Looking at your finances the perfect New Year's resolution
MONEY is never boring. So you have to ask yourself: are you transfinancial?
It's the latest financial buzz-word flying about these days.
It describes someone whose financial health and wealth isn't where they might have expected it to be, at this stage.
The good news is that it's eminently fixable.
We are at the start of a new year, and there's never a better time to take a look at our financial planning – in fact, it should be a compulsory new year's resolution! If you do pause to look at your personal financial ‘package', there can be so many simple things you can do to make 2019 a much better financial year for you.
You might want to look at your pension, to make sure you have the right investments in there, so that your money is working as hard as it can for you. Did you know that a financial adviser can analyse the funds in your pension and, if they aren't the best ones, move you into top-performing funds? Perhaps in the past you thought such stuff was rather technical and even ‘boring' – but it's all about having extra money in your life - and as I say, I think we all agree that money's never boring.
Our friends who do financial research at Bestinvest look at the investment funds where a lot of our pension savings are held, and regularly tell us which of those funds have not been producing great returns.
Their latest report showed that there's never been a better time to lift the lid on your pension, and check where you are invested. Bestinvest's research team identified 58 badly underperforming funds in their latest report, compared to 26 a year ago. Some of those funds are among the largest in the UK, in fact the level of assets held in underperforming funds took a massive leap during 2018, from £6.4 billion to £33.6 billion. That's a lot of pension savers who probably aren't even aware their money isn't growing as it could. That is so easily fixable.
On the savings front, the introduction of the Personal Savings Allowance or ‘PSA' in 2016 really moved the goalposts. We can now earn up to £1,000 in interest on our savings each year, before we are taxed. This is more than enough for most people, so really if you are looking at the difference between having an ISA and saving in a bank account, the only thing you want to look at now is the interest rate, to get yourself the best deal.
Nationwide, for instance, have an account called FlexDirect, which is ideal for smaller savers. It gives an interest rate of 5 per cent AER fixed for a year on up to £2,500, as long as you haven't had a FlexDirect account before and pay in at least £1,000 a month. Now, the rate drops to 1 per cent after a year, so it might be time to look at it again when you do next January's financial check.
Now we come to the third area of our financial planning, family protection. There are various insurances you can have in place that would protect your family's lifestyle and security, if something unexpected were to happen.
Most of us know and understand life insurance, but have you also got critical illness insurance (CI) in place? They say that critical illness is the insurance you need in case you don't die. If you are hit by a severe health condition such as cancer, stroke, MS, or need major surgery, you might be unable to work during a long-term convalescence.
It's not just those major illnesses though, lots of other conditions can be covered as well. CI gives a tax-free lump sum that can be set to pay off your mortgage, and perhaps also put a few bob in the bank so that you and the family don't have to worry about the pennies, at a time that is already difficult and stressful.
These are just a few of many ideas that could improve your financial health this year.
If you feel this is worth thinking about, then why not come and have a chat with us? We can help make sure that your money is working as hard as it should be.
:: Michael Kennedy and Shaun Doherty are independent financial advisers and pensions specialists, and can be contacted on 028 71886005. Further information is available on the Facebook page 'Kennedy Independent Financial Advice Ltd' or the website www.mkennedyfinancial.com