Assumption

Assumption

You will have probably heard the saying “assume – makes an ass of u and me”. Whilst this holds some truth, it naturally requires context. As financial planners, we make assumptions about the future all the time, but equally we review these on a regular basis.

Watergate Bay

Like most people, I have picked up the occasional parking fine in the course of my driving lifetime, most, on reflection, were fair. One more recent experience, where I paid and displayed, resulted in a fine as my ticket “wasn’t seen”. I didn’t keep the original ticket, (does anyone?) so I had no evidence to affirm my claim. Reluctantly I paid the fine, which left me with a fairly bitter feeling towards the car park at Watergate Bay in Cornwall and its fine dining (yes, I have an irrational streak).

Court Orders Woman to pay £24,500 in parking fines

The headline above grabbed my attention. You can read the full story here about how Carly Mackie managed to accumulate fines that she could have avoided fairly easily – if only she had paid a small monthly fee. This would have permitted her to park in exactly the same spot, but ensuring that she could do with peace of mind, legitimately.

Price and Value

This reminded me of the mess that people can get in because they don’t see the value of a maintenance agreement. OK, it doesn’t necessarily hold true all the time, (electric goods “service agreement”) but it made me think about our services to clients. We provide an ongoing service to look after your financial “stuff”. We keep you posted about changes to rules and your arrangements. The purpose in doing so is to help prevent a larger expense later, because something was missed or not known. The problem with any such service is that most people see the price not the value. They assume that this aspect of life is all very straight-forward and any such service is an unnecessary cost. In fairness, it doesn’t help that the point of the service agreement is to do precisely that – to avoid unnecessary cost and making things appear to be simple.

Are you still paying attention?

I don’t wish to overstate, but a phrase that comes to mind is “those that pay, pay attention”. In other words, if you don’t really pay (enough) for something you tend not to value it. If you don’t value it, you probably ignore it….which can lead to problems.

Whilst some aspects of financial planning are “blindingly obvious” – such as spending less than you earn. Some are not (think new tax on annual pension allowance excess). Also, if nobody is around to challenge you on some “obvious” stuff, who will keep you on track? There are some “basic” traps that most people fall into…. Ready for it? (this is basic, but uncomfortable)…. If you spend more on your car each month than you put towards your pension, you are set for a miserable retirement. Most cars are monthly payment plans. It’s true of your holiday spending and so on… your pension is your future income stream, not an optional extra.

How is that coffee smelling?

All of which reminds me of one of the short films (Bombita) within “Wild Tales” (one of my favourite) about a demolition manager who takes the law into his own hands after dealing with the city parking bureaucrats.

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

Assumption2023-12-01T12:18:37+00:00

Black Mirror – Nosedive

Black Mirror – Nosedive

The new series of Black Mirror has been released (21 October 2016) on Netflix and is a bit of a cross between Tales of the Unexpected and The Twilight Zone…. Remember them? If you do, then there is a fair chance that you will have had more than your fair share of adopting new technology over the years and Black Mirror is a small leap of the imagination into a future that is almost within our reach.

Nosedive, the first episode of the new series from the writer Charlie Brooker provides plenty of food for thought for those of us that use social media. Irrespective of who you are, there is something very satisfying about having a post or tweet “liked” or “retweeted” – a sense that you are being heard. Of course for small and large business, your social media marketing strategy is all about trying to engage people, both prospective clients and existing ones. This blog is no different.

Brooker draws out attention to the insatiable underlying desire for approval that underpins this and reflects a future society (not very much in the future) where “service with a smile” and the constant demand for ratings and feedback result in desperate collective anxiety and need to fake it in order to gain approval. Not only approval, but the point-scoring system acts as the new form of societal sorting and classification of us all.

image of Lacie, the lead character practicing her smile, current score 4.243
image of Lacie, the lead character practicing her smile, current score 4.243
image of Lacie, the lead character practicing her smile, current score 4.243

Are you getting feedback?

I thoroughly enjoyed his take on this rather dystopian future, of a world addicted to handsets and a numbing or removing of real experiences and interactions. I’m sure that if you shop online, you now get a request for some feedback. As with many things this was intended to be for our good – a chance to engage and improve services, yet it has become so widespread it now simply feels needy, like some spoiled child constantly asking for approval.

Here at Solomons are guilty of this too. We ask for feedback and comments – and for you to share posts, tweets and so on. This is now all part of helping spread the word about the business and how we help clients, how we bring value. That said, it can become very irritating (hence we try to limit our “neediness”).

Rage against the machine

I guess this reflects the changing nature of relationships between us all and the organisations that we use. Seeing people rant online, whether about Donald Trump, Hilary Clinton, Southern Rail or Brexit is at least raw and exposing, of course great care needs to be taken, but in Nosedive, we are faced with a “sanitized” society where genuine emotion, thought or comment is parked firmly out of sight, to the point where who you are seen to be and with are more important than who you are.

At least here in 2016 we continue to help our clients verbalise and express their true values, not simply those that are deemed “acceptable”. Its funny how often I ask people when they plan to retire and they invariably say 65 – which used to be the default State pension age, as though this is an appropriate “date”. The truth is that you can “retire” whenever you want – or not at all and why here at Solomons we prefer to use the term financial freedom day – when you choose to work, not because you have to, but because you want to.

Here’s a bit about Nosedive.

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

Black Mirror – Nosedive2023-12-01T12:19:02+00:00

Talking Money – July 2016

Talking Money – July 2016

The latest online version of Talking Money is now available. In the issue there is a piece on alternative assets – all well and good, but please remember that for most people this is unnecessary, focus on getting the basics right before trying to take additional risk with a more sophisticated range of options.

For example, we have just watched Andy Murray and Serena Williams become champions of Wimbledon again. Frankly they make tennis look pretty easy, and often make their opponents look like a poor match. The truth is rather different, as it is with investing. Focus first on getting the basics right (something that our Government fails to do).

So what are the basics…

  • Have a plan
  • Spend less than you earn
  • Build reserves
  • Avoid debt wherever possible
  • Remember the impact of inflation
  • Take a long-term perspective
  • Diversify risk
  • Automate your saving – reduce your proscrastination
  • Ensure you have a Will
  • Have adequate financial protection
  • Take advantage of tax allowances
  • Live your life and dreams, not someone else’s
  • Someone will always have more than you, success is not a bank balance
  • Review, review, review….

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

Talking Money – July 20162023-12-01T12:19:05+00:00

What is the best way to save for retirement?

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What is the best way to save for retirement?

As pretty much everyone is now being told to open a pension under the new auto enrolment rules, perhaps it is appropriate to cover the basics of what pensions are what some of the alternatives (or additions) that are also available. I’m going to provide a basic course on pensions, annuities and the alternatives. Bite size chunks that we can all manage.

Pension Plan BasicsBack To The Future

Let’s start with some basics. A pension is not a pension. A pension is little more than a savings plan or pot with tax relief (a Government sweetener). The income that you ultimately take is really your pension, however to confuse matters this is invariably called an annuity. Yes, if it wasn’t true, you’d think that the financial services industry simply made it up to keep you in the dark.

Cut to the chase

In the hope of not boring you to death, I’m going to start at the end. Let’s say you have now decided to retire. If you have a pension (and there are lots of types based on history) they tend to fall into one of two camps, firstly a final salary (sometimes call defined benefit) pension and secondly a “Money Purchase” pension (or in plain English an investment based pension). In this post I’m only going to refer to the latter (an investment based pension).

A pension fund is a pot of money

So you are now at retirement and have a pot of money. You have loads of choices. You can take 25% of the fund as tax free cash and put it straight into your bank account and go spending. The balance (or all of it) is normally used to buy an annuity. This is simply an income for life. The income will stop when you die unless you have a spouse and you have included an option to have the income continue to him/her after your death for the remainder of their life. Simple enough right? Well yes and no. Simple idea, tough decisions. Why? Because you have to take a gamble on what you think the rate of inflation will be for the remainder of your life – do you buy an annuity that rises each year at RPI or an agreed amount (say 3% each year) or do you have a higher initial income but that stays constant. As a guide it will take about 12 years for a rising annuity to catch up with a level one and another 12 years to have paid out more in total. So as well as having to predict inflation (which by the way economists, Bank of England, Chancellor, professional investors) all fail to get right) you also have to guesstimate how long you will live.

Are we there yet?

Oh and if you think, “not long” remember that the average age of death for a man is now about 80 and about 84 for a woman… but then consider your own family’s longevity and perhaps add a bit for improved diet, lifestyle and medical care… unless of course you are wolfing down the processed food whilst spending no time outside getting any exercise. Alternatively like about 40% of people at retirement age, you may be taking regular medication for high blood pressure etc, in which case you probably qualify for an enhanced annuity. This is a polite way of saying “you have a reduced life expectancy”.

Back to the future..

So – a pension is not a pension, an annuity is a pension. You have to take a gamble on what inflation will do and how long you will live. You may want to build in a spouses pension, if not the annuity will die with you. To make the decision a little more pressured, once you have gone down this route, there is no U-Turn, no change of mind. You have to live with it. Sadly there is no time machine to see the future. Steve Webb, the pensions minister doesn’t like this either… but there are no easy solutions, unless you have a DeLorean with a Flux Capacitor.

Next up…what are your other options to buying an annuity? I will cover that tomorrow.

Dominic Thomas: Solomons IFA

What is the best way to save for retirement?2023-12-01T12:38:50+00:00

When is the right time to retire?

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When is the right time to retire?

When is the right time to retire? Well, asking Mark Webber who retired from Formula One at the weekend would suggest at only 37. The same weekend, I watched the deeply disturbing yet beautifully written “Philomena” starring Judi Dench, who is turns 79 in a few days time, more than twice Mark Webber’s age. Both are “global stars” and have the raw natural talent for their chosen professions. They are of course completely different, perhaps as different as chalk and cheese, but what is evident is that both have a deep passion and love for their work. Both involve taking risks, Mark’s rather more obviously, but ask any actor a few questions and its pretty evident that the action of “putting yourself in the role” and being on public display is no small feat and requires considerable courage.

How about living the life you love?philomena

So retirement will mean rather different things depending on your chosen career/profession. For some it’s a lifetime choice (I’m thinking of the nuns in the film) for most of us, gradually we reach a point when it simply isn’t possible to continue at the same level, or at all. Those in the world of sport generally have very short careers, though in truth this is perhaps a sweeping generalisation, there are many that become coaches, managers, trainers, pundits or even dancers ….well they appear and occasionally win on Strictly Come Dancing. I’m reminded too of the anniversary of Dr Who (which I didn’t see) but understand that the Timelord himself got rather caught up with himself or himselves. Anyhow, my point being that retiring at 65 or State retirement age, should not be the default option. Why would you permit the economics of the State purse to determine when you stop doing the thing you love? OK I can recognise that for many, sadly, they don’t enjoy their work, but if you can break out of that into a vocation that you love, then why would you not do that for as long as you want?

Questions for financial planning week

This week is financial planning week, which I support. However invariably the majority of questions from the media are always about financial products – when can I retire? Meaning how big does my pension need to be? This is of course an aspect of financial planning, but it rather misses the point. The purpose of financial planning is to figure out what life you want, what the future might look like and how you might change it. Essentially you get to be your own Timelord… you get to decide when you pull into the pits and take the chequered flag. You get to decide what story is written and how you handle the present, past and the future. You are not following anyone else’s script, you are making it up. Financial planning is not about telling you your future, like some sort of fortune teller, but of helping you to decide what you want in it and how it could look. There are choices.

Write your own story

Thank you for reading my blog, may I suggest you have a look at the wonderful film Philomena. It is a story about one woman’s decision not to accept the story of her life as told by others. Judi Dench stars alongside Steve Coogan and both are excellent. Here’s the trailer (below)…. perhaps you will be “one in a million” and be inspired… oh and for the record Steve Coogan wrote the screenplay for Philomena.

Dominic Thomas: Solomons IFA

When is the right time to retire?2023-12-01T12:38:38+00:00

When Can I Retire?

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When Can I Retire?

A question that I used to ask a lot was “when would you like to retire?” the answer that many people gave was “yesterday”. We all chuckle and then I would pose the question differently. On reflection, part of me finds it rather sad that so many people are keen to quit their work and whilst I would not wish to make too many assumptions, it would appear that many don’t actually like their work, but do it to pay the bills, looking forward to the day when they don’t have to. Of course we all might feel like this from time to time, but for me and for many of my clients, work is a joy…most of the time.

How long can I continue to work?MuchAdoAboutNothing

Take for example the world of the arts, few people actually “retire”. Last night I was at the Old Vic in London to see an adaptation of “Much Ado about Nothing” starring James Earl Jones (born in 1931 now 82) and Vanessa Redgrave (born in 1937 now 76). These two were reforming a partnership that they enjoyed in the West End performing “Driving Miss Daisy” and presumably enjoyed the experience so much that they have come back for more. The play runs to end of November at the rather lovely and thankfully spacious Old Vic.

Who decides when you retire anyway?

Of course other “professions” retire at different ages. In football you would be a rarity if you played “professionally” over the age of 40 in any league. In golf – well the Masters are all “still going”. Certainly age catches up, but there is no rule that says at 65 (or whatever the Government decide… remember that phrase) that s the time you stop. It’s simply not the case. In the world of business there is no age limit (if you run your own firm), in many professions, there are defined ages, but these tend to be those professionals that have the State determine their salary and pension.

Retirement age – much ado about nothing?

To answer the question “when can I retire?” if this is really asking when can I begin to draw money from my pension fund, the answer is currently 55. In terms of when you stop working, well that all depends on what you do and who you do it for and of course if you enjoy it… so “retirement” is much misused phrase, one might say much ado about nothing… and yes I can recommend the play.

Dominic Thomas: Solomons IFA

When Can I Retire?2023-12-01T12:38:34+00:00
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