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Category : News

Investing is about more than money

Traditionally the role of a financial adviser has been to help you grow your financial resources. This has evolved significantly in more recent times into a much broader role, as financial planners have developed the skills and the tools to provide a lot more value than this. Sitting at the heart of what we do now is helping you to identify the life that you want to live, and then through careful financial planning, guiding you on your financial journey to ensure you achieve your goals and dreams.

We believe that as part of helping you to identify the life you want to lead, it makes sense to think far beyond the traditional boundaries that might have existed. Yes your financial plan should include goals such as when you want to retire, where you want to live and how you will transfer money effectively to your loved ones. Each of these takes careful planning and sound investment of your resources. But we believe wise investment goes far beyond investing in funds, shares and other assets. You cannot only invest in financial assets, as the most important investment is in yourself.

Here are a few areas that we believe you should invest in, most of which should also find their way into your financial plan. These are in no particular order as some will be more important than others to different people.

 

Your health

This is a pretty obvious one, but takes an investment of time, commitment and sometimes money. Staying healthy significantly improves your quality of life, but isn’t always easy. Eating the right food often takes a bit more effort and self-control, as does having a healthy social life!

Getting enough exercise is really important. For some people this is simply about walking the dog or going for a run. Others like more structure, a bit of competition and more interaction with other people. If this is what you want, join that gym, tennis club or golf club. Talk to us about what works for you so that we build all health related expenses into your financial plan. Maintaining both your physical and mental health will have a very positive long-term impact on your financial plan.

 

Your learning and skills

Just because you may have that university degree or other qualification in your pocket, it doesn’t mean your time for learning is over. Continuous learning and personal development will keep you sharper, more capable to face challenges in your life and will broaden your thinking and horizons. Sometimes this means reading more – reading books as opposed to only scanning through social media feeds.

Also it may take a more significant investment of time and money. Are you going to go back to college to finally do that degree you always regretted not pursuing? Or in the same vein, is there a series of short courses that you’re finally going to undertake to improve your skills? Maybe you could use technology better, enabling you to be more efficient at work – this could be learning how to use social media effectively or indeed brushing up your skills with Excel. Now might be the time to make these part of your life plan, and to also build them into your financial plan.

 

Your partner in life

You share so much with your partner in life. Your hopes and dreams, your worries and challenges. They hear about your issues today and your perspectives about the future. They know you better than anyone else and are central to your life. So why would you not invest in them?

Of course investing in your life partner means many things. Giving them your time, your love, your listening, your best support and advice. Having their back every step of the way and helping them grow as a person. If you have children together, helping each other be the best parents you can be. It also means spending time together, doing the things you love doing as a couple. It is not unusual to see holidays, weekends away, an entertainment budget and babysitting costs appearing in a financial plan! Are they in yours?

 

Your passions in life

What is it that really makes you feel alive? For some people it is travelling to far-flung places, for others it’s classic cars or motorbikes and for others again it is getting involved in a charity, organisation or a club. If money is stopping you from enjoying whatever your own passion is, talk to us. Let us see if we can help you achieve it, either today or in the future through better management of your finances.

 

We all get just one life to lead. As your financial planner, we know the important role that money plays in helping you lead the life you want. Of course we will use our skills and expertise to help you make wise decisions and best use of your financial resources at all times. However this life starts with you and what is important to you, so investing in yourself should be a central feature of your plan.

Claims are what count

As part of our financial planning conversations with you, we always bring the attention around to subjects that are not easy to think about – a serious illness or death visiting a family member or indeed yourself. We all naturally don’t want to spend too long thinking about this, but unfortunately for us to do our job properly it’s a subject that we simply must contemplate.

The reason for this is because we’ve seen the cost of not thinking about it. We can all picture the devastation, grief and loss that accompanies a death or serious illness. However we’ve also seen at first hand the catastrophic financial consequences that can follow. We’ve seen families losing their total income and the enormous financial impacts of a serious illness where home adaptations and specialist care services are needed. We’ve seen family members becoming carers because there are no alternatives.

So we spend time considering the best financial products to protect you in these circumstances – the ones that work best for you, have the most appropriate benefits and that are available at the lowest cost. All these are important considerations.

But the most important consideration is what happens when you claim.

For this reason, we were very interested to examine Irish Life’s recent claims statistics, which give some insight into trends in this area.

Irish Life paid out on average €5.75 million every week for a total of 7,900 claims during 2018. This came to €299m over the year. When you dig a little deeper into the figures, there are some very interesting findings.

 

Living benefits made up the lion’s share

Lots of people think only about pay-outs on death when they hear of protection claims. In fact 72% of the total number of Irish Life’s claims in 2018 were for living benefits – lump sums for specified illnesses and regular payments for being unable to work due to illness or accident. Life assurance claims made up the balance – 28% of the total number of claims for a not insignificant amount of €119m.

 

Cancer is the No. 1 cause of claims

Cancer is the big issue. 2 in 3 specified illness claims were for cancer, followed by heart conditions in a distant second. Cancer also accounted for 45% of life assurance claims. Irish Life saw the level of claims rise for cancer in 2018 – up 8% for specified illness claims and 14% for life assurance claims.

 

The gender differences are interesting

Women remain under-insured for life assurance – only one in three life assurance claims were for women. This is a statistic that we as an industry are determined to tackle.

In terms of living benefits though, almost 75% of income protection claims were for women, who also on average claim at a younger age than men. The specified illness claims figures are more gender neutral, with 54% of the claims for men. But within this there were some interesting gender differences,

  • 75% of claims for women were for malignant cancer
  • There were four times more claims by men for diagnosed heart related conditions
  • There were three times more claims by men for strokes.

We think the learning from this is that while women are more aware of and financially protect themselves against getting ill, more needs to be done to raise awareness of the need for women to financially protect their loved ones against their death.

 

Claims are what count. Having that certainty that if such an event is visited upon you, the key is to know that financial pressures will not be added to the problem. While we hope that you never have cause to claim for a living benefit, and that any death claim by you is in the very distant future, we want to ensure you have the right cover in place to protect you and your family. Please give us a call and we will happily discuss your financial protection needs.

Lessons from a Mexican Fisherman

We’d like to share a story with you that originated back in 1963 when published by the German writer, Heinrich Böll. It’s a very short story, but perfectly captures one of the key messages that we stress with our clients.

The message is that while the amount of money you have or build up for the future is important, it is far more important to know the life that you want to lead and to have enough money to live that life. Otherwise, what’s the “right” amount of money to have, how much is “enough” for you? Is it €500,000, €5 million or €50 million? These are simply numbers.

Instead, it is far better to identify the life that you want lead – where you want to live, how long you want to work for, what you want to be able to do and buy in the future and how much money you want to be able to give / leave to loved ones. Once you are clear on these important life choices, we can then help you put a price on this life that you want. That is the right amount of money for you, as that is enough to do everything that you want.

See below – the Mexican fisherman is very clear about how much is “enough”.

 

 “The Mexican Fisherman”

An American investment banker was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large fin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.

The Mexican replied, “Only a little while.”

The American then asked why he didn’t stay out longer and catch more fish.

The Mexican said he had enough to support his family’s immediate needs.

The American then asked, “But what do you do with the rest of your time?”

The Mexican fisherman said, “I sleep late, fish a little, play with my children, take siesta with my wife, Maria, stroll into the village each evening where I sip wine and play guitar with my amigos. I have a full and busy life.”

The American scoffed. “I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat, and with the proceeds from the bigger boat, you could buy several boats. Eventually, you would have a fleet of fishing boats. Instead of selling your catch to a middleman, you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing, and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually NYC, where you will run your expanding enterprise.”

The Mexican fisherman asked, “But how long will this take?”

To which the American replied, “Fifteen to twenty years.”

“But what then?”

The American laughed and said that’s the best part. “When the time is right, you would announce an IPO and sell your company stock to the public and become very rich; you would make millions.”

“Millions?” asked the fisherman. “Then what?”

The American said, “Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evening, sip wine, and play guitar with your amigos!”

 

Now we’re not suggesting that everyone gives up work and goes fishing! After all, the Mexican fisherman doesn’t have much of a safety net here in case anything goes wrong – what if he gets sick or his boat sinks or what happens when he gets too old to go fishing? But his starting point is good, he knows the life he wants.

This is what we want for you. We want to help you to identify the life that you want and to then put a plan in place to ensure you achieve it, under all scenarios.

What does your future life look like?

What factors impact your investment returns?

Well there is no exhaustive list for this one – there really are so many potential factors that can influence your investment returns. When you ask a professional investor, they will often jump to factors such as the economy, sentiment and interest rates. All very relevant factors.

Some factors of course have bigger impacts than others. So, we’re going to set out below the factors that we see as potentially having the biggest impacts, focusing on the factors that you have some control over – either yourself or more likely with some assistance from us.

This is not an exhaustive list and these factors are not necessarily in order, however we’ll start with the factor that (maybe surprisingly to you) tends to have the biggest impact on investor returns.

 

Investor Behaviour

Are you surprised by this one? This factor definitely has the single biggest impact on investment performance. How many investors around the world panicked at the end of last year after the S&P 500 index fell 14% in the last quarter of 2018, and moved their portfolios to “safer ground”?  Thousands if not millions of investors did – and they all then missed the 11% bounce in the first 2 months of 2019.

We see this all the time… fear in falling markets and people selling as assets get cheaper, and greed in rising markets with investors then piling in and buying expensive assets. The key is to have a clear investment strategy… and to then stick to it.

 

Time

Time impacts investments in a number of ways. First of all, the earlier you can start investing allows the magic of compounding of investment returns to get to work. The longer you then invest allows this compounding to really deliver over time. This is one of the big reasons why we encourage people to take a medium to long timeframe with their investments. Also markets can be quite volatile over short periods of time, so investments held for longer periods tend to exhibit lower volatility than those held for shorter periods – another advantage of longer term investing.

Finally you will often hear us say that trying to guess the best time to either enter or exit markets is folly – none of us have a crystal ball. The key is to have a structured plan for your investments, and to then stick to the plan.

 

Asset Allocation

The choices that are made between different asset classes can have a significant impact on your investment – whether you are invested in equities, property, bonds or cash etc. or how much you should have in each of these asset classes. After all, the greatest stock selector in the world will have little impact on your investment returns if only 10% of your money is in equities… Asset allocation is an important driver of investment returns, and is a factor that we spend a lot of time considering when building investment portfolios.

 

Stock Selection

“Star” fund managers get a lot of media attention, but their impact in reality on the returns of investors is actually relatively small. Yes they can positively impact the return on a portfolio, but this impact is quite a bit lower than most of the other factors that are mentioned. Out-performance in stock selection is also a hard one to anticipate as past performance is not a guide to future performance. Just because one investment house outperformed in recent years is not very meaningful… Understanding an investment manager’s philosophy and strategy is a far better guide than recent performance when choosing a fund manager.

 

Investment Costs & Tax

There are a number of factors that create a drag on investment returns that must be managed carefully. You should be satisfied that you are minimising the potential tax impact on your investments, and that any charges and expenses applied to your investment are competitive. Costs matter – you must ensure that you are receiving value for these costs. We are always happy to chat though the charges that apply to any investments, and also the different tax strategies that can potentially be deployed.

 

These are just some of the factors that will impact the returns on your investments, and over which you have some control. We will always look to bring your focus back to the plan – what you are trying to achieve, the investment strategy put in place to get you there and to keep you focused on that. This is the best way to grow your investments and to minimise any negative impacts.

Be on your best (financial) behaviour in 2019

2018 ended with a bit of a sting in the tail for investors, where we saw a lot of volatility in markets and a modest correction. While many analysts are forecasting single digit growth in 2019, they are also suggesting that 2019 may be another bumpy ride for investors with more volatility in markets. We fully recognise that volatility can cause uncertainty and lack of confidence for investors, but it’s our job to help you to avoid making mistakes now that will hurt your long term financial future.

Here are a few habits and behaviours that we believe will stand you in good stead throughout 2019, and will prevent you from making short term mistakes that will negatively impact you in the future.

 

Your financial objectives are paramount – keep them in mind

First and foremost, remember your investment objectives, and crucially your investment timeframes. In most cases, these are medium to long-term – at least they should be if you are invested in any sort of risky assets. These time frames are critical to your investment success. As we have seen in recent months, markets regularly experience short-term volatility. To try and forecast market movements and time this volatility usually results in further losses – none of us have a crystal ball. Research tells us time and time again that staying invested is the key to long-term success. Investors who look to sell out at the top and buy at the bottom usually miss both points, and often by very wide margins.

 

Keep saving

When short-term volatility happens, some investors are slow to commit more money to their investment strategies. This is effectively trying to time the market. It’s important that you keep the faith! Keep investing, although talk to us about the best way to do this. It may make sense for you to employ a strategy such as “euro cost averaging”. This is where you invest a fixed amount at regular intervals. This ensures that if markets are moving around, you are buying in to the market at various price points. As a result you are not exposed to the risk of investing all of your money, to be followed closely by an immediate fluctuation.

 

Volatility is part and parcel of investing

Volatility is simply a feature of investment markets which go through periods of both calm and volatility, sometimes in line with the market cycle, at other times reacting to once-off events. At the end of 2018 we saw potential trade wars, Brexit and tech stocks losing their lustre among other factors that caused some jitters in markets. Times of volatility have historically proven to be bad times to make significant investment decisions, as strategies tend to be coloured by short-term factors. Don’t let your emotions cloud your decision-making.

 

A diversified portfolio is key

A far more robust approach to investing is to stick to the asset allocation approach that was used in constructing your portfolio, as this is more likely to deliver long-term success. There are endless examples of investors chasing that one sure bet – technology companies in the late 1990’s, bank stocks in Ireland and foreign property investments in the 2000’s.  All ended in tears. A key principle of successful investing is to stay diversified across asset classes, geographical regions and sectors. This will protect you against unforeseen calamitous events in a single area.

 

Look at what you’ve already achieved

While of course we are always at pains to point out that past performance is not a guide to future performance, at the same time it’s sometimes worth looking back and seeing where you came from. This hopefully will give you confidence in the future! Look at an investment that you’ve had for a long time – this could be an old pension fund, a children’s education fund or even your family home. Or for example, just look at stock market returns over any 10year+ time frame. With very few exceptions, the results are extremely heartening – often that policy that you haven’t touched has been your stellar performer! This will give you a sense of how the passage of time is an investor’s friend, and this will hopefully bolster your confidence to stick with a consistent investment approach throughout good and bad times.

Often it simply makes sense to sit down with an expert who will look dispassionately at your situation and reassure you, or guide you towards a change. We would be delighted to help you.

Important: Past performance is not a guide to future performance

5 reasons it’s time to review your pension

At the start of a new year and as outlined in our other article this month, we all tend to take stock of how we manage our finances. We look at our financial habits, ways of saving money and managing our spending better. This is also a great time of year to take a hard look at our retirement planning, to ensure it is in the best shape possible.

Here goes on five reasons why we think it’s a good time now to do so.

 

The State Pension picture is far from rosy

Where do we start on this one! There is a lot of uncertainty over the long term viability of the state pension due to the fact that the ratio of people working compared to retired people is reducing from 5 to 1 today, to 2 working to 1 retired by 2050. As the numbers of those working reduces in relation to the numbers of pensioners receiving benefits, there will be less money coming in to the central government coffers, with more going out. Who is going to pay for the benefits, as the government actually hasn’t saved any money for future pensions?

In any event you can’t rely on the state if you want any more than a subsistence lifestyle.  The maximum state (contributory) pension is currently €243.30 per week for a single person and €442.30 per week for a couple. While this will increase marginally from March 2019 as announced in the most recent budget, it’s not a lot of money if you fancy going on the odd holiday!

The state is looking to address this problem – we’ve already seen retirement dates and eligibility for state pensions pushed out. For anyone born in 1961 or later, they won’t get their state pension until age 68. We’re likely to see further such developments in the future. Could we possibly see retirement ages being pushed out further again, benefits being reduced / means tested or stricter qualifying conditions? Nothing can be ruled out.

The government has recently announced a move towards mandatory pensions to also help address the situation, so watch this space… The reality is that it’s up to each of us individually to look after our own retirement needs, if we want a nice lifestyle to enjoy later in life.

 

Life Expectancy

We’re all living longer now and can thank our healthier lifestyles, better diets and medical science for this! While this is certainly good news, it also comes with a price. If you live longer, you need a bigger nest egg to see you through these years. Savings in retirement will need to last on average for at least 20 years in retirement for female clients who are aged 66 and 17 years for males when they retire, based on current mortality rates. Indeed more and more people will now be retired for 30 – 35 years. What size of pension fund would you need to maintain your lifestyle for that period? Many people seriously under-estimate the size of their required fund to maintain a chosen lifestyle over such a long period of time.

 

It’s time to take Control

Well it’s probably quite obvious but the longer that you pay into a pension fund, the more you can expect to receive when you retire and the more likely you are to achieve your financial goals. Be realistic about how much it will take to achieve your goals. As a very rough rule of thumb, you should aim to save “half your age”. So if you are 40 years old, you should aim to save 20% of your income each year from now until retirement to build up a decent fund. If you wait until you are aged 50 to start, you should then aim to save 25% of your income each year.

Of course, this is only a rough calculation. We will help you develop a far more tailored picture for you, taking account of any existing benefits that you have already built up, and will help you to implement a plan that is right for your particular circumstances.

 

Compound interest is your friend

The “Rule of 72” is a simple maths equation to determine how long an investment will take to double, given a fixed annual rate of interest. All that you have to do is divide 72 by the expected rate of return. The answer is the number of years it will take for the amount of money to double.

  • If you are aiming for a return of (say) 8% p.a., it will take 9 years for your investment to double (72/8% = 9 years)
  • However if you are more cautious, you may only be aiming for a return of (say) 3% p.a. In this case it will take 24 years for your investment to double (72/3% = 24 years).

So starting early, having the opportunity to take on a bit more risk in the hope of achieving higher returns and then having the benefit of time can have a seriously positive impact on your pension fund. It really is a case of starting sooner rather than later.

Then there’s the question of how to achieve higher growth rates. First of all, a long-term perspective is critical, particularly if you are investing in the likes of stock markets. For example, according to historical records, the average annual return for the S&P 500 since its inception in 1928 to 2017 is approximately 10% p.a. Now there have been a number of crashes along the way and of course previous returns are not a guide to future performance, but they give a sense of what can be achieved over a long timeframe when one is willing to accept a level of risk.

 

And then there’s the Tax Benefits

Clients who are paying income tax at the higher rate of 40%, effectively receive a 66% increase on their pension contribution when investing, i.e. by foregoing €6,000 in net pay, €10,000 is invested in your pension. Pensions are pretty much the final frontier for such generous tax reliefs. Also any contributions paid before 31 October next can be used to reduce your 2018 tax bill. This applies to contributions to personal pension plans (e.g. PRSAs, Retirement Annuity Contracts) and employment pension schemes (i.e. AVCs – Additional Voluntary Contributions).

In addition to tax relief on contributions and your fund growing free of any tax (DIRT, CGT etc.), clients can also avail of a tax free retirement lump sum up to €200K. In most circumstances, a structure (Approved Retirement Fund – ARF) can also be put in place at retirement that enables tax efficient wealth transfer on death to your estate of any remaining fund.

 

There’s 5 good reasons to review your pension now. Please give us a call and let us help you achieve the lifestyle that you want in retirement.

What does your future life look like?

We hope that you have experienced the quiet evolution of our role in recent years. Going back in time, the role of the financial adviser was to help clients to identify gaps that they had in their portfolio of financial products, to find the best products to fill those gaps and to then put these products in place for clients. While this is still an important strand of what we do, our role has evolved in recent years into a much broader and more valuable service.

Now our role is one of being your financial guide, of helping you to identify the life that you want to live, and then helping you actually achieve this life. Today our most powerful conversations don’t start with a long discussion about your money – your assets and debts, your income and expenditure. Instead the conversation centres around you, yourself. Your hopes and dreams, what you want to achieve in your life and what living life on your terms looks like.  When you are clear about your desired future life, only then does the conversation turn to being able to afford that life and how we can help you make the life you want a reality.

While developing a financial plan that will guide you to achieve your desired life requires all of our expertise, experience and financial planning tools, the process of achieving it is relatively straightforward. We take you through four main phases of work when working with you on our full lifestyle financial planning service.

 

Discovery

This is the most important of all of the stages. This is where we help you to identify and articulate your lifetime goals and ambitions, where we help you to visualise your future life in your own terms – the type of life that you will lead, the possessions that you will own, the positive impact you will have on the lives of others, what you will do and achieve in your life.

Until you know the answer to these questions, what are you financially planning for? Just building a pot of money with no idea of what it will allow you to do?

During this phase of work, we revert to the important old adage of “having two ears and one mouth for a reason”. Our role in this is to carefully ask you the right questions that will enable you to visualise your future life. And then we listen intently. It is not “airy fairy”, instead it is the most important conversation that we will have together, as we get to understand your hopes and dreams.

 

Planning

The second stage is where we apply our expertise and tools to develop the roadmap that will get you from where you are today to achieving the life that you want to live. As part of this, we may use some clever technology that enables us to map out your future cashflows for the rest of your life – how much money you will have every year and whether you will have enough to live the life that you want. Of course we are making a range of assumptions around this, but these assumptions will be fine-tuned during the lifetime of your plan to increase the accuracy of the forecasts.

We will show you whether you are on track to lead the life you’ve visualised, and if not what you need to do to get on track. We can demonstrate the impact of unforeseen events and how to plan for them, the impact of your goals changing and of course the actions you need to take, or financial habits and products you need to put in place to achieve the plan.

 

Implementation

This is the phase of work we are often most commonly associated with. It’s also the most straightforward of all of the phases. This is where we put the required financial products in place that will play a role in helping you to achieve your goals in life.

 

Your ongoing guidance

Regular contact and scheduled meetings sit at the heart of lifestyle financial planning. The ongoing interactions turn the plan into a real journey towards you achieving your lifetime ambitions. These regular meetings are the opportunity to review and restate your goals, consider again the assumptions used, review the progress and performance of the actions and products that were implemented, and to keep you on track in terms of your behaviours with your money and investments.

To help you stay on track, we know that we need to be with you at every turn, helping you to navigate your way towards your dreams. We value our appointment as your financial guide and will be in your corner helping you to make the best decisions possible throughout your life.

 

Our job is done only when you are living the life that you want to lead.

Do you know what your future life looks like and whether you will be able to lead it or not?

Is it time to save regularly for your retirement?

Paying tax bills can be a challenging time for both business owners and sole traders alike. Of course if your business is very successful, tax is simply an expense that needs to be met when your tax payment deadline rolls around. However, there are also many small enterprises that don’t enjoy the comfort of high levels of excess cashflow. For these businesses, the tax payment deadline can be a stressful time, gathering all expenses together and working with your accountant to identify ways in which you can legitimately reduce your tax liability.

Pension contributions are rightly viewed as one of the most effective ways of reducing your tax liability. The challenge is often having the spare cashflow to make that pension contribution while also being able to meet your tax payment! And as a result, the pension contribution often gets reduced or indeed removed in order to meet the tax liability. The unintended consequence of this is that your retirement plans and future lifestyle are now at risk.

So what’s the alternative?

The approach that many sole traders and business owners take to overcome this problem is to make pension contributions regularly (usually monthly) throughout the year, rather than leaving the pension contribution until the last minute. This approach has a number of advantages.

 

You’re putting yourself at the top of the queue

Leaving your pension contribution until the end of the year results in this payment being based effectively on money available, rather than your retirement plans. The outcome is often a reduced pension contribution and when this happens, the loser is your future self. Your retirement plan is being paid after everybody else, putting you right at the back of your cashflow queue.

The alternative is to work with us on identifying a sustainable regular amount. By then making this contribution regularly each month, you have accelerated yourself to the top of the queue, putting your future self before other expenses. After a while, this simply becomes another regular expense of the business (like your rent, salaries, power and other monthly payments) but now you are truly working for yourself and not just to pay other people’s bills.

 

Life is easier at year end

Consider an individual business owner who wants to put aside €20,000 – €25,000 into a pension plan each year. That is quite a significant amount to find at year end at the same time that your tax bill is due. The alternative is to pay maybe €1,500 per month into a pension plan. At the end of the year, you are then only looking to find the balancing amount of €2,000 – €7,000. If your company has had a very good year, a larger balancing pension payment might also be possible.

Yes, by adopting this monthly payment approach you are increasing the regular overhead of the business. But you are doing this now with your own interests at heart. The flip side of this coin is in how you are making life so much easier for yourself at the end of the year, when your tax payment is also due.

You also need to consider though your options in case your business goes through a difficult period. We always advocate flexible retirement plans that enable you to change your regular contribution amounts or indeed take a break from them if needed. We want you to fully look after your future self, but we also recognise that you can’t do this while blindly ignoring your current business environment.

 

You gain from Euro Cost Averaging

Making a single payment each year increases your investment risk. We never suggest that you should try and time the markets and indeed investment risk works both ways – sometimes you gain and sometimes you lose. But the situation that you want to avoid is being up against a deadline (for example the tax deadline) to make a pension contribution at a time when you feel uncomfortable with the investment conditions.

Making a regular contribution significantly reduces this risk. If markets have been performing poorly, well then you are buying in when prices are low – just where you want them to be when you are entering the market. Of course if instead markets have been steaming ahead and you have a nagging doubt that they may be near their peak, they are now relatively expensive. With a monthly contribution, you are now only committing one twelfth of your full year’s pension contribution into the market at that time, rather than potentially the full amount. So in effect your regular payment strategy is smoothing your entry points into the market and as a result reducing your investment risk.

 

We all like to avoid incurring more regular expenses in our business. However this is one instance where it makes sense. Because you’re bringing yourself to the top of the queue.

 

We would welcome the opportunity to discuss your own pension contribution strategy – please give us a call and we will help you to put your future self first.

Retirement Planning is about more than money

When you think of retirement, what do you think about? Is it those additional games of golf, spending a few months every year in the sun and lots of time with the grandkids? Or instead do you think about your pension fund and silently worry that you might not have enough money to do all the things that you want to do?

Yes, we recognise the important role that we play in minimising that financial worry and helping you to build up a pension fund that will allow you to live your life in retirement on your own terms. We do this with clients every day and to be honest, this is “meat and drink” to us! However we also recognise how important it is for us to help you to take a much more holistic view of retirement, and that is our focus here.

So let’s assume that together we’ve done the best job possible on the financial side and that you have the financial means to live your life to the full in retirement. What else do you need to think about?

 

Being together fulltime

Think about it – day one of your retirement. You wake up, not to the sound of the alarm clock but at your leisure. Your spouse who has been at home fulltime for the last few years is busy about his/her usual routine. Where do you fit in?

There are of course many ways to approach this. The wrong way is probably to just assume everything is now changed because you’re around! Instead you need to recognise that your partner may love their routine and don’t want this changed too much. Equally they need to be aware of the momentous shift in your life, and that you may struggle for a while to build your own new routine, both of your own activities and hopefully shared activities.

This is not the time for the “bull in a china shop” approach! Instead awareness of each other’s space, routines and hopes for the future together are crucial. The key to this is talking about it and working through it together.

 

Long days

The thinking around this needs to begin long before retirement. The working day, including your commuting time often punched in 11 or 12 hours every day. That’s a lot of time to fill now, so how are you going to do it? Are you going to play lots of golf? Are you going to study or do voluntary work? Are you going to spend time out and about visiting all those places you’d been promising to see, but never had the time?

Have a plan and fill as many of your days as possible with activities that interest you and make you feel good about yourself. Keep your mind and body active. Your life will be one long day after another if you end up falling asleep in front of afternoon TV shows!

 

Mind your health

The simple task of getting up and going to work was good for your health, often followed by some exercise in the evenings. Now is the time to increase the focus on healthy habits, not cut back on them. You have more time now to exercise than ever before, so use it. That might be golf, it might be a brisk walk or a visit to the local gym – the instructors there will devise a fitness programme suitable for you.

Apart from the physical benefits, this will also be very important for your mental health. Physical exercise makes you feel better about yourself, so reap the rewards both physically and mentally.

Stay aware of maintaining your mental fitness too. Spend time with friends, do the crossword, read and study. Stay sharp.

With more time on your hands, you also have the opportunity to spend more time preparing healthier meals for yourself. The excuse of another takeaway because you’re late home just won’t wash anymore! Make good food a hobby – taking the time to get fresh, healthy ingredients and then spending a bit of time on food preparation.

 

Remember your value

You have so much to offer in terms of experience, expertise and time. Some people can retire with a perceived loss of value. Previously a company and colleagues relied upon you, and now that is gone. All that actually needs to change here though is that previously you were paid for your time and expertise, while now you can still offer this but maybe without payment. You will do it on your terms, only in areas that interest you, at times that suit you and in ways that make you feel good about yourself. You will add enormous value, whether that’s to a voluntary organisation, coaching a sports team or mentoring less experienced business owners.

 

Having your finances in order is very important for a happy and satisfying retirement. But it’s the other factors that will make you feel good about yourself and will help you live your life to the full for many years to come.