Your Questions
Independent Financial advisers must offer you the choice to pay for your advice through a fee arrangement, where the cost of the service is met directly by you, or through commission paid from the products recommended and taken out by you.
Like anything else you pay for in life, the true cost is measured by comparing what you put in to what you get out.
Our costs are explicit and we explain them to you before you make a decision. We aim to give good value for money as well as add value to your long term financial plans.
We feel in the medium to long term, no or "cheap" advice can be more costly than "good" advice.
If you are looking for a short term plan which offers instant access to your money, then it is difficult to disagree with this, and generally we wouldn't.
Armstrong Watson can give you advice on all types of investments and savings, including long term investments as well as bank/building society accounts and low risk investments.
Something which should be borne in mind is that the interest paid on bank/building society accounts is taxable at either 20% for a basic rate UK taxpayer, or 40% for a higher rate UK taxpayer. This reduces a 6% return to 4.8% or 3.6% respectively.
In addition, inflation reduces the true value of your funds over time. Bank/building society savings accounts return after tax, therefore only just beat inflation, if at all. This means that over longer periods the spending power of your money reduces, meaning you can buy less with it.
The type of investment portfolios we provide include "real" assets such as property and shares, which aim to increase in capital value over time (although they can be subject to falls in value over shorter time periods). In addition they usually provide dividend or rental income. They have the best chance of beating inflation and producing "real" growth in the value of your money, increasing your future spending power, meaning that you can buy more with it.
A balanced approach to investing is to have some money available to you through bank/building society accounts, with some invested in lower risk areas and some invested for the longer term, perhaps in higher risk areas. How this is proportioned is fully dependent upon your own needs, future aims and attitude to investment risk, and should be fully discussed with an independent financial adviser.
The basic state pension paid each year is currently growing at a slower rate than average UK earnings, meaning that the gap between what the state will provide when you retire and your salary at that time is likely to be even wider than it is now.
It is therefore advisable to discuss your individual circumstances with an independent financial adviser, and consider setting up additional independent pension provisions to ensure that you have more choices when you reach retirement.
The full basic state pension (dependent on your national insurance contribution record) for tax year 2007/08 is £87.30 per week. With this in mind, you may like to try our pensions calculator, to give you an idea of the amount of private provision you may also like to make.
This fully depends on your individual circumstances and aspirations for your retirement.
However, a good starting point is to consider how much income you think you will need when you retire and compare this to what the state may provide you (see Q3). Next work out how much you can afford to save towards this goal each month, bearing in mind that the earlier you start saving, the less you will potentially need to save later.
Try our pensions calculator to get an overview of how this looks in reality, but don't be downhearted if the figures seem daunting, they are only a guide and are not to be seen as a replacement for quality professional advice. At this point, give us a call to see how we can help.
The benefit of tax relief on all pension contributions should not be overlooked, with all personal contributions receiving tax relief at source. Examples of this are:
A basic rate taxpayer who wants to contribute £1,000 per annum into his pension would only require a contribution from him of £780. The difference is funded by the taxman, giving him an effective rate of return on his personal contributions of 28.2%.
A higher rate taxpayer would pay the same £780, but his situation is even better as he can claim further tax relief. His contribution equates to £600, giving an effective rate of return on his personal contributions of 66.6%.
Armstrong Watson offer independent mortgage advice with access to the whole of the market, allowing us to give advice to first-time buyers, home movers, and those looking to re-mortgage or needing commercial deal.
The amount you can borrow will be viewed in line with each lenders' criteria and can typically be between 2.5 times and 5 times your income.
The cost of your new mortgage/re-mortgage depends on a variety of factors, including the amount of loan required, the deposit available, the number of years you take it out for and whether you choose an interest only or capital and interest (repayment) style agreement.
Why not try our mortgage calculator for an indication of how much you may need to pay. Remember to take into consideration that there are thousands of deals on offer from various lenders, each with their own view on your particular circumstances. You should therefore seek advice from an independent mortgage adviser to ensure that you get a deal which meets with your individual needs.
