The Press and Journal (Aberdeen and Aberdeenshire)
OVER MONEY
It is vital that you like, and have confidence, in your adviser – but most importantly that you trust them.
My tip is to choose someone you can build rapport with and with whom you are happy to build a professional relationship with for years to come.
Financial planning is important because it allows you to meet your short and long-term goals, stop making financial decisions based on fear or hearsay and helps you to prioritise your major money decisions at every stage in your life.
Given the environment that we currently live in, with interest rates at an all-time low and the impact of inflation, it is important to explore your options. When inflation is at low levels, it is easy to overlook the adverse effect it has on your capital and the income it produces.
By capital, we mean any money, funds, investment or other assets you have. Inflation does not reduce the monetary value of your capital. It reduces the real value, eroding the spending power of your money, and potentially putting your standard of living at risk. Left to the effects of inflation, your money would have lost 37% of its purchasing power over the last 20 years.
As improved life expectancy means we will live longer in retirement, the impact of inflation will become even more of a consideration. The danger of outliving our capital is very real. Investing in a broad range of assets, each with potential to offer protection against the damaging effects of inflation over the long term, can help.
This is where the expertise of an adviser can help. An adviser can help you identify where you are now, where you would like to get to and within what timescale.
From there a bespoke plan can be put in place which will be reviewed with you regularly to ensure that you are on track to achieve your goals.
Many people are unsure how much money they need to fund their retirement. This is often a good starting point to work backwards from to devise a plan accordingly.
As with any change in circumstances, a review of goals and investments is recommended.
In light of conditions surrounding the coronavirus outbreak, which has shaken global markets, no one can be certain what lies ahead.
Uncertainty is hard to accept when it concerns your finances, and it can lead to making decisions in the heat of the moment, which can have disastrous long-term consequences.
It is important to remember the basic principles of long-term investing remain unchanged.
We talk about “time in the market” and not “timing the market” and past events have shown us that maintaining perspective is what is important.
This is easy advice to follow in times of prosperity, but it’s now that this advice really matters. Staying the course with a diversified portfolio of investments, positioned for the longterm, is typically the best route to achieving your goals.
Generally speaking, the economy has been kind to those born in the years immediately after the Second World War, and in the 1950s, but less so to other generations, especially those born in the 1980s and 1990s. Consequently, many parents are having to support their children financially well into their adult lives.
While our children may be struggling with their finances, our parents are typically living longer.
This has led to an increase in the need for residential and nursing care, which is likely to be financed from accumulated savings, sale of property or with support from close relatives.
These pressures mean that financial planning is becoming a family business. Instead of each generation making their own arrangements, families are starting to consider how to use their combined resources in the best, most tax-efficient way to benefit all members.
With the right advice, transferring wealth to others in your family can be extremely rewarding, offering simple ways to reduce or eliminate a future Inheritance Tax liability.