Lloyd French of Delaunay Wealth Management offers some all-year-through financial planning tips to help you make the most of 2021. Have you got a To-Do list?
You don’t need me to tell you that 2020, for most of us, was one of the strangest and most challenging years of our lives.
At the time of writing, this is the first anniversary of the time that Coronavirus popped onto our radar. And, to be fair, I think that most of us were assuming that it would be a localised issue; that it would go quietly away and slip back under the radar, without reaching our shores.
Little did we suspect that it would affect every aspect of our lives, as well as countless lives and economies around the world.
Well, we are where we are.
A Better Year Ahead in 2021 – Time for a Review?
In my opinion, the development of tested, effective vaccines now offers a strong light at the end of the tunnel, and thank goodness for that. Good for our morale, job prospects, and of course, for helping to boost any investments you may have.
Life, and the financial markets could be on their way back to relative normality, although recovery could be sporadic, or slow. In light of more positive news, however, now is most definitely the time to reach out for expert advice for an all-angles review of your current financial situation:
Where you are now, where you’d like to be, and how best to get there.
As an experienced financial planning consultant, I can offer you a full assessment. Perhaps from an investments point of view you could benefit from a review of your asset mix; maybe you’re not making the most of your pensions allowances. Your savings could be analysed, for example.
I’ll look at the whole of your financial situation. Several variables could be interconnected and although it may all seem complicated, I’ll untangle everything for a jargon-free conversation.
Feel free to get in touch with me on 0345 505 3500.
So, in addition to a financial review, what else would I advise for 2021? Have a think about the following. I’m not going to beat about the bush here, so apologies if my words touch on sensitive subjects.
OK, this first one is quite delicate. And the second, actually.
- Consider Your Mortality – Are you Protected?
Hearing about daily deaths may have focused your attention on a few “what-if” scenarios. Who are your dependents, and what would happen to them if you died? How would they cope from a financial point of view?
Delaunay offers advice on products that could provide a safety net, should the worst happen. In my view, the subtle nuances within insurance mean that there’s not enough space in this blog to go into in-depth detail. However, I can convey the basics as a starting point for a discussion.
Important: There are many facets relating to Covid-19 here; whether it’s covered or not, and I’m afraid I can’t be definitive. Again, it’s best to get in touch to find out more.
I can offer advice on the following:
This is cover that pays out should you be unable to work due to sickness or injury. These latter vary from provider to provider, and insurance can be either short-term or long-term.
A pay out that goes to your beneficiaries in the event of your death, and that’s often used to pay off an outstanding mortgage, thus eliminating a possible major worry once and for all. Whilst more clear-cut than income protection, there are still different types of policy, so do take advice on which kind could suit you best.
Critical Illness Cover
Broadly, this is a tax-free lump sum that you could receive if you’re diagnosed with a serious illness that’s covered by your policy.
- Think About Inheritance Tax
An extension of the mortality awareness concept above, perhaps, and in my view, no less important to ensuring that 2021 offers a little more security in your life. Peace of mind, perhaps.
Whilst we all pay our taxes and are glad to do so (not least to support our amazing NHS in the current pandemic) there are legal ways to reduce your tax burden with regard to IHT.
In summary, you’ll pay IHT at 40% of the value of an estate worth more than £325,000. Nevertheless, there’s a bit of leeway if you leave it to your children or grandchildren. This year, couples will be able to pass on £1 million tax-free, which is good news.
This notwithstanding, tax issues remain and it’s helpful to be aware of them. So, good financial planning comes into play here, as there are various tax-compliant ways and means to reduce your bill to HMRC.
- Consider your Tax Position
To coin a phrase, tax can be taxing.
Yet, information is power. Knowing that you’re potentially going to be reducing your tax bill to HMRC with regard to your savings, pensions and investments whilst remaining fully within the law is, in my opinion, a positive way to move forwards into 2021 and beyond.
The January 31st deadline to submit your tax return has now passed, of course, yet we have another one looming: 5th April, and, seeing as how time moves at a lightning pace these days (or is it just me?) it will be here in the blink of an eye.
Don’t forget: if you’d like to make the most of your tax-efficient investment allowances, the time to act is now. As I mentioned in my last blog, you can’t carry them over to the next tax year.
So, I’d recommend a chat with me about Individual Savings Accounts (ISAs, in particular Stocks and Shares ISAs), Capital Gains tax allowances and, should you wish to consider high-risk, high-reward schemes, Venture Capital Trusts, Enterprise Investment Schemes and Seed Investment Schemes. (NB: these last three investments must be discussed with a qualified financial advisor. They’re risky, to say the least.)
Also, have a think about:
- Your Pension
Saving money into a pension could mean all the difference between a comfortable retirement and well, an uncomfortable one. I think that pensions are important, so finding the best pension advice possible will enable you to make the best decisions about your future financial security, and that of your family.
Even in a world dealing with Covid-19, planning for your latter years, especially if you’re considering a more sophisticated (rather than “off the shelf”) scheme, such as SIPP or SSAS is crucial.
- Hold Fast in 2021
Please may I advise you to resist the temptation to withdraw any investments you may have.
The markets go up. They go down. And then, they go up again.
Further, the stock market is not unlike a highly strung horse – it reacts to external events, then it calms down again! Importantly, since the news of vaccines has emerged, and in the wake of a Brexit deal just before Christmas, markets rallied somewhat. Fluctuation continues but do bear in mind that investments should be considered for the long-term, rather than a quick fix.
Tax treatment depends on individual circumstances. Both your circumstances and tax rules may be subject to change in the future. Not all areas of Estate Planning or tax planning are regulated by the Financial Conduct Authority.