UK Financial Planning Week 2013 runs from today 24th November until Sunday 1st December. David Crozier CFP at Navigator Financial Planning, gives his top tips for sound #financial planning: 1. Above all, have a plan – it’s the old adage: if you don’t know where you’re going, you’ll probably end up somewhere else. 2. Don’t do it yourself. It is very difficult to be objective about your own circumstances, particularly when it comes to failures or shortcomings. You need an honest assessment of your financial situation, and the only way to get that is to have it done by an objective third party. 3. If you’re going to save, start early – the magic of compound interest means that the first contribution is the most valuable. If you start a savings plan at age 20 and stop contributing at age 35, you will have more money at 60 than someone who starts at age 35 and contributes double from 35 to 60. 4. Take advantage of available tax reliefs – examples are ISAs which grow free of personal taxation, and pensions, which also grow free of personal tax, but also qualify for tax relief on the contributions. 5. Clear off expensive debt before saving – you will certainly not get as much interest after tax from a bank account as you will be paying on your debt. There is a possibility you might get a better return on a different sort of investment but you would have to take more risk and there would be no guarantee; and all the while you’ll be sure to be paying the interest on the debt. 6. Protect your loved ones – there is no point in putting in place great plans for the future if you’re not going to get there. Life insurance is generally inexpensive and gives you and your family peace of mind that liabilities are going to be met. 7. Put it in trust – if you do take out life insurance cover, consider putting it in trust. Failure to do this could mean a long delay before the money is paid out, disputes about who gets the money, and an Inheritance Tax liability – all at a time when money is needed quickly and with the minimum of additional aggravation. 8. Don’t forget critical illness cover – people in the UK are five times more likely to suffer a critical illness like heart attack, cancer or stroke before 65 than they are to die. Critical illness cover pays out money on diagnosis of one of a list of serious illness, money that can be used to repay a mortgage, fund needed private medical treatment, or just tide you over during recuperation. 9. Make a will – only around 35% of people in the UK make a will. Even in the simplest of circumstances, having a will reduces the time and the cost needed to deal with an estate. In more complex cases, it is likely that a will, with the help of a specialist financial planner and solicitor, will reduce Inheritance Tax liabilities and make sure more of your assets pass to your loved ones. 10. Review your planning – you would think of driving 100 miles without checking if you were on course, so why would you treat your financial planning like this? Regular checks against your original plan, updated to take account of changing circumstances, will give you the confidence that you are on track to achieve all that is important to you.
Posted on: Sun, 24 Nov 2013 12:00:00 +0000
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