Tis The Season…

We very much hope that you and your families enjoy a well-earned break and find some time to relax and unwind this festive season and we wish you all a Merry Christmas and a happy and prosperous New Year!

It has been an exciting time for Mangu Wealth Management over the past 12 months and we have enjoyed helping clients move towards achieving their ideal lifestyle during 2022 despite challenging investment markets and wider economic and political concerns.

The period between Christmas and New Year is often a period of reflection and, should your thoughts turn to your finances, we thought we would share ten things to consider as we move into 2023.

#1 - Review Your Expenditure

How many of us have actually reviewed our expenditure recently and in particular our direct debits and subscriptions? It seems that more and more of the things that we buy and consume come in the form of a subscription service, from socks and razor blades to coffee and wine as well as the usual magazine subscriptions and television streaming services.

Are there any direct debits, perhaps set up many years ago, for a service or subscription that you are no longer using? For example, mobile phone insurance for a phone you no longer use. Alternatively, do you and your spouse or partner subscribe to the same streaming service? It is relatively straight-forward to cancel unwanted direct debits online via your online banking app.

#2 – Have an Emergency Cash Pot

It is always useful to have access to sufficient cash in the event of an emergency, such as the boiler breaking down or the roof springing a leak. Typically, we suggest to clients that they hold three to six months’ worth of expenditure as emergency cash.

It is also worth taking into account any large expenditure items that you may have in the coming year and ensuring that you have sufficient cash to cover these. Having to withdraw money from investments at an inopportune time is often something to be avoided where possible.

#3 – Review Your Mortgage

For those with Fixed Rate Mortgages, it is worth finding out when your deal expires and considering your options. Mangu Wealth Management don’t operate in this area but we can refer you to a trusted mortgage broker and it is always worth doing this in good time especially if your circumstances are unusual or complex.

#4 – Review Your Protection Policies

We are increasingly seeing new clients who are significantly under-insured often relying on a Death-in-Service Scheme at work or a protection policy when they took out their first mortgage to provide for their family in the event of their death. It is important to consider what would happen to your family should the worse happen and particularly if you were unable to work through illness or incapacity. Often we see a non-working spouse under-insured and their death or incapacity will have an enormous impact on the family.

#5 – Review Your Long Term Goals

In the busyness of our everyday lives, it is often easy to forget our longer term goals and now is a great time to pause and reflect on some of the bigger questions:

Are we on track to achieve financial independence?
Do we have enough to maintain our lifestyle now and in the future?
Can we afford to take the holiday of a lifetime, to re-design the kitchen or to buy a holiday cottage that the whole family can enjoy?
Can we afford to support our family and loved ones and help them to be financially secure?

Setting longer term goals provides the motivation and discipline to stick to an investment strategy and weather any short-term volatility in order to achieve positive long-term returns.

#6 – Are You Saving Enough for Your Retirement?

Throughout our working lives, we may work for several employers and accumulate pension benefits in a number of different pension schemes. These could include a Defined Benefit scheme from your very first employer to several Individual or Group Personal Pensions. Often we lose sight of where these pensions are invested and the likely benefits they may provide. It therefore makes sense to review your existing pensions and to determine whether you are on track to achieve the level of income you require in retirement.

Pensions can be a complex area of financial planning and it is essential to understand how your pension benefits can fit into your longer term financial planning strategy. For example, do you have the full Annual Allowance available to make pension contributions or are you subject to a tapered Annual Allowance or even a Money Purchase Annual Allowance? Is your overall pension fund close to or in excess of the Lifetime Allowance? Do you know what options you have for taking your pension benefits?

#7 – Are You Saving as Tax Efficiently as Possible?

Making use of the various allowances and reliefs available is a great way of improving overall portfolio performance. For example, ensuring that you use your ISA allowance each year. The reduction in the annual Capital Gains Tax exemption announced in the Autumn Budget as well as the reduction in the Dividend Allowance makes tax planning even more essential. For example, it might be prudent to ensure that high dividend-paying investments are held within an ISA wrapper. Using both spouse’s Personal Allowances is also important.

#8 – Consider the Impact of Your Investments

When we consider our longer term goals we may be thinking in timescales of ten, twenty or even thirty years or more and it is important that we consider the impact our investments might be having on the planet and how this could affect our ideal lifestyle. There is little point in having significant wealth in retirement with the intention of travelling if large parts of the world are uninhabitable and beset by social unrest. Scientists agree that we need to address the climate crisis within the next ten years in order for the earth to avoid significant tipping points from which it cannot recover. If we want future generations to inherit our wealth and live their best lives, we must be mindful of the state of the planet we leave them.

#9 – Review Your Will and Lasting Power of Attorney

This is important if your circumstances have changed significantly over the last 12 months, for example, the birth of a child or grandchild or the ending of a relationship. Even if little has changed it is worth a quick review to ensure that your Will is suitably drafted to protect and benefit those loved ones left behind.

As well as your Will, you should also consider drafting a Power of Attorney if you don’t have one already and reviewing any existing Powers of Attorney. For example, are the Attorneys still appropriate or have their circumstances changed?

#10 – Consider Your Inheritance Tax Position

Inheritance Tax (IHT) receipts have been steadily increasing over recent years especially as the nil rate thresholds have been frozen until 2028. If you believe that IHT is going to be an issue, it is important to start considering implementing an appropriate estate planning strategy as early as possible. There are a number of ways to mitigate IHT and, where appropriate, we would always suggest involving the wider family in any discussions.

Bringing This All Together

There are many facets to financial planning and engaging the services of a well-qualified financial planner (preferably one who holds both the Certified Financial Planning and Chartered Financial Planning qualifications) is key to removing the stress around managing your own finances and also to provide you with the peace of mind that you are on track to achieve your ideal lifestyle. What the last few years have shown is that we simply don’t know what the future holds so it is important to remember that money is simply a means to an end, something that enables you to live your best life.

If you wish to reduce your financial stress and to obtain peace of mind around your finances, please do get in touch by clicking the button below.