Hobbit at home

home work

Working from home for the last few months has been hard. The novelty of ‘no commute!’ and ‘no office politics!’ soon wears off and you risk becoming a little hobbit, isolated and alone in your office come spare room, and I’ve never liked hobbits.

Despite that I am often out and about to see clients, this doesn’t take up all week and there needs to be time taken to write-up meetings and get the advice out the door. So you then spend a large amount of hours alone.

It makes you consciously aware of your flaws! Laziness, ability to be distracted, tendency to procrastinate, lack of self-discipline, of conscientiousness, and need to check with someone else that what you are doing is right every 30 seconds.  Your days become a personal battle between your good and bad qualities.

It’s honestly more isolating and more draining than my old commute. I have found I’ve become quite emotional, since I can’t regularly express any exasperation, happiness or stress to anyone else, other than to Basil (!), so I think it all builds up.

I’ve taken for granted in the past how much you gain from seeing your colleagues and having a quick 10 minutes talking about your weekend plans or to share joys or problems. Doing this on the phone is just not the same.

The second worst problem is the fact that my office is now my home and my home is now my office. I used to love coming home to my home, my haven and enjoyed my space, time out, alone. Now, there’s not really any true escape.

Whilst of course, when working in an office you still fret about the work awaiting you on your desk, or check your email on the mobile out of hours, but there is still a great advantage and mental release in being able to walk out of the building when your day is done, and mark the beginning of a time and a space that officially belongs to you.

The good news is that in the New Year this will all be easier as I will be in an office. We got the keys this week! It will be small and basic and just as an administration hub to begin with, but I can work on a daily basis with the other members of the team and we are all looking forward to it.

We get desks next week and phone lines the week after and it can’t come quick enough for me! Roll on 2016 when we can be there full time!

Keeping it in the family – pensions technical post

pension reform

As a planner, I’ve always liked pensions. However, it’s true… they are confusing and are not helped by the Government changing the rules all the time!

The latest pension changes – known in the industry as ‘pension reform’ – that came into place from April 2015 – means that everyone should be using them more and trying, at least a little, to understand them better.

This is because, thanks to the changes, pensions can now be passed down from generation to generation and this should be very attractive to lots of people.

So… I’m going to try to explain in simply terms how pensions can be used to pass wealth, tax efficiently, to the future generations – and keep more wealth in the family, rather than HMRC’s hands.

Tax and pensions

Before the new rules there were already good reasons for using pensions:

Tax relief on way in + tax-free growth =

greater pension pot and better lifestyle in retirement

These still remain positive planning reasons for using pensions but now, pensions are even better!

 Passing down wealth

  • The new rules will allow holders of flexible pensions (but not members of Defined Benefit plans) to nominate an individual to inherit their remaining pension fund.
  • This can be anyone at any age and is no longer restricted to ‘dependents’.
  • This means adult children (who may have long since left home and have families of their own) can now benefit and don’t have to wait until their own pension years to access the money.
  • Beneficiaries can continue to have the advantages of tax-free investment returns and, potentially for some beneficiaries, tax-free withdrawals.

On and on…

  • The ability to pass on and on pension wealth does not stop with one generation.
  • The first nominated beneficiary can nominate their own successor who will take over the fund following their death.
  • This will allow accumulated pension wealth to cascade down the generations, whilst continuing to enjoy the tax freedoms that the pension wrapper will provide.

TECHNICAL BIT: The Age 75 rule and income tax

  •  If the original member dies after age 75, any withdrawals will be taxed at the beneficiary’s marginal rate of Income Tax.
  • If death occurs before age 75, the nominated beneficiary has a pot of money they can access at any time completely tax-free.
  • In either case, the funds are outside the beneficiary’s estate for Inheritance Tax while they remain within the pension and will continue to enjoy tax-free growth.

Tax rate determined by age at last death

Each time a pension fund is inherited, the tax rate will be reset by the age at death of the last beneficiary / owner.

For example:

Mary, a widow, dies age 82 and had nominated her son Oliver to receive her pension. As Mary died after age 75, Oliver is taxable at his marginal rate on any income withdrawals. This could mean he pays 45% income tax (highest rate).

Sadly, Oliver dies age 65. He leaves the remaining fund to his daughter Simone. Simone can take withdrawals from her successor’s pension account tax-free as Oliver died before 75.

Review review review

The death benefit rules changes mean that for those looking to pass on any remaining pension funds on death to their family a review of the current plan is required.

This means revisiting existing death benefit nominations to ensure they continue to do what you want. Under the new rules, the scheme administrator cannot pay out a nominee’s pension drawdown if there’s an existing dependent (or an existing nomination in place that says something different).

Don’t forget that a nomination doesn’t have to be all or nothing. It’s possible to nominate a number of different beneficiaries and to perhaps skip a generation with some of the fund.

It’s also important to check that the current pension provider can allow what you want to do. Just because the legislation allows, doesn’t mean everyone will be able to in the contract they hold.

For the purposes of this blog and to keep it simple I have just referred to a ‘pension’. However, it should be noted that this ‘pension’ will need to be a Flexi Access Drawdown Pension. In addition, all of this type of planning relies on the existing pension arrangement being able to offer the nominees’ and successors’ drawdown accounts.

You will need financial advice to establish the correct pension contract / vehicle to use and some existing providers may be unable to provide this as an option.

Make sure you seek advice and #planitwell – call me on 07974 329864 for more information.

 

That silly thing called worry

head full of worries

Worrying runs in my family. My Dad worries, my sister Geraldine, worries, it stops sleep. Mum and Geraldine have note pads next to their beds to scribble down things they wake up thinking about at night.

As a child, I worried constantly about fire, I hated bonfires or candles. I had repetitive nightmares that the house burned down, with all of us in it.  That fear / worry has mainly gone now as an adult, but I still have the dream about twice a year.

Geraldine was given some little ‘worry dolls’ as a child. I love this idea and I think whilst she was very young it helped her a lot.

For those that don’t know, worry dolls (muñecas quitapenas), or trouble dolls, are very small and colorful dolls traditionally made in Guatemala.  A person (usually a child) who cannot sleep due to worrying can express their worries to a doll and place it under their pillow before going to sleep.  According to folklore, the doll is thought to worry in the person’s place, thereby permitting the person to sleep peacefully. The person will wake up without their worries, which have been taken away by the dolls during the night.

Worry Dolls:

Worry_dolls

 

 

 

 

 

“Worry dolls” by Leena – Own work (From Wikipedia)

A conversation this week made me realise that it’s really important to manage worry in life, or it can overwhelm you so much that you cannot function or see the best way forward.

Winston Churchill said:

 ‘Let our advance worrying become advance thinking and planning’

Sounds great right?  But the fact is…..we all worry even though we know it’s silly to and we all know we could be using our time and efforts more constructively – yet we still worry.

I think the main thing is that as an adult you have to develop a strategy – like the little worry dolls – to help rid ourselves of the worries we can DO NOTHING ABOUT, and move on to working on those things that we can control.  Let worry become constructive planning.

Everyone needs to work out a way to manage the worry and slow the brain down and the method that suits each person is likely to be different.

Whilst taking my Ceramics degree and whilst I was heavily involved in the ‘arty’ world, I went to a Buddhist Centre in Cardiff once a week and learnt how to meditate.  Hippy Dippy and all that – but it did really help me understand the importance of time out, mindfulness and breathing.

I still regularly use some of these techniques and it helps a lot when I am lying in bed and my brain is still very active or I’m worrying.

I also find any type of craft activity helps too. I distract myself with crochet, knitting, sewing – you name it, I will try. Keeping my brain busy with other things (and not heavy-going or work things) means there is not time to worry and I am relaxed for bed.

Breathing to relax and ease worry:

A deeply relaxed person breathes around seven times a minute. Slow your breathing down and you will automatically relax.

This is especially helpful when you need to focus, do a presentation, attend an interview or just simply to calm down.

  1. Breathe in (count to 6 – approx.)
  2. Hold it (count to 2)
  3.  Let the breath out slowly (count to 8 – approx.)

(*This is from ‘The little book of Mindfulness’ – Tiddy Rowan).

I sleep pretty well nowadays, but if I don’t I revert to the breathing techinque.

In case you are interested, here are some crafty things I’ve been making in my down time:

Ninja Turles for cat toys:

tutles

Heart shaped bowls on a large 15mm crochet hook with Zpagetti (Tshirt) Yarn:

hearts

Dancing to your height

I am a huge Strictly Come Dancing fan. I even loved the original ‘Come Dancing’ with Rosemarie Ford. It’s the glitter, costumes and drama of it! I love Autumn and Winter Saturday nights, cozied up with a glass of wine and enjoying the wholesomeness and fun of it all with family and friends.

Earlier this week, on the sister show, It Take Two, Jeremy Vine spoke about how a professional dancer had told him right at the start of the competition to “Dance your height”. This really stuck with me and got me thinking.

I’ve read a lot about successful people having two characteristics: they believe in themselves and they are always maintaining a positive disposition in everything.

I think this is easier said than done, especially when things do not go according to the plan and emotions come into play.

I’m generally a very positive person, but sometimes life and things can just get you down. My Father refers to it as having the devil on your shoulder, that nagging voice, wearing you down saying that ‘you can’t do it’ or ‘don’t bother no one cares’.

A lot of this, I think, is about mindset and your support network. If you can master the art of positive thinking and surround yourself with helpful and optimistic people, then I think you can be better equipped for the hurdles and obstacles that get thrown in the way of your plans.

A step towards mastering this positive thinking is to be proud of your achievements no matter how big or small they are – this itself I think can help maintain a positive mindset.

It’s surprising the time and energy we expend on worrying what other people think of us; our appearance, our intellect and our faults. We should more often use the time to consider our strengths, our abilities and our best points.

Proud

Saying this, I’m not very good at receiving praise or accepting compliments without being embarrassed. But, I’m determined to learn that there is absolutely nothing wrong with celebrating your successes and achievements. I’ve put in the hard work and I should feel happy!

On that note, I am proud to show you the wonderful badge that I received from the IFP, showing that I was shortlisted (down to 3 people) as CFP Professional of the year 2015. I am very proud of this.

Award

Enjoy Strictly this weekend if you watch it! It’s the Halloween spooktacular! I’m routing for Jeremy to Dance Tall and Proud.

Children and savings

piggy

I’ve been asked twice this month about options for investing for children, specifically for Grandparents of very young children. One of these times of course was for little Jackson Strong, the other by a friend, as her Father wants to give money to her children.

So I thought I would give a summary here of what can be done, although not giving specific investment advice about where to invest the money – for that, you need to speak to me!

Tax and savings

Most generally and for small amounts, it makes sense to save in the child’s name, rather than parents / grandparents.

This means interest earned is generally tax-free (up to certain limits) as children get the same tax-free allowance as adults. So, whether you are saving into a Junior ISA (JISA) or an ordinary savings account your child’s interest will remain tax-free up to the HMRC personal allowance limit, set at £11,000 for 2015/16.

The exception to this is the so-called ‘£100 rule’. This stipulates that any amount of interest exceeding £100 that results from a payment made by a parent / grandparent to a child must be taxed at the parent’s tax rate. This rule is applied to almost all children’s savings accounts except JISAs – which are totally tax-free in the same way as adult ISAs are.

Financial responsibility

Bear in mind that any account held in a child’s name becomes legally theirs to do with as they wish at age 18! And as we all remember, that is not always the best age to have a large lump sum to hand!

The alternative is to hold the money in your own name (see below) or set up a Trust – but I am not going to into detail about that today.

 So….Investment Options

JISA – Junior ISA

  • These work like an adult ISA
  • They are tax-free, but are for the long-term.
  • They replace the Child Trust Fund (CTF) and if a child was not eligible for the CTF they can have a JISA.
  • JISAs have an annual savings limit of £4,080 (current tax year) which can be held entirely in cash, stocks and shares or any mixture of the two.
  • Anyone can pay into the JISA although a parent or legal guardian must set it up and funds cannot be withdrawn until the child turns 18.
  • As an added bonus, JISAs can be held concurrently with an adult ISA between the ages of 16 and 18, giving the child a boosted tax-free allowance for two years.
  • Only two JISAs may be held per child at any one time – one cash, one stocks and shares.

Regular savings

  • Children’s savings accounts offer varying interest rates depending on your chosen bank or building society and the tax rules stated earlier apply.
  • Be warned – you will have to apply for gross interest to be paid by completing a form R85, the bank should provide this to you!
  • They allow instant access to the funds at any time, unlike JISAs which effectively lock the money away until age 18.
  • They can be added to by anyone, anytime, without limit.
  • They can be useful for teaching children financial housekeeping as the child is given access to the account at age seven and can pay in and out of the account as they grow. I remember how nice it was to save in my Nationwide Teddy!
  • NOTE however, regular accounts that pay good interest rates tend to have lower savings limits than JISAs with many providers cutting interest rates if deposits exceed a certain amount.

Pensions – forward planning by 55 years!

  • Child pensions allow parents to pay into a pension for their child from the moment they are born.
  • Like adult pensions, child pensions are hugely tax efficient and are eligible for 20 % tax relief meaning that you only have to pay in £2,800 per year to receive £3,600 back.
  • The maximum that can be paid per annum is £2,800.
  • They are incredibly attractive if you are the kind of person who really enjoys planning ahead and you want to help your child enjoy their twilight years.
  • At an assumed growth rate of 5%, 18 yearly payments of £2,800 would equal £1,053,405 by the time your child reaches 65! Now that’s proper forward planning!
  • Like all pension plans however, they cannot be accessed until 55 at the earliest and many see this as a real downside.

Adult savings

  • It is perfectly possible to save money in your own name for your children or grandchildren.
  • The advantages are that you will be able to control the money, even when the child turns 18.
  • The disadvantage is that the money will be taxed on you in the normal way.
  • It’s also worth considering that the child has no automatic legal right to the money and this could cause problems in the event of death or divorce.

What’s best you ask? …. Well… what’s it for?

  1. What you are saving for and therefore the term. A Car? University? House deposit?
  2. How do you feel about access? At 7, 18 or retirement?!

It’s likely to be best to consider a mix of a few things, but bear in mind most offer really poor cash returns, so shop around for the best deals and remember you can’t beat the excellent tax efficient growth a JISA can offer (and it can convert into an adult ISA).

Hope this helps some of you!

Turning Points

turning-point

As a Financial Planner I say to clients that I want to help guide them through the ‘turning points’ in their life, to help them plan with confidence.

These turning points happen to everyone. A major shift happens in life, maybe someone dies or becomes ill, you lose a job or you get a divorce. Or the event could be something positive like a new marriage, new baby, a mid-life career change, or moving into your dream house. Either way, it can change your perspective on life.

My job is to help people navigate life’s changes and provide the financial tools and resources to give those important choices clarity and direction. So that when it happens and you have those feelings of excitement, grief, or worry, that you are confident that you don’t have to be anxious about your finances. That’s the last thing you need to be fretting over.

It’s when you focus, plan and consider these turning points, that you see what’s really important in life.

These have been some of my turning points:

  1. Deciding to not pursue Ceramic Art as my career and do this instead!.
  2. When my Granny died, realising how much she enriched my life and how I would miss her, especially for the little things. She was the most loving and un-judgemental person I have known.
  3. My latest job change.
  4. Becoming Auntie Gretchen last week.

Jackson, the tiny one

Gretchen and Jackson

Jackson David Strong arrived last week. My first nephew and oh how beautiful he is… 6 tiny pounds of loveliness.

He is my sister and brother-in-law all rolled into one – and it’s wonderful to see them so happy. I could have held him all day and I certainly did not want to leave to come home.

Our family (the Betts-Strong clan) has grown and things will change.
It really is a turning point for us all and what a wonderful one.

I should add that his Grandad and I immediately talked about savings for him!!

I found this poem online and since it was #poetryweek when Jackson was born, it made sense to share it here.

A Baby Changes Things

A baby changes things;
They’ll never be the same;
Your life is filled with wonder,
Since your little miracle came.

There’s lots of things to do now,
But with the new tasks you face,
Your family gains more love,
And bonds time will never erase.

Source: http://www.poemsource.com/baby-poems.html

Autumn – the planning season

AutumnOnce I get over the initial shock of the darker mornings and nights, Autumn has always been my favorite season, as it leads up to my favorite time of year with family, Christmas. It also means the fabulous Strictly Come Dancing is back on the BBC!

It’s quite a symbolic time of year. It’s a season of transition and a hustle-bustle month, as preparations are made for the changing season.

We spend time in the garden tidying up ready for winter and getting things in order. We plant the seeds for next year’s plants and crops.

In autumn we celebrate Harvest and have done in Britain since pagan times. This reminds people of how much we have and those others who are less fortunate.

This is a time of taking stock of all the bounty and provision that we have been afforded and make plans for the next year.

In poetry Autumn has often been associated with melancholia. The fun and warmth of summer is gone, and the chill of winter is on it’s way. Skies turn grey, and many people turn inward, both physically and mentally. It has been referred to as an unhealthy season.

So this is my plan for Autumn and as the nights draw in:

  • Try not to get the winter blues.
  • Work hard in my new job, but enjoy myself too.
  • Get organised for 2016. I have a Hen Do to organise for a friend, invites to help make (her wedding is in April and I am bridesmaid), a holiday to Berlin to book and then my brother’s wedding to be ready for (I need an Indian and British outfit). That sees me through until end of June/start of July.
  • Do more craft in the evenings, instead of moaning I am too tired.
  • Get organised ready for Christmas – as we will have with a new addition to our family and a different format to our Christmas Day.
  • Enjoy Strictly and think fondly of my Granny, who loved the program.

Strictly

Wellbeing, Lists and Financial Planning

This week I had dinner with a good friend and we talked about our week, work, life etc. She told me that she was feeling very stressed and like everything was a little out of control.

She’s working 10 hour days, learning a language one night a week, has some family stuff going on, is trying to eat well and still trying to exercise 3 times a week. The peak came last week when she had a melt down over finding time to buy a friend’s birthday gift, a task which normally she would relish and enjoy, but that was just too much on top of everything else. Sounds daft, but the small things to do on top of the big worries just sometimes get too much. I think everyone feels like this sometimes and I know I’ve been at this stage at some points in the last 18 months. You eventually realise that something HAS to change.

What is the point of running yourself ragged to get to the gym 3 times a week, if everything else is spiralling out of control, so you still feel stressed and ill?

For some people, it might not mean giving up the gym, it might mean saying no to a night out, or a change of job, alteration to your family life. Either way, I believe you have to be open to not trying to do everything when it all gets too much. You need to make a list and make priorities. You can always go back and do that thing again when you feel better.

My point is, our ‘wellbeing’ is not just physical wellbeing and nutrition – it’s so much more.  Many things have to work together for us to feel content, well and happy:

Career Wellbeing:- How we occupy our time each day and trying to ensure that we like it.

Social Wellbeing:- Having strong relationships and love in your life.

Financial Wellbeing:- Effectively managing your finances to reduce stress and increase security.

Physical Wellbeing:- having good health and enough energy to get things done on a daily basis.

Community Wellbeing: The sense of engagement and involvement you have with the area where you live and your ability to have a positive impact on the quality of your environment.

Of course, this leads nicely for me to the importance of having a Financial Planner to help with Financial Wellbeing!  But actually, all of these type of ‘wellbeing’ are linked.

If you can get your finances focused and organised and know what your strategy is for the future, then you can think about other elements much more clearly. Can you afford to change your job, reduce hours or work from home? Can you afford a gym closer to home or equipment at home? Can you take time off to ‘give back’ to a charity you want to help? Can you afford to take some time out with your family on holiday?

A personalised Financial Plan can help you get focused, organised and move on, knowing you have a sound plan in place so that you don’t need to worry about money, or at least know what you need to do to ensure you are on track for the future. That ticks one item off the list so you can move on to sorting the others.