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Income Protection For Dentists - How To Choose The Right Policy (Part 1) All dentists have a number of important decisions to make when planning their financial future, such as:
- Should I invest more into pensions?
- What is the best mortgage available?
- I've sold the practice - what do I do with the realised capital?
Unfortunately, some dentists forget to put in place what is probably the most important component of their financial jigsaw: income protection (which is also referred to...
•Income Protection For Dentists - How To Choose The Right Policy (Part 2)
Income Protection For Dentists - How To Choose The Right Policy (Part 2) In Part 1 of How To Choose the Right Income Protection Policy, we looked at:
- The background to how income protection works
- Occupation definition
- Guaranteed rates
- Exclusions
Let's wrap it up with the other factors that you need to consider.
Additional Factors
You should check that your cover includes:
- HIV cover, included for needlestick injuries
- Ceasing age of the policy to tie in with drawing your...
•Investing For Children - Which Options Are Best?
? With the potential costs of a university education spiralling, house prices still being relatively high and the cost of weddings increasing, it has never been more important to begin a programme of savings for children and grandchildren.
Added to this the effective demise of the Child Trust Fund has left a gaping hole in effective provision.
In part 1 of this 2-part series, let's examine some of the tax-efficient opportunities that remain.
Facts and Analysis
The economic downturn has...
•Guaranteed Stock Market Bonds - Are They A Good Option?
? At the moment, one of the frustrations for savers is the low rates of return they are experiencing on cash deposits. This has resulted in some investors being persuaded by salespeople to put their money into a Bond that is linked to the performance of the stock market in some way or form.
There are many articles appearing in the press on this, and as usual the banks and building societies are coming in for criticism.
According to Money Mail, savers have committed £40 billion to these...
•Proposed Pension Changes - How Will You Be Affected?
? No doubt you are aware that more proposed changes to pensions has been announced by the Government.
The good news is that the Coalition has attempted to simplify matters, which is very welcome after Labour's legacy of the anti-forestalling legislation (how complicated does it need to be?).
Let's take a look at the main changes that will affect doctors and dentists:
- There's a new annual allowance (AA) of £50,000 a year (reduced from £255,000), including all individual and employer...
•Retirement Planning - How Much Is Enough?
? It is THE subject that we get the most enquiries about from new clients, and the one that greatly concerns many doctors and dentists - retirement planning.
To ensure we are always up to date with the latest developments, and to keep up with our CPD, we read a huge amount on this subject. Recently, one article concerned the amount of time we spend as a proportion of our adult lives being retired.
The statistics looked like this:
- in 1950, the average man spent 18% of his adult life in...
•How To Invest - Funds Or Individual Shares?
? As you can probably imagine, we read a huge amount about the subject of investments. Included here, as well as the more 'serious' reading we do, are the many journalists who write numerous articles about the 'best way' to invest your hard earned money.
One such journalist is a chap called Harvey Jones, who writes for The Motley Fool. Their motto is to "Educate, Amuse & Enrich", and a recent article covered the subject of having a strategy for your investments.
As we have said before,...
•Investing Company Money - Cash, Shares, Pensions?
? Investing company money that has built up within a business bank account poses a challenge to many company directors.
If you are a dentist that has decided to incorporate (or perhaps you've already done it), or a doctor with private earnings that has incorporated, one of the main differences you'll have noticed is that there is now another party in your business life.
The Limited company.
Beforehand, life appeared to be simple. You earned your net profits, your accountant prepared your...
•Investing Your Capital - Obvious & Hidden Risks
As we have said consistently for many years, we favour passive funds and tracker funds when investing clients' capital. The evidence for actively managed funds where the Fund Manager stock picks, and perhaps tries to time the markets leading to consistent long term performance above the average is thin on the ground.
Especially so when you take into account the higher costs usually associated with active fund managers.
So, in our opinion, the decision for canny investors using passive and...
•Independent Financial Advice - Can a Bank Really Provide it?
? As we read a lot of articles every week on a wide variety of subjects, a very common one that keeps on coming up is the appalling reputation of the banks.
Time after time we read of the banks' sales people selling products that are totally unsuitable to unsuspecting customers.
Which? Magazine has recently carried out research on this very subject. In an undercover probe, researchers found that just 4 out of 37 branches of banks and building societies gave good advice about investing a lump...
•Entrepreneurs' Relief - Will You Actually Qualify?
? Entrepreneurs' Relief was introduced following the abolition of the Capital Gains Tax taper relief scheme in April 2008.
At the time, the government was intent on imposing an 18% flat rate on all capital gains, whether business or non-business assets.
However, after a period of lobbying from business, the government backtracked (or actually listened?) on their original decision.
Quite rightly, business pointed out that the new 18% rate was an 80% increase over the old 10% rate that applied...
•Investment Bonds - Pros & Cons For the Higher Rate Tax Payer
Background
A Life Insurance Investment Bond is widely available for you to invest in. As with many investments, there are advantages and disadvantages to using this form of tax wrapper.
One of the main points to bear in mind is that the tax wrapper status of any financial product dictates how much tax you will/won't pay on the investment at outset, during and at the end of the term.
It is the actual funds where the money is invested that determines how much you will get back when the plan...
•Capital Gains Tax - Is an Increase on the Way?
? One of the most frustrating things we encounter whilst helping clients secure their futures, is governments changing the rules.
It's a bit like you when play a game of football, and at half time with a comfortable 2-0 lead, the referee explains that the goal size of your opponents will decrease, whilst yours will double.
What?!
Hey ref, that's not fair!
Well, in the world of financial planning, and no doubt along with millions of taxpayers, we await the budget announcements with bated...
•Inheritance Tax Planning - What About Pre-Inheritance?
? We have all heard of surveys and reports about nearly or newly retired professionals stating with a smile on their face that they were going to 'spend the kids' inheritance'.
Many dreams were being fulfilled, involving travel to exotic far flung places, cruising, buying a boat or a Harley Davidson motorbike - or whatever appealed.
However, some latest research has revealed that many well off parents have decided that rather than simply knowing that the children will inherit when they die...
•Mortgage Endowments - Stick Or Twist?
? We read a huge amount of articles on all sorts of financial matters each week. One that appeared in the press recently about the latest news on With Profits Endowment policies' payouts grabbed our attention.
Money Management magazine does an annual survey of policy payouts by various companies, and this years results have shown that yet again most are showing a fall compared to last year.
The background to all this of course is that, particularly in the late eighties and early nineties,...
•Tracker Funds Vs Active Funds - Where to Invest
Readers of Financial Tips will have seen many articles that we have written talking about how to invest your money. It goes something like this:
Check if you even need to invest more by having your planner build you your own financial forecast. After all, if your big picture looks very good, why not spend more/semi retire/gift to children and therefore reduce any inheritance tax issues?
Presuming investing is sensible, then:
check your capacity for risk buy your risk assessed funds that...
•Learn Magic Tricks And Impress Your Friends With This Simple Yet Powerful Card Trick
If you like doing simple card tricks, this one is easy to do, and doesn't require any special skill whatsoever. It's one of many "self working" card tricks that don't require any sleight of hand, or stacking the deck or any misdirection. This is a favorite among those that love to learn magic tricks.
The first thing you need to do is sort through the deck, and pull out all the cards of the same suit. Doesn't matter which. After than you simply order them, either from ace to king, or from king...
•Investment Costs - What is the 'Real Deal'?
? We have visited this subject many times, but make no apology for doing so again. If you currently have investments in Unit Trusts, Stocks & Shares ISAs or Pensions, or are planning to do so, then reading this article could save you a small fortune over, say, 10 - 20 years.
Let's take a look at the typical costs you are faced with when you invest your money:
Initial Costs
This is the percentage of the investment that you pay up front and is taken from the product you are investing in....
•Life Assurance, Critical Illness Cover Etc - Are You Paying For Policies You Don't Need?
? One of the common issues we find when we review a new client's situation is that over the years they have been sold (or have purchased) many life, critical illness and income protection policies.
Now, it's important of course to state that such cover for, say, a couple with a family and a mortgage, is absolutely vital. It is perhaps better to have 'a little too much' cover rather than a shortfall that would cause them serious problems if the worst was to happen.
However, it's also fair to...
•Investment Risk - What's Your Risk Tolerance?
? As you'll know, the main global stock markets have been VERY volatile over the last 12 months or so.
And it's likely that you have money invested in one or more of several investment vehicles:
ISAs
Personal Pensions
Self Invested Personal Pensions
Life company funds
Unit Trusts
Open Ended Investment Companies
Investment Trusts
For example, if you have capital invested in ISAs and personal pensions, you may well have your money invested in up to 20 separate investment funds.
Knowing...
•Your Retirement - What Will You Actually Do?
? When we start working with a new client who's, say, aged 50, it's always interesting to get down to what they want to aim for in life. After all, if life is not about thoroughly enjoying doing things you love most, what is it about?
So when the 'Retirement Reality' study from an insurance company came out the other day, it was something that we took notice of. It looked at what retired people actually did in the first year or two of their retirement.
Two decades ago, most people believed...
•Life Coverage, Critical Illness, Income Protection - Are You Fully Covered?
? When you graduated, there's a high probability you 'signed up' for income protection cover. Maybe it was at a graduation Ball, or perhaps it was following a talk you attended.
Even if you found out since that better coverage was available, the key is that you took action and purchased a very important protection plan. After all, imagine if you'd been off work for a number of years soon after starting work?
What would you have done if you hadn't had coverage?
From a financial planning...
•Savings Rates - Are You Getting the Best Rate For Your Money?
? We are not talking about serious longer term investments here. This is money which is meant to be safe and accessible, and preferably tax efficient. It could well be that it's money earmarked for your tax bill, for example.
So, the natural products that come to mind are National Savings (NS&I), as well as all the various banks and building societies deposit accounts. But of course it all depends on what the rates are, and indeed would it not be better to pay off debt if your lender...
•Financial Planning - The 10 Key Questions to Ask Yourself
No matter what stage of career you've reached, or even if you've retired, there's a number of key questions that you should be able to answer to give yourself the confidence that you've addressed all the important areas of your financial planning.
So, today, I'm going to run through the key areas that we run through with each client to take a 'barometer' of their financial planning health.
Let's get started.
So, have you...?
1. Really thought about what you want for the rest of your life?...
•Absolute Return Fund - Should You Invest in One?
? You may have heard about Absolute Return Funds being launched and appearing in the press recently. We have seen quite a few of them launched in the last year or so, and they sound good don't they? Absolute returns - hmmm, let's investigate.
There are 3 main reasons why these funds have appeared on the radar recently:
Managers have only recently been allowed to use techniques such as shorting (see below) in retail funds. With stock markets down 40% in the past year (to the end of March) and...
•NHS Pension Choices - The Key Factors
If you are a member of the NHS pension scheme, you will soon be asked to make a very important decision.
That is, should you remain in the current version of the scheme (applies if you were a member pre-April 2008) or should you transfer to the new version (post-April 2008).
To help, the NHS have produced 'Your NHS Pension Choice' Guide. You will not receive individual advice in the guide, rather it's up to you to read it through and really understand whether you should stay as you are in...
•Getting Financial Advice - Your Options Explained
If you're looking for help with your financial planning decisions, there are a number of resources you can turn to:
- the internet / media
- friends and family
- your own knowledge
Ideally, it's likely that you'll want impartial formation upon which you can make objective decisions. Whilst these three resources can be utilised, they may not 'do the job' as you'll be hard pressed to get an objective view with no emotion (which often runs high when making financial decisions) attached.
The...
•Income Tax Rises 2010 - Will You Be Affected?
? Large rises in income tax are due to take effect from next April for people earning over £100,000.
New rates of tax were announced by the Government in the recent budget and they are going to hit many of our clients hard! This is because our clients tend to be higher earners, with many in the £150,000 to £350,000 pa bracket.
So, how are you going to be affected?
Well, let's look at different incomes and how they are taxed now, and compare the same incomes and how they will be taxed next...
•Dentists & Doctors - Do You Need Your Own Cash Flow Forecast?
? Regular readers of our newsletter will probably recognise the words Cash Flow Forecast (Financial Map or Sat Nav), as we often refer to this when talking about how we help doctors and dentists work out:
What they really want to achieve in life? What is this going to cost and when? How does this look when compared to their incomes/assets? After all, dreams are just that unless you measure them and give them a deadline. So this measurement of what our clients want versus what they have to...
•Critical Illness Claim Statistics 2008
In line with the trends of the last 3-4 years, many insurance companies have announced their claims statistics for critical illness cover.
As a brief reminder, the idea with critical illness cover is that it will pay out a lump sum (usually) in the event of diagnosis of a number of serious illnesses.
Critical illness cover is purchased for a variety of reasons, with the main ones being to cover a mortgage loan (both personal and business) and for family protection purposes.
Unlike...
•ISAs - Are They Really That Tax Efficient?
? One of the standard pieces of advice we have always given when it comes to investing in stocks & shares is that it really will pay off to maximise the allowances clients have to ISAs.
If a client is looking to invest, this is the first port of call for us as wealth managers. As a couple can invest £7,200 each in every tax year, this 'pot' can potentially grow very nicely over the longer term. This growth will then be sheltered from the ravages of taxation.
Let's say a higher rate...
•New NHS Pension Choice at Retirement - More Pension Or More Cash?
? In the past when it came to how the NHS paid your pension, it was very simple. You had a pension based on the number of years' service in the Scheme, your income, and whether you had purchased added years. You also received a tax free lump sum of three times that pension (although GMPs and GDPs have their pension entitlement calculated on a slightly different basis).
No thought was required when you reached retirement age. You simply signed the form to say you were retiring and waited for...
•1970s Crisis - Is it the Same This Time?
? Well, what a year it's been...
High street banks in crisis, investment banks closing their doors, 'experts' pointing fingers, and SERIOUS questions asked of the Financial regulators. Yes, what WERE the regulators doing on both sides of the Atlantic?
And to cap it all, a $50bn (expected) fraud uncovered in the US.
Is there more to come, one wonders?
No one knows the answer to this, but it may be of use to look back in history so we can observe the lessons then.
With reference to the stock...
•Bank of England Base Rate Reduction - What About the Savers?
? There has been a lot of talk about the big winners when interest rates fall - i.e. borrowers. But what about people who rely on a reasonable amount of interest on their deposit accounts - the savers?
Falling interest rates are a nightmare for savers, and with the Bank of England (BOE) dropping rates further, what options do you have if you are a saver?
National Savings have often been chosen by savers looking for a safe place for their money with a reasonable rate of interest. But even...
•Lower Interest Rates - What Do They Mean to You?
? The fact that the Bank of England (BOE) has slashed interest rates by 1.5% to 3%, I think shows how worried they are about the British economy.
In a Bloomberg survey of 60 economists, nobody had predicted such a large cut in one go.
You would be forgiven for wondering what the reasoning behind this decision is when inflation has reached over 5%, and the BoE are supposed to target 2%. However, the BOE are looking ahead 24 months, and the outlook for next year is very different with inflation...
•Retirement Planning - Should You Take Your Pension at 60?
? This week we are discussing a scenario where an individual is about to reach 60 and are wondering whether they have to take their pensions at 60, or if they can delay this decision. And indeed, what are their overall options?
Some years ago, many in the pensions world advised investors not to touch their pension until it was absolutely necessary. The main reason for leaving pensions until the last minute was that they grew tax-free and the older you were the bigger pension you could buy....
•How Safe is Your Money? - Your Guide to Protection
How Safe is Your Money? - Your Guide to Protection My goodness what a rollercoaster it has been recently!
It seems that not a day goes by without more gloom. A bank goes bust or is rescued, an insurance company is swallowed up by another or is nationalised.
It is in times like these that people quite naturally get very worried and want to make sure that they are protected.
Let's look at cash deposit savings.
What are the rules and what protection do you have?
Where should you put your...
•The Cost of Investing - Are 'Hidden' Charges Eating Your Returns?
? We live in interesting times.
The investment bank Lehman Brothers has filed for bankruptcy protection, Merrill Lynch is being taken over by Bank of America and it's predicted thousands of bank employees will be picking up their P45s by the end of the month. If you have money invested in ISAs and personal pensions these may be worrying times. It's likely that you'll have a reasonable percentage invested in the UK, US and major economies' stockmarkets.
With the major indeces, such as the...
•Have You Clearly Defined Your Goals? - Living the Life You Want to Lead
Have You Clearly Defined Your Goals? - Living the Life You Want to Lead When we meet a new client or review the financial affairs of someone we have known for some time, the first thing we automatically concentrate on is what goals in life do they have?
For a new client - how can we as planners really encourage them to think about what they want to do with their lives?
For existing clients - we know their goals and so where are they on this journey? Are there any new factors to consider?...
•Be Smart - Be a Passive Investor
One of the first things we come across when we take on a new client is starting to make sense of the collection of policies and investments they have.
They are usually in a pile somewhere and tend to consist of many different funds across several providers. Almost without exception, their investment plans include 'active fund manager' investments.
The values vary, but £100,000 to £250,000 is not uncommon.
A sizable amount, I'm sure you'll agree.
We have written many times on this subject -...
•Saving Money From Income - Are You a Saver Or Spender?
? It certainly looks all doom and gloom at the moment doesn't it?
Open any newspaper or tune into the news on TV and if you are anything like me, you get punch drunk with all the articles on how bad the stock market or property market is etc etc.
It may seem perverse then to write an article on savings!
However, as ever, this is an immensely important subject that affects our clients' future security. As we view a Doctor or Dentist's financial affairs over at least 15/20 years, we can...
•Investing in Money Market Cash Funds - Are They a Wise Option?
? When it comes to investing your money, you'll probably know by now that you have numerous options to choose from.
In fact, it can feel like a bit of a minefield and sometimes you may not know if you've made the right choice.
Should you choose a bond fund, equity fund, property fund or a money market cash fund? Or any other type of fund?
So, what is a Money Market fund?
They are essentially unit trusts that aim to provide investors with an income from risk-free, short-term cash and...
•Dentists' Provident Society - Income Protection Claim Statistics
If you are a dentist, it's likely that you've taken out income protection insurance (also referred to as permanent health insurance). In fact, you may have even claimed on your policy.
During the last few years many of the leading insurers have been releasing their claim statistics for critical illness cover and income protection. This information is very useful to know as it gives you an insight to what policyholders are claiming for, and also peace of mind in knowing that the insurance...
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