed to constitute investment, legal, tax or other advice. The information contained in this article shall in no way be construed to constitute a recommendation with respect to the purchase or sale of any investment.

Pension carry forward is a useful tool for pension planning. Once an individual has fully utilised their current tax year’s allowance, one can go back and utilise the unused pension allowance from the previous three tax years, starting with the oldest first. ​Potentially, this enables one to make quite a large pension contribution in a given year. Care needs to be taken on various issues, especially having sufficient ‘earned income’ for the large pension contribution. ​

Here is an example of carry forward at work (assuming an individual  has the standard annual allowance): 

Nothing contained in this article constitutes or should be construed to constitute investment, legal, tax or other advice. The information contained in this article shall in no way be construed to constitute a recommendation with respect to the purchase or sale of any investment.

According to the Association of British Insurers, every year 1 million people in the UK find themselves unable to work due to a serious injury or illness. Although many of us would like to think “that will never  happen to me” or “it is not something I am worried about at the moment”, it is of course often only seriously considered in a moment of hindsight when it is too late. A large amount of employed individuals tend to benefit in some way from their employer in times of need, but for those who are self-employed it is left to you to personally organise any cover that you may need. 

Income Protection​ 

Income protection, (sometimes known as permanent health insurance), insures part of your earnings against illness or accidental injury. It ensures you continue to receive a regular income until you retire or are able to  return to work. ​It is not possible to insure yourself for your entire gross income; insurers feel that you need some incentive to get back to work! Income protection is usually based on a percentage of your earnings; up to 60% is the norm. 

Life Cover​ 

The most basic type of life insurance is called term insurance. With term insurance, you choose the amount you want to be insured for and the period for which you want cover. ​If you die within the term, the policy pays out to your beneficiaries. If you do not die during the term, the policy does not pay out and the premiums you have paid are not returned to you. ​Family income benefit is similar to the above, with the slight difference that the insured amount would be paid monthly/annually for the term of the policy rather than one big lump pay out. 

Nothing contained in this article constitutes or should be construed to constitute investment, legal, tax or other advice. The information contained in this article shall in no way be construed to constitute a recommendation with respect to the purchase or sale of any investment.