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Economic Insights

Market volatility webinar feedback

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Ellis Bates Q&A Webinar

Market Volatility & Your Investments

As world events continue to affect the investment markets, we recently held an open Q&A session for all Ellis Bates clients to ask their questions to our in-house Investment Team.

Headed by our Director of Investment Alan Cram, questions included the ‘Ukraine’ impact on Russian funds, the changing role of China within the markets, re-assessing attitude to risk with the current market volatility and how to spread investments over the short, medium and long term.

Clients welcomed the opportunity to gain a better understanding of the ups and downs of the markets and how this affected their investment portfolios and ongoing investment decisions.

Ellis Bates are here to enhance people’s lives by delivering peace of mind, enabling financial freedom and helping clients achieve their goals.

If you would like more information about our financial advice and investment services simply book a chat.

Market Update – January 2022

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We are now in the midst of another volatile period in investment markets and the inevitable questions are starting to come through from clients as to what is going on. Global stock markets have undergone a correction in recent weeks, while the FTSE 100, which consists of the UK’s largest companies, is moving higher and is back to pre-pandemic levels. What is causing this divergence?

The answer behind this behaviour is two-fold: (1) inflation and interest rate expectations, and (2) the way in which global stock markets are constructed.

Looking at point (1) first. Coming into 2021, inflation in the UK was running close to zero, driven down by lower levels of spending during the third Covid lockdown. However, an increase in consumer spending following the easing of lockdown restrictions in summer, rising wholesale energy prices, global supply chain issues (and, specific to home, increased trade friction between the UK and EU due to Brexit) has pushed up prices, such that inflation is now at its highest levels for many years. This spike (not just in the UK but also in the US, Europe and elsewhere) has caused concerns that central banks worldwide will have to step in and raise interest rates to bring it under control.

Now onto point (2). No two markets are constructed in the same way in terms of the sectors within them, meaning each one moves differently depending on market conditions.

Simplistically, sectors within a stock market can be split into two buckets: ‘value’ and ‘growth’. Value stocks typically operate in ‘old economy’ industries (e.g. miners, oil & gas companies), that consequently tend to pay out more of their earnings to investors as dividends, rather than reinvesting back into the business. On the other hand, ‘growth’ stocks are those in rapidly expanding industries with strong future earnings potential (e.g. technology) – to generate these returns and stay ahead of their competitors, they tend to reinvest their profits into the business and pay less in the way of a dividend (if at all), and some may have borrowed money for future expansion.

Increases in interest rates (and expectations thereof) are a catalyst supporting a positive outlook for value stocks, as investors place more emphasis on the earnings they generate today (i.e. the dividend), so they are relatively immune from higher interest rates. Conversely, growth stocks traditionally underperform in these conditions as more emphasis is placed on their long-term prospects, which could be eroded by inflation (and, if they have borrowed money, higher borrowing costs).

Notably, the UK’s FTSE 100 predominantly has more ‘value’ businesses, with Materials (e.g. miners Rio Tinto and BHP Group), Energy (e.g. BP and Royal Dutch Shell) and Financials (particularly high street banks) making up a large chunk of the index. On the other hand, the S&P 500 in the US is more of a ‘growth’ market, with technology (e.g. Facebook, Apple, Netflix) representing about a quarter of the index.

The table below shows the breakdowns of the FTSE 100 and the S&P 500 indices in percentage terms, and the differences between them in the right-hand column. The subsequent performance chart shows how the Materials, Energy, Financials and Technology sectors have performed over the past five years.

Sector FTSE 100 S&P 500 Difference
Consumer Staples 18.4 6.7 11.7
Materials 13.4 2.3 11.1
Energy 11.0 3.3 7.7
Financials 17.0 13.6 3.4
Utilities 3.5 2.6 0.9
Industrials 8.8 8.4 0.4
Real Estate 1.3 2.7 -1.4
Healthcare 11.9 13.3 -1.4
Communication Services 6.6 10 -3.4
Consumer Discretionary 7.3 11.7 -4.4
Information Technology 0.1 25.4 -25.3

Importantly, though, our portfolios are not – and never have been – the FTSE 100. Rather, they are diversified geographically, by sector, asset class, investment style, company size, fund house and other considerations, in order to reduce the amount of risk that our clients are exposed to, while aiming to provide them with optimum long-term investment returns. This means that our portfolios have exposure to the UK, as well as the likes of the US, Asia and Emerging Markets (all of which are more ‘growth’ oriented areas).

Following on from this, it is worth noting that it was the US/technology, Asia and Emerging Markets that powered the returns of 2020. While they have had a more difficult time of late, and there is likely to be heightened volatility in the months ahead (primarily linked to expectations around inflation and interest rates), we remain positive on the outlook from current levels. Firstly, the growth of technology companies over the past decade or so has been incredible, and the digital transformation of many sectors (e.g. electronic payments, online shopping, cybersecurity, among many others) seems to be far from over. We have also identified Asian and Emerging Markets (where the middle/consumer class continues to increase considerably in size) for strong potential returns over the next 5+ years. More generally, the funds within our portfolios are invested in high-quality companies with strong brands and pricing power, which puts them in strong positions to pass on price rises to consumers/their suppliers, thus providing a degree of inflation protection over the long term.

All in all, we therefore believe that our portfolios are well-positioned to benefit from these longer-term trends.

a lady looking out of a window thinking about pension freedoms

Pension freedoms

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a lady looking out of a window thinking about pension freedomsPension Freedoms – Looking for a wider choice of investment options?

Saving for your retirement is one of the longest and biggest financial commitments you will ever make. Imagine you’re retiring today. Have you thought about how you’re going to financially support yourself (and potentially your family too) with your current pension savings? The pension freedoms introduced in 2015 provide even more of an incentive to look again at your retirement savings.

If appropriate to your particular situation, one option to consider is a Self-Invested Personal Pension (SIPP), especially if you’re looking for a wider choice of investment options. It’s an option for people who are more comfortable with investment risk and who have more time to regularly review their pension investments to make sure they continue to meet their needs.

Range and flexibility of investment

First introduced in 1989, this structure provides a range and flexibility of investment that makes a SIPP one of the most flexible methods of saving for retirement.

UK residents can invest money into a SIPP up until the age of 75, and start withdrawing money from as early as 55 (57 from 6 April 2028). Tax relief is available on personal contributions up to £3,600 or 100% of relevant UK earnings (whichever is greater), with tax-efficiency also subject to the pension annual allowance, which is £40,000 for most people and applies to contributions from all sources, including employer. Any unused allowance from previous years may mean more than £40,000 can be contributed tax-efficiently.

Saving for a child or grandchild

Parents can also open a Junior SIPP for their children. It may seem a little premature to start putting money into a SIPP for your child or grandchild at birth, but the tax relief that is available on the contributions makes this a particularly attractive way to save for your child’s future. The money is tied up until they reach retirement age, so this money will not be accessed any time soon.

As with all Defined Contribution pension schemes, the amount that you will have available when you retire depends on the contributions that you (and any employers) have made and how your investments perform over time.

Bring everything together in one place

If you’ve got several pensions, it could make sense to bring everything together in one place. Even if the amounts are small, it all adds up. You can transfer most types of pensions to a SIPP and combine them, letting you manage your pension pot in one place. But SIPPs are not suitable for every investor and other types of pensions may be more appropriate. Once in a SIPP wrapper, your savings will grow free from UK Income Tax and Capital Gains Tax.

Just starting your pension journey?

Investing your retirement savings in a SIPP may not be for everyone. If you are not sure which type of pension scheme is best for you, it’s essential you obtain professional financial advice to review your options. To find out more about pension freedoms and to discuss your options – please contact us.

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028). The value of your investments (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.
The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future. You should seek advice to understand your options at retirement.
Accessing pension benefits early may impact on levels of retirement income and your entitlement to certain meanstested benefits and is not suitable for everyone. You should seek advice to understand your options at retirement.
Older man enjoying skiing in a bright orange jacket after not exceeding his lifetime allowance

Take it to the Max

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Older man enjoying skiing in a bright orange jacket after not exceeding his lifetime allowance

Feel confident about your retirement!

If you’ve been diligently saving into a pension throughout your working life, you should be entitled to feel confident about your retirement. But, unfortunately, the best savers sometimes find themselves inadvertently breaching their pension lifetime allowance (LTA) and being charged an additional tax that erodes their savings.

If you are a high-income earner or wealthy individual, you could be putting too much into your lifetime pension and risk exceeding the pension lifetime allowance.

The government will maintain the pensions Lifetime Allowance at its current level until April 2026, removing the usual annual incremental rises.

The following questions and answers are intended to help you avoid this tax charge.

Q: What is the lifetime allowance?

A: The LTA is a limit on the amount you can withdraw in pension benefits in your lifetime before you trigger an additional tax charge. By pension benefits, we mean money you receive from your pension in any form, whether that’s a lump sum, a flexible income, an annuity income or through any other method.

This allowance applies to your total pension savings, which may be in different pensions.

Q: How much is the allowance?

A: In the 2021/22 tax year, the LTA is £1,073,100. This allowance has now been frozen until April 2026.

Q: What happens if you exceed the allowance?

A: Once you have received your full LTA in pension benefits, you will be required to pay an additional tax charge on any further benefits you receive.

If you take your remaining benefits as a lump sum, you’ll pay a tax charge of 55%. If you take your remaining benefits as multiple withdrawals, you’ll pay a tax charge of 25% on each one.

Q: How is the usage of your lifetime allowance measured?

A: Each time you access your pension benefits (for example, by purchasing an annuity, receiving a lump sum or establishing a flexible income), this is recorded as a ‘benefit crystallisation event’. There is an additional benefit crystallisation event when you turn 75, and finally, upon your death.

Q: Is lifetime allowance protection available?

A: You can only protect your pension from the LTA if your savings were worth more than £1 million on 5 April 2016. You may be able to protect your pension savings up to £1.25 million, or up to the value of your pension on that date, depending on the type of protection you have.

Q: Is it possible to avoid the lifetime allowance?

A: If you do not have LTA protection and you are approaching the limit, there are various actions you can consider. These include stopping your contributions (and, instead, investing your money into an alternative tax-efficient environment), changing your investment strategy or starting retirement earlier.

Q: Who does the allowance affect most?

A: The LTA affects high earners and those approaching retirement age the most, including those with defined benefit pensions. As the value of high earners’ pensions rises over the next five years towards a lifetime limit that will remain fixed, more and more individuals may find they need to stop contributing to avoid breaching the limit.

Q: When should you seek professional advice?

A: The rules around the LTA are very complex and making the right decisions can feel difficult. Receiving professional financial advice will help to identify if you have a problem and offer different solutions to consider, based on a full review of your unique circumstances.

For more information on information regarding the Lifetime ISA, please get in touch!

Generation Xers Chronically Under-Saving

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57% face financial difficulty in retirement years.

According to The International Longevity Centre UK (ILCUK) report, a substantial proportion of Generation Xers (those born between 1965 and 1980) in the UK face financial difficulty in retirement, with one in three expected to face significant disadvantages.[1].

Many 40-55-year-olds are reluctant to invest because they are frustrated by various financial stresses, such as coping with fluctuating incomes and balancing conflicting goals like childcare, loans and mortgages.

Multiple financial pressures

Generation Xers are chronically under-saving, with nearly one in three at risk of reaching retirement with inadequate incomes. The majority (57%) say they want to save more for retirement but they cannot afford to because of multiple financial pressures.

Many are also unaware they are saving too little to achieve the level of income they desire: just 7% of those with a defined contribution (DC) pension are saving enough to achieve a moderate lifestyle in retirement.

No pension funds

More than half of those who contribute to DC pensions do so with less than 8% of their wages, and over half have substantial delays in their pension savings of at least ten years.

Of those who are employed, more than a quarter expect to rely on the State Pension for the bulk of or all their retirement money, or have no pension funds at all.

Additional income in retirement

COVID-19 has further disrupted people’s retirement plans, with one in five Generation Xers saving less or spending down their savings as a result.

Generation X is a very diverse cohort. Some subgroups in the age band are well prepared for retirement: almost 60% expect to have additional income in retirement, such as property wealth, other investments or savings, an inheritance or income from their partner or family.

High risk of financial difficulty

But other subgroups are at high risk of financial difficulty in later life, including those on benefits, the self-employed, low earners, renters and carers.

The pandemic has disproportionately influenced Generation Xers: they are the age demographic most affected by the pandemic, with 91,000 more older adults unemployed now than a year earlier. This is a year-over-year rise of more than 30%, and far more than in any other age demographic.

Uncertain about retirement plans

According to the ILCUK study, nearly 40% of Generation Xers are uncertain about retirement plans, and few grasp the rate of investment needed to reach a secure retirement income.

The findings of this report are really worrying and highlight the precarious financial future facing some of those in their 40s and 50s. Increased housing costs, insecure work and caring responsibilities risk leaving many without the savings they need for later life.

Maximise your wealth potential

Everyone’s situation is unique. This is why a personalised approach is important to help you, and your family, map out your goals and aspirations. Whatever the source of your wealth, there is an opportunity to maximise its potential through professional financial advice. To find out more, please contact us.

Source data: [1] https://ilcuk.org.uk/slipping-between-the-cracks/

Retirement Clinic

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Answers to the myths about your pension questions. If you are approaching retirement age, it’s important to know your pension is going to finance your plans.

Pension legislation is extremely complex and it’s not realistic to expect everyone to understand it completely. But, since we all hope to retire one day, it is important to get to grips with some of the basics. It’s particularly helpful to become aware of the things you may have thought were facts that are actually myths. Here are some examples.

MYTH: The government pays your pensions

FACT: The government pays most UK adults over the pension age a State Pension, which is currently:
– Retired post-April 2016 – max State Pension of £179.60 a week
– Retired pre-April 2016 – max basic State Pension of £137.60 a week (a top-up is available for some, called the Additional State Pension)

Not everyone is eligible for the full amount, which requires you to have at least 35 qualifying years on your National Insurance record. If you have less than ten qualifying years on your record, you’ll receive nothing. Even if you receive the full amount, you’ll usually need to supplement it with your own pension savings.

MYTH: Your employer pays your pension

FACT: Most people are automatically enrolled into a workplace pension. Your employer is usually required to pay a minimum of 3% of your salary into it and you must also pay a minimum of 5%
of your salary.

If you keep your contributions at the minimum level, it might be difficult to save enough for retirement. As life expectancies grow longer, your retirement can be almost as long as your working life. It’s therefore important to put aside a portion of your earnings to create a pension pot that will enable you to receive the income and live the lifestyle you want during retirement.

MYTH: You can’t save more than your lifetime allowance

Fact: There is a lifetime allowance on the benefits you can access from your pension, which is currently £1,073,100 (tax year 2021/22). That doesn’t mean that you can’t withdraw any more after that, but it does mean that you’ll pay a tax charge of up to 55%. However, there are ways of withdrawing the money with a tax charge of 25%.

MYTH: Your pensions provider’s default fund is suitable for everyone

Fact: Most pension default funds will start out with a high-risk strategy and steadily move your capital into lower-risk investments, such as bonds and cash, as you get closer to retirement. This is to reduce volatility in the value of your investments so that you can have a higher degree of confidence in how much you’ll eventually end up with.

If you don’t plan to purchase an annuity, you don’t necessarily need to reduce volatility before retirement. You may be leaving some of your money invested for several more decades, in which case a higher risk strategy may be more  appropriate.

MYTH: Annuities are outdated

Fact: There was a time when almost everyone bought an annuity when they retired, and that time has passed because there are now alternative ways to access your pension savings. But annuities still have a useful role for generating a retirement income and can be an appropriate product for some people. Unlike other pension withdrawal methods, such as drawdown, an annuity offers a fixed income for life, so there’s no risk of your money running out. That’s a crucial benefit for many pensioners.

MYTH: Your can’t pass on a pension

Fact: If you’ve used your pension savings to purchase an annuity, the income from this will usually cease when you die. But if you have pension savings that you haven’t used to buy an annuity (for example, if you’ve been taking an income through drawdown), what’s left can be passed on to a loved one.

If you die before the age of 75 there will usually be no tax to pay by the beneficiary. Otherwise, they will need to pay Income Tax according to their tax band.

Look after your future

There’s a whole lot to think about when you’re planning for retirement. Is it worth paying into private or workplace pensions? Are you saving enough? Which investments should you choose? All these unanswered questions can make planning feel a little overwhelming. To review your situation or consider your options, please contact us – we look forward to hearing from you.

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028). The value of your investments (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future. You should seek advice to understand your options at retirement.

Generation Covid-19

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Financial support to younger members as a direct result of the pandemic.
The coronavirus (COVID-19) pandemic has led to more people supporting younger family members financially. New research shows that 5.5 million older family members expect to provide additional financial support to younger members as a direct result of the pandemic[1].

Of these, 15% estimate they will provide an additional sum of £353 in financial aid. The most common reasons given for the payments were to help cover household bills, rent payments, allowing them to move back to the family home or paying off debts. This equates to £1.9 billion  being given to younger family members needing financial support.

Regular Gifts

This COVID-19 specific support comes in addition to regular ongoing financial support provided by older family members. Over a third (39%) of young adults, around 3.3 million people, receive regular financial support from their older family members and depend on it to cover their monthly outgoings.

Older family members provide on average £113 a month, collectively giving £372 million to loved ones each month in the form of regular gifts. While the majority (31%) say they use monthly gifts to save for ‘big ticket’ items like a housing deposit, over a quarter use it to pay for everyday essentials (29%) and a similar number to pay their bills (27%).

Financial Aid

Despite the significant sums handed out, 80% of older family members who gift money feel it is only natural to provide support to their younger relatives and are more than happy to do so. Of the 50% of adults who have received financial aid from a family member, many have sought further support during this year.

16% have utilised the government furlough scheme, 15% moved back to their family home to live rent free and 13% have taken out a one-off
loan. The trend of younger family members moving back home is becoming more common, with the most recent data from the Office for
National Statistics (ONS) showing that over the last two decades, there has been a 46% increase in the number of young people aged 20-34 living with their parents, up to 3.5 million from 2.4m[2].

Gift Money

While the majority (62%) of those who give away money do so knowing they can afford to maintain their current lifestyle, the research  suggests that selfless relatives are occasionally making changes to their own finances to meet the expense. Over a third (38%) of those who gift money to family members have made sacrifices in order to do so. While many (31%) reported cutting back on some day-to-day spending in order to gift money, a fifth (21%) admitted they struggled to pay some bills having helped out a loved one.

Most parents and grandparents will gladly help out when they can, but people are often making personal compromises to provide this support. Giving money to a family member has the potential to be a special experience, but the key is not to lose sight of your longer-term plan.

Property Wealth

There is a risk that people could be underestimating what they need to fund a comfortable retirement, and therefore it’s important to gift sensibly. Utilising property wealth, by either downsizing or using equity release, can often be helpful here as it allows the opportunity to give a living inheritance without touching your income.

These decisions aren’t easy, and the tax rules mean gifting money can be complicated. When gifting, HM Revenue & Customs stipulates you
must be able to maintain your current standard of living from your remaining income to take advantage of tax exemptions and there are
tax implications for anything gifted over the £3,000 annual allowance.

“Bank of Mum and Dad” Open for Financial Support

Younger generations, who stand to be impacted most by the crisis, may need to call on you – the ‘Bank of Mum and Dad’ – for financial support. If this is the case you need to evaluate how any cash calls could impact your own retirement plans. To discuss any concerns that you may have, please contact us.

Source data:
[1]Opinium Research ran a series of online interviews among a nationally representative panel of 4,001 UK adults between the 25 September and 3 October 2020


Responsible Investing

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Responsible, sustainable and environmentally friendly investing is here to stay. But, while demand is growing among all age groups, genders and income bands, some savers and investors are missing their biggest opportunity for responsible investing, which is through their pension.

We all want to make responsible choices as more of us are becoming aware of global challenges, such as environmental issues, human rights and climate change. We’re also starting to care more about how our behaviours affect the planet and society.

Future Success

Taking ESG (Environmental, Social and Governance) factors into consideration when investing is becoming more mainstream. It is acknowledged that companies that act responsibly to their employees, the environment and the public have a better chance of future success than those that don’t. Investing in these companies is a logical approach financially as well as ethically.

Many pension holders understand this approach and see the value of it. In a recent survey, more than one-third of respondents said that the option to invest their pension only in sustainable companies is important to them[1]. Nearly two-thirds said having clearly branded funds for investing in environmentally and socially responsible companies is important.

Pension Investments

The same survey suggests that pension holders feel that sustainable investing isn’t just important, but interesting. More than half of respondents said that a fund focused on clean energy and lowering carbon would make them more interested in their pension. A similar number felt that way about a zero-plastic fund.

But while pension holders feel these issues are important and interesting, that isn’t yet affecting the way they invest. Most people don’t manage their pension investments themselves, instead leaving their pension invested in the default options set by a provider chosen by their workplace. So, more than two-thirds of pension holders do not know how sustainable their pension is.

Environmentally Friendly

Many pension holders don’t know that they can choose their own funds, and therefore that they can choose sustainable or responsible funds. Around half are unaware of ways to ensure their
pension is environmentally friendly. Clearly, there is a large audience of individuals who would like to invest their pension more sustainably and responsibly but don’t know where to start. There are plenty of options, but without specialist experience, it can be difficult to select those that are truly responsible and environmentally friendly and will also deliver the financial return you’re seeking.

Investing with purpose

Responsible investors essentially take responsibility for the impact that the companies they invest in have on the world. Speak to us about what responsible investing options are available in your pension scheme and for advice on how to help your money have the greatest impact. We look forward to hearing from you.

Source data: [1] https://adviser.scottishwidows.co.uk/assets/literature/docs/2020$09-responsibleinvestment.pdf
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The value of your investment (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available. Your pension income could also be affected the interest the rates at the time you take your benefits. The tax implications of pension withdrawals will be based on individual circumstances, tax legislation and regulation which are subject to change in the future. You should seek advice to understand your options at retirement.

ISA Deadline 5 April 2021: Use it or lose it!

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Make the most of the tax breaks before it’s too late. If you hold a Cash Individual Savings Account (ISA) you may be dissatisfied with the low rates of interest you receive, which could make it difficult to grow your money even at a rate that keeps pace with inflation.

Stocks & Shares ISAs offer the possibility of higher returns than Cash ISAs, but only if you’re prepared to take some risks with your savings. These investment accounts offer tax-efficient benefits, and while a Cash ISA is simply a tax-efficient savings account which offers capital security, a Stocks & Shares ISA lets you put money into a range of different investments.

Make the most of your ISA allowance

All UK residents over the age of 18 receive an annual ISA allowance of £20,000 (2020/21 tax year). This is the amount you can pay into your ISA (or split between several ISAs of different types) to allow it to grow through interest, capital gains or dividend income, and you won’t pay tax on these proceeds.

Because you can’t carry over your ISA allowance into a new tax year, it’s important to use it by 5 April each year. You need to bear in mind, though, that tax rules can change in future and that their effects on you will depend on your individual circumstances.

Don’t obsess over timing

When getting started, a common concern is that the market will fall just after you’ve made a large investment. Some people make the mistake of trying to ‘time the market’ – buying in just before
prices spike – which, while tempting, is very difficult given the unpredictable nature of investments.

If appropriate, a safer strategy can be to drip-feed money into your Stocks & Shares ISA throughout the year. Sometimes you might buy when the market is high, and sometimes when it is low, but over time the aim is for this to average out.

Time to make your decision

When you set up your Stocks & Shares ISA, you’ll make some decisions about how your money is invested. How involved you are in your investment decisions varies between different ISA providers; some allow you to choose individual investments, while others provide ready-made portfolios.

Either way, your professional financial adviser can explain how funds work. These funds may invest in shares in specific markets, regions or industries, or in bonds, in property, in a combination of these, or in entirely different assets.

Match your investment goals

Funds tend to advertise themselves based on their past performance, so it’s naturally tempting to choose those that have achieved the most growth in recent years. But past performance doesn’t guarantee future performance and outstanding performance last year could be the result of a trend that will self-correct this year. Don’t base your decisions on this factor alone.

Instead, select funds with a stated objective that matches your investment goals in terms of risk and return. Any investment involves an element of risk. But multiple factors can raise or lower the risk level of a fund, including the assets it invests in, the region, industries and companies it invests in, and the way it is managed. Consider all these factors.

Review your investments regularly

Once you have made your investment selections, you should review your Stocks & Shares ISA regularly to make sure it still meets your needs, which may change over time. For example, if you hope to buy a house in ten years, you might initially choose higher-risk investments, but after five years you might want to reduce your risk level to protect your existing capital.

While annual reviews of your investment strategy are wise, more frequent adjustments are not usually recommended. There are many reasons you might be tempted to adjust your investments. You might have heard of a well-performing stock that’s offering unbelievable returns. Or you might have suffered a sudden loss and decide your existing investments are underperforming.

Investments, by nature, fluctuate in value

It’s more helpful to recognise that investments, by nature, fluctuate in value. A sudden rise in one doesn’t mean you should buy and a sudden fall in another isn’t a sign you should sell – in fact, you may recoup that loss quicker by holding it.

Constantly moving funds can be stressful and ultimately unproductive. In most cases, you’re better off sticking with your investments through ups and downs. Diversification (which can be achieved by investing in several unrelated funds) can also help to manage your risk level.

Invest in your future today with a stocks & shares ISA

Amid the mayhem caused by the coronavirus (COVID 19) pandemic, it is easy to forget that the end of the current tax year is approaching on 5 April and that means you don’t have much time left to make use of the tax advantage of your £20,000 ISA allowance. For help selecting funds to suit you, contact us for more information.

Information is based on our current understanding of taxation legislations and regulations. Any levels and bases of, and reliefs from, taxation are subject to change. The value of investments and income from them may go down. You may not get back the original amounts invested. Past performance is not a reliable indicator of future performance.

Budget 2021: Key announcements at a glance

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What was announced in Chancellor Rishi Sunak’s speech?

The Chancellor of the Exchequer, Rishi Sunak, says he would do ‘whatever it takes’ during the pandemic, and that he has done and will continue to do so. ‘It’s going to take this country, and the whole world, a long time to recover from this extraordinary situation,’ he told Parliament.

Mr Sunak said he wants to be honest about the government’s plans for fixing the public finances, and set out plans for the future. These are the key Budget 2021 takeaways announced from his Budget 2021 speech on 3 March.


  • UK economy contracts by 10% in 2020
  • Chancellor forecasts a ‘swifter and more sustained’ recovery
  • 700,000 people have lost their jobs since the coronavirus (COVID1- 9) pandemic began
  • Unemployment expected to peak at 6.5% next year, lower than 11.9%previouslypredicted


  • Economy set to rebound in 2021, with projected annual growth of 4% this year
  • Economy forecast to return to pre-COVID levels by middle of 2022, with growth of 7.3% next year


  • UK to borrow a peacetime record of £355 billion this year
  • Borrowing to total £234 billion in 2021/22
  • Debt levels set to peak at 97.1% of GDP in 2023/24

Personal taxation , investments and pensions

  • No changes to rates of Income Tax and National Insurance (CPI rise from April 2021)
  • Personal Income Tax allowance to be frozen at £12,570 from April 2022 to 2026
  • Higher Rate Income Tax threshold to be frozen at £50,270 from 2022 to 2026
  • No changes to Inheritance Tax or Lifetime Pension Allowance or Capital Gains Tax allowances until April 2026
  • Adult Individual Savings Account (ISA) annual subscription limit for 2021/22 remains unchanged at £20,000
  • Annual subscription limit for Junior Individual Savings Accounts UISAs) and Child Trust Funds for 2021/22 remains unchanged at £9,000
  • The government has maintained the Lifetime Allowance at its current level of£1,073,100 until April 2026

Coronavirus (COVID-19)

  • Extension to Coronavirus Job Retention Scheme (CJRS) u ntil the end of September
  • 80% of employees’ wages to continue to be paid by the government for hours they cannot work
  • Employers will be asked to contribute 10% in Jul y, 20% in August and 20% in September, as the economy reopens
  • Support for the self-employed extended until September
  • 600,000 more self-employed people will be eligible for help as access to grants is widened
  • Working Tax Credit claimants will get £500 one-off payment
  • Minimum wage to increase to £8.91 an hour from April
  • £20 increase in Universal Credit worth £1,000 a year to be extended for another six months


  • Stamp Duty Land Tax (SDLT) holiday on property purchases in England and Northern Ireland extended to June, with no tax liability on sales costing less than £500,000

Transport, environment and infrastructure

  • Leeds will be the location for a new UK Infrastructure Bank
  • The new UK Infrastructure Bank will have £12 billion in capital, with the aim of funding £40 billion worth of public and private projects
  • £15 billion in green bonds, including for retail investors, to help finance the transition to net zero by 2050


  • £19 million announced for domestic violence programmes, funding a network of respite rooms for homeless women
  • £40 million of new funding for victims of 1960s Thalidomide scandal and lifetime support guarantee
  • £10 million to support armed forces veterans with mental health needs
  • £1.65 billion to support the UK’s COVID vaccination rollout

Nations and regions

  • First eight sites for Freeports in England announced
  • £1.2 billion in funding for the Scottish government, £740m for the Welsh government and £41Om for the Northern Ireland executive

Other announcements

  • Duties on all alcohol frozen for a second year
  • No extra duties on spirits, wine, cider or beer
  • Eleventh consecutive year fuel duty to be frozen
  • £100 million to set up an HMRC taskforce with 1,000 investigators to tackle fraud in COVID support schemes


  • Corporation Tax on company profits set to rise from 19% to 25% in April 2023
  • Corporation Tax rate to be kept at 19% for companies with profits of less than £50,000
  • Tax breaks for firms to ‘unlock’ £20 billion worth of business investment
  • VAT registration and deregistration thresholds will not change for a further period of two years from 1 April 2022
  • VAT rate for hospitality firms to be maintained at reduced 5% rate until September
  • Interim 12.5% VAT rate to apply for the following six months
  • Firms will be able ‘deduct’ investment costs from tax bills,reducing taxable profits by 130%
  • Incentive grants for apprenticeships to rise to £3,000 and £126 million for traineeships
  • For firms in England, the business rates holiday to continue until June followed by a 75% discount
  • £5 billion in Restart grants for shops and other businesses that closed due to COVID
  • £6,000 grant for premises for non­ essential outlets due to re-open in April and £18,000 for gyms, personal care providers and other hospitality and leisure businesses
  • New visa scheme to help start-ups and rapidly growing tech firms source talent from overseas
  • Contact less payment limit will rise to £100 later this year
  • Review of the current 8% bank surcharge to make sure the sector ‘remains internationally competitive’

For a more detailed insight, download our Guide to Budget 2021