WARNING ABOUT LIFETIME ISAS

TODAY’S BLOG

WARNING ABOUT LIFETIME ISAs

Most of our clients have ISAs, because they are a fantastic way to grow investments in a tax free environment. Lifetime ISAs, or LISAs are not really aimed at the sort of people we work with. However pehaps you have a child, friend or colleague, typically under the age of 40 that might have a LISA – this may be worth sharing with them.

An ISA but with tax relief

Lifetime ISAS (sometimes called LISAs) are a way in which many people will opt to save money – be that to buy their first property or for later in life. This was a Government response to attempt to help young people build a deposit to get onto the property ladder (not a good one in my opinion). The total penalties savers have paid when withdrawing their money in a Lifetime ISA has been revealed by HM Revenue and Customs (HMRC). Savers who have a Lifetime ISA can get a 25% government bonus added to their savings in this type of account – up to a maximum bonus of £1,000 per year. The maximum amount which can be paid into the account is £4,000 each tax year – up until a person reaches the age of 50. But while the 25% bonus may attract some savers, there are some rules about withdrawing the savings. The money can be withdrawn from this type of ISA if a person is:

Buying their first home
Aged 60 or older
Terminally ill, with less than 12 months to live.

Break the agreement, expect a hefty charge

However, a 25% charge must be paid if the saver withdraws cash or assets for any other reason. The withdrawal charge aims to recover the government bonus received, and applies an extra charge to the original savings. this means that if a person treats their Lifetime ISA as a short-term savings product, it may be that they get less back than they paid in. Data obtained by the Royal London in a Freedom of Information (FOI) request shows that HM Revenue and Customs (HMRC) have so far charged more than £9million in penalties for withdrawing money out of a Lifetime ISA. In short people that picked the WRONG type of ISA pay a price.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk
Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

PRIVACY POLICY | DATA PROTECTION

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

PRIVACY POLICY | DATA PROTECTION

WARNING ABOUT LIFETIME ISASDominic2023-12-01T12:13:25+00:00

Talking Money…. again

Solomons-financial-advisor-wimbledon-blogger

Talking Money… again

As you will have gathered from the plethora of adverts in the weekend papers and advertising hoardings everywhere, the tax year is coming to a close. This means it is your last chance to use up your 2016/17 ISA allowance of £15,240 or perhaps a Junior ISA for those young enough.

This tax year has had many unwelcome changes, most significantly the pension tapered annual allowance, which has reduced the annual allowance (normally capped at £40,000) to a £10,000. This applies to anyone with “adjusted income” over £150,000. But that doesn’t make you “safe” if you don’ earn £150,000. As the annual allowance is £40,000, the maths starts at £110,000 of income. Pension contributions paid are added to income, indeed any income, be it rent, dividends or interest are all counted. So many may well find that they have exceeded the annual allowance.

Solomons-IFA-Smart-Money-Magazine-March-2017-cover

Deliberate Complexity

Yes, the Government could have made things easier, but why bother when there are so many willing voters who will forget the hassle at the ballot box. In fact, Mr Hammond, the Chancellor has had two opportunities to abolish this utterly ludicrous rule in either in his Autumn Statement or his Budget last week. There are tax penalties and charges if this is exceeded and you don’t have any unused relief from any of the three previous tax years 2015/16, 2014/15 and 2013/14. Pensions have the ability to go back 3 tax years if you exceed your annual allowance.

Shrinking heads?

To provide a little more context – ten years ago, the annual allowance was £215,000 in 2006/17, it rose each tax year to £255,000 by 2010/11. It was then slashed to £50,000 for 2011/12 and remained at that level until 2014/15 when it became £40,000. Today in 2016/17 it is likely to be £10,000 for many high earners.

Of course the Government knows what they are doing, by encouraging us all to save for our retirement and financial independence…. I expect that we will soon hear “lessons will be learned”. Oh and no, this is not fake news, its just unwelcome news.

Clients will be receiving a printed copy of Talking money this week, which has some more facts.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Email me to get in touch

Talking Money…. againDominic2023-12-01T12:18:39+00:00

Investing: ETF Statistics from LSE

ETF statistics from the LSE

Further to my recent post “What are ETFs” it is perhaps worth outlining the size and growing popularity of ETFs. The LSE (London Stock Exchange) publishes monthly data about various investments that it provides a trading function for.

The latest data (in the July 2015 LSE report) to the end of May 2015 shows that the UK is now the largest market for ETFs in Europe, with 32.7% market share. This beats the Germany (25.5%), France (13.4%), Italy (11.4%), Switzerland (8.5%) and Holland at 4.9% with the other European markets making up the rest. £22billion of trades were placed in June, representing around 302,000 individual trades (buy/sell). These sums are not insignificant and increasing each year, increasing 61% over the last 12 months.

We can explain the pro’s and con’s of ETFs for your portfolio and arrange your investments to suit your requirements and ability to cope with investment risk

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Investing: ETF Statistics from LSEDominic2023-12-01T12:40:17+00:00

Investing: What are ETFs?

An ETF (Exchange Traded Fund) is one of a number of financial products or “instruments” which are better described as ETPs – Exchange Traded Products. In very simple terms, it is an investment that can be traded in pretty much the same way on any world stock market. They are relatively new (beginning life in 1993) but are growing in popularity.

Low cost and transparent

The main advantage of an ETP is that they are often very low-cost and transparent, particularly as the total cost of ownership is very clear. As we know, there are very few things that we can control in the investment world – but cost is one that we can exercise some degree of control over. We cannot control markets (at least not legally!) and whilst use strategies to take account of what is going on in the world, I believe that attempting to time investments to produce superior returns is pretty much beyond everyone. Admittedly it looks very easy in hindsight, but the truth is rather different and knowing when to get out is easier than knowing when to get back in…. and both decisions need to be made. Low cost is not the same as “cheap and nasty” and more than high cost is the same as quality. Cost of ownership is one of many aspects that we consider for our clients.

Focus which enables diversity

So an ETP offers a low-cost approach to accessing markets. In addition they can also provide tremendous focus. If you really want to invest in something specific an ETP will invariably have a solution. Arguably an ETP “democratizes” investing, making is just as cost-effective to invest £100 as £1m. However there are some snags.

Evolving market – teething troubles

Firstly, an ETP doesn’t have the advantage of the FSCS (compensation scheme) behind it. Frankly that may not bother you as one can make the argument that the such protection is paper-thin in the event of a serious global meltdown. Secondly as a “security” an ETP is traded, often via a stockbroker, which means dealing costs. If the amount is large enough, then this can be an insignificant sum, but clearly it’s not for those that invest modest amounts each month or trade frequently with small sums. Many ETPs are priced in non-sterling currencies, such as the dollar, thus exposing you to increased currency risk. Finally accessibility is still limited, of course I can find the best way for you to access ETFs and resolve these snags, but the choice of providers that genuinely offer trading facilities and best execution practice is fairly small – this is an evolving market. Once these costs are included, often an ETP can be more expensive than a good low-cost Unit Trust or OEIC – which have more “protection”. So I would argue that for all but a few, the main appeal at present remains the ability to use highly specific investment strategies to add value to your portfolio. Essentially this comes down to your investment experience and requirements – which ought to serve your goals, not simply a different investment experience.

However, I want to make it very clear that ETPs can make a lot of sense for the right investor and something that we are able and willing to use appropriately, after all this is part of being independent and being able to access the entire market for solutions.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Investing: What are ETFs?Dominic2023-12-01T12:40:14+00:00

Cash ISA latest rates

Latest Cash ISA Rates

There continues to be the expected speculation about inflation and interest rates – how on earth would the media use their time if they didn’t spend so much of it guessing the future? As we know, official inflation rates are falling, yet you and I probably pay more for the things we actually consume, strange but true. Anyway, here are some of the top rates currently available. Please note that this is simply a list, it is not advice. It is important to ensure that your funds are ideally within FSCS compensation limits and not restricted due to shared banking licenses.

Instant Access Accounts

On-line: Melton Mowbray 2.50%
Bank: Virgin Money 2.20%
Building Society: 2.35%

Cash ISA – Variable Rates

On-line: Sainsbury’s Bank 2.80%
Bank: Virgin Money 2.40%
Building Society: Earl Shilton 2.70% (90 day notice)

Cash ISA – Fixed Rates

On-line: Bank of Cyprus UK 3.20% (3 years)
Bank: Halifax 3.60% (5 years)
Building Society: Yorkshire 3.20% (fixed until 31 May 2014)

I have to admit that I’m not overly comfortable with a society that has supermarkets offering banking services, which probably says more about Banks than it does about supermarkets. However many people visit their supermarket more than they visit their bank. I have to admit that I prefer to visit neither and am rather an advocate of on-line service.

New ISA Allowance for 2013/14

You may wish to know that the ISA allowance is now linked to inflation and the September figure for inflation (2.20%) is used for the following tax year. So the 2013/14 ISA allowance will be £240 more. As a result the full 2013/14 allowance will be £11,520 with up to half this into a Cash ISA (£5,760).

Cash ISA latest ratesDominic2023-12-01T12:23:04+00:00

M&S Offers Tempting Alternative Bank

1994: Shopping – Anderson

The Banks continue to come under the microscope. HSBC had a rather awkward week, with a time in the proverbial frying pan after failing to prevent significant Money Laundering. This was followed by the exit of David Bagley the head of Global Compliance at HSBC who resigned. The CEO of HSBC Stuart Gulliver apologised to the US Senate, following the revelation that HSBC had allowed drug money to be laundered though its accounts. HSBC has done a Mexican waive..not the type that we will see in the Olympic stadium shortly, its just Visa (the credit card, not the visa that you won’t get if you get stuck in passport control strikes and Lloyds

[hey don’t we all own that and get entitled to corporate tickets?] that are the banking sponsors) Sadly a small firm like ours cannot get away with an apology, we have to follow protocols laid down by the regulators and EU to ensure that proper identity and residential checks are done on clients as well as the source of their funds. If we mess this up, then the consequences for me is far more significant which does little to quell suggestions that Banks are favoured over IFAs by regulators.

Another Bank that has been in the news is RBS due to its system failure. One of its subsidiaries Ulster Bank had prolonged problems with customers unable to access funds from their accounts. They now seem to have largely corrected problems saying that 99% of its 1.9m customers’ balances are now up-to-date.

The failure of a bank system like this is a real problem and it may be worth considering an alternative. Marks & Spencer have also revealed their new current account which will be available in October. It will have a monthly fee of £15 or £20 if you want travel insurance as well. It is designed for M&S shoppers rather than the general public. The account will provide access to a savings account that pays 6% along with a £10 birthday gift, two £20 store vouchers, a 20% discount per month for the first year on clothes and homeware. There’s also an M&S point for every £1 spend on the debit card (much better than a credit card – unless you clear the monthly balance). They are also throwing in four “Treats and Delights” worth £45 and a further 48 M&S café hot drinks vouchers worth £127. So if you are an M&S shopper, this looks like a pretty good option.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

M&S Offers Tempting Alternative BankDominic2023-12-01T12:22:21+00:00

Cash ISAs and Doomsayers

1950: Edge of Doom – Robson

Here’s your updated Cash ISA and instant access account information. Remember this is a list (and not a very long one), it is not advice. The only advice here is to ensure that you know the compensation limits on bank accounts as outlined by the FSCS, which means not holding more than £85,000 in any account with any bank or group of banks under the same banking license. Be wary of any bank that offers the top rate, think about why they may wish to hold your money.

Instant Access Accounts

Online: ING 3.24%

Bank: Virgin Money 2.60%

Building Society: Manchester 2.81%

Cash ISA Variable

Online: Santander 3.30%

Bank: Santander 3.30%

Building Society: Market Harborough 3.00%

Cash ISA Fixed

Online: Governor Money 4.05% Fixed for 5 years

Bank: Halifax 4.15% Fixed for 5 years

Building Society: Kent Reliance 3.75% Fixed for 5 years

You may be aware that the UK’s inflation figures came out today. CPI (the Consumer Price Index) have fallen to its lowest level since November 2009 and is 2.4% but above the 2.0% Bank of England target. RPI is 2.8%. So by these figures all of the accounts shown above now beat CPI, so accounts are now heading in the right direction. This comes on the back of more miserable news from the IMF which has downgraded Britain’s GDP (growth) forecasts considerably. It seems that the world is currently full of doomsayers, which don’t forget is a very easy position to hold when being wrong is actually good news.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Cash ISAs and DoomsayersDominic2023-12-01T12:22:17+00:00

The Real Bank Rates?

2006: Blood Diamond – Zwick

It’s the second week of Wimbledon. As I write this post, peering through my window, the sky is a mixture of grey and white cloud, but little if any blue sky. The forecast for the week is not good, but then we all know about the problems of weather forecasting. Tennis will resume though, after all the Centre Court has a roof. The current media storm surrounding the Banks and their collective fraud will probably not find much shelter this week, though sadly I fear that despite the fines, sanctions, tough talk and grovelling apologies, little will actually change their behaviour, because this truth is one that is far too uncomfortable for our economy.

So with this in mind, here is a list of some of the top rates. None of them are LIBOR rates, but of course they are based on rates that Banks want to offer. Remember too that this is not advice, just a compiled list. You need to be aware of the FSCS compensation restrictions and indeed the identity of Banks that operate under the same shared Banking License.

Instant Access Account

Online: Santander 3.20%

Bank: Virgin Money 2.60%

Building Society: Nottingham 3.25%

Cash ISA Fixed Rate

Online: Governor Money 4.05% (5 year fix)

Bank: Halifax 4.25% (5 year fix)

Building Society: Kent Reliance 3.75% (5 year fix)

Cash ISA Variable Rate

Online: Santander 3.30%

Bank: Barclays 3.05%

Building Society: Market Harborough 3.00%

The above is not my advised selection, just a list of current top rates to give you a sense of what is available. In short, most rates are very poor (you know this) they look unlikely to improve in the short-term. However, if Banks take any heed of the sentiment raging against them, then expect more transparent accounts – including these, but don’t expect free banking as when the Banks finally figure out what they are meant to do, they will realise that there’s no way that they can make profit at previous levels, so expect lots of reasons why your Bank will become more expensively honest.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

The Real Bank Rates?Dominic2023-12-01T12:22:07+00:00

Cash ISA Update

1935: The Irish In Us – Bacon

A quick update to the Cash ISA rates. Remember this is not advice, just a list of some top rates – however you should do your own checking of the detail (I suggest looking at MoneyFacts) and remember the compensation limit of £85,000 per person per banking license.

The only real change on last week is the Post Office, who have made a bit of a play for online savings, (Issue 5) which can be accessed “24/7/365″… which is asking for trouble! Now paying 3.17% it is better than a considerable number of Cash ISAs. However, be warned that the Post Office Ltd (not the same as National Savings) is an appointed representative of the Bank of Ireland (UK) Plc. If you would like to see their latest credit report, just click here. Though be warned, the data only goes to June 2010, which is pretty useless as its nearly 2 years out of date. So be warned, if you are able to place the maximum of £2m into this account, only £85,000 of it will be protected by the FSCS.

Otherwise rates look fairly unchanged. Kent Reliance have altered their fixed rate Cash ISA to 4.00% for their 5 year fix, which is probably good for a mortgage or loan, but not for your savings – locking in for 5 years at 4% seems like a very gloomy outlook for interest rates over the next 5 years.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Cash ISA UpdateDominic2017-01-06T14:40:02+00:00

Cash ISA Update

2010: Conflict of Interest – Manning

As usual, for the sake of the hard of thinking, I need to state that this is not advice, but a list of some of the better rates available “out there”. You should always check the detail and I recommend doing so via the Moneyfacts website as your starting point. Remember the rules about consumer protection – only the first £85,000 is covered by the compensation scheme (FSCS) and be warned that there are a number of Banks that come under the same Banking license. I would be unwise to speculate about which Banks may have liquidity problems, but a glance at the media would suggest you are more circumspect of those that from within Portugal, Ireland, Greece and Spain, which may provide you with a conflict of interest.

Instant Access Accounts

Online: Coventry 3.15%

Bank: Virgin Money 2.60%

Building Society: Nottingham 3.25%

Cash ISA Fixed Rate

Online: Bank of Scotland 3.80% (4 years)

Bank: Halifax 4.25% (5 years)

Building Society: Kent Reliance 3.75% (5 years)

Cash ISA Variable Rate

Online: Santander 4.00%

Bank: Barclays 3.05%

Building Society: Nationwide 3.50%

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Cash ISA UpdateDominic2017-01-06T14:40:02+00:00