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It’s important to be aware of all the variables at play; inflation, interest rates, taxation and frozen allowances all affect your finances.

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When the property market reopened in mid-May last year, pent-up demand, combined with many people reassessing their housing needs following lockdown, led to a surge in buyer demand. Demand was further bolstered when, in July, the Chancellor announced a Stamp Duty holiday, during which the first £500,000 of most residential property purchases in England and Northern Ireland would be duty-free, until 31 March 2021.

Housing market activity robust towards the end of 2020

According to the latest figures from Nationwide, house prices rose by 0.9% in September and 0.8% in October, taking the annual growth figure to 5.8% in October, the highest rate since January 2015.

Nationwide also reported that a total of 91,500 mortgage approvals were granted in September, which is well above the August figure of 84,700 and represents the highest level since September 2007.

Elsewhere, Zoopla reported the size of the home sales pipeline to be 50% bigger than in the same period of 2019, with 140,000 more buyers rushing to buy a home before losing out on the Stamp Duty holiday.

Mortgage payment holidays

The mortgage payment holiday scheme had been due to end on 31 October, but when a second national lockdown for England was announced last November, the scheme was extended, allowing borrowers who had not yet applied for a mortgage holiday to ask their lenders for a repayment break of up to six months.

Mortgage protection is important

If 2020 taught us anything, it’s that the unexpected can happen and being prepared is key to ensuring our loved ones are financially secure. This includes mortgage protection cover – ensuring you have the right cover in place should be a priority for 2021.

We can help with your mortgage search and more

Finding a suitable mortgage and the right protection cover can be challenging, particularly in the current climate, but we can help. We can assess a wide range of mortgages and protection policies and advise on which best suit your circumstances.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.

Last January, as a new decade dawned, little did we know how the next 12 months would unfold. Now, as we’re in the early stages of 2021, there are growing shoots of optimism but, whatever the year does bring, a crucial lesson from 2020 is undoubtedly the need to prioritise financial wellbeing in order to ensure we can cope with life’s trials and tribulations.

Key lessons

The coronavirus pandemic has vividly laid bare our fragility and vulnerabilities, and presented immense challenges on many different levels. It’s also reinforced a number of key financial lessons, from the importance of budgeting and building up an emergency savings fund, to investment diversification and holding appropriate life and protection policies.

In short, the pandemic has demonstrated the value of maintaining sound financial planning principles and the peace of mind this delivers. In effect, by getting into good financial habits, it is possible to ensure you are cushioned against the shock when crisis does strike.

Financial wellbeing

Another key takeaway from last years’ experience has been the entwined relationship between financial wellbeing and emotional wellbeing: while a lack of financial stability typically leads to stress and anxiety, sound finances can provide mental peace.

Research conducted by insurer Royal London also highlights the critical role expert advice plays in improving emotional wellbeing by increasing clients’ financial confidence and resilience. According to the study, advised customers who have an ongoing relationship with their adviser were nearly twice as likely to feel in control of their finances as those who didn’t.

Help at hand

The first few months of the year inevitably provides the perfect opportunity to take stock of your finances and build foundations for a better financial future. And seeking professional advice is a vital step in achieving those objectives. So, get in touch and we’ll help you develop sound plans designed to ensure you hit your short and long-term financial goals and ultimately provide a boost to both your financial and emotional wellbeing.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

One effect of the pandemic has been to divide segments of the population, whether by age, where they live or what they do for a living. When divisions occur, tensions can develop, not least between the generations.

There is now rising concern about the economic impact of the pandemic upon Generation Z. A summary of youth unemployment statistics published in October revealed, ‘581,000 young people aged 16-24 were unemployed in June-August 2020, an increase of 35,000 from the previous quarter and an increase of 87,000 from the year before.’

Students stranded in halls of residence whilst learning online may feel more resentful over tuition fees and worsening job prospects. Many young people are also worried about whether they will ever leave the rental sector, as saving for the deposit for a home can be difficult while paying rent.

The Intergenerational Foundation (IF) says, ‘Younger generations are under pressure like never before. IF was established to draw policy-makers’ attention to this, and to get a fairer deal for young people. It concentrates on policies in housing, health and higher education, employment, taxation, pensions, voting, transport and environmental degradation.’

Empathy is the power of connection

COVID has brought added worries for elderly people, too. One concern has been poor access to banking services and cash, with branch and ATM numbers declining due to lower usage. As Age UK puts it, ‘We are hurtling towards a cashless society with no real consideration for the many people who will be left behind.’

Many older people recognise the challenges that upcoming generations face; often they do something about it by helping grandchildren at important life stages, if concern about funding their own future care allows. Those unable to assist hope government will support key elements of young adult lives – a challenge when national finances have been battered by the pandemic.

It’s about family

Although the pandemic has certainly heightened intergenerational issues, it has also highlighted health, social, emotional and financial vulnerabilities – and impacted every generation. Plenty of people have reflected on the balance in their lives and the importance of feeling connected. It’s reminded us that it’s good to talk and not to be afraid to start a conversation.

Although generational divides exist, we’re in this together and although we’ve had to endure time apart, in a strange way it’s brought us all together. If you are in a position where you want to engage your family with a conversation about finances, we understand your apprehension because money can sometimes be a contentious issue. ‘Wealth transfer’ is such an abstract term for such an emotional topic, but we can help break down those barriers and get your family talking in a positive and productive way.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

With the end of the tax year fast approaching (Monday 5 April), if you have cash that you don’t need to access in the short term and would like to use some or all of this year’s ISA allowance, don’t leave it too late and risk missing out on this opportunity to save tax-efficiently; remember you can’t carry any unused allowance over to the next tax year, so timing is important.

The ISA allowance for the 2020/21 tax year is £20,000 and if you’re thinking of saving tax-efficiently for a child, the Junior ISA annual limit is £9,000.

You can put all the allowance into a cash ISA, or invest the whole amount into a stocks and shares ISA. You can also mix and match, putting some into cash and some into stocks and shares if you wish, as long as the combined amount doesn’t exceed your annual allowance.

Now, more than ever, it’s important for people to ensure their savings are offering the best return possible. Putting money aside tax-free is a simple way to make your savings work a little harder, an especially useful tool for those in higher tax brackets who don’t benefit from the Personal Savings Allowance.

With many after-school kids’ clubs off the agenda, why not invest the average spend of £57.36 per week, totalling almost £2,200 over the course of a 38-week school year, into a JISA? It all adds up.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

Whatever 2021 has in store, we want to reassure you that we’re here for you and all your financial planning needs.

While the coming months are expected to see the global economy rebound from the COVID-induced recession, the pace of recovery is indeterminable. In addition to uncertainties created by the pandemic, Brexit, trade and political issues will no doubt persist. As always, the only real certainty is that we live in uncertain times.

You can rely on us; we take the time to understand your objectives and circumstances and advise you on the financial strategies most appropriate for you.

We are proud to support you through 2021 and look ahead with hope and confidence.

With the current tax year having begun on 6 April 2020, the clock is ticking and it is important to utilise all the tax reliefs and allowances available before 5 April 2021 in order Read more

The outgoing Governor of the Bank of England, Mark Carney, has said that thousands of UK pension schemes could be at risk of becoming worthless due to the challenges of climate change.

Speaking during an interview with Radio 4’s Today programme, Carney said that every investor should be considering their plan when it came to climate change and how it could affect their assets and savings.

The Governor was invited on to a special show guest edited by Greta Thunberg, who asked whether pension funds should stop investing in fossil fuels even if the returns were attractive.

In response Mark Carney said: “Well that hasn’t been the case but they could make that argument. They need to make the argument, to be clear about why is that going to be the case if a substantial proportion of those assets are going to be worthless.”

There are growing fears generally that too many pension schemes are too tied to fossil fuel industries and that in the event of a rapid change to the economy to meet carbon targets many people could end up with worthless investments when they come to retire, despite fossil fuel backed investments proving historically to be relatively safe.

Mr Carney described climate change as a “tragedy on the horizon” and said there would be “more extreme weather events”, but that “by the time that the extreme events become so prevalent and so obvious it will be too late to do anything about it. We look to political leaders to start addressing future problems today.”

Mr Carney’s wife, Diana, is a prominent environmental campaigner and in September he addressed the United Nations’ Global Climate Action Summit in New York on risks to financial stability.

He will step down from his role at the Bank in March to take up a role as the UN’s special envoy on climate change, where he is expected to help financial markets deal with the challenges that climate change may bring.

Link: Pension fund investments held by millions could be rendered worthless by climate change crisis, warns Mark Carney

As the UK state pension age continues to increase, a new study has found that many savers are looking to retire at least three years before they reach the official threshold – living instead for several years on private pensions.

Currently the state pension age is 65 for women and 66 for men, but the state pension age is rising at the same rate for both men and women and is set to reach 66 for both sexes by October 2020 ahead of further increases to 67 and then 68 in the following decade.

Despite the rise in state pension age, the new study from Canada Life has suggested a complex picture emerging of the average UK worker planning to access their private pensions before retiring from work and reaching state pension age.

It found that adults under the age of 55 believe early retirement might be too ambitious in terms of achieving their financial goals, but many still hope to retire at the age of 63, having received their private pensions at 62.

For many this may mean that they have a gap of three to four years where they are entirely reliant on their own savings.

Meanwhile, those who have already reached their 55th birthday plan to wait until they are 63 to access their savings, and not retire from work until age 67.

Andrew Tully, Technical Director at Canada Life, said: “Working till you drop clearly doesn’t appeal to the average UK worker who has plans to slow down in their early 60s, typically retiring from work three years before their expected state pension age.

“This ambition is helped by an expectation that they will begin to access their private pensions before they retire, at age 62. This creates a clear financial planning issue and people need to take positive steps early to mind the pension’s gap.”

Last year the Pensions and Lifetime Savings Association (PLSA) launched new Retirement Living Standards, designed to help people picture the lifestyle they want when they retire.

It found that 51 per cent of people focus on their current needs and wants at the expense of providing for the future and only 23 per cent of people are confident they know how much they need to save.

Link: Workers plan to retire years before state pension age

The latest data from banking trade body UK Finance has shown that the British public has more than £870 billion in savings within major high street banks.

Savings increased by 2.6 per cent in November 2019 compared to the previous year thanks to higher wages and lower consumer spending.

UK Finance said that despite this, greater political and economic uncertainty had made consumers more cautious about spending and saving, with Brexit having dampened consumer confidence.

The most common kind of account is either an easy-access current or savings account, with more than three-quarters of the total £870.4 billion held in such accounts.

It is thought that uncertainty over short-term household finances is behind the trend in easy-access accounts, which has led to a 1.4 per cent annual decline in funds stored in more restricted but more lucrative long-term accounts.

UK Finance said: “While low investment returns play a part, quick access to disposable income in uncertain economic times is the driving force for individuals when managing household budgets.”

The latest UK Finance data also showed that credit card spending dropped by 3.3 per cent year-on-year to £10.9 billion in November 2019, while overdraft borrowing also decreased by 0.8 per cent.

Link:  Household Finance Review