Six questions to figure out if your money is working as hard as you are
At home, in the office, or in a mixture of the two – wherever you work, it’s a fair bet you’ve worked harder than ever over the past year or so. But is your money putting the hard yards in too?
Making your money work harder could help you reach your goals more quickly and boost your long-term financial security.
A financial adviser will be able to help, but whether you want to grow your wealth, save for retirement or ensure your loved ones are provided for, the place to start is to ask yourself the right questions.
1. What do you want your money to do for you?
The answer will partly depend on your life stage, and priorities. What are the financial milestones you want to hit? Do you have a secure plan in place for your retirement or is, say, saving for your children’s future your priority?
Whatever your goals, are you making the most of the money that you have accumulated, or could it be working harder?
2. Are your savings growing?
Any cash savings could be languishing in accounts paying dismal interest rates, now the Bank of England has cut the base rate to historic lows.
Although the stock market goes down as well as up, history shows that it tends to perform more strongly than cash over the long term. Investing could therefore give at least some of your money the opportunity to grow faster. If you want expert advice, a wealth manager can help, as they make the decisions on what to buy and sell on your behalf.
3. When do you want to retire?
This question will be at the core of any long-term financial strategy.
Working backwards will allow you to cross-reference your desired lifestyle with the funds you need to sustain it and the time needed to accumulate them.
Retirement planning can be a complicated process, but advice can deliver the key benefit of clarity.
4. Are you separating your long and short-term priorities?
Defining your goals is one thing – but considering how much time you need is just as important. You will most likely have different priorities over your lifetime which may require separate financial strategies.
Our financial planners can help you prioritise your goals and put timely plans in place to achieve them.
5. Do you have debts to tackle?
The interest rates on credit cards, overdrafts and personal loans are usually higher than the interest rates on cash and the average return on investments. By paying off expensive debts, you’ll be in a better overall position in the long term.
6. Are you using all your tax allowances?
No-one knows what tax changes may lie ahead. Maximising your tax allowances now could give your finances a boost. Fortunately, there are plenty of opportunities to benefit from tax efficiency today and profit over the long term.
Our financial planners can help you keep abreast of changes in the tax landscape and make decisions that optimise the allowances that do exist, such as pensions and ISAs.
The value of investments, and any income from them, can fall and you may get back less than you invested. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Neither simulated nor actual past performance are reliable indicators of future performance. Information is provided only as an example and is not a recommendation to pursue a particular strategy. Opinions expressed in this publication are not necessarily the views held throughout Brewin Dolphin Ltd