Bowmore Bulletin: Your latest update from the Bowmore team

Every month, we share some highlights of what’s been happening in and around the Bowmore Group. December was a busy month of charitable giving, so, this month we share three of the ways we’ve been giving back to the local community and the team.

Doing good in our Christmas jumpers

Throughout December we wore Christmas jumpers every Friday and raised £281 for Gympanzees.

Gympanzees support children and young people with disabilities in and around Bristol. The charity runs a lending library where families can loan specialist play and exercise equipment along with organising pop-up Gympanzees centres during holidays.

Visit the Gympanzees website to learn more about the brilliant work they do to improve the lives of young people in the area.

Donating food

As well as raising money for Gympanzees, we also collected food for a local foodbank. Everyone donated generously and we ended up delivering 78.22 kg of food to Nailsea Foodbank.

We received a lovely thank you letter and learned that, serendipitously, some of the items were things the foodbank had run out of that day. It was great to be able to make an immediate difference to local people in need and the foodbank is a cause we’ll continue to support.

Give and Take

Finally, we have implemented a new “Give and Take” annual leave policy.

From January 2022, each year every team member will have a “Give Day”, which they can use to volunteer their time to help a charity or community cause they care about.

In return, they get a “Take Day”, which they can take on or around their birthday, to spend extra quality time with their family, and help take care of their own wellbeing.

Coming soon… 7 books to add to your reading list before they arrive on screen

book and cup of coffee in hands of girl on winter evening near fireplace

If you’re a book lover, chances are you’ll have experienced a degree of anxiety about seeing your favourite novel adapted for the screen.

There’s no doubt that TV and film adaptations can be a contentious issue. From who plays your favourite character to decisions about detail missed in the re-telling, there’s a lot riding on whether you’ll love or hate the eventual outcome.

At the start of the new year, there’s a lot of new TV shows and movies to look forward to, so make sure you devour the delights of these seven brilliant books before they arrive on screen.

1. Where The Crawdads Sing by Delia Owens

With almost 150,000 five-star Amazon reviews, if you haven’t already discovered the magic within these pages, Where the Crawdads Sing should go straight to the top of your reading list.

Delia Owens’ debut novel tells the story of Kya, a young woman who is forced to raise herself in the North Carolina marshes when her family abandons her at the age of six. She grows up an outsider in her community, who ostracise and mistreat her, calling her “Marsh Girl” and “swamp trash”.

Despite having no formal education, Kya grows up to be wise and self-sufficient and makes a success of her life. But when she’s accused of murdering her former boyfriend, everything changes.

Actress-turned-producer, Reese Witherspoon is behind the project. So, if you’ve seen Big Little Lies or Little Fires Everywhere, which Witherspoon was also responsible for bringing to the screen, you’ll know this amazing book is in good hands.

The movie release date has been set for 24 June 2022.

2. The Wonder by Emma Donoghue

The Wonder is a tale of two strangers who transform each other’s lives, a psychological thriller, and a story of love pitted against evil.

Set in the Irish Midlands in the 1850s, Emma Donoghue’s novel tells the story of 11-year-old Anna O’Donnell and Lib Wright, a young English nurse tasked with watching Anna and uncovering the truth of how it seems the girl remains miraculously alive and well, even though she has stopped eating.

Starring Florence Pugh, who played Amy in the 2019 adaptation of Little Women, The Wonder is expected to air on Netflix in the second half of 2022.

3. Exciting Times by Naoise Dolan

When you leave Ireland aged 22 to spend your parents’ money, it’s called a gap year. When Ava leaves Ireland aged 22 to make her own money, she’s not sure what to call it, but it involves: a badly-paid job in Hong Kong, teaching English grammar to rich children; Julian, who likes to spend money on Ava and lets her move into his guest room; Edith, who Ava meets while Julian is out of town and actually listens to her when she talks; money, love, cynicism, unspoken feelings and unlikely connections.

Set against the backdrop of Brexit and the 2017 Hong Kong elections, Exciting Times is a bestselling debut and was longlisted for the Women’s Prize for Fiction in 2021.

The book has been adapted into a series starring Bridgerton star Phoebe Dynevor and is expected to air on Amazon Video in 2022.

4. Conversations With Friends by Sally Rooney

Conversations With Friends follows the adaptation of Rooney’s Normal People, which became a huge hit in the first lockdown and broke records as the most-streamed BBC series of 2020.

As with Normal People, Conversations With Friends will be directed by Lenny Abrahamson, who directed the film adaptation for Emma Donoghue’s heart-rending novel, Room.

Conversations With Friends is a BBC drama and expected to air on BBC and Hulu, hopefully sometime during 2022.

 

5. Foe by Ian Reid

Foe tells the story of Junior and Hen, a young married couple who live a solitary life on their farm.

The novel is set in the near future where environmental decay is destroying the planet. The couple are informed by a stranger that Junior has been selected to travel to a large, experimental space station orbiting Earth.

As for Hen, she won’t have a chance to miss him since arrangements have been made to ensure she’ll never be left alone.

Amazon Studios bought the rights in a deal worth more than $30 million.

Filming starts early this year in Australia and stars Saoirse Ronan, Paul Mescal, and Aaron Pierre. Director Garth Davis was behind Lion, a film that received six Oscar nominations, including Best Picture and became one of the highest-grossing Australian films ever.

Airing on Prime Video, the date is yet to be confirmed.

6. All the Light We Cannot See by Anthony Doerr

Anthony Doerr’s deeply moving novel tells the story of Marie-Laure, a blind teenager in occupied France during the second world war who meets up with a German soldier, Werner. The story follows Marie-Laure and Werner as they try to survive the devastation.

With more than 30,000 five-star reviews on Amazon, this New York Times bestseller won the 2015 Pulitzer Prize for Fiction and the 2015 Carnegie Medal for Excellence in Fiction.

The four-part series is expected to air on Netflix later this year, or early 2023, and is being helmed by Peaky Blinders adapter Steven Knight and Stranger Things director Shawn Levy.

 

7. Queenie by Candice Carty-Williams

Carty-Williams’ debut novel tells the story of Queenie Jenkins, a 25-year-old Jamaican British woman whose life starts to unravel when she takes a break from her long-term boyfriend.

Channel 4, who is behind the series, says, “Queenie is about heartbreak and bad dates and worse sex. It’s about south London and the gentrification that’s chipping away at it and what it represents. It’s about race, identity, culture and the politics that shape you. It’s about the love of friends, the chaos of family and community and all the other varying relationships in-between, but especially the one with yourself.”

Expect the TV series to be full of as much heart and soul as Queenie herself.

Due to air late 2022, if everything goes according to plan.

Love and money: 3 reasons you should do your financial planning as a couple

Happy middle-aged couple with laptop studying documents while working on couch at home

When it comes to discussing money, the most important person to talk to is your partner. Yet 25% of couples don’t find it an easy or comfortable subject and only 17% of people regularly talk about finances with their partner.

If you’re reluctant to talk money with your partner, you should probably rethink your reticence.

Even if you are in the early days of a new relationship, don’t be afraid to bring money into the conversation. Another study found that 40% of people find being financially responsible more appealing in a potential partner than their attractiveness.

Apart from financial responsibility being an attractive trait, if you’re in a relationship, your financial affairs are important to you both. So, it’s crucial to be open and honest, share information and plan your financial future together.

Here are three reasons you should manage your money as a couple and how you can benefit.

1. Decide on your financial plan together

Even if you and your partner have vastly different incomes, it’s useful to start by considering yourselves as equal when it comes to your financial plans. By starting out with the right mindset you’re less likely to find tension creeping into your conversation.

From buying a home together, choosing a car, and even deciding where you’ll go on your next holiday, the key financial decisions you’re making affect both of you. Plus, joint decisions often turn out to be better decisions.

While you may find that one of you usually takes the lead when making day-to-day decisions, such as paying bills or managing your household budget, this is often a case of which of you has the time or is better at doing the sums.

However, when you’re thinking about your overall financial planning strategy, it’s better if you both take an equal part in the decision-making. This way, even if one of you ends up handling the resulting paperwork and administration, you’ll know you both agree on the plan being executed.

2. Plan together and save money

There are various advantages to planning your savings, investments, and pensions with your partner. By planning together, you can benefit from tax incentives and allowances that you’re both entitled to.

Your annual ISA allowance

Each tax year you have an individual ISA allowance. ISAs allow you to save money and take the proceeds free from Income Tax or Capital Gains Tax (CGT).

In the 2021/22 tax year, the ISA allowance is £20,000. This means, as a couple, you can tax-efficiently save and invest up to £40,000.

Capital Gains Tax

The current annual exempt amount for CGT is £12,300 in the 2021/22 tax year.

By holding investments in joint names, you could take up to £24,600 worth of gains on eligible assets without having to pay CGT.

Pension contributions

The usual limit on tax-efficient pension contributions is either £40,000 gross, or 100% of your earnings – whichever is lower.

Because you receive tax relief at your marginal rate of tax, it often makes sense to maximise contributions for whichever of you is the higher earner.

However, if one of you isn’t working you can still contribute £2,880 into a pension each year and the government will top this up to £3,600 through basic-rate tax relief.

Marriage Allowance

If you’re married or in a civil relationship, you can use the Marriage Allowance to transfer £1,260 of your Personal Allowance to your husband, wife, or civil partner.

This means by planning together, you can reduce your tax bill by up to £252 a year.

3. Collaborate to achieve your life goals

Planning for your financial future together means you’re both invested in the same outcome. With a clear understanding of your joint income and expenditure, you can collaborate with your partner and plan to achieve your wider life goals.

No matter how you ultimately decide to spend your future or your money, it needs to work for you both. Discuss your goals and make plans together and you’re more likely to achieve the goals you’re both aiming for.

Get in touch

If you and your partner want to plan your finances in the most effective way, we can help. Email enquiries@bowmorefp.com or call us on 01275 462 469.

 

Bowmore Financial Planning Ltd is authorised and regulated by the FCA.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

The tax treatment of certain products depends on the individual circumstances of each client and may be subject to change in the future

Bowmore Financial Planning Ltd is not regulated to provide tax advice.

Bumpy but bright – what will investors be watching closely in 2022?

Investor watching the change of stock market on tablet

Following two years of uncertainty, caused by the coronavirus pandemic and global lockdowns, 2022 is forecast to be a little bumpy, but also brighter.

Inflation is on the rise, as are interest rates, and continuing disruption to supply chains will create some stock market volatility. However, as the pandemic gradually moves towards an endemic, the hope is that consumer spending habits will normalise and economies will continue to strengthen.

Here’s what we’ll be watching in the coming months.

Pandemic pressures

The latest Omicron variant is yet to show how much it will impact the global economy. Although most expect its negative force to be short term, it will undoubtedly exacerbate supply chain disruption and this will have a knock-on effect on inflationary pressures.

On the other hand, eventually, we could see Omicron turn into a positive. Because it is proving highly contagious, so far the Omicron variant appears to be helping to disperse the more dangerous Delta strain.

Although cases are up, hospital admissions are not. The majority of those who have had Omicron have suffered relatively mild symptoms. The chart below, which shows the number of cases in London alone, is a helpful illustration of how this is playing out.

Source: Ft.com – data taken from the UK government Covid-19 dashboard.

Meanwhile, global vaccination programmes continue to roll out and the introduction of the Paxlovid pill should help to improve the odds of recovery for those who get seriously sick.

Optimists hope that the combined effect of the milder mutations, vaccination programmes and introduction of new treatments will help relieve pressure on the service economy and benefit the job market, which should help give asset prices a boost.

Inflationary pressures will play a key role in markets in 2022 and have forced the hands of monetary policymakers around the world

The main inflationary pressures have been caused by:

  • Surging demand as economies reopen
  • Labour and materials shortages
  • Higher energy prices, especially in Europe
  • Expansionary fiscal and monetary policies through the pandemic
  • Other factors caused by Covid-induced distortions.

These pressures are expected to ease during 2022, but certainly not disappear entirely. A major risk to this view is if these pressures more permanently affect wage negotiations, which could fuel more persistent price increases.

Although few are anticipating a return to 1970s-style stagflation, many expect inflation to remain elevated across developed markets. While inflationary pressures are likely to ease as supply chain issues gradually resolve, firms are split over how transitory inflation will be.

The biggest risk for markets lies with potential monetary easing missteps

Central banks will need to maintain a careful balance between keeping inflation expectations under control while allowing support for economic growth.

Inflationary pressures have put the focus on monetary policymakers, who will need to tread carefully in both implementing policy actions and how these are communicated. The hope is that central banks will resist overreacting and remain conscious of the risk of inflation feeding through into more persistent shifts in wage and price increases.

Interest rates in 2022

Money managers, investors and consumers will all be watching interest rates in 2022, because it’s these rates are the primary and most effective monetary tool available to policymakers to combat rising inflation.

Although higher interest rates typically mean that savers get more return on their cash, on the flip side it becomes more expensive to borrow. This means that some people will save more and spend less, which can help keep inflation in check.

In December 2021, the Bank of England (BoE) increased the base interest rate from 0.1% to 0.25%. This was the first time interest rates had been hiked in more than three years.

With UK inflation currently above 5% – its highest level in more than 10 years – and expected to reach 6% in April, gradual interest rate rises are likely in 2022.

Rocketing energy prices have added further fuel to the fire

Following lockdown in 2021, there was a surge in demand for energy. This helped to fuel inflation figures.

Soaring energy prices have seen almost 30 UK providers go out of business in the past year, causing consumers to see a sharp rise in their gas and electricity bills.

Unfortunately, this problem is unlikely to be short-lived.

According to Dr Craig Lowrey, a senior energy consultant at Cornwall Insight, “The continued increase in gas and electricity wholesale prices, [means] our forecast for the default tariff price cap has risen to approximately £1,800 per annum.”

With the current cap set at £1,277, which came into force in October 2020, this prediction is a rise of nearly £600. And Lowrey’s figures don’t take into account the spate of energy suppliers going out of business.

With concerns over energy supply availability for the coming winter and wider geopolitical issues that may affect gas European supplies, in particular, the wholesale markets are experiencing renewed volatility.

Supply chains are still playing catch up

Supply chains remain knotted up, and few would like to predict when this may resolve.

This chart, from the New York Fed, tells a graphic story of the pressure the global supply chain is under:

Source: New York Fed

While some supply constraints are starting to ease, most are still clogged up. Although some financial analysts expect a brutal 2022, in terms of supply and demand, others are anticipating some relief in the second half of the year.

Even the most optimistic financial experts aren’t expecting a full return to normal during 2022, although they do expect normalisation in certain specific sectors.

Use insight to inform decisions and invest for the long term

Recently, markets have been choppy to say the least. This is reflective of the fact many are still undecided on whether the darker days of the pandemic are now a thing of the past.

However, we believe we are in a transitionary phase. Investors are still grappling with certain aspects of the economic recovery as we gradually return towards something more like a pre-Covid environment.

In the short term, this means that certain investment styles can fall in and out of favour quickly, but it is important to remember that longer term trends don’t play out overnight.

The problems we have talked about here are global issues that have a knock-on effect on the world economy and stock market movements. This insight can be used to inform investment decisions.

The secret of success is to recognise and understand these key issues and consider the long-term prospects in light of these events, rather than make rash decisions based on short-term noise.

The most important thing to remember when you invest in the stock markets is that investing is a long game.

We are optimistic about return prospects in 2022 as we continue on the path of recovery and positive investor optimism starts to gather momentum. Needless to say, there will inevitably be a few speed bumps along the way.

While there’s no hard and fast rule about how long you should hold your investments, ideally you should consider five years the minimum. For the best chance of benefiting from long-term compound growth, you should expect to remain invested for 10 years or longer.

Get in touch

If you are interested in learning more about how you can profit from expert insight to maximise and grow your wealth during 2022, get in touch.

Email enquiries@bowmoream.com or call us on 0203 617 9206.

 

The value of your investments can go down as well as up, so you could get back less than you invested.

Past performance is not a guide to future performance.

Bowmore Asset Management Ltd is authorised and regulated by the FCA.

Do returns in January set the tone for the rest of the year?

Young man sitting by large window in a modern kitchen looking thoughtful as he reads important message on phone

The old stock market adage “As goes January, so goes the year” was first discussed in 1972 by Yale Hirsh, creator of the Stock Trader’s Almanac.

The idea is that if the first month of the year is positive, it bodes well for the rest of the year. If, however, January sees stock markets close at a loss this may signal a turbulent time ahead.

So, does the saying ring true, and should you take heed when making your investment decisions?

The adage suggests when markets fall during January, an investor might decide to sell on 31 January and remain out of the market until the following year.

Beware such wisdom

Analysis that an investor with £100 invested in the FTSE 100 on 1 January 1999 who followed this strategy and sold their stock would have missed valuable years of growth. If they repeated the same pattern of behaviour every January, their £100 investment would be worth £97.08 by the end of 2019. Giving them a loss of almost 3%.

Meanwhile, the FTSE 100 returned 28% for investors who remained fully invested over the same 20-year .

So, if the same investor had invested their £100 and remained invested no matter how the stock market behaved in January, their £100 would have been worth £128 at the end of 2019.

The charts below show the £100 invested and then taken out of the market, compared with a £5,000 investment during the same 20-year period.

£100 invested following the old stock market adage “so goes January so goes the year” would have returned -3% over a 20-year period. The chart shows the value of the investment at year-end.

Meanwhile, the FTSE 100 returned 28% over the same period: FTSE 100 index Dec-98 to Dec-19 

Source: Bowmore Asset Management

Remember, past performance is not an indicator of future performance. The value of investments can fall as well as rise.

Attempting to predict market movements can be extremely difficult. By investing with this mindset, you’re more likely to miss out on rebounds in stock prices, which often occur during periods of increased volatility.

For example, during the height of the 2008 financial crash, between April 2008 and March 2009, the FTSE 100 dropped by 38% but had rebounded by 41% before the end of 2009.

Trying to time market movements could erode the value of your capital

Time in the market is a far more successful strategy than trying to time the market.

As well as missing out on positive rebound growth, by attempting to time market movements you may also be exposed to the risk of inflation eroding the real-term value of your capital.

Money that is not invested in the stock market is less likely to keep pace with the rate of inflation, which leaves your capital exposed to being eroded in real terms.

Sudden market movements can be stressful and cause anxiety. This is one important reason to make sure you invest at a level of risk you are comfortable with. It is also crucial that you invest for the long term. Ideally, when you invest you should always be thinking beyond five years, preferably 10 or longer.

Investing with a long-term time horizon

Investing for a short-term gain is a dangerous and often unprofitable strategy. Markets are volatile and your funds are susceptible to short-term losses if you set short-term investment horizons.

Historically, over the longer-term markets have shown a strong tendency to trend upwards

As our investment manager Owen Moore says, “Riding out short-term ups and downs gives you the chance of accessing much better long-term returns.

“Trying to time the market is rarely the best way for building wealth. While short-term movements are inconsistent and largely dependent on changes in valuations and sentiment, long-term trends are much more predictable.”

Get in touch

Bowmore Asset Management specialise in building and managing investment portfolios for private clients, trusts and charities. We invest across all major asset classes including equities, fixed interest, hedge funds, commodities and property funds. Our primary objective is to help you achieve your investment goals.

To find out more about how we can help you invest your money wisely and how you can profit from expert insight and long-term growth, email enquiries@bowmoream.com or call us on 0203 617 9206.

 

Bowmore Asset Management Ltd is authorised and regulated by the FCA.

The value of your investments can go down as well as up, so you could get back less than you invested.

Past performance is not a guide to future performance.

4 important things to consider when planning your retirement budget

Retired couple managing budget and paperwork together

Whether you’re planning ahead in anticipation of a comfortable retirement or are already enjoying retired life, it’s important to have a good understanding of your finances.

When you’re no longer working for your income, having a budget is sensible planning. This is especially true as some expenses, such as medical and health insurance, are likely to increase.

Knowing what you have coming in and going out each month can also bring peace of mind, allowing you to relax and enjoy your retirement without worrying about money.

You’re likely to find a significant difference in your budget when you retire compared with when you’re working. So, here are four things you should consider when planning your retirement expenditure.

1. Your regular weekly spending habits

Calculating your essential household expenditure should come at the top of your list when planning for your retirement.

You might find that your regular outgoings begin to change in the years leading up to your retirement. If, for example, you finish paying off your mortgage or your children leave home, you may suddenly find yourself paying out less than you have in years.

Meanwhile, one of the outcomes of the pandemic is that many of us have saved money by working from home. The most significant saving for many of us is not having to commute. No longer paying for our habitual morning coffee or lunchtime sandwiches has also left us with extra money in our pockets.

To put this into perspective, according to ThinkMoney, the average cost of a regular latte in 2020 was £2.63. If you enjoyed a morning latte every weekday morning, you would spend just over £600 a year on your caffeine fix, taking into account your annual leave.

This is just one example of how small purchases can add up to large amounts over time.

As you’ve seen above, one of the useful things about working out your budget is to find out how much you’re spending on potentially unnecessary treats and whether you might be able to save that money or put it towards something else instead.

If you have been used to travelling to work in your car or have been commuting by train, you may also save on daily travel costs. Of course, this will depend on how you intend to spend your retirement, as you may end up taking longer trips more frequently. These may end up costing more than your previous daily commute.

Finally, consider how your household bills might alter when you retire. You’ll perhaps spend more time at home. This could mean running the heating more often and for longer periods and you’ll probably boil the kettle more or use the oven more frequently.

If you’re going to be at home more of the time this increase in electricity and gas will cause your monthly bills to rise and you’ll need to account for this.

2. Will you lose any high-value perks when you retire?

If you currently drive a company car or have private medical cover or life insurance through your employer, it’s important to factor in the cost of replacing these perks before you retire.

Depending on where you live and what your local transport links are like, you may decide you’re happy to do without a car, especially if your work involved a lot of time behind the wheel.

If you’re content to rely solely on the NHS, you may not be too worried about losing medical insurance, but make sure you know what you’re giving up and that you are satisfied to let go of your employee protection benefits.

Life insurance is one area you should probably make sure you have covered. Since this is one cost that increases with your age, the sooner you set up protection, the better.

3. How will your lifestyle choices change what and how you spend?

As you do your calculations, you may find you actually save money by not going to work. However, this won’t necessarily equate to having more disposable income if your retirement income is less than the salary you were earning.

Once you know how much you’ll need to cover your monthly essentials, how much will you need to live the life you want and have fun when you retire?

Whether you have grand plans to go on an adventure and see the world or want to move house and relocate to live closer to family, it’s important to work out how much you’ll need to meet your retirement dreams.

If you’re not sure how you intend to spend your time in retirement, now’s the time to start dreaming and planning.

Don’t be afraid to dream big. Once you have a plan in mind, calculate whether your retirement lifestyle will be more expensive than your working life. Make sure you’ll have enough to pay the bills with enough left over to live your dreams .

When it comes to planning for bigger expenses, such as luxury travel, you may find it useful to set out a timeline of what you want to do and when, so you can plan ahead for the increased expenditure you expect to incur.

In doing this, don’t forget to include the small lower cost treats and activities you expect to enjoy too. Things like more meals out, day trips, gym or club memberships all add up, so make sure they feature in your budget.

4. Important factors to remember when you’ve drawn up your retirement budget

When you’re budgeting for your retirement, you’ll also need to think about:

  • Your options for where and when to draw your retirement income
  • Optimising your tax allowances
  • How you’ll cover the costs of care later in life
  • Making plans to pass your wealth on to your family and loved ones.

With so much to take into account, it’s a good idea to talk things through with a financial planner a few years before you retire.

Speaking with someone who understands all elements of retirement planning can help you set out a sound strategy to fulfil all your objectives. Where necessary, a conversation early enough may allow crucial time to adapt your plans so you can enjoy the retirement you hope for.

Get in touch

If you’re approaching your retirement and would like help to organise your finances, please get in touch. Email enquiries@bowmorefp.com or call us on 01275 462 469.

 

Bowmore Financial Planning Ltd is authorised and regulated by the FCA.

Bowmore Financial Planning Ltd is not regulated to provide tax advice.

How much do I need to save to cover the potential costs of later-life care?

a nurse handing an older woman a cup of tea

As advances in medicine mean many of us are living longer, the costs of long-term care (LTC) in later life have arguably never been so much of a concern for retirees.

In fact, you may remember seeing in the news back in September 2021 that the government had announced major reforms to the way individuals pay for their later-life care.

With changes coming into effect from October 2023, the new rules could have a significant impact on how you’ll pay for your care, and how much you’ll need.

So, find out how much you might have to pay for later-life care, what the government reforms will mean for you, and how you can prepare for these costs.

Average costs range from £11,000 to £50,000 a year

Let’s start by looking at the average costs of care in recent years. These costs vary greatly, depending on the kind of care you’ll need.

According to figures from social care charity PayingForCare, the table below shows the average cost of care in residential and specialist nursing care homes in 2020:

Even choosing to remain living in your own home with regular visits from carers would cost you upwards of £11,000 a year, assuming you had 15 hours of care a week at £15 an hour, which Age UK says is the national average.

The British Geriatrics Society estimates life expectancy at specialist care homes to be 12 months and 24 months for non-specialist facilities. This means, on average, you’ll typically have to pay between £49,000 and £70,000 for your care.

Bear in mind that these costs would just be for your care, not for any so-called “hotel costs”. These additional costs could include accommodation, food, utilities, or any other living expenses.

A new £86,000 lifetime cap for care costs

Alongside these figures, you should also be aware of the Government’s restructuring of care costs. This includes a new maximum cap for how much individuals will be expected to contribute towards their care.

Starting in October 2023, the amount individuals will have to pay towards their care will be fixed at £86,000. Any remaining care bills will be state funded.

Based on the averages above, the costs of your care would reach this cap in:

  • Just under two years of care in a specialist home
  • Around two and a half years at a non-specialist residential home
  • Nearly eight years living in your own home with visiting carers.

However, the £86,000 cap only applies to the costs of your actual care.

This could drive your care costs even higher because the £86,000 limit only includes care costs such as washing or eating, excluding any “hotel costs” such as utilities and rent.

So, while there is a limit for how much you’ll pay directly for your care, you may still end up needing more than £86,000 to fund your entire stay.

According to Metro, those costs could come to an additional £20,000 a year.

When you take into account the additional costs not covered by the care cap, this means that the average 12-month stay in a nursing care home would cost you nearly £70,000, and as much as £110,000 for 24 months in a standard residential home.

Higher means-tested benefit thresholds

Alongside the cap on how much you’ll have to contribute towards your care, the Government has also confirmed an increase to the capital limit for means-tested benefits.

The means test limit determines how much of your care will be state funded, depending on how much you have in capital assets.

This calculation is based on anything you own with value, including things such as cash, stocks and shares, or property other than your main home. It can also include your home if you move permanently into care.

The table below shows the limits as of the 2021/22 tax year, and what they’ll be from October 2023:

 

 

Source: gov.uk

This means that:

  • If you have less than the lower threshold in capital assets, the state will pay for the entire cost of your care
  • If you have more than the upper threshold, you will be entirely responsible for paying for your care
  • If you have capital assets between these two thresholds, your costs will be partially subsidised, depending on how close to the limits you are.

Of course, even with this increase, the upper cap is still fairly low, especially if you are currently a high earner or were during your working life. As a result, it’s still possible that you’ll be ineligible for state-funded help when the new limits come into effect.

Preparing to pay for later-life care

While many people may not ultimately end up in care, the high costs that you potentially face may be a cause of concern for you. That’s why it can be sensible to consider measures that will ensure you’ll have money to pay for your care if you do ever need it.

Setting money aside

The first thing you could consider is earmarking certain funds to go towards care costs in your savings or potentially even within your pension.

By doing this, you can be confident that there’s sufficient money set aside somewhere in the event that you ever need to use it.

Of course, you need to make sure not to set aside money that you intend to use in your retirement. It can be sensible to take financial advice at this stage so that you can still achieve your retirement goals while also having the reassurance that you have money to pay for potential care costs.

Downsizing

If you’re concerned that you’re over the means test limit for capital assets but feel you’re short on accessible cash to pay for care, you could consider downsizing your home.

By downsizing, you’ll be able to access value tied up in your home, especially if the value of your property has risen since you purchased it.

Equity release

Alternatively, you could consider using an equity release product. If you’d like to find out more about equity release, please seek advice from a mortgage broker.

Working with a professional     

If you have any concerns about funding your care in later life, please get in touch with us at Bowmore.

We can help you with a personalised financial plan that includes provisions for paying for later-life care if you ever need to rely on it, giving you the confidence to live the retirement you want.

Email enquiries@bowmorefp.com or call us on 01275 462 469 to speak to one of our experienced advisers.

Please note

Bowmore Financial planning is not regulated to provide mortgage advice

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.

5 great strategies to help you combat workplace burnout

stressed man at desk looking at laptop

The past 20 months or so have been stressful for everyone in one way or another. So, unsurprisingly, there’s been an increase in the reported incidents of burnout.

Mental Health UK describes burnout as a “state of physical and emotional exhaustion” brought on by work-related stress in a particular job or role.

Indeed, according to data collated by job search site Monster and published by mental health charity Mind, 69% of employees said they’d experienced burnout while working from home during the pandemic.

Burnout can negatively affect you both professionally and personally, with the joylessness of work damaging your enthusiasm for your career. Ultimately, this can have a knock-on effect on your home life, making it difficult to relax or enjoy time with your family.

That’s why it’s important to address burnout, keeping both your work and home life on track. Here are five strategies that can help to reduce these feelings and help you combat workplace burnout.

1. Fix your working hours

A major cause of burnout is overworking, spending too much time focused on work. So, the first thing you can do to help battle burnout is to try and stick to fixed working hours.

Simply arrive at the office and then leave at a set time each day, regardless of what’s going on at work. This doesn’t have to be the traditional nine-to-five, but whatever pattern works for you.

Doing this can help to compartmentalise your work, defining your free time. You may also find an improvement in your productivity, encouraging you to work efficiently as you know that you have a certain amount of time to complete your tasks.

This can particularly be a problem for homeworkers, as the lines between work and home become even more blurred. So, try to build a standard routine for your day even if you’re not headed to the office.

As part of having set hours, make sure you turn your phone off outside of work hours. Being constantly contactable can make it feel like you never get away.

Turn off notifications for emails and messages or switch your phone off completely to give you some extra separation from work.

2. Build downtime into your schedule

In a similar vein, having downtime away from work throughout the day and beyond can be a helpful way to reduce the impact of burnout.

Make sure you take regular breaks, including an extended period to relax and eat at lunch. You should use your entire annual leave allowance and book paid time off throughout the year.

Remember: even if it feels like it will fall on your shoulders, it is your employer’s responsibility to make sure your work gets done in your absence. Don’t feel bad for taking time off, as that’s what it’s there for!

3. Prioritise family time, social activities, and hobbies

As well as adding downtime away from work into your schedule, make sure you include positive social experiences in there, too.

Whether that’s spending time with family, taking part in hobbies that you love, or simply going for a drink with a friend, social activities are a great antidote to feelings of burnout.

Pastimes like these are a great opportunity to switch off from work and focus on something else entirely, even if just for a few hours. And, while it may be subtle, you’ll certainly feel better for it.

4. Work on your overall health

Often, a way to combat burnout is to try and improve your overall health, whatever that means to you.

When you’re stressed, it can be easy to stop taking care of yourself. You might find that you stop eating regularly or enough, that your sleep pattern is interrupted and inconsistent, or that you can’t exercise as often as you’d like.

These are basic needs that you need to make sure you fulfil, no matter what’s happening at work. Similarly, while what’s happening at work may be difficult to change, these are all well within your control.

Physical health and mental wellbeing often go hand in hand. Take the time to focus on yourself and your needs to help combat burnout.

5. Ask for help

Above all else, if you feel like you’re struggling with burnout, be willing to ask for help.

Whether you seek support from family, friends, or even from a professional, remember that there’s no shame in asking other people to help you through difficult times. Burnout is a normal, natural response to prolonged periods of stress, and is not a form of weakness.

Even if they just listen without providing constructive suggestions, you may find that you feel better simply because you reached out and spoke to someone else about what’s going on.

If you feel like you can, consider telling your employer how you feel, too. Burnout is specifically a work-related phenomenon, and so changing the elements of your working routine that are causing you stress could make a huge difference.

Working with us

While you may be stressed about work, one thing you shouldn’t be stressed about is money. So, if you’d like help securing your financial situation, please contact us at Bowmore.

Email enquiries@bowmorefp.com or call us on 01275 462 469 for more information.

Please note

This article is for information only. Please do not act based on anything you might read in this article.

New year, new venture: When is the “right” time to start your new business?

woman working on a laptop at her desk

At the start of a new year, it’s common to reassess many things in your life, and work is no exception.

You may have even decided that 2022 is your chance to start the new business that you’ve been thinking about for a while. However, with uncertainties over Brexit, Covid-19, and the economy, you may also be concerned that now isn’t quite the “right” time.

Interestingly, 2021 was a popular year for would-be entrepreneurs to take their shot at tackling the business world.

According to Companies House data published by Business Money, more than 257,000 new businesses were registered between January and June in 2019.

Meanwhile, in the same period in 2021, more than 340,000 new businesses were registered. That means, despite the challenges posed by the pandemic, the number of newly registered businesses actually increased by 32% during 2021.

This begs the question: is there a “right” time to start a business? What sort of factors influence when it might be the optimum moment to begin a new venture? And when do you know it’s your chance to start yours?

Here are a few things to consider if you’re thinking about starting your new business in the near future.

Are you emotionally ready?

A good starting point for your readiness is how you feel emotionally. Are you ready to take on the hard work and stress that comes with starting a new business?

In a study published by Business Leader, insurance provider Simply Business found that 82% of small or medium-sized enterprise (SME) owners said their mental health had declined during the Covid-19 pandemic.

This is understandable; after all, businesses struggled to operate as lockdown restrictions brought many industries to a halt, threatening many entrepreneurs’ livelihoods.

While these may have been exceptional circumstances, you need to be mindful of the fact that being a business owner is stressful and requires you to be emotionally resilient. Make sure you’re ready for a new set of worries and concerns that owning a business can bring.

Are your personal finances ready for a business?

Next, you should consider giving your personal finances a thorough inspection.

You might not think that your personal finances are important when starting a new venture, as they’ll be separate from your business cash. But you need to be confident that you can afford to take this on, or that you’re willing to make changes to your lifestyle to make it happen.

There are two reasons for this. Firstly, you may be giving up a paid position as an employee to start your new business. You may also be giving up valuable financial benefits that come with your position, such as a death in service arrangement, employer pension contributions, or a company car.

As a result, you need to budget for the fact that you’ll no longer be receiving this money once you go for it alone.

Additionally, you may even go for a period in your new business in which you don’t generate much profit at all. In fact, according to software provider FreshBooks, it takes businesses an average of two to three years to become profitable.

Be sure you know what kind of sacrifices you might have to make when getting your business off the ground.

You may also want to check that you have an emergency fund of cash held in an easy-access savings account. This should contain three to six months’ expenses to fall back on if you need to rely on it.

What do you want to achieve in the future?

As part of considering your personal finances, you might want to give some thought to your goals for the future.

If you’re still in the middle of your career, your aspirations might include buying a new home or living a certain kind of lifestyle that allows you to go on regular holidays with your family.

Meanwhile, if you’re approaching the end of your working life, you might have one eye on your retirement plans.

No matter where you are, you need to make sure that your plans for your new business are compatible with what you want to achieve in the future.

It’s probably not sensible to use the money you had set aside for your dream retirement in your business. Equally, you may need the money generated by your business to drive you towards your targets.

These goals are just as important as how much money you have, so make sure you include them in your planning.

Have you prepared properly?

Finally, you need to make sure that you’ve done all the necessary preparation that every aspiring entrepreneur needs to do.

There are many things to think about before you start a business, but some key elements to consider could be:

  • Researching your target market, including whether it’s currently a profitable sector
  • How you intend to fund your business, whether that’s from your own funds or from loans
  • Your business protection options, including insuring the business if something happens to you or someone working with you
  • The tax efficiency of your new business.

Areas such as protection or tax can be complex and difficult to understand. If you think you might need help with this part of your endeavour, consider taking financial advice from a professional.

So, when is the right time to start a business?

There are a lot of different things to consider when starting a new business.

Unfortunately, the truth is that the answer to whether now is the right time for you or not will depend entirely on where you are now and where you want to be in the future.

If you have years of your career ahead and have a firm financial base to build on, now could be an ideal time for your new business.

Equally, if you’re approaching retirement and already have an exit plan for your new business that still lets you reach your later-life goals, this could be an ideal opportunity too.

If you’re in any doubt about whether now is the right time for you to start a new business, you should consider working with us at Bowmore.

We can help you to make informed decisions about your current financial situation and provide advice on how to manage money in your new business.

Email enquiries@bowmorefp.com or call us on 01275 462 469 to find out more about how we could help you.

Please note

This article is for information only. Please do not act based on anything you might read in this article.

Aim for a higher yield

Mark Incledon, CEO quoted in The Times 16th January 2022

Over one fifth (22.5%) of companies on AIM now pay a dividend, with 195 companies from a total of 867 on the junior market regularly paying out cash to investors, says Bowmore Financial Planning.

The average yield of the 195 dividend-paying shares on AIM stands at 2.5%, with over 60 shares (or 7% of the market) on AIM generating a dividend yield of 3% or higher.

Well-known shares on AIM that pay a dividend include premium mixers maker Fevertree Drinks, biotech group Abcam and software house Ideagen.

Bowmore says the fact that almost 200 AIM shares now pay a dividend shows that AIM investment may be more suitable for older investors than previously thought. The rising number of income shares on AIM means investors can benefit from income as well as Inheritance Tax relief on their investment.

Bowmore says the tax relief known as Business Property Relief (BPR) means AIM shares can be an effective way for investors to pass on some of their wealth completely free from Inheritance Tax.

BPR allows people inheriting unlisted shares, as well as those listed on AIM, to claim 100% IHT relief on them provided they have been held for at least two years. The shares can even be held in a tax-free ISA wrapper and still benefit from BPR.

AIM shares are treated as unquoted for tax purposes so long as they are not ‘dual listed’. It is relatively common for AIM companies, especially in the oil & gas and mining sectors, to be listed both on AIM and another overseas exchange, such as Australia’s ASX or Canada’s TSX. This means they are no longer considered ‘unquoted’ by HMRC and wouldn’t qualify for BPR.

Mark Incledon, CEO of Bowmore Wealth Group, says: “The relative lack of dividends among AIM companies used to mean they weren’t a great choice for older investors who want income to play a bigger role in their portfolios. With so many AIM shares now coming with a good yield attached, that is no longer the case.”

“BPR means that AIM shares can be a great way for investors to shield their wealth from the taxman when passing it on to their children. It is a lot easier now for investors to find the right balance between shares that benefit from BPR but still offer the potential for a strong yield.”

“Using a BPR AIM strategy, investors have the potential to get a good income and pass it on inheritance tax free. There is also no upper limit – you can invest £10,000 or £10 million and still attract 100% IHT relief.”