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At Independent Financial Advisor Ltd we pride ourselves on the quality of service that we offer to all our clients and offer an holistic financial planning service that enables us to investigate a number of different areas and combine the results to shape your overall financial strategy:
A) Understand what you have and where you have it!
We use a comprehensive client profile to record your current circumstances prior to actively starting The Financial Planning Process. This is often referred to as the Factfind (Personal Factfind) (Corporate Factfind).
B) What does risk mean to you?
“Plan for the best, prepare for the worst” Therefore we will not only analyse the risk you face but also the risk your loved ones face. You will then be in a much easier position to decide how to prioritise and mitigate risk, such as:
• Dying too young
• Partner dying
• Losing income due to illness
• Retirement age changes
• Tax rises and changes
We also analyse the investment risk you are prepared to take by undertaking a psychometric risk profiling technique of 17 questions. (Risk Questionnaire)
Investment risk refers to “volatility of investments”, which can include:
• Income volatility
• Liquidity
• Underperformance
• Changes to taxation of gains
C) What are your goals?
If you know where you are going it makes it easier to get there! What are your financial objectives?
• Maintaining your standard of living in retirement
• Investment planning
• Long term savings
• Providing for your children’s education
• Reducing your tax burden
D) How do we / you achieve your goals?
We will discuss your objectives and create a financial plan to help you achieve your goals. This can be as simple or complex as you like. If you create a financial plan you are more likely to achieve your goals.
E) “The earlier the better!”
Starting to save at a young age can dramatically help you enjoy time later in life:
Example One
£7,200 annual sum into a Stocks & Shares ISA from age 20 achieving a net investment return of 7% pa
At age 60 you would have a projected fund in real terms (allowing for an inflation assumption of 4%) of £559,168. You would have invested a total of £288,000 and made a profit of £271,168.
Example Two
£7,200 annual lump sum into a Stocks & Shares ISA from age 40 achieving a net investment return of 7% pa At age 60 you would have a projected fund in real terms (allowing for an inflation assumption of 4%) of £199,268. You would have invested a total of £144,000 and made a profit of £55,268.
F) “Tax or not to be taxed”
By investing tax efficiently you can improve your net investment.
• An investment of £10,000 each year for 40 years giving you a rate of return of 7.5% per annum will have a fund of £2,285,154
• An investment of £10,000 each year for 40 years at 7.5% per annum less 40% tax therefore giving you a return of 4.5% per annum will give a fund of £1,072,807
Therefore with all investments you should always seek to utilise tax efficient savings.
G) Make a Will
A Will helps to ensure that the right people receive your money, at the right time and with less cost.
Why is it important?
This link provides the Governments view on Wills and why they should be made.
What happens to your money on death?
This links to the HMRC interactive tool allows you to see what happens if you make a Will or not.
H) Pay Off Your Debts?
Mortgages and other debt interest rates might be at historic lows, but so is inflation, so the real cost is virtually the same. Paying off these debts will free up more income later. This will allow you to save more later. You should always compare the net returns (charges, tax and commissions) against the interest on your debt.
Please see the Repayment Mortgage & Regular Monthly Investment calculators.
I) All your eggs in one basket
“Remember Technology Funds?” Imagine the Northern Rock without the Government stepping in? When we invest clients’ hard earned savings we always look at legislative protection and will always utilise various asset classes of investments. Never can one company be good at every area of investment. |
Financial Issues