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Asset & Investment Management Summer Edition 2013

YOUR FINANCIAL GUIDE TO A BRIGHT FUTURE

Most of us recognise the need to protect our dependents and understand how life assurance can help. The most common reason for investing in life cover will be to protect against the financial burden of mortgage payments but it is also part of the review we undertake perhaps after getting married or, more likely, when we have children. For a single person with no dependents, life assurance may not be necessary. However, if you have debts and no savings, then a small amount might be necessary to pay expenses and prevent someone else being landed with that problem after you’ve gone. There is also an argument that you should cover a mortgage but in this case, if you are happy to pass the property back to the bank, or if your beneficiaries are more than able to cover the mortgage payments while a house is being sold, then you may not feel the need. If you have dependents, however, you need to look at the consequences for them if your income were removed suddenly. How much do you earn? Do you have debts? How much is your mortgage or rent? Do you pay school or university fees? How long minimumyour requirements. before children will be working? Does your partner work? Could they continue to work without your support? Even for those people who do not work, there can be a considerable cost involved in getting help with children or around the house if the partner needs to keep working and that support is removed. Life assurance may be a small price to pay to put your mind at rest. Interested in protecting your family? Arrange a free consultation with us today on 0208 943 4343.

An overlooked peril of our ageing population is the rising cost of long term care. For those of us who want to help ourselves, there are two ways to plan: a pre-funded insurance policy or an immediate care plan. A pre-funded policy will pay your fees for you if and when you need it. However, such insurance can seem expensive and therefore the vast majority do not choose to cover themselves. Most people meet short-term requirements out of income and saving. But if you need help long-term, payments for care can increase substantially and many may wonder how long their savings will last. An immediate care plan might at least help to top up what you can afford to meet the full bill.

Asset & Investment Management Ltd 0208 943 4343 | www.aimifa.com | enquiries@aimifa.com


The entire 2013/14 tax year ISA allowance of £11,520 can be invested into a stocks and shares ISA. There is a vast and ever increasing range of different investment options from which to choose, offering not only huge flexibility in how you invest but also access to the whole range of global stock and bond markets. For the investor who knows what they want, self -select ISAs offer the most flexible approach, allowing you to choose your own shares or collective investment funds. These schemes cover a range of asset classes and markets, so you can make up your own portfolio – or use your ISA allowance to target one specific investment to complement your wider portfolio. However choosing your own shares can be a risky approach and, unless it forms part of a wider share portfolio, can concentrate your investment around the fortunes of just one or two companies. Many investors therefore choose to put their ISA allowance into something more diversified, such as a collective scheme or fund, which reduces risk by accessing a whole selection of shares for a relatively small investment.

More aggressive funds may be found in, for example, the UK All Companies, UK Smaller Companies or Global Emerging Markets sectors.

If you need income from your ISA then you may wish to consider a fund that delivers regular dividend, rental or interest payments. The three main choices are equity income, commercial property or bonds. There are a number of funds that combine these asset classes together, There are many funds to choose from and some thereby producing income from a more prioritise income and some capital growth. Over diversified portfolio. the long term, those with a higher equity Ultimately, the choices you make for your ISA content have generally offered higher returns have to reflect your aims and goals and sit within than equivalent investments in cash, bonds or any wider portfolio you might hold. If you want commercial property. But it must be noted that to make sure you have covered all the options equities can go down as well as up and have available, you can always seek professional been volatile. Funds are grouped into categories advice by calling us on 0208 943 4343. Please to give you an indication of their aims. For also remember that past performance is not a example, the ‘Mixed Investment 20-60% shares’ reliable indicator of future results. category will have no more than 60% in shares.

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Asset & Investment Management Ltd 0208 943 4343 | www.aimifa.com | enquiries@aimifa.com


Once a financial plan has been put in place, it is tempting to believe the paperwork can simply be tucked away in a drawer and forgotten. However, like a well-kept garden, a financial plan needs regular tending to help it thrive. What should a financial health-check comprise? A financial review will first look at whether an individual’s goals –for example to retire at 60, or to fund school fees – have changed, perhaps following the birth of another child or a change of job. It should consider any need to save more or to switch to different types of investments to achieve the set goals. A review will also look at an investor’s progress towards their goals and examine whether their investments are performing in line with expectations. Fund managers for instance, will have good and bad periods but your financial adviser will be able to judge whether this is expected or a sign of a deeper problem.

Investors are generally either income-seekers or growth-seekers but, whatever your aims, it is important to set them out and understand your attitude to risk as these decisions will form the basis of the investments you make.

A portfolio will also need to be tweaked according to the wider economic environment. The 2008 financial crisis changed the investment landscape – for example, the low interest rates that have followed mean income-seekers have had to work harder to achieve the same level of yield. While an event of this magnitude will hopefully not repeat itself in the short term, it highlights the importance of regular reviews and ensuring your financial plan continues to be appropriate. Interested in investment management? Call us to arrange a meeting at our expense on 0208 943 4343.

There is a relationship between the amount of risk taken and the amount of potential return but, to ride out short-term ups and downs, you need to take a longterm view. So the decisions you make about a pension – which might have a 35-year lifespan – will be different to those of, say, an inheritance which you want to spend in less than five years. Put the latter in the wrong place and you risk losing a lot of what you have been given.

Asset & Investment Management Ltd 0208 943 4343 | www.aimifa.com | enquiries@aimifa.com

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The government has proposed sweeping changes to the provision of pensions for public sector employees. The recommendations affect individuals across an array of public sector pension schemes, from the armed forces and the health service to teachers, fire-fighters and the police. The final report of the Independent Public Services Pension Commission, headed by Lord Hutton of Furness, recommended that existing final-salary schemes should be replaced by new schemes linking the employees’ pension entitlements to their career average earnings. The report contended that this approach is fairer for the majority of members who do not experience high salary growth. The report found that the cost of public sector pensions to the taxpayer should be capped, and that the schemes should be simplified. Workers should have a greater level of involvement in the running of their schemes and governance should be improved. The report proposed that the age at which individuals are able to draw their pension should be increased in line with that of the state pensionable age, which is set to reach 66 by 2020 for both men and women. Meanwhile, the pensionable age for individuals in the police, fire service and armed forces is recommended to increase to 60. The government views the current structure of public service pension provision as “not tenable” in the long term. British individuals are living longer – the life expectancy of a 60 year old has risen from around 18 years in the 1970s to 28 years. Public service pension schemes paid out £32bn in 2008/09 – about two-thirds of the cost of the basic state pensions and about 20% of UK citizens has some entitlement to a public service pension. Nevertheless, union bodies responded with some hostility to the proposed reforms – for example, the Association of Teachers and Lecturers balloted for strike action for the first time in more than 30 years over the proposals. Minister Nick Gibb has pointed out the cost of teachers’ pensions increases every year in 2005/06, the cost of paying teachers’ pensions reached around £5bn, and the cost is expected to reach almost £10bn by 2015/16.

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Over the long term, the stockmarket has traditionally tended to outperform cash. But it is important to acknowledge that past performance is not a reliable indicator of future performance and the market is also volatile. This tends to worry investors, tempting them to sell at the first sign of trouble. However, selling after a sharp fall can be a knee-jerk reaction. Falls can be followed by upward movements and, over the long term, short-term ups and downs should have no serious impact on achieving your objectives. Share prices do go down as well as up and are not guaranteed, but think before you act. Have your needs changed? Has your attitude to risk changed? If your portfolio has been set up to fit your aims, time should be all it needs.

Asset & Investment Management Ltd 0208 943 4343 | www.aimifa.com | enquiries@aimifa.com


STAFF COLUMN Stephen Trenholm is the latest addition to our Paraplanning team. He is filled with enthusiasm and is ready to take on any challenge head on. He has a strong background in mortgages, insurance and inheritance tax planning and welcomes anyone interested in the above to get in touch. Stephen enjoys most sports, but is particularly interested in football and is a loyal fan to Middlesbrough. Qualifications 

Level 4 Diploma for Financial Advisers

Level 3 Certificate in Mortgage Advice & Practice

Andrew Mina has recently passed his first two out of the six required examinations to acquire the Diploma title with flying colours. He is more driven now than ever, to pass the next four in record time to gain his Diploma in Regulated Financial Planning. In the meantime, we will be cheering him on until he reaches the finishing line. Qualifications 

RO2 Investment Principles and Risk

RO1 Financial Services Regulation and Ethics

MSc Finance and Accounting

We are delighted to announce that Stewart Twidle has successfully reached his ultimate goal and obtained the title as a Chartered Financial Planner. Being at the top of the game will ensure that all of our clients benefit from a comprehensive approach to financial management. Qualifications 

Advanced Diploma in Financial Planning

Diploma in Investment Planning

Certificate for Financial Adviser

Certificate for Mortgage Advice and Practice

Asset & Investment Management Ltd 0208 943 4343 | www.aimifa.com | enquiries@aimifa.com

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Content of the articles featured in this newsletter is for your general information and use only and is not intended to address your particular requirements. They should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date the newsletter is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles. We are delighted to confirm that AIMIFA is registered as an independent adviser under the rules of the Retail Distribution Review which took effect from 1.1.2013. To Find out more about the FSA's changes to the way you get financial advice go to http://www.fsa.gov.uk/static/pubs/ consumer_info/rdr-consumer-guide.pdf or please call us and we will print a copy for you. We are authorised and regulated by the Financial Conduct Authority.

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Summer Edition 2013  

• Life assurance • Long-term care plans • Investing in stocks and shares • Public sector pensions Adviser-hub (www.adviser-hub.co.uk)

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