Lowes Magazine Issue 123

INVESTMENT

The world changes and so must our plans FINANCIAL PLANNING CAN NEVER BE A ‘ONE AND DONE’ event. Lowes will always recommend that our clients put in place a long-term plan in respect of their wealth building and lifetime financial goals. But the world is nothing if not a moving feast and over time it is inevitable that we will need to amend our savings and investments appetite and our financial plans accordingly. This will have a potential impact on where we save and invest and the action we need to take to avoid unnecessarily paying tax, as examples. Currently, we are all being affected by the rise in the cost of living – notably in the prices paid for fuel and energy. Governments are fighting the dual-headed and, in terms of policy, conflicted dragon of rising inflation and economic slowdown. Both of which may affect our savings and investment portfolios and our financial plans. There are numerous ways the landscape has changed over the years which demonstrate why we need to review our financial planning strategies on a regular basis. Stockmarket volatility Over our 50+ years of advising clients we have seen markets rise and fall – including some ‘crashes’, such as in 1973, and 2008, with smaller market downturns along the way. Overall, however, while stockmarkets are driven by investor sentiment and so by nature are volatile, they have always recovered from these setbacks and in time, started climbing again. But we don’t want simply to rely on index performance in our financial plans, ideally we want to take more control of the situation and find investments which can deliver more consistent returns through professional management and provide a buffer against volatility. It’s important therefore that we review and diversify our investments on a regular basis, with a view to creating a smoother investment path. No matter how we manage our

Lowes Consultant Chris Large explains why it is so important that we review our financial plans and goals on a regular basis and, in conjunction with Independent Financial Advice, take appropriate action where needed.

investments, at times of negative volatility our portfolios can be affected but placing our investments in the hands of investment professionals who day-in day-out are watching the markets and finding the best companies in which to invest, makes sense. Likewise, bringing in investments that can provide some protection against falls in the stockmarket and deliver a constant income stream can help balance out a portfolio – structured products and fixed income investments are cases in point. The ability to react to the changing landscape is one of the reasons we set up the Lowes Managed Portfolio Service, as it enables the Lowes Investment team, as the portfolio managers, to review each portfolio against its investment criteria and take prompt action where and when needed. Pensions policy Pensions h ave been subject to considerable change over the past 20+ years. It is somewhat ironic that a much needed shake-up of the pensions market in 2006 was heralded as ‘pensions simplification’, as since then, pensions have become ever more complex and confusing for people to deal with. How we use our pensions within financial planning was significantly affected by the introduction of the Pensions Freedoms legislation in 2015. This inherently changed the way we view and use our personal pensions. Death benefits are a case in point. These changed to enable pensions to be passed on to beneficiaries outside of a person’s estate, making pensions a central pillar of estate and inheritance tax planning, not just a way to save for retirement. Changes to how much may be saved within a pension before incurring a tax surcharge – known as the Lifetime Allowance - have altered dramatically also. In the 2010/11 tax year it was £1.8million – that was drastically cut and currently stands at £1.07million, which has been frozen until 2026. These changes have s ignificantly altered financial plans.

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