Lloyd O Sullivan https://www.lloydosullivan.co.uk/blog Our Blog Tue, 26 May 2020 09:14:50 +0000 en-US hourly 1 Income protection insurance https://www.lloydosullivan.co.uk/blog/income-protection-insurance/ https://www.lloydosullivan.co.uk/blog/income-protection-insurance/#respond Wed, 27 May 2020 08:11:55 +0000 https://www.lloydosullivan.co.uk/blog/?p=1601
How will you pay the bills if you were sick or injured and couldn’t work?

There is a growing unease about the economic fallout of coronavirus (COVID-19), with many businesses laying off contractors and putting staff on extended leave, as well as natural worries about contacting the disease.

What this crisis has shown is that being unable to work can quickly turn our world upside down. No one likes to think that something bad will happen to them, but if you can’t work due to a serious illness, how would you manage financially? Could you survive on savings or sick pay from work? If not, you may need some other way to keep paying the bills – and income protection insurance is an option to consider.

You might think this may not happen to you, and of course we hope it doesn’t, but it’s important to recognise that no one is immune to the risk of illness and accidents. No one can guarantee that they will not be the victim of an unfortunate accident or be diagnosed with a serious illness. This won’t stop the bills arriving or the mortgage payments from being deducted from your bank account, so forgoing income protection insurance could be tempting fate.

Cover monthly payments

Income protection insurance is a long-term insurance policy that provides a monthly payment if you can’t work because you’re ill or injured, and typically pays out until you can start working again, or until you retire, die or the end of the policy term – whichever is sooner.

Keep your finances healthy as you recover from illness or injury:

▪ Income protection insurance replaces part of your income if you become ill or disabled
▪ It pays out until you can start working again, or until you retire, die or the end of the policy term – whichever is sooner
▪ There’s a waiting period before the payments start, so you generally set payments to start after your sick pay ends, or after any other insurance stops covering you. The longer you wait, the lower the monthly payments
▪ It covers most illnesses that leave you unable to work, either in the short or long term (depending on the type of policy and its definition of incapacity)
▪ You can claim as many times as you need to while the policy is in force

Generous sickness benefits

Some people receive generous sickness benefits through their workplace, and these can extend right up until the date upon which they had intended to retire. However, some employees with long-term health problems could find themselves having to rely on the state, which is likely to prove hard.

Tax-free monthly income

We’re already seeing, as a consequence of COVID-19, how many people are finding it a struggle financially without a regular income. Even if you were ill for only a short period, you could end up using your savings to pay the bills, but how long would they last? In the event that you suffered from a serious illness, medical condition or accident, you could even find that you are never able to return to work. Few of us could cope financially if we were off work for more than six months. Income protection insurance provides a tax-free monthly income for as long as required, up to your nominated retirement age, should you be unable to work due to long-term sickness or injury.

Profiting from misfortune

Income protection insurance aims to put you back to the position you were in before you were unable to work. It does not allow you to make a profit out of your misfortune. So the maximum amount of income you can replace through insurance is broadly the after-tax earnings you have lost, less an adjustment for state benefits you can claim. This is typically translated into a percentage of your salary before tax, but the actual amount will depend on the company that provides your cover.

Self-employment

If you are self-employed, then no work is also likely to mean no income. However, depending on what you do, you may have income coming in from earlier work, even if you are ill for several months. Self-employed people can take out individual policies rather than business ones, but you need to ascertain on what basis the insurer will pay out. A typical basis for payment is your pre-tax share of the gross profit, after deduction of trading expenses, in the 12 months immediately prior to the date of your incapacity. Some policies operate an average over the last three years, as they understand that self-employed people often have a fluctuating income.

Cost of cover

The cost of your cover will depend on your occupation, age, state of health and whether or not you smoke. The ‘occupation class’ is used by insurers to decide whether a policyholder is able to return to work. If a policy will pay out only if a policyholder is unable to work in ‘any occupation’, it might not pay benefits for long – or indeed at all. The most comprehensive definitions are ‘Own Occupation’ or ‘Suited Occupation’. ‘Own Occupation’ means you can make a claim if you are unable to perform your own job. However, being covered under ‘Any Occupation’ means that you have to be unable to perform any job, with equivalent earnings to the job you were doing before not taken into account.

You can also usually choose for your cover to remain the same (level cover) or increase in line with inflation (inflation-linked cover):

▪ Level cover – with this cover, if you made a claim, the monthly income would be fixed at the start of your plan and does not change in the future. You should remember that this means if inflation eventually starts to rise, the buying power of your monthly income payments may be reduced over time

▪ Inflation-linked cover – with this cover, if you made a claim, the monthly income would go up in line with the Retail Prices Index (RPI)

When you take out cover, you usually have the choice of:

▪ Guaranteed premiums – the premiums remain the same all the way throughout the term of your plan. If you have chosen inflation-linked cover, your premiums and cover will automatically go up each year in line with RPI

▪ Reviewable premiums – this means the premiums you pay can increase or decrease in the future. The premiums will not typically increase or decrease for the first five years of your plan, but they may do so at any time after that. If your premiums do go up or down, they will not change again for the next 12 months

Making a claim

How long you have to wait after making a claim will depend on the waiting period. You can typically choose from between 1, 2, 3, 6, 12 or 24 months. The longer the waiting period you choose, the lower the premium for your cover will be, but you’ll have to wait longer after you become unable to work before the payments from the policy are paid to you. Premiums must be paid for the entire term of the plan, including the waiting period.

Innovative new products

Depending on your circumstances, it is possible that the payments from the plan may affect any state benefits due to you. This will depend on your individual situation and what state benefits you are claiming or intending to claim. This market is subject to constant change in terms of the innovative new products that are being launched. If you are unsure whether any state benefits you are receiving will be affected, you should seek professional financial advice. Please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.

]]>
https://www.lloydosullivan.co.uk/blog/income-protection-insurance/feed/ 0
Moving closer to retirement https://www.lloydosullivan.co.uk/blog/moving-closer-to-retirement/ https://www.lloydosullivan.co.uk/blog/moving-closer-to-retirement/#respond Mon, 25 May 2020 08:02:51 +0000 https://www.lloydosullivan.co.uk/blog/?p=1597
Delay taking your pension if you can

For those people moving closer to retirement who may have been impacted by the recent market volatility, an option to consider is deferring your private pension. If you’re in a defined contribution scheme, delaying when you claim means that you leave your pension pot invested for longer, so you could secure a bigger pension pot when you do eventually come to retire.

Deferring also means that you can continue to save as much as £40,000 in the current tax year into a pension and earn tax relief under current rules. There is also the opportunity to defer your State Pension for extra income.

Choosing to defer your State Pension means that once you do start claiming it, you’ll receive more than you otherwise would have. It can also help you manage your tax liability if you don’t want to be pushed into a higher income bracket.

The most important thing to do in the face of what is an unexpected and uncertain period for investors is not panic. We have seen extremely volatile stock markets recently, and it is impossible to say when markets will recover.

5 reasons to delay taking your pension

1. Your pension has longer to grow

2. You can maximise your investment potential before moving to safer assets

3. Your employer will keep topping up your pension

4. You’ll continue to receive tax relief on pension contributions until age 75

5. Delaying your State Pension can boost your payments

How can we help?

For more information, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk – we look forward to hearing from you.

]]>
https://www.lloydosullivan.co.uk/blog/moving-closer-to-retirement/feed/ 0
Market fluctuations https://www.lloydosullivan.co.uk/blog/market-fluctuations/ https://www.lloydosullivan.co.uk/blog/market-fluctuations/#respond Tue, 19 May 2020 07:00:44 +0000 https://www.lloydosullivan.co.uk/blog/?p=1595
Investments that best align with your financial goals

Without a plan, investors are prone to making knee-jerk reactions when there are swings in the market. A well-thought-out investment strategy provides the guidance needed to help you stay on track when inevitable market fluctuation occurs. It can also point you towards the types of investments that best align with your financial goals.

By maintaining a clear purpose for your investment strategy, you help yourself stay on track and confidently navigate the ups and downs of the market.

When developing your investment strategy, consider the following factors:

1. Your investment goals

Specifically, for what or whom are you accumulating funds? Your investment goals will help you determine suitable investments.

2. Your time horizon

How many years will it be until you need to use what you have invested? Longer time horizons may provide flexibility for more aggressive investment choices.

3. Your tolerance for risk

Take your broader financial situation into account, and consider how comfortable you are with varying degrees of risk as you pursue your investment goals.

How can we help?

For more information, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk – we look forward to hearing from you.

]]>
https://www.lloydosullivan.co.uk/blog/market-fluctuations/feed/ 0
Coronavirus investment scams https://www.lloydosullivan.co.uk/blog/coronavirus-investment-scams/ https://www.lloydosullivan.co.uk/blog/coronavirus-investment-scams/#respond Tue, 19 May 2020 07:00:35 +0000 https://www.lloydosullivan.co.uk/blog/?p=1603
If it sounds too good to be true, it probably is

Fraudsters are getting more sophisticated, particularly with investment scams. They can be articulate and financially knowledgeable, with credible websites, testimonials and materials that are hard to distinguish from the real thing. However, if it sounds too good to be true, it probably is.

From simple cons to elaborate schemes, attempts to prise away your hard-earned money are nothing new. Yet there are arguably more windows of opportunity for scammers today than ever, especially with the backdrop of coronavirus (COVID-19) and using this to play on the concerns of investors about their money, market performance and what they should do.

Out of the blue

If you’re contacted out of the blue about an investment opportunity, chances are it’s a high-risk investment or a scam. Scammers usually cold-call, but contact can also come by email, post, word of mouth or at a seminar or exhibition. Scams are often advertised online too.

If you get cold-called, the safest thing to do is to hang up. If you get unexpected offers by email or text, it’s best simply to ignore them. You can register with the Telephone Preference Service and Mailing Preference Service to reduce the number of letters and cold calls you receive.

How to spot the other warning signs

Callers may pretend they aren’t cold-calling you by referring to a brochure or an email they sent you – that’s why it’s important you know how to spot the other warning signs.

Unexpected contact – traditionally, scammers cold-call, but contact can also come from online sources, for example, email or social media, post, word of mouth, or even in person at a seminar or exhibition.

Time pressure – they might offer you a bonus or discount if you invest before a set date or say the opportunity is only available for a short period.

Social proof – they may share fake reviews and claim other clients have invested or want in on the deal.

Unrealistic returns – fraudsters often promise tempting returns that sound too good to be true, such as much better interest rates than elsewhere.

False authority – using convincing literature and websites, claiming to be regulated, speaking with authority on investment products.

Flattery – building a friendship with you to lull you into a false sense of security.

When faced with an investment opportunity, especially one that has come out of the blue or is advertised, always ask yourself: ‘Could this be a scam?’ Always take the time to check who you are dealing with.

How can we help?

For more information, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk – we look forward to hearing from you.

]]>
https://www.lloydosullivan.co.uk/blog/coronavirus-investment-scams/feed/ 0
What are you waiting for? https://www.lloydosullivan.co.uk/blog/what-are-you-waiting-for/ https://www.lloydosullivan.co.uk/blog/what-are-you-waiting-for/#respond Tue, 19 May 2020 07:00:08 +0000 https://www.lloydosullivan.co.uk/blog/?p=1599
COVID-19 pandemic has made more people think about just how crucial it is to make a Will

Since the outbreak of coronavirus (COVID-19), the number of people seeking to write new Wills has risen by over 30%, according to The Law Society. Understandably, the current situation is causing angst among people, particularly elderly and vulnerable clients who have been self-isolating. It’s estimated that more than half of British adults have not made a Will.

The coronavirus pandemic has made more people think about just how crucial it is to make a Will and ensure it is kept up to date. Everyone should have a Will, but it is even more important if you have children; you own property or have savings, investments, insurance policies; or you own a business. Your Will lets you decide what happens to your money, property and possessions after your death.

Make sure your wishes are clear

Making a Will and keeping it up to date is the only way you can ensure that when you die, your wishes are clear. If you die with no valid Will in England or Wales, the law will decide who gets what. If you have no living family members, all your property and possessions will go to the Crown.

If you make a Will, you can also make sure you don’t pay more Inheritance Tax than you legally need to. It’s an essential part of your financial planning. Not only does it set out your wishes, but die without a Will, and your estate will generally be divided according to the rules of intestacy, which may not reflect your wishes. Without one, the state directs who inherits, so your loved ones, relatives, friends and favourite charities may get nothing.

Cohabitants

It is particularly important to make a Will if you are not married or are not in a registered civil partnership (a legal arrangement that gives same-sex partners the same status as a married couple). This is because the law does not automatically recognise cohabitants (partners who live together) as having the same rights as husbands, wives and registered civil partners. As a result, even if you’ve lived together for many years, your cohabitant may be left with nothing if you have not made a Will.

A Will is also vital if you have children or dependents who may not be able to care for themselves. Without a Will, there could be uncertainty about who will look after or provide for them if you die.

Peace of mind

No one likes to think about it, but death is the one certainty that we all face. Planning ahead can give you the peace of mind that your loved ones can cope financially without you, and at a difficult time it helps remove the stress that monetary worries can bring. Planning your finances in advance should help you to ensure that when you die, everything you own goes where you want it to. Making a Will is the first step in ensuring that your estate is shared out exactly as you want it to be.

If you leave everything to your spouse or registered civil partner, there’ll be no Inheritance Tax to pay, because they are classed as an exempt beneficiary. Or you may decide to use your tax-free allowance to give some of your estate to someone else or to a family trust. Scottish law on inheritance differs from English law.

Passing on your estate

Executors are the people you name in your Will to carry out your wishes after you die. They will be responsible for all aspects of winding up your affairs after you’ve passed away, such as arranging your funeral, notifying people and organisations that you’ve died, collating information about your assets and liabilities, dealing with any tax bills, paying debts and distributing your estate to your chosen beneficiaries.

You can make all types of different gifts in your Will – these are called ‘legacies’. For example, you may want to give an item of sentimental value to a particular person, or perhaps a fixed cash amount to a friend or favourite charity. You can then decide who you would like to receive the rest of your estate and in what proportions. Once you’ve made your Will, it is important to keep it in a safe place and tell your executor, close friend or relative where it is.

Review your Will

It is advisable to review your Will every five years and after any major change in your life, such as getting separated, married or divorced, having a child, or moving house. Any change must be by Codicil (an addition, amendment or supplement to a Will) or by making a new Will. Please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk to find out more.

]]>
https://www.lloydosullivan.co.uk/blog/what-are-you-waiting-for/feed/ 0
Working remotely https://www.lloydosullivan.co.uk/blog/working-remotely/ https://www.lloydosullivan.co.uk/blog/working-remotely/#respond Tue, 19 May 2020 07:00:04 +0000 https://www.lloydosullivan.co.uk/blog/?p=1593
10 essential tips how to work from home effectively

Prior to the coronavirus (COVID-19) pandemic outbreak, we might have imagined working from home as the opportunity of sleeping in late, lounging around in our pyjamas, and long leisurely lunches. However, as many of us are now having to work from home, even though this offers a great amount of flexibility, it is still a professional job – and it needs to be treated as such.

As you have likely already discovered, working where you live is not as easy as it sounds, especially if you have other people in the space. So where practical and depending on the individual for many working at home, it is still important to have set hours, a dedicated workspace, avoid home-bound distractions, and actually dressing as if we’re going to work, to help keep our mindset sharp and focused.

To tips on how to successfully work from home

1. Plan your day

This will help you minimise your distractions and maximise your true productive times. Without supervision, even the most conscientious of us can lose focus. Setting a plan not only provides structure to the day, but it also helps you stay motivated. Start the day as you would if you worked in an office. Get up at the time you would usually wake up. Get dressed, and try to avoid online distractions once you sit down to work. You’ll soon discover the best rhythm for your day. Then set realistic expectations for what you can accomplish on a daily basis. Make a plan and stick to it. Make sure you give yourself permission to have downtime. If you have to work extra hours, give yourself some extra free time later on to compensate.

2. Get organised

Maintaining balance is one of the most difficult aspects of working at home, because the work is always right there staring you in the face. To keep you on track (and not working too much or too little), organisation will be key. Get organised by creating schedules and to-do lists. At the start of each day, spend some time organising your to-do list. Be realistic by setting goals you know you can achieve, and never promise too much. Along with your to-do items, set yourself deadlines to get each one done. For example, if you’ve got a report to write, promise yourself you’ll finish it before lunch, before moving onto the next item.

3.Have a set workspace

If you can, designate a specific place for a home office. Store all work-related files, reference materials, supplies and computer or laptop there. Try not to make it near a bed or a TV. Avoid home distractions, and never underestimate the gravitational pull of the fridge and your comfy bed. Ideally, you should ensure that your office space emulates that of a true work environment.

4. Set office hours

Make sure to create a time slot for each of the day’s activities. This helps with communicating to others when your work-time and down-time is. If you have small children, you may need to schedule your work around their naps and periods of home schooling, so that you can have a good period of time to work uninterrupted.

5. Limit the number of times emails are checked

You might find yourself constantly checking email because you’re worried about being out of the loop. However, while it’s important to stay connected, spending too much time on email might distract you from more important tasks.

6. Turn off all social media accounts

In this social media–driven world, it’s likely that you spend a significant portion of your spare time browsing Twitter, Instagram and Facebook. And because the home is therefore inherently capable of putting you in a social media mindset, it’s important to remove it as a distraction while working. Unless it’s essential for your work, stop checking Facebook, turn off Twitter notifications and avoid the temptation to browse your Instagram feed while working. Again, you can do this by promising yourself some time with them once the work is done.

7. Keeping connected and in touch

If you are now having to work remotely due to the coronavirus pandemic, your employer may already have provided the technology – and the chances are you’re using Zoom, Google Chat, Microsoft Teams and so on. However, if this is not the case and you’re looking for tech to enable you to keep in contact with clients or customers, employees or suppliers, the main tools are Microsoft’s Skype, Google’s Duo and Apple’s FaceTime, the last of which only works on Apple devices. Most phone-based messaging apps, including Signal, WhatsApp and Facebook Messenger, also offer video chat, which can be easier to use.

8. Take micro-breaks

When making your schedule, you might want to consider working in smaller chunks of time, and allowing yourself time to get up from the computer to stretch. This will really help you both physically and mentally. When you take micro-breaks, you’ll likely to be more productive. Get some fresh air if you can. Open your windows to let in as much natural daylight and fresh air as possible.

9. Don’t get distracted

One significant difference between home working and the traditional work environment is the presence of family members. While they may not be there all the time, you’re bound to come into contact with them occasionally while working. Because of this, it’s vital that you set boundaries. Make sure that you are focused on the best and proper use of your time during your work hours. Have the radio or some music on in the background as you might do at work.

10. Maintain a healthy lifestyle

Working at home can lend itself to a sedentary lifestyle, not to mention the close proximity of the kitchen and refrigerator, making weight gain a problem. Make sure to schedule time for exercise, keep healthy nutritional snacks nearby to maintain your concentration levels, and remember to keep yourself hydrated at all times.

How can we help?

For more information, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk – we look forward to hearing from you.

]]>
https://www.lloydosullivan.co.uk/blog/working-remotely/feed/ 0
How secure is the future of your family or business? https://www.lloydosullivan.co.uk/blog/how-secure-is-the-future-of-your-family-or-business/ https://www.lloydosullivan.co.uk/blog/how-secure-is-the-future-of-your-family-or-business/#respond Wed, 22 Apr 2020 10:20:28 +0000 https://www.lloydosullivan.co.uk/blog/?p=1577
Projecting ourselves into the future to see what’s around the next bend is not an easy thing to do

Given the current situation during this difficult and unsettling time with coronavirus (COVID-19), it’s important to think about how secure your family’s or business’ future would be in the event that you were no longer around. Understandably, we would rather not think of the time when we’re no longer around, but this crisis has highlighted the importance of protecting the things that really matter – like our loved ones, home, lifestyle and business – in case the unexpected happens.

The outbreak of the coronavirus may mean you have concerns about your life insurance and whether you’re covered. If you have life insurance to provide for those left behind, or to cover business loans after your death, it’s important to keep paying the premiums, even if you’re tempted to put it on hold to cut costs. You could lose your cover and may struggle to find the same level of cover if you start another policy later on.

Full replacement value

For many of us, projecting ourselves into the future to see what‘s around the next bend is not an easy thing to do. However, without thinking, we insure our cars, homes and even our mobile phones – so it goes without saying that you should also be insured for your full replacement value to ensure that your loved ones and business are financially catered for in the event of your unexpected death. Making sure that you have the correct type and level of life insurance in place will help you to financially protect them.

Life insurance provides a safety net. Ultimately, it offers reassurance that your family and business would be protected financially should the worst happen. We never know what life has in store for us, as we’ve seen in recent weeks with the outbreak of COVID-19, so it’s important to get the right life insurance policy. A good place to start is asking yourself three questions: What do I need to protect? How much cover do I need? How long will I need the cover for?

Ask yourself

▪ Who are your financial dependents – your husband or wife, registered civil partner, children, brother, sister, or parents?
▪ What kind of financial support does your family have now?
▪ What kind of financial support will your family need in the future?
▪ What kind of costs will need to be covered, such as household bills, living expenses, mortgage payments, educational costs, debts or loans, or funeral costs?
▪ What amount of outstanding business loans do I have now?

Financial safety net

It may be the case that not everyone needs life insurance. However, if your spouse and children, partner, or other relatives or business depend on you to cover the mortgage, other living and lifestyle expenses, or business loans, then it will be something you should consider. Putting in place the correct level of life insurance will make sure they’re taken care of financially.

That’s why obtaining the right professional financial advice and knowing which products to choose – including the most suitable sum assured, premium, terms and payment provisions – is essential.

No one-size-fits-all solution

There is no one-size-fits-all solution, and the amount of cover – as well as how long it lasts for – will vary from person to person. Even if you consider that currently you have sufficient life insurance, you may probably need more later on if your circumstances change. If you don’t update your policy as key events happen throughout your life, you may risk being seriously under-insured.

As you reach different stages in your life, the need for protection will inevitably change. How much life insurance you need really depends on your circumstances – for example, whether you’ve had a mortgage, you’re single or have children, or you have business loans that you are liable to pay.

Don’t leave it to chance

Since the outbreak of COVID-19, some insurers are restricting cover for new applicants and have introduced new questions to their application forms. This has been done in order to establish and manage the insurance risks it poses. Planning for a time when you’re no longer around may seem daunting, but it doesn’t have to be. Don’t leave it to chance – speak to Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk for more information.

]]>
https://www.lloydosullivan.co.uk/blog/how-secure-is-the-future-of-your-family-or-business/feed/ 0
Managing volatility https://www.lloydosullivan.co.uk/blog/managing-volatility/ https://www.lloydosullivan.co.uk/blog/managing-volatility/#respond Wed, 22 Apr 2020 10:14:22 +0000 https://www.lloydosullivan.co.uk/blog/?p=1575
Diversification is paramount in uncertain times

The outbreak of coronavirus (COVID-19) has understandably been dominating the news headlines. Market fear over the escalating global spread of coronavirus has seen a sell-off across many asset classes. This period of market stress further emphasises the importance of diversification within portfolios. Investors’ objectives can rarely be met by investing in a single asset class.

Diversification means making sure your portfolio has varied investments: investing in stocks and bonds, in different industries, and in large and small companies. Whilst ‘don’t put all your eggs in one basket’ is a well-used adage, it is still relevant today and means: don’t have all your money in one place, as you could lose it all in one go.

Smoother return profile

By holding well-diversified assets at both a geographical and asset-class level, our portfolios experience a (relatively) smoother return profile because risk exposure is less concentrated.

Investment options span every sector of the stock, bond and property markets, but allocating your assets based on performance alone is often ill-advised because the market is a moving target. One year, a particular type of security can be a star performer, only to severely underperform the very next year.

Range of assets

During the early weeks of the coronavirus outbreak, the response from financial markets was somewhat muted. However, as the virus has continued to spread, markets have reacted in a more pronounced way to the impact on supply chains, tourism and global demand.

This further strengthens the case to invest across several asset classes to provide greater diversification potential. Therefore, if one asset class performs favourably, it can potentially offset another that is performing less favourably, providing more balance to your portfolio when market shifts occur. Investment returns vary significantly between different investment ‘baskets’, or asset classes, year-to-year.

Different life stages

Different investors are at different stages in their lives. Younger investors may have a longer time horizon for their investing than older investors. Risk tolerance is a personal choice, but it’s good to keep perspective on personal time horizons and manage risk according to when access to funds from different assets is needed. If cash is needed in the near term, it is better to sell an asset when you want to sell it rather than when you have to sell it.

Under normal market conditions, diversification is an effective way to reduce risk. If you hold just one investment and it performs badly, you could lose all of your money. If you hold a diversified portfolio with a variety of different investments, it’s much less likely that all of your investments will perform badly at the same time. The profits you earn on the investments that perform well offset the losses on those that perform poorly.

Minimising risk

While it cannot guarantee against losses, diversifying your portfolio effectively – holding a blend of assets to help you navigate the volatility of markets – is vital to achieving your long-term financial goals while minimising risk.

As well as investing across asset classes, you can further diversify by spreading your investments within asset classes. For instance, corporate bonds and government bonds can offer very different propositions, with the former tending to offer higher possible returns but with a higher risk of defaults, or bond repayments not being met by the issuer.

However, although you can diversify within one asset class – for instance, by holding shares (or equities) in several companies that operate in different sectors – this will fail to insulate you from systemic risks, such as international stock market volatility.

Further diversification

As well as investing across asset classes, you can further diversify by spreading your investments within asset classes. For instance, corporate bonds and government bonds can offer very different propositions, with the former tending to offer higher possible returns but with a higher risk of defaults, or bond repayments not being met by the issuer.

There are four main types of investment, known as ‘asset classes’. Each asset class has different characteristics and advantages and disadvantages for investors.

Market timing

Resist the temptation to change your portfolio in response to short-term market movement. ‘Timing’ the markets seldom works in practice and can make it too easy to miss out on any gains. The golden rule to investing is allowing your investments sufficient time to achieve their potential. Warren Buffett, the American investor and philanthropist, puts it very succinctly: ‘Our favourite holding period is forever.’

Over the long term, investors will experience market falls which happen periodically. Generally, the wrong thing to do when markets fall by a reasonable margin is to panic and sell out of the market – this just means you have taken the loss. It’s important to remember why you’re invested in the first place and make sure that rationale hasn’t changed.

Optimal balance of risk and return

Whatever your approach to not ‘putting your eggs in one basket’ is, diversification can help manage your investment risk. If you would like further information or to discuss your requirements, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.

INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION 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 AMOUNT INVESTED.

PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.

]]>
https://www.lloydosullivan.co.uk/blog/managing-volatility/feed/ 0
Beware of pension fraudsters https://www.lloydosullivan.co.uk/blog/beware-of-pension-fraudsters/ https://www.lloydosullivan.co.uk/blog/beware-of-pension-fraudsters/#respond Wed, 22 Apr 2020 10:08:07 +0000 https://www.lloydosullivan.co.uk/blog/?p=1573
Safeguard your hard-earned retirement savings from COVID-19 scammers

Fraudsters are exploiting fears over the COVID-19 pandemic to target pension savers and investors. The Pensions Regulator, the Financial Conduct Authority (FCA) and the Money and Pensions Service have issued a joint statement urging people not to make rash pension decisions in the wake of the global pandemic, as criminals try to exploit public fears over the market turmoil to dupe victims out of their cash.

Persuading you to transfer your pension pot

Scammers will make false claims to gain your trust – for example, claiming they are authorised by the FCA or that they don’t have to be FCA-authorised because they aren’t providing the advice themselves, or claiming to be acting on the behalf of the FCA or the government service Pension Wise.

Scammers also design attractive offers to persuade you to transfer your pension pot to them (or to release funds from it). It is then often invested in unusual and high-risk investments like overseas property, renewable energy bonds, forestry, storage units; or, invested in more conventional products but within an unnecessarily complex structure which hides multiple fees and high charges; or stolen outright.

Fraudsters look to exploit people’s anxieties and fears

Attempts to scam personal data and monies are likely to increase during the COVID-19 pandemic and economic downturn as fraudsters look to exploit people’s anxieties and fears. You need to be aware of receiving emails, calls or texts from criminals impersonating investment companies, insurers, pensions providers and other organisations to trick you into providing personal or financial information or money.

Cold calls about your pension – it is illegal for firms to contact you out of the blue about your pension, and you should hang up. The caller may offer to help you access your pension before age 55, or offer you a ‘free pensions review’.

Phishing emails – these attempt to trick people into opening malicious attachments or reveal personal or financial information.

Ghost brokers – fraudsters may attempt to use an insurer’s branding to promote and sell fake or invalid pension or investment products which may claim to offer COVID-19 protection.

What should I look out for?

• Be suspicious of offers that seem too good to be true
• Do not feel pressured or agree to offers or deals on insurance, pensions or investments
• Check the credentials of the person you are dealing with by getting a name and contact details. You can check the financial service register to make sure you are dealing with a regulated company. Hang up and call them back on details you can verify
• Never give your personal details out, such as an insurance or pensions policy number or other account details
• Always use contact details on your documents provided by your insurer or pension provider
• Don’t assume all online sites are genuine

Don’t let a scammer enjoy your retirement

If you’re contacted out of the blue about your pension, the chances are it’s high risk or a scam. Be wary of free pension review offers. A free offer out of the blue from a company you have not dealt with before is probably a scam. Should this happen to you, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.

]]>
https://www.lloydosullivan.co.uk/blog/beware-of-pension-fraudsters/feed/ 0
Coronavirus impact on the global economy https://www.lloydosullivan.co.uk/blog/coronavirus-impact-on-the-global-economy/ https://www.lloydosullivan.co.uk/blog/coronavirus-impact-on-the-global-economy/#respond Wed, 22 Apr 2020 10:05:08 +0000 https://www.lloydosullivan.co.uk/blog/?p=1571
It’s more important than ever to stay the course

The coronavirus (COVID-19) outbreak is first and foremost a human tragedy, affecting hundreds of thousands of people. It is also having a growing impact on the global economy. The markets have been extremely volatile as investors weigh the effect of the coronavirus against measures aimed at easing its economic impact. Therefore, it’s hard to say how this will affect investments in the short term.

Even with events like the coronavirus and global market volatility dominating the headlines, the key is to keep calm and remember that ups and downs are a normal function of markets, and part and parcel of investing. Bear markets are a fact of any investor’s life. Single-day volatility will continue to be common, and we can expect choppy markets as investors and firms react to the ongoing pandemic.

Recalibrating the markets outlook

If the markets follow the pattern established over the past few months, sudden market drops have been followed by similarly acute intra-day upswings as the market absorbs the news and recalibrates its outlook.

What we’ve recently been experiencing is global stock market lows not seen since the 1987 market crash – and as a consequence, many hard-hit companies have laid thousands of employees off. However, it’s important not to let global uncertainties affect your financial planning for the years ahead.

‘Prepare, don’t predict’ approach

When markets look worrying, a ‘prepare, don’t predict’ approach can often be the best strategy. Understandably, market falls can be unnerving and make you question your investments. A few months in, it is still hard to grasp the scale and scope of COVID-19’s global impact. A third of the world population has been under some sort of ‘lockdown’. Over 200 countries have been affected, and the number of new cases and deaths in many places has grown exponentially. All the while, a second crisis in the form of an economic recession is underway.

The increasing concerns surrounding the coronavirus outbreak pandemic has had a significant impact on markets around the world. However, performance chasing can be a costly mistake not only due to the narrow investment choices it encourages, but also due to the higher costs and taxes incurred. Overall, investors can end up selling low, buying high and, importantly, missing out on creating long-term value.

Financial planning for the years ahead

It’s important to remember that the overall direction of developed stock markets is a relentless and continual rise in value over the very long term, punctuated by falls. It’s important not to let global uncertainties affect your financial planning for the years ahead. Individuals who stop their investment planning, particularly during market downturns, often miss out on opportunities to invest at lower prices.

Such volatility is less worrying if you take a longer-term view. It’s important to keep to your strategy and keep moving ahead consistently by spreading risk and growing your wealth. Volatility in stock markets understandably makes investors nervous. However, on the flipside, not all volatility is bad – without volatility, stock prices would never rise.

Try to think long term

Even during this pandemic crisis, our financial solutions and expertise to clients still remain the same, to actively grow and protect their wealth over the long term. If you would like to find out more or discuss your situation, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.

]]>
https://www.lloydosullivan.co.uk/blog/coronavirus-impact-on-the-global-economy/feed/ 0