Out Of Adversity cOmes OppOrtunity - ISSUE 18 - Armstrong Watson
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INSIGHT
ISSUE 18 A WEALTH OF ADVICE
Out of Adversity
comes Opportunity
Potential Women’s Scams are
Capital Gains state pension becoming more
Tax changes shortfall sophisticated
Support & advice welcome
throughout these Welcome to our latest issue of Insight. We hope you, your
families and your loved ones continue to remain safe and
challenging times well. As we continue to see the effects of the heath crisis
and local lockdowns, The Government is trying to balance
minimising loss of life with protecting the economy which is
no mean feat. At Armstrong Watson we continue to work
04 as normal as we can and all our offices are open with social
distancing measures but also by remote video.
The unfortunate side of this pandemic has seen businesses
06
hit hard which has resulted in job losses. It can be a very
worrying time and in this edition we highlight some key
considerations to help you process what is happening and
08 make a smooth transition into your desired future path.
We continue to discuss health & wellbeing. Research carried
18 out by the Office for National Statistics (ONS) found that,
since the outbreak of COVID-19, almost half the population
have experienced ‘high’ levels of anxiety. It’s well known that
12 emotional and financial wellbeing are connected to each
other and we discuss how employers can engage with their
employees.
inside this issue More than £30m has been lost since 2017 to pension fraud,
04 Out of Adversity comes Opportunity according to Action Fraud, as unauthorised “advisers” tout
06 sector focus -INSPIRED COMMUNITY unrealistic investments. Men aged in their 50s are the most
ENTERPRISE TRUST LIMITED likely victims of fraudsters who target people’s long-term
- the usual place pension savings. There are things to look out for and do if
08 More Capital Gains Tax changes you think you may be a victim of a scam.
ahead?
National Savings & Investments (NS&I) have just announced
10 Scammers are Becoming more significant cuts across their range of savings from 24th
Sophisticated… please be alert November. Considering the current economic turmoil
12 THE WINTER OF (DIS)CONTENT? caused by the Coronavirus, some savers are perhaps
14 Why does the health & wellbeing of understandably continuing to seek safe havens for their
employees matter? money. However, there are pitfalls that you need to be aware
16 Women’s state pension shortfall of and cash is not always king.
18 When cash is not always king The full list of the articles featured in this issue appears
opposite, and we hope you enjoy this issue of our magazine.
If you would prefer to download a digital copy or subscribe
to new issues electronically, please visit
...we’re with you. www.armstrongwatson.co.uk
Contact our Financial Planning Consultants to book an appointment on 0808 144 5575
armstrongwatson
www.armstrongwatson.co.uk/financial-planning-wealth-management paul dickson
Armstrong Watson Accountants, Business & Financial Advisers is a trading style of Armstrong Watson LLP. Armstrong Watson LLP is regulated by the Institute of Chartered Accountants in England and Wales for a range of @aw_wealth chief executive and managing director
investment business activities. Armstrong Watson Audit Limited is registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales. Registered as a limited company in
England and Wales, number 8800970. armstrong watson
Armstrong Watson Financial Planning Limited is authorised and regulated by the Financial Conduct Authority. Armstrong Watson Financial Planning & Wealth Management is a trading style of Armstrong Watson Financial armstrong watson
Planning. Firm reference number 542122. Registered as a limited company in England & Wales No. 7208672. Registered Office: 15 Victoria
Place, Carlisle, Cumbria CA1 1EW.
The value of investments and the income from them can fall as well as rise. You may get back less than you originally invested. Past performance is not a reliable indicator of future results.
insight 03
tax tax
Clearly everybody has different circumstances, and this impacts how people react to this situation. Whilst for most people
this will be a stressful situation, it is important to reflect on how you address this significant change and life event and
indeed, how you move forwards.
In our experience there are some key considerations to help process what is happening and make a smooth transition
into your desired path.
Out of Adversity What is the next step? creating an immediate tax liability of
£4,000.
if they were a higher rate tax payer
an additional 20% tax relief on the
comes Opportunity
You will need to decide what your £10,000 can be reclaimed upon
next step will be, whether that is Once you know what the payment
is, you will need to look at your completion of a tax return, taking
a change of occupation, or even the effective cost of this contribution
opportunities for self-employment, outflows and budget for the short
term i.e. money in versus money to £8,000. This could be even more
a career break, retirement or simply efficient if the contribution was made
to find a new job that is similar to out = surplus or deficit. If there is a
deficit you may wish to contact The via salary sacrifice, which can often
your current one. This helps to focus be considered by seeking financial
your mind as to what you need to do Citizen’s Advice Bureau to seek advice
on debt management or payment advice to help support you through
next to achieve this. For example, if this situation.
you change occupation, what is your arrangements, or you could seek
ambition? What additional training, guidance and information on The Clearly dealing with such a significant
qualifications, will you need and Money Advice Service website. change and life event as redundancy
how much will it cost? Do you have If there is a surplus, you may wish can be daunting and all sorts of
enough money to budget for this? to consider some of the options and thoughts and emotions will be going
Who do you need to speak with to opportunities available to you. through your mind. It is therefore
seek employment in this sector? really important to take advice from
What can I do with the surplus all sources, including personalised
The words ‘redundancy’, or in some However, if you are around the age
financial advice from an adviser
you may wish to retire (or semi- money that I won’t need in
firms these days ‘organisational with empathy and experience of
retire), the questions you may ask the short term?
change’, around a workplace will supporting people in this situation,
yourself will be different, for example,
and who will act as your trusted
almost certainly cause trepidation do you have enough to live on? How There are various options available
adviser. Everybody’s circumstances
and apprehension, or maybe even will this impact your plans? What and the route selected is dependent
are different and therefore a one size
help and support is available to help upon what stage of life you are at
fear at the thought of uncertainty. fits all approach will not work.
me with this? and what your overall objectives are.
As an employee you may worry Typical questions asked by clients
The key here is to take time to reflect
about the challenge you might face are;
on your next course of action, and
trying to regain employment, or the seek some support and counsel - Should I keep it in cash or given low
changes you would need to make to before making any rash decisions. interest rates are there any other
your budget or lifestyle which could options?
occur as a result. Budget – First thing is to - Should I repay my mortgage/debt?
check what payment you will - Can I contribute some of this in to
Benjamin Franklin once said ‘out of actually receive my pension? Simon MAyoh
adversity comes opportunity’. In Out of the above questions we Financial Planning consultant
reality, whilst for most people there Usually the first £30,000 of a - leeds
commonly also get asked the
redundancy payment is paid free
will certainly be short term hurdles following question; ‘is there any way
of income tax, however anything in
which need to be addressed, there can I can save some money on tax?’
excess of this may create an income
Should it be appropriate for someone
be, for many people, opportunities to tax liability. For example, should At Armstrong Watson our quest is to
to opt for the pension route, the
move forward and grow. Redundancy your pro-rata earnings for the help our clients achieve prosperity,
answer to this question is typically
year be £50,000 and you receive a a secure future and peace of mind.
can sometimes provide the much ‘yes’, as of course you receive tax
redundancy payment of £40,000, We can provide a full review of your
needed push to make the changes relief on money which you put into
the first £30,000 out of this would financial affairs and discuss the
to your lifestyle, career, retirement pensions. Should an individual opportunities available to you with
be tax free, however the remaining
contribute £10,000 into a pension, our compliments in the first instance.
or ambitions you may have long £10,000 would push your total
they would receive tax relief on this You can also now do this remotely
thought about but have put off for earnings into the higher rate tax
contribution and it would be uplifted by video, telephone as well as face
threshold and would be charged at to face.
one reason or another. to £12,500 immediately. Furthermore
40%, thereby, in this example,
04 insight insight 05
client focus
client focus
Charity
sector
The Usual Place opened its doors in Armstrong Watson assists the The Trusted Adviser role is one
INSPIRED COMMUNITY
2013 as the brainchild of CEO Heather Directors with their annual statutory that we cherish and we have been
Hall. The social enterprise works as a financial statements but it was part of a steering group looking at
community café providing training, the implementation and support opportunities to be able to introduce
education and employability skills for provided for a new Xero accounting more employers to the organisation
ENTERPRISE TRUST LIMITED young people with additional support
needs. Many of these youngsters
were previously ‘invisible,’ excluded,
package which had the most
significant positive impact on the
business. Our accounting team
and to break down the barriers
of employability of young people
living with autism. It is important to
at risk of isolation and loneliness, supported The Usual Place’s team consider the valuable contribution
- THE USUAL PLACE and importantly, unable to fulfil their to establish a bespoke accounting that all young people living with
potential as valuable, active citizens, package, providing hands-on autism can provide in a variety of
contributing positively to their training, and managed the transition workplaces. These youngsters are
communities. to electronic reporting, giving the often more committed and dedicated
business accurate information to to their work but may need a little
This award-winning organisation allow more informed decisions to be more encouragement, support and
focuses on the promotion of the made in real-time. time from their employers at the
innate talents and capabilities outset.
of young people, enabling and More recently, the closure of the
empowering them to flourish, café due to the COVID-19 pandemic
and challenging the established and the drive by the Directors With the café closed since March, all
stereotype of young people with and management to seek new staff and trainees safely at home,
learning disabilities. opportunities has led to more the small management group
strategic planning taking place. led operations during the COVID
Strongly supported by the Scottish The Directors have progressed lockdown. A chance email sent to
Government in its unique approach with a change to the status of the Armstrong Watson by a funder
of supporting young people to company to becoming a Registered provided a wonderful and unexpected
reach their full potential within the Charity. Our charities team has surprise for the organisation.
hospitality sector, this community advised on the key differences from Submission deadlines were tight and
café is now recognised on a national both an operational, financial and eligibility criteria narrow, however
level for its achievements, and is a governance perspective alongside the operations of The Usual Place
footprint that could be replicated the constitutional and application seemed to fit, and Karen Rae, our
successfully throughout the UK. processes. The guidance given will Director of Education and Not for
ensure that the transition to a new Profit, passed on the email within 5
The venue of the café is the former minutes of receipt, closing date being
Townhead Church in Dumfries, the regulated entity goes smoothly and
that all compliance obligations are a couple of days later. We were
building initially being transferred thrilled to hear the wonderful news
The Usual Place became a client of met.
from Dumfries and Galloway Council. that they had been awarded a grant
Armstrong Watson over three years Following an extensive refurbishment of £45,000 to support the business
ago when their existing accountant programme, a large contemporary during lockdown - you just never
retired. They were looking for a community café, kitchen area and know when good luck may strike!
business partner who could support flexible training/meeting rooms were
created.
both the Board of Directors in fulfilling
their responsibilities, and the business
as a whole, by advising on the risks karen rae
and financial challenges that lay ahead Audit & Assurance
Director
as the enterprise grew in stature and
- carlisle
reputation.
06 insight insight 07
tax tax
More Capital Gains It has to be said that the existing CGT system is extremely complicated, so some simplification would be
welcome. Here are a few options open to the Chancellor:
Tax changes ahead? - Increase the rates of tax – it is certainly the case that rates are lower than in the past. The top rate for
residential properties is 28% and other assets 20%, whereas in the past the top rate has been 40%, the
same as Income Tax. However, until 2008 the cost of an asset could be increased by inflation so the gains
on assets held long-term were much lower.
- Reduce the Annual Exemption – this is currently £12,300 and means small gains each year don’t have to
be declared to HMRC.
- Restrict Private Residence Relief – currently no tax is paid on the sale of a main residence. This is an
expensive relief but removing it would be deeply unpopular.
Due to the unprecedented support - Further reform of Entrepreneurs’ Relief – this allows sales of certain business assets to be taxed at 10%
throughout this continuing rather than 20%, and the lifetime limit was reduced from £10 million to £1 million in the March 2020 Budget.
At the same time the relief has been renamed as Business Asset Disposal Relief.
health crisis, The Chancellor of
the Exchequer now needs to find - Removing rebasing of assets on death – this is one of the more likely changes as it was one of the
recommendations of the OTS in their Inheritance Tax review published in 2019. At present assets can be
ways to raise extra revenue to
sold shortly after inheritance without paying any CGT.
reduce his budget deficit. On 14
- Restriction on Holdover Relief – which allows agricultural and business assets to be gifted without triggering
July it was announced that the
a tax bill. This allows the capital gain to be deferred until the asset is sold at a later date.
Office of Tax Simplification (OTS)
had been asked to carry out a
review into Capital gains Tax The deferral of the Budget until Spring 2021 gives
(CGT). The OTS is an independent individuals the opportunity to consider taking action
before changes are introduced.
body and the Chancellor will not
necessarily implement all their
recommendations. This was Financial planning, wealth management and
followed by intense speculation tax advice all under one roof. keith johnston
about tax rises which the tax director
At Armstrong Watson our quest is to help our
Chancellor has tried to calm - carlisle
clients achieve prosperity, a secure future and
by saying that there won’t be peace of mind. Our Tax and Financial Planning
a “horror show of tax rises”, Consultants can provide a full review of your
but we are left waiting for the circumstances and discuss the opportunities
“
available to you with our compliments in
Budget in spring 2021 for further the first instance. You can also now do this
information. remotely by video, telephone as well as face
to face.
there won’t be a “horror show of
tax rises”, but we are left waiting
for the Budget in spring 2021 for
further information.
“
08 insight insight 09
scams scams
Our client had been looking for a Upon further investigation immediate In this instance what saved the client
better interest rate for his Cash alarm bells started to ring as some from this scam was having an active
ISA than his current provider was of the words in the email from the relationship with a trusted, regulated
paying. He carried out a search company didn’t look quite right. The adviser. This meant he felt it best
on the web and found what he prospectus, however, was incredibly to get another opinion first before
thought was a much better return convincing. Due our advisers making a decision. The experience
Scammers are from a very well-known investment
provider. He felt reassured it was a
highly reputable firm as they were
suspicions he made contact with the
well-known company who confirmed
the prospectus had not been issued
of the adviser meant he could see
through what was a very convincing
scam to the public, and saved the
Becoming more so well known and so he made an
enquiry. The person on the end
of the line was very helpful and
by them. They confirmed this was
indeed a scam as they didn’t have
any products of this nature. The
client from parting with his £80,000
and all the stresses, strains and
angst that would have gone with
Sophisticated… discussed how five products were
available paying different interest
rates, all higher than he was
company also then acted and the
matter was immediately then passed
on to their fraud department.
having acted and transferring the
monies over. Having the support of
a “Trusted Adviser” you can reply
currently receiving. This ranged upon is more important than ever.
please be alert from a 1 year fixed rate of 1.75% Scammers are becoming more
through to a five year fixed rate of sophisticated. In this case, whilst the
3.5% returns offered didn’t look quite right, At Armstrong Watson our quest is to
they were not promising ridiculously help our clients achieve prosperity,
Scams can come in many forms, but all are To provide further reassurance he high returns. They offered a rate of a secure future and peace of mind.
designed to get hold of your hard earned was then sent an email along with a interest that looked attractive enough Our Financial Planning Consultants
20-page prospectus complete with without raising suspicion initially work with our clients to provide them
money. They can do this by getting you to
the well-known company branding. from the client. They then produced with support, guidance and advice
reveal your personal details, stealing your At this point the client was mentally a detailed prospectus brochure that to help support them throughout
information, or even convincing you to committed to transferring his looked very convincing and also had their financial planning journeys. Visit
willingly hand over the cash. £80,000 Cash ISA. people on the end of a phone who www.armstrongwatson.co.uk for
also sounded knowledgeable. more information about our Financial
However, as he had a good Planning and Wealth Management
Knowing how to recognise a scam can be service.
relationship with his Armstrong
extremely difficult. Chances are, you’ve Watson Financial Planning
come across the most common type of Consultant before he acted he
scams – the spam emails, often from other wanted to double check the interest
countries, or attempting seemingly to be rate was correct. Our adviser
david porter
commented that the interest rate
from HMRC or your bank. However, while looked quite high, taking in to
- chartered alibf
email scams can be easier to spot and account that deposit rates are at Financial Planning Consultant
avoid, others are much more sophisticated. historically low levels due to the - Leeds & Skipton
The following situation happened to a long Covid crisis, and wanted to look
“
at the email and brochure in more
standing client of ours recently. Thankfully
detail. He advised him to put his
our client made contact with us to look in to plans to transfer on hold while he
further and we were able to prevent him from looked in to it for him. Upon further investigation
making a potentially very costly mistake. immediate alarm bells started
to ring as some of the words
in the email from the company
didn’t look quite right.
“
10 insight insight 11
future money future money
THE WINTER OF
(DIS)CONTENT?
The 1978/79 Winter of Discontent saw a nation unsettled as political battles and fierce storms combined to test the
resolve of a suffering public. Parallels with today’s challenges are not difficult to draw. With the struggles of that time
heralding the arrival of Thatcherism and its new social contract, today’s arguments of individual freedoms against
public health, and the dawning of a post-Brexit era have the potential to be remembered as a similarly significant
moment in time. Add in the US election and the coming winter months may see the setting of a new world order: for
better or for worse.
Taxes, Trade Wars & Twitter Parting Ways In Search of the Holy Grail
With Americans heading to the polls Four years on from the referendum In any other time the US election
on 3rd November, the direction of and we are now in the final throes of and Brexit would be the defining
the world’s largest economy will Brexit. 2021 will see the end of the factors in the mood of markets, yet
become clearer in the following transition period and the beginning in this period of Corona, just one
days. Traditionally, stock markets of a new UK-EU trading relationship. story dominates. With cases rising
would favour a Republican candidate Whether that will be based on a hard- on the way to winter, Boris Johnson
and Trump’s low tax regime is fought free trade agreement, or on must judge the public mood on
popular, yet this time around there basic WTO rules is yet to be seen, further restrictions, while Rishi Sunak
are contrasting elements in play. A but when clarity is achieved, expect a must judge the public finances.
strong Democratic victory would spike in market movements. Pound The Chancellor has promised to
likely result in higher corporate taxes sterling will likely be the clearest think creatively, yet so long as the
eventually, yet with the current measure of sentiment, with strength virus surges, the economy will be
economic crisis, further fiscal expected in the case of a deal, while challenged. A turning point, of
stimulus is more likely in the short within equities those focused on the course, would be a vaccine. With
term, enabling a rapid economic domestic economy are likely to be high hopes surrounding a number
recovery. On China, continued the most sensitive. An opportunity of contenders, there is the potential
hostility is likely to persist regardless or a threat, everyone has their own for important results in the months
of who occupies the White House, views on the merits of Brexit, but ahead. If a successful vaccine is not
but on other international affairs, a either way, the coming weeks look found, then continued economic
calming return to multilateralism can set to be remembered as the time suppression can be expected. Yet, if
be expected should Biden prevail. we moved on. one is, the depths of winter may not
The ending of Trump’s twitter feel all that bad.
diplomacy would also be welcomed
by global markets.
richard cole cfa
fund manager -
Future Money
“
Asset Managers
The Chancellor has
Keeping you informed
promised to think
“
creatively, yet so long
as the virus surges,
the economy will be
To hear more of our thoughts tune in to Armstrong Watson’s regular
investment podcast where we discuss the latest market, financial and
economic developments from around the world
challenged.
12 insight insight 13
financial education & wellbeing financial education & wellbeing
Why does the health It’s well known that emotional and
financial wellbeing are connected
Why should employers provide
financial wellbeing support? There
For employees financial wellbeing
is becoming more important,
& wellbeing of to each other. By being in a poor
financial situation, people are much
more likely to experience feelings
is clear evidence from these and
other sources of research that many
employees believe there is a role
especially in this current crisis, but
this has been building for a while. For
employers having a workforce that is
employees matter? of stress and worry, causing
sleepless nights, which can lead to
poorer performance at work and
to play for employers to support
their personal financial wellbeing.
The Money Advice Service (MAS)
engaged, informed, supported and
efficient will improve productivity,
it can also help to improve staff
with relationships with colleagues. website also comments that 46% of retention, and thereby also reduce
Ultimately, this can also lead to employees say they would appreciate costs and provide benefits in other
greater levels of absenteeism in the their employer providing access to ways. If employees can see their
workplace which then places extra financial awareness programmes. employers supporting them outside
Research carried out by the Office for stress on other staff and so the MAS also provide impartial guidance of their pay and immediate other
cycle goes on. across all areas financial matters. benefits structure they clearly feel
National Statistics (ONS) found that, since
more valued, it’s no wonder they
the outbreak of COVID-19, almost half the It is a common misconception that Employers are uniquely positioned to go hand in hand. By understanding
population have experienced ‘high’ levels of financial wellbeing is purely about deliver money guidance around life these issues employers will go a long
anxiety. pay. Whilst money worries tend changing events such as for examples way towards building trust with their
to become less as income rises, changing roles, locations, starting a employees.
“ “
those earning £100,000pa are just family and retirement.
as likely to have as many financial
You maysuitable,
By seeking advice and arranging
tailored protection can ensure
give
form of normality, at least
““
need to bring
in specialists who can
that some
regulated advice
financially,
worries as someone on much lower
income if they have little savings and
a lot of debt. Financial worry is not
necessarily directly linked to pay.
Understanding employee
and feedback through a colleague
needs
survey can provide valuable insight
for an employer and helps them
dominic Gaunt
Business
Development &
can continue should you in
be areas.
unable to to understand the information and Relationship
work for the longer term due to accident There are many causes of financial support their employees value the Manager
or sickness. stress. Debt is an obvious one but most. A survey of this nature will help
in recent surveys and webinars we an employer to decide the type of
have carried out, one of the most financial wellbeing programme to run
popular questions that employees and if you need specialist support and
wanted to have more information on guidance, for example if the feedback
was around “how to budget?” is around pension or retirement
planning. You may need to bring in
On the Financial Capability website specialists who can give regulated
- www.fincap.org.uk - it states advice in areas such as this.
that 23 million working age adults
do not feel confident planning for
their financial future. Research by
the Neyber (The DNA of Financial
Wellbeing) estimates that money
worries cost the UK economy At Armstrong Watson our quest is to help our clients achieve prosperity,
£120bn and 17.5 million lost hours of a secure future and peace of mind. We can help support a business and
work. In the research it discusses the employees run financial education and wellbeing programmes tailored
evidence for why employers should to your needs. Visit www.armstrongwatson.co.uk or email
be developing and supporting their dominic.gaunt@armstrongwatson.co.uk
employees financial wellbeing.
14 insight insight 15
pensions pensions
Women’s state
pension shortfall Rumours abound ahead of the
expected Autumn Budget that the
The main groups of people affected,
according to the research, are:
Some married women who did
not realise they needed to make a
government may need to loosen the claim for the uplift pre- March 2008
pension triple lock to help recover • Married women whose are planning to make a complaint
stretched public finances following husbands turned 65 before 17 of maladministration to the
the Covid-19 pandemic. Meanwhile, March 2008 and have never Parliamentary Ombudsman. They
More women should ask the Department will say that the DWP failed to make
research from a leading law firm claimed the 60% uplift.
for Work and Pensions to check their state has highlighted how relying on sure that they knew about the need
pensions, according to former pensions the intricacies of the state pension • Widows with pensions that to make the second state pension
minister Sir Steve Webb. system could mean many are losing weren’t increased after their claim when their husband turned 65.
out. husbands’ deaths. Currently the payments for women in
that category can only be backdated
Under the previous system, married • Widows who think they may 12 months rather than the 12 years
women who reached state pension have been underpaid when their or more of pension uplift that has
age before 6 April 2016 were able to deceased husband was still been missed.
claim a basic state pension of 60% of alive, even if their pension is now
the full rate based on their husbands’ correct.
contribution record, if this was larger At Armstrong Watson our quest is to
than the pension they could get • Women in their 80s receiving help our clients achieve prosperity,
based on their own contributions. a basic pension of less than a secure future and peace of mind,
£80.45 per week, if they satisfied we work with you to ensure your
This uplift in the state pension should the basic residence test at age retirement plans remain on track
have been given automatically since 80. with regular reviews. We can do this
17 March 2008, but before then remotely via video as well as face
a married woman had to make a • Widowers and heirs of women to face with the necessary social
‘second claim’ when her husband who have now died but were distancing precautions in place.
reached age 65 – and many women underpaid state pension while
did not make this claim. alive.
The Department for Work and • Divorced women who might
Pensions (DWP) is checking its not be benefiting from their ex-
Kerry Chaloner
records, but the chances are that husbands’ contributions.
many women will miss out and Financial Planning
should call the department to see if Consultant -
“
they have been underpaid. northallerton
research from a leading law
firm has highlighted how relying
on the intricacies of the state
pension system could mean many
are losing out.
“
16 insight insight 17savings savings
When cash is
not always king Considering the current economic
turmoil caused by the Coronavirus,
some savers are perhaps
There are also limits to the amount of
protection holding cash for all other
deposit providers bar the Treasury
Many people believe that knowing
when to buy and when to sell is
the secret of successful investing.
understandably continuing to seek backed NS&I. The Financial Services The truth is that no one knows
safe havens for their money. In times Compensation Scheme (FSCS) with certainty when investment
of trouble cash is traditionally seen offers individual account holders markets will rise or fall. Trying to
as offering capital security over other protection up to £85,000 (£170,000 time the investment markets is
National Savings & Investments (NS&I) have just assets namely, shares, fixed interest joint account) if that banking/building not only stressful, it is very seldom
and property. However, savers society institution is unable to meet successful. Leaving funds invested
announced significant cuts across their range of
still need to apply caution. Even in its obligations to investors. usually produces the best returns.
savings. From the 24 November Income Bonds, `normal` times some people hold
will to go from paying 1.15% monthly interest high cash balances, perhaps to meet For most savers this generally When markets are volatile it`s
to just 0.01%. There are further dramatic capital expenditure in the short term provides sufficient protection, but a big temptation to put all your
reductions to the rates payable on the NS&I or just to provide extra piece of mind, what are the options for clients investments in the relative security of
but there are unseen risks to holding holding in excess of these limits? cash. It may seem like a safe haven,
Investment Account, Direct Saver and Direct however as they say, a ship is safe
high levels of cash - inflation. They could simply spread their
ISA’s. In addition there is also a reduction in the cash across a number of different in harbour, but that is not what ships
odds of winning in the Premium Bonds draw The Consumer Prices Index 12 institutions. Whilst this makes sense are made for.
from December, the odds of winning anything month rate is currently standing at in theory, in practice it can be quite
in the draw will go from 24,500 to one to 34,500 0.2% (source - Office for National difficult, not least because many
Statistics as at August 2020) and banks have different trading names Armstrong Watson Financial
to one, and the estimated number of total prizes the base rate at an all-time low of but only the main deposit taking Planning & Wealth Management,
won reduced by 1m. NS&I said that it had no 0.1% (source - Bank of England). licence holder can provide the FSCS as well as providing Independent
choice but to act because savers had put away However, whilst the inflation rate is protection. For example if you hold Financial Advice and personalised
billions of pounds more than usual during the at its lowest level for long time this accounts with Lloyds Bank, Bank of investment planning also offer a
is impacted with the health crisis Scotland or Halifax, you would only bespoke `cash management` service
COVID-19 lockdown, whilst they were paying aimed at maximising interest rates
and the measures to restart the be afforded one level of protection as
market leading rates, which left it in danger of economy such as the Eat Out to Help Lloyds Bank is the principal holder. by identifying the most competitive
breaching its government-mandated funding Out Scheme where the cost of eating Likewise, between The Royal Bank of cash accounts, whilst ensuring
limit for the year. out was significantly discounted. As Scotland and Natwest. clients` savings are afforded full
FSCS protection.
“
we move further through this crisis
inflation is predicted to rise again, So how can cash savers hope to
with central banks continuing to stick bridge the gap? The answer may be
to a conventional inflation target of to invest into `real assets` such as
2%. Cash savings, as has been the shares, fixed interest and property.
The key factor is case for a number of years now, are
“
not about when to
invest but rather the
amount of time you
invest for.
therefore likely to be eroded daily
as typically rates of interest on cash
savings, as demonstrated by the
NS&I reductions, cannot keep pace
But is this a good time to invest? It`s
all too easy to get caught up with the
bad news we currently hear every
day about financial markets. The key
steve shovlin
Financial Planning
Consultant -
carlisle
with the cost of living. As a result this factor however is not about when to
gap can have a serious long term invest but rather the amount of time
impact on wealth. you invest for.
18 insight insight 19Our Financial Planning Team is available to
advise you in these challenging times on all
financial matters
We can provide advice remotely via video, telephone or, of course,
face to face where appropriate
Call 0808 144 5575 to be put through to a Financial Planning Consultant
To help our clients achieve prosperity,
a secure future and peace of mind
ArmstrongWatson
®
Financial Planning & Wealth Management
www.armstrongwatson.co.uk
Armstrong Watson Financial Planning Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 542122. Registered as a
limited company in England and Wales, number 7208672. The registered office is 15 Victoria Place, Carlisle, CA1 1EW. Armstrong Watson Financial Planning & Wealth
Management is a trading style of Armstrong Watson Financial Planning Limited.
The value of investments and the income from them can fall as well as rise. You may get back less than you originally invested. Past performance is not a reliable
indicator of future results.You can also read
