It is always sensible to check over your financial arrangements to maximise the potential and weed out any items that are having a negative impact. Perhaps as we go into 2017 and the challenges that lie ahead for our economy, it is even more important than usual? It is very easy to carry on as we were, assuming all is well. However have a look over the following – it might produce some real benefits for you:
Your Mortgage: Once again we start the new year expecting an increase to interest rates. Mortgage rates are beginning to creep up, so if you are on a variable rate, fixing now might give you peace of mind and actually reduce your monthly mortgage payment. If you can still afford the higher payment, consider a remortgage to a lower rate and you will pay the mortgage off early.
Your Investments: In general 2016 was an excellent 12 months in terms of returns from many investments but this has consequences for 2017 and beyond. In very general terms if you have assets exposed to shares, equities or investment funds, then the value may well have increased significantly. However this means your portfolio may now be higher in risk than you realise, particularly if you are now 12 months closer to when you want access to the capital or start drawing an income. If you take a more cautious approach, then you are likely to have exposure to Government Gilts and the long expected fall in capital values of these has started. Gilts over the longer term are typically lower in risk than shares, however there are always short term anomalies. The return from the average Pension Gilt Fund in the UK was -4% in the last 3 months of 2016*. It might be a good idea to review your investments and get someone to ‘look under the bonnet’ to see what you have, so you are better prepared for 2017.
Cash: While I have mentioned interest rates potentially increasing, this does not mean banks and building societies will pass this on to savers any time soon. You are likely to be earning less than 1% on your savings – maybe a lot less. Keeping enough for emergencies is important. However you may have ‘too much’ on deposit and this money could be doing significantly better for you elsewhere.
Tax: Maximising investments and capital is important, but so is keeping an eye on how much tax you are paying. As we head towards the end of another tax year, maybe you need to speak to an adviser about ownership of your assets, utilising your personal allowances, your remuneration strategy if you are a Director, making pension contributions, NISA savings or utilising other tax planning opportunities.
Debt: If you have some, then maybe by looking into the other areas above, you can free up some capital to reduce or repay it. Debt has a nasty habit of causing problems when unexpected events occur either on a personal, national or global level.
Protection Cover: Do you have any existing personal or corporate ‘life assurance’ or ‘sickness policies’? If so, a review of the cost might be an idea. It’s possible you could get the same or better cover for less than you currently pay.
These are just a few ways to improve your financial position. They might create more disposable income each month, they might give greater security, they might enable a positive impact on your future plans. However I would recommend advice is sought because there may be greater priorities for you and it is important to ensure any of the above ideas are appropriate to your specific circumstances.
*Trustnet Financial Express 04/01/17
Author: Phil James, Grosvenor Consultancy Ltd
There are advantages and disadvantages to using all of these strategies and they depend on individual circumstances so don’t take action without seeking competent advice. Tax rules, rates and allowances are all subject to change. The Financial Conduct Authority does not regulate tax advice and some forms of offshore investments. The value of investments and the income from them can fall as well as rise and you may not get back the full amount you invested.
The information contained within this document is correct as at 2015/16 tax year and are based on current government legislation. These can change.