SBA Financial - Solving the financial puzzle... ...piece by piece

Monthly Update - October 2011

SBA Open Day!

Following our recent relocation of the SBA offices, we are now settled in our new home and would like to take the opportunity to invite all of our valued clients and professional connections to come over and visit our new premises during our 'Open Day' on Saturday 22nd October.

The office will be open from 11am-3pm for anyone who would like to drop in to take a look at the new offices and have a chat to me and the rest of the team over a glass of wine and a few nibbles!

I am also pleased to announce that along with moving premises, we have also recently taken onboard some new members of staff, to ensure that our clients continue to receive the highest standards of service from the whole SBA team.

The 'Open Day' is an informal day exclusively for our clients, so there is no need to book a place, just simply pop round and enjoy a glass or two of wine with us!

I look forward to catching up with you on the day.

Steve

Investment Planning for the Future!

Here is a recent Meon Valley News Reader, who wrote in with a common problem facing many people today.

Hi Steve,
Can you help with investment planning for the future? We have invested in stocks and shares with companies like British Gas, British Telecom, TSB and Santander and others over the last ten years to the value of about £11,500. This has given us an annual return of about £380 last year and less for the present year. Our question is, could this money be reinvested in a better investment that would give us a higher return, with no tax complications and as safe as possible for a long period with a monthly return? We are retired and low rate tax payers, looking for a safe income from the investment.

Regards
Mr P

Answer:

The good news is yes it can! You won't need me to tell you that some of these companies you are invested in, have been through some very tough times recently which is why you have seen the dividend payouts decrease over recent years, not to mention the actual share value. You will obviously pay tax on the dividend and you are also taking a very high risk strategy with your investments, as you money is held in just a few stocks and shares, which means that all of your eggs are in one baskets and therefore this lack of diversification increases the risk to your capital, which based on your letter, does not seem to fit in with your more cautious attitude to risk.

The returns that you have received for last year was just 3.30% which can almost be achieved in cash ISA's with 100% capital security, so you may want to look at this more safer investment vehicle, assuming you have not used up all of your cash ISA allowances this year?

That said you seem to be in conflict, as you said you want higher returns, with a safe income and herein lies the problem. Unfortunately there is no such investment that will do it all. Some companies offer relatively secure protected Equity ISA Investments, where the possible losses in bad markets are protected and the expected long term average annual growth would be in the region of around 5% to maybe 6%, so around £575 to £690 per year, but if you are looking for higher than average, long term growth, then I am sorry, but you will have to accept a higher level of risk to your capital.

Of course, one of the other benefits of all ISA's is that they are very tax efficient and there is no need to even put them on a Tax Return, as this is not required. One final point, please do not tie your money up for any period of time. This is a major trap that many people fall into (or are talked into) no one can predict the future or when you may need your cash, it's a good idea to plan to leave your money invested for the medium to long term, but it should never be locked away, where you can't touch the capital no matter what and unfortunately, I see this happening all too often, where many people are attracted to the promise of a higher fixed rate of growth, but in return give up access to their capital and lock their money way for anything from 1 to 5 years.

If you are worried about this type of problem and would like someone to talk to, then just call us, for some help and guidance or come along to one of our regular public workshops.

Steve

Up-coming Workshops!

There is a lot going on at SBA in 2011. We are busy holding regular monthly workshops on all different financial and estate planning topics. Our aim is to help educate and inform the public, so they can avoid the mistakes and pitfalls, which we encounter every day, when we meet new clients who have been mis-sold or poorly advised in the past. If you or someone you know would benefit from coming along to one of our informal workshops, then please take a look at our Workshop Calendar and find a workshop that interests you.

Steve

Book your own expert speaker!

Over the years I have been delighted to help many groups by delivering presentations on a whole range of financial planning areas of importance, ranging from Wills, trusts and estate planning to pensions and retirement planning, savings and investments and many more.

Apart from our own regular workshops, which of course are open to the public, we regularly provide an expert speaker to a number of organisations for their group meetings. If you would like to book an expert speaker for group you belong to, then contact us at our office on 01489 878 290.

Regards