Portafina in the press
Some of the UK’s leading media outlets turn to Portafina when it comes to pensions and finances.
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The dangers of store credit
With credit now easier than ever before to get hold of, buying those ‘needs’ now and paying for them later, can come at a hefty price. This really doesn’t help your finances at all, as it gradually becomes unaffordable. And, once you’re in that rut, it can be extremely hard to get out of it. We have to think do we really need the things that we are buying with these cards? They are luxury items that we think we can’t do without but let’s face it, we usually end up with buyer’s regret!
How to spread your investment risk
When it comes to investments such as your pension, make sure your money is globally diversified. If there is an issue in one part of the world, it won’t affect all of your funds. Then, check to see if your pension is invested across different asset classes. These could be equities, property, or fixed interest investments such as bonds. It’s all about spreading your potential risk across many baskets. This will help to offset decreases in your investments no matter what is going on in the world.
The power of workplace pensions
With auto-enrolment you don’t even need to remember to find money to save into your pension. You contribute 4 per cent of your annual salary which is taken directly from your pay packet. On top of this your employer will also contribute 3 per cent and you’ll receive tax relief from the government. So, each year your pension will receive in total 8 per cent of the value of your annual salary. That’s why it’s really important not to opt out of your workplace pension. Especially if you have no other retirement savings or provisions.
Best and worst performing pension providers
The pension freedoms put a strain on providers and it took a while for a number of providers to gear up to cope. The majority have things under control now and we are generally seeing an improvement in response times overall, even if the very fastest are no faster than the timescales we were seeing three or four years ago. The exception, of course, are the local councils who are struggling with the resource they have available to them. Nine out of the ten slowest schemes were local councils and it can be hard for clients to understand how things can take so long.
All is fair in love and debt
If you are in a long-term relationship, it’s likely that you are already pooling your money together. Living by the mantra “what’s mine is yours and what’s yours is mine” naturally extends to your finances. And ultimately, debt falls within that too. You have two choices. Continue to pool money together, in which case one partner’s earnings will naturally be attributed to the other’s debt. Or, if your partner is unhappy to play a part in clearing the debt, look at how the relationship and finances would work if you revert to keeping your income separate. Short term relationships are trickier. While you might feel like you want to help, there should be no pressure to do so.
Helping kids to learn the value of money
Like it or not, a level of financial security can be the difference between opportunity and worry for children as they become adults. That’s why learning to respect and appreciate money from an early age is vital and, to my mind, should be an essential part of any education programme in the UK. Even though it can be hard for a parent to say no to a child who wants something, the positive impact of learning the value of saving far outweighs that momentary pain…for both the child and the parents! If we want our children to be financially mature and responsible when they’re older, then we need to be open and honest about money with them from an early age.
The savvy way to tackling debt
The difficulty is when you use debt to pay down debt. You can look to see if you can consolidate the debt and move to a lower interest rate but be aware of any transfer fees. Or you can create a debt hit-list. But don’t target the largest debt first. Instead look to the debt with the highest interest rate. Clear this first and you will have the money that was being swallowed up by interest to go towards any other outstanding debts. If you’ve ranked your hit-list highest interest rate to lowest, you will find yourself with more disposable money each time a debt is cleared. And if trying to tackle debt is leaving you feeling overwhelmed and stressed, there are debt counsellors who can support you through the really tough times.
Finding lost or forgotten pensions
Millions of pounds is forgotten in pensions each year because of lost details such as names and key dates. Most of these schemes will be from the pre-internet age and so all the information people hold at home will be on bits of paper. The government, the companies involved and the various regulators all want these lost pensions back in the hands of their rightful owners, and hence there is a lot of free support available to do this. It is well worth looking into as even a long-forgotten pension can be a significant asset. Plus of course, there may be a better pension that it could now be transferred to in order to improve its growth, once you have recovered it.
Stay-at-home adults: the fine line between helping out and missing out
While it’s great to want to help financially, parents are clearly facing a fine balancing act between their innate need to support their children and their own need to fund a retirement that’s comfortable. If one in twenty parents can’t see that their children will ever be able to afford to move out, dipping into their own pocket to help out feels likes an obvious choice. With parents choosing to sacrifice their pension pots to cover the additional costs created by adult children living at home, what happens when they reach retirement? If not thought through carefully, using their hard-earned money this way now could have a massive impact on their own quality of life further down the road.
Getting to grips with the pension basics
It’s worrying that so many people still don’t understand what a pension is. Auto-enrolment means you will be saving into a pension without having to think about it. Which is great on one hand, but it could mean you have questions about where your money is going or how it is being invested. There are people that can help you understand pensions, such as The Pensions Advisory Service who can offer you guidance and cover the pension basics. Or if you want to talk about how your money is invested you should speak with an independent financial adviser who is regulated by the FCA.
Financial resolutions to put you one step ahead
Your 20s and 30s are the prime time to be paying into a pension, especially when you consider they often have better rates compared to other saving schemes. They’re also invested over a long period of time, so compound interest builds up – and the government pays in too. Check to ensure you’re paying into a workplace pension. Your contributions come out of your pay before it hits your bank account, so you don’t need to think about paying it in yourself or finding the money each month. If you’re not sure how much you’re paying, take a look at your pay slip. Your contribution will show in the deductions.
Your pension: small actions could mean big returns
Could giving up one take-away a week and paying that money into a pension really make that much difference to your pot size? Yes – and we’re talking possibly thousands!
Increasing your workplace pension contribution from 4% to 7% at a cost of £50 extra a month could mean as much as £25,000 more in your pension pot at retirement. You should speak with your employer or pension provider directly to find out how you can increase your contributions if you are part of an auto-enrolment scheme at work.