Sample Page – Page 3

Time is Money

Five principles of investing everyone should know

Are your investments working as hard as they could be? With so many options out there, it can be confusing. We can help you navigate your options and provide a personalised recommendation based on your investment goals.

The following five principles will help you get on top of some key issues that affect everyone who invests their money.

1. Set Investment Goals

Successful investing begins by setting measurable and attainable investment goals and developing a plan for reaching those goals. Keeping your plan on track also means evaluating the progress on a regular, ongoing basis. Whatever your personal investment goals may be, it is important to consider your time horizon at the outset, as this will impact the type of investments you should consider to help achieve your goals. Committing to investment goals will put you on the path to building further wealth. Investors who make the effort to plan for the future are more likely to take the steps necessary to achieve their financial goals.

2. Invest as Soon as Possible

It’s easy to say that it is better to invest early, but why? The benefits of investing early are numerous and should not be overlooked. However, the benefits that come with starting your investment portfolio as soon as possible will also depend on your attitude towards investment risk and how patient you can be. It is no secret that the well-known proverb ‘time is money’ could not ring more true in today’s society. You might be inclined to ask yourself the following questions: ‘Why bother investing early?’ ‘What difference does it make?’ And ‘Why should I invest now instead of next year or beyond?’

The answer is that time allows you to take more calculated risks. If you invest for the long term, any short-term volatility shouldn’t affect your ability to reach your investments goals over time. If you invest early and incur a loss, you have more time to make up for the loss on investment. Whereas an investor who starts investing at a later stage in life will get less time to recover any losses. Thus, with early investments, your investment has the opportunity of more time to grow in value.

Not only is time your best friend when you’re investing, but you’ll also reap the benefits of something called ‘compounding’. To paraphrase Ben Franklin: Your money makes money. And then you make more money on the money your money makes. The longer your money can benefit from the power of compounding, the bigger your gains will be as time goes on.

3. Invest Regular Amounts

By investing regularly, you benefit from highs and lows in the market – called ‘pound cost averaging’ – and this helps cut down the risk of investing when the market is high. Dips in the market, particularly in the early years, could even work to your advantage provided you have committed to investing for a lengthy period. If your chosen investments have become cheaper to accumulate it means your investment buys more shares or units to keep for the long term. By investing regular monthly amounts, rather than a larger lump sum in one go, you end up buying more shares or units when prices become cheaper and fewer when they become more expensive.

Although it might sound quite technical, it essentially means adding money on a regular basis into your investment. This is an effective way to invest because if you keep buying when the market falls you could, over time, turn volatility to your advantage.

4. Diversify Your Portfolio

Diversification is spreading investment risk, the goal being to increase your odds of investment success. Your investment portfolio risk tolerance should be split across different types of investment, so your money is less likely to be affected by any single event or economic development.

A simple example might be splitting £10,000 between shares in FTSE100 companies and shares in small companies, government bonds and corporate bonds. Diversification is important in investing because markets can be volatile and unpredictable. While individual asset classes can suffer declines, it’s very rare that any two or three assets with very different sources of risk and return, like government bonds, gold and equities, would experience declines of this magnitude at the same time.

Where possible, always make investment decisions and portfolio allocations based on your personal circumstances and goals. Accordingly, asset allocations in a portfolio should not only be guided by your risk tolerance and its ability to guard against market volatility, but also by the stage of life you are at.

5: Resist the Urge to Panic Sell

What this means is that your ability to cope with short-term volatility in your investments is just as important as the choices you make at the outset of your investment journey. But if, say, there is a stock market correction, resist the urge to sell up immediately; instead sit tight and ride out any downward movement before looking for opportunities to exploit if they arise later.

The fear of incurring major losses could make it extremely tempting to sell your investments. Yet while this may temporarily alleviate your nerves, doing so could put a significant dent in your long-term gains. Investment trends show that leaving your money invested increases the chances of it growing and building your wealth pot.

If you invest for the long term, any short-term volatility shouldn’t affect your ability to reach your investment goals over time. Keep calm and carry on building up your investments. History has shown that over long enough time periods, no matter what challenges the global economy has faced, markets recover from significant downturns.

Active or Passive Fund Management

Researching the market to give a good profit…

Active Management

Most collective investment schemes are actively managed. The fund manager is paid to research the market, so they can buy the assets that they think might give a good profit. Depending on the fund’s objectives, the fund manager will aim to give you either better-than-average growth for your investment (beat the market) or to get steadier returns than would be achieved simply by tracking the markets.

Passive Management – Tracker funds

You might prefer to track the market. If the index goes up, so will your fund value, but it will also fall in line with the index. A ‘market index tracker’ follows the performance of all the shares in a particular market. In the UK, the most commonly used market index is the FTSE 100, a group of the 100 biggest companies based upon share value.

If a fund buys shares in all 100 companies, in the same proportions as their market value, its value will rise or fall in line with the change in the value of the FTSE 100. Tracker funds don’t need to be managed so actively. You still pay some fees, but not as much as with an actively managed fund. Because of the fees, your real returns aren’t quite as good as the actual growth of the market – but they should be close.

Setting Financial & Lifestyle Goals

Plan for tomorrow, live for today

Financial success doesn’t happen by accident. It’s a process starting with having a goal, planning carefully and being confident of making the right decisions at the right time. It is easy to stray from basic, solid principles of finance. These remain true no matter what your age or circumstances. It’s those same principles that need to be applied to your financial affairs.

The start of the new year is the perfect time to obtain professional financial advice and in doing so help secure your future – and that of your family – for years to come. Whether it’s advice on significant lifestyle changes, such preparing for your retirement, helping your children buy their first home or investing to beat inflation, we can help.

Life goals

Part of the process should also include articulating and writing down your financial and life goals. Doing this can actually have an impact on achieving them, by helping you to maintain focus in the face of distractions, setbacks or challenges. You might write down, ‘I want to be mortgage-free by the age of 50’ or ‘I want to retire by the age of 55.’ Think of each goal as a financial milestone. This will enable you to check that you’re on course, without worrying too much about how much longer you’ve got to reach your destination.

Reach milestones

Developing effective money habits, having a lifestyle you can afford and thinking carefully about your family priorities will help you identify and reach these goals or milestones – the key to having money serve you well over your whole lifetime.

Whatever stage you are at, a new year offers the chance to rethink your earning, spending, saving, investing and giving behaviours and habits to ensure they are aligned with what really matters. It’s also a good time to make sure that your financial life is well organised so you feel in control.

Clear objectives

Any goal (let alone financial) without a clear objective is nothing more than a pipe dream, and this couldn’t be more true when setting financial goals. It is often said that saving and investing is nothing more than deferred consumption. Therefore, you need to be crystal clear about why you are doing what you’re doing. This could be planning for your children’s education, your retirement, that dream holiday or a property purchase. Once the objective is clear, it’s important to put a monetary value to that goal and the time frame within which you want to achieve it by. The important point is to list all of your goal objectives, however small they may be, that you foresee in the future and put a value to them.

Realistic

Just setting goals doesn’t guarantee success—setting goals is only one part of a process that can lead you to success. Setting goals is key to planning, executing a plan, staying motivated and ultimately evaluating your success. Set realistic goals. It’s important to set goals that you can achieve. It’s good to be an optimistic person, but being a Pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, being overly unrealistic can definitely impact on your chances of achieving them. A realistic goal is one that you can reach given your current mindset, motivation level, time frame, skills and abilities. Realistic goals help you identify not only what you want but also what you can achieve, and help you stay the course by keeping you motivated throughout your journey until you get to your destination.

Divide goals

Now you need to plan for where you want to get to, which will likely involve looking at how much you need to save and invest to achieve your goals. The approach towards achieving every financial goal will not be the same, which is why you need to divide your goals into short, medium and long-term time horizons. As a rule of thumb, any financial goal that is due within a five-year period should be considered short-term. Medium-term goals are typically based on a five-year to ten-year time horizon, and over ten years, these goals are classed as long-term. This division of goals into short, medium and long-term will help in choosing the right savings and investments approach to help you achieve them, and it will also make them crystal clear. This will involve looking at what large purchases you expect to make, such as purchasing property or renovating your home, as well as considering the later stages of your life and when you’ll eventually retire.

Inflation matters

It’s often said that inflation is taxation without legislation. Therefore, you need to account for inflation whenever you are putting a monetary value to a financial goal that is far away in the future. It’s important to know the inflation rate when you’re thinking about saving and investing, since it will make a big difference to whether or not you make a profit in real terms (after inflation). You could use the ‘Rule of 72’ to determine, at a given inflation rate, how long it will take for your money to buy half of what it can by today. The Rule of 72 is a method used in finance to quickly estimate the doubling or halving time through compound interest or inflation respectively. Simply divide 72 by the number of years to get the approximate interest rate you’d need to earn for your money to double during that time.

Risk protection

There’s much to be said for ‘protecting before investing’. If loved ones are relying on you financially, your priority should be ensuring their security rather than taking on investment uncertainty. Discuss your goals with those you’re closest to and make plans together so that you are well aligned. An evaluation of your assets, liabilities, incomings and outgoings will provide you with a starting point. You’ll be able to see clearly how you’re doing and may find areas you can improve on. Risk protection plays a vital role in any financial plan as it helps protect you and your family from unexpected events. Make sure you have put in place a Will to protect your family, and think about how your family would manage without your income should you fall ill or die prematurely.

Tax liability

With tax rules subject to constant change, it’s essential that you regularly review your own and your family’s tax affairs and plan accordingly. Tax planning affects all facets of your financial affairs. You may be worried about the impact that rises in property values are having on gifts or Inheritance Tax, how best to dispose of shares in a business, or the most efficient way to pass on your estate. Utilising your tax allowances and reliefs is an effective way of reducing your tax liability and making considerable savings over a lifetime. When it comes to taxes, there’s one certainty – you’ll pay more tax than you need to unless you plan. The UK tax system is complex, and its legislation often changes. So it’s more important than ever to be tax-efficient – particularly if you are in the top tax bracket – making sure you don’t pay any more tax than necessary.

Take control

Developing a comprehensive financial plan allows us to take control of our money, assess our current financial situation, set goals and prepare a strategy to achieve those goals. By better understanding your finances, setting goals and creating a strategy, you will live more comfortably and with greater confidence. This will help you develop a clear picture of your current financial situation to see the big picture and set long and short-term life goals, which is a crucial step in mapping out your financial future. When you have a comprehensive financial plan, it’s easier to make financial decisions and stay on track to meet your goals.

Retirement decisions

Retirement planning goal setting is important because it can help you avoid running out of money in retirement. It enables you to calculate the rate of return you need on your investments, how much risk you should take, and how much income you can safely withdraw from your portfolio. The number of options available at retirement have increased with changes to legislation, which have brought about pension freedoms over the years. The decisions you make regarding how you take your benefits may include tax-free cash, buying an annuity, drawing an income from your savings rather than pension fund, or a combination of these. Beginning your retirement planning goal setting early gives you the best chance of making sure you have adequate funds to support your lifestyle.

Life changes

There is little point in setting goals and never returning to them. You should expect to make alterations as life changes. Set a formal yearly review at the very least to check you are on track to meeting your goals. Monitoring your financial performance in this way creates more certainty and confidence in making both short and long-term decisions. We will help you to monitor your plan, making adjustments as your goals, time frames or circumstances change. Discussing your financial and lifestyle goals with us is highly beneficial as we can provide an objective third-party view, as well as the expertise to help advise you with financial planning issues.

Finally, get SMART

To make sure your financial and lifestyle goals are clear and reachable, each one should be:
Specific (simple, sensible, significant); Measurable (meaningful, motivating);
Achievable (agreed, attainable); Relevant (reasonable, realistic and resourced, results based);
Time bound (time based, time limited, time/cost limited, timely, time sensitive).

Pooled Investment Funds

The advantages of Collective Investment Schemes

Pooled investment funds are usually large funds built by aggregating relatively small investments from individuals. A professional fund manager (or a team of fund managers) determines which assets to invest in and then purchases accordingly. They are also known as ‘collective investment schemes’.

By pooling resources with other investors, you are all able to achieve something greater than what you could achieve on your own. There is a diverse range of funds that invest in different things, with different strategies – high income, capital growth, income and growth, and so on.

Popular Types of Pooled Investment Fund

Unit trusts and Open-Ended Investment Companies

Unit trusts and Open-Ended Investment Companies (OEICs) are professionally managed collective investment funds. Managers pool money from many investors and buy shares, bonds, property or cash assets, and other investments.

Underlying assets

You buy shares (in an OEIC) or units (in a unit trust). The fund manager combines your money together with money from other investors and uses it to invest in the fund’s underlying assets. Every fund invests in a different mix of investments. Some only buy shares in British companies, while others invest in bonds or in shares of foreign companies, or other types of investments.

Buy or sell

You own a share of the overall unit trust or OEIC – if the value of the underlying assets in the fund rises, the value of your units or shares will rise. Similarly, if the value of the underlying assets of the fund falls, the value of your units or shares falls. The overall fund size will grow and shrink as investors buy or sell. Some funds give you the choice between ‘income units’ or ‘income shares’ that make regular payouts of any dividends or interest the fund earns, or ‘accumulation units’ or ‘accumulation shares’ which are automatically reinvested in the fund.

Higher returns

The value of your investments can go down as well as up, and you might get back less than you invested. Some assets are riskier than others, but higher risk also gives you the potential to earn higher returns. Before investing, make sure you understand what kind of assets the fund invests in and whether that’s a good ft for your investment goals, financial situation and attitude to risk.

Spreading risk

Unit trusts and OEICs help you to spread your risk across lots of investments without having to spend a lot of money. Most unit trusts and OEICs allow you to sell your shares or units at any time – although some funds will only deal on a monthly, quarterly or twice-yearly basis. This might be the case if they invest in assets such as property, which can take a longer time to sell.

Investment length

However, bear in mind that the length of time you should invest for depends on your financial goals and what your fund invests in. If it invests in shares, bonds or property, you should plan to invest for five years or more. Money market funds can be suitable for shorter time frames. If you own shares, you might get income in the form of dividends. Dividends are a portion of the profits made by the company that issued the shares you’ve invested in.

If you have any questions, please don’t hesitate to get in touch!

The Six Principles of Investing

How to invest your money and avoid costly mistakes…

Have a Plan and Stick to it

It is one thing to have a target, but a sound financial plan can be the difference between simply hoping for the best and actually achieving your goals. You can review your plan regularly with your professional financial adviser and make adjustments when necessary, but staying focused on your plan will help you to not be distracted by short-term market uncertainty.

Think Twice Before Putting your Money into Cash

Putting all of your money in cash can seem appealing as a safe and secure option – but inflation is likely to eat away at your savings. For most people with longer-term investment plans, cash needs to be supplemented with investment in other asset classes that can beat the perils of inflation and offer better capital growth potential.

Diversify & Always Consider your Investments as a Whole

When markets are fluctuating, it’s all too easy to worry about the performance of certain investments while forgetting about the bigger picture. But when one asset class is performing poorly, others may be flourishing in the same market conditions. A diversified portfolio, including a range of different assets, can help to iron out the ups and downs and avoid exposing your portfolio to undue risk.

Start Investing Early if you Can

As a general rule, the earlier in life you start investing, the better your chances of longterm growth. Compound growth (the ability to grow an investment by reinvesting the earnings) is a powerful force but it takes time to deliver. The right time to invest is when you and your financial adviser have formulated a clear financial plan that requires growth.

‘Activity Bias’: The Urge to ‘Just Do Something’

Some people suffer from what behaviourists call ‘activity bias’: the urge to ‘just do something’ in a crisis, whether the action will be helpful or not. When investments are falling in value, it can be tempting to abandon your plans and sell them – but this can be damaging because you won’t be able to benefit from any recovery in prices. Markets go through cycles, and it’s important to accept that there will be good and bad years. Short-term dips in the market tend to be smoothed out over the long term, increasing the potential for healthy returns.

No Substitute For A Plan That is Tailored Specifically For You

Every single investor’s needs are different and, while the points above are good general tips, there’s no substitute for a plan that’s tailored specifically for you. What’s more, in volatile times, advice can help you take the emotion out of investing and provide an objective view. It may just be the best investment you ever make.

Turn your Pension Savings into an Income for Life

There are many things to consider as you approach retirement. It’s good to start by reviewing your finances to ensure your future income will allow you to enjoy the lifestyle you want. The earlier you start thinking about what you’ll need for a comfortable retirement and where your money is going to come from, the more control you can have over that period of your life.

The changes in the retirement landscape mean some people are adjusting their expectations for retirement. With life expectancy still on the increase, the need to save and plan for retirement is becoming ever more critical.

The concept of ‘retirement’, as viewed through the opinions of those currently saving towards it, may have a broad range of meanings. But the reality is that traditional ‘retirement’ is changing, with few now seeing it as a singular event. The future of retirement is likely instead to see a fundamental change in people’s lifestyles, with a growing aspiration to combine work and leisure to help manage the costs of a longer life expectancy.

It’s also important to remember that any investment comes with risk. All investments can go down as well as up, and you may get back less than you invest. A pension is a long-term investment not normally accessible until age 55 (57 from April 2028). Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future. You should seek advice to understand your options at retirement.

What can you do with your pension?
Deciding how you want to start taking money. Due to the changes introduced by the government in April 2015, when you reach the age of 55 (subject to change) you now have more flexibility than ever when it comes to taking money from your pension pot.

But before you do anything with your hard-earned cash, it’s important to take the time to understand your options, as the decisions you make will affect your income in retirement. Before you take money from your pension plan, it’s important to ask yourself if you really need it right away. When and how you take your money can make a big difference to how much tax you might pay and how long your money will last. Most pensions will set an age from which you can start taking money from your pension. They will also have rules for when you can take your pension earlier than normal, for example, if you become seriously ill or unable to work.

When the time comes to start taking money from your pension, you’ll need to decide how you want to do this. If you’ve got a personal pension or a defined contribution pension, you can take up to 25% of its value as a tax-free lump sum. The remainder of your pension fund will be taxable and may either be taken as cash, used to buy an annuity (a guaranteed income for a specific period or for the rest of your life), or you may leave the money invested and take withdrawals on a regular basis or as and when you need.

With a defined benefits pension, you may be able to take some of its value as a tax-free lump sum, but this will depend on the rules of your scheme. The rest of the money will be paid to you as a guaranteed income for the rest of your life.

Different levels of risk and security and potentially different tax implications
The different ways of taking your money have different levels of risk and security, and potentially different tax implications too. As with all retirement decisions, it’s important to take professional financial advice on what’s best for you. Everybody’s situation is different, so how you combine the options is up to you.

Annuities – guaranteed income for life
Annuities enable you to exchange your pension pot for a guaranteed income for life. They were once the most common pension option to fund retirement. But changes to the pension freedom rules have given savers increased flexibility. The amount you will receive depends on a number of factors, for example, how long the insurance company expects you to live and other benefits the annuity provides, such as a guaranteed payment period or payments to a spouse or dependent. Annuities can also be for a specific period, not just for life. This can be useful if someone wants a guaranteed income for part of their retirement, say say before the State Pension is payable.

Flexible retirement income – pension drawdown
When it comes to assessing pension options, flexibility is the main attraction offered by income drawdown, which allow you to access your money while leaving it invested, meaning your funds can continue to grow. Pension drawdown normally allows you to draw 25% of your pension fund as a tax-free lump-sum, or series of smaller sums.

This ‘tax-free cash’ is known as the PensionCommencement Lump Sum, or PCLS.
The rest of the fund remains invested and is used to provide you with a taxable income, via withdrawals on a regular basis or as and when you need. You set the income you want, though this might be adjusted periodically depending on the performance of your investments. You need to manage your investments carefully because, unlike a lifetime annuity, your income isn’t guaranteed for life.

Uncrystallised Funds Pension Lump Sum (UFPLS)
You do not have to draw your pensions commencement lump sum at the outset. Instead you may use your pension fund to take cash as and when you need it and leave the rest untouched where it can continue to grow tax-free.For each withdrawal, the first 25% (quarter) is tax-free and the rest counts as taxable income. There might be charges each time you make a cash withdrawal and/or limits on how many withdrawals you can make each year.

Combination – mix and match
It may suit you better to use a combination of the options outlined above. You might want to use some of your savings to buy an annuity to cover the essentials (rent, mortgage or household bills), with the rest placed in an income drawdown scheme that allows you to decide how much you wish, and can afford, to withdraw and when.

Alternatively, you might want more flexibility in the early years of retirement, and more security in the later years. If that is the case, this may be a good reason to delay buying an annuity until later.

Find out more about your options for taking an income in retirement and what you need to consider. If you’re unsure about the best approach for you, please get in touch with us for further information.

Investment Diversification

Investment diversification- it’s another way of saying “Don’t put all your eggs into one basket”. If we could see into the future, there wouldn’t be any need for portfolio diversification. Hopefully one day! But for now, we have Investment diversification as a tool to lower risk, balance your investment portfolio and give some extra peace of mind.

From a practical viewpoint, diversifying your investments offers more balance to your portfolio. It’s a risk management strategy to spread your money across a range of assets that have been previously known to perform differently in the same circumstances.

The 4 main asset classes are:

Cash
- Bonds
- Shares
- Property

Each one carries its own advantages and disadvantages. Like most financial decisions there is no one way to invest, it is all dependent on your individual circumstances.

Risk Taker or Safe Player?

Where you are in your life or career will massively shape your attitude when it comes to investing. Under normal circumstances, diversifying your portfolio across different assets is an effective way to reduce risk. If you hold only one investment and it performs badly, you could lose all of your money. If you have a variety of different investments, it is very unlikely they will all perform badly at the same time and hopefully balance out one another.

What are the four main investment asset classes and the risks associated with them?

Cash

Cash, it is relatively secure but can lose value if the interest rate doesn’t keep up with inflation.

Bonds

These provide regular income. However, the main risk here is that the bond issuer cannot repay in full.

Shares

These provide regular income and an opportunity to grow over time. From a risk point of view, shares can go up and down and as a result so will your investment.

Property

This can provide stable and regular income and has the potential to grow over time. The downside is property prices can fall reducing the value of your investment and property transactions can take a long time, which means your money might be tied up longer than you want.

Talk to a financial adviser about investments, your goals and current situation to find an investment strategy that will suit you.

When investing in your future, remember It takes time to grow money. Making an investment can be daunting, especially if the market experiences volatility, which in the lifetime of investments it most certainly will. A lot of advisers will say give an investment at least ten years and during uncertainty, don’t lose sight of your financial goals. If you have concerns or worries about your investments, then don’t hesitate to get in touch.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.

PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.

Ethical Investing- Make Money and Make a Difference

If you were to invest in something, what would it be? Would it be for purely financial return or would you want to invest in something that will make the world a better place and still deliver a return? Well, let me introduce you to Ethical Investing.

Ethical investing is about investing where there are not just financial benefits, but benefits for the wider economy and the world. Also known as Sustainable and Responsible Investment (SRI), ethical investment adopts a range of investment styles to incorporate a client’s Environmental, Social and Governance concerns (ESG).

Part of ethical investing is the ESG issues. Alongside traditional investing, it takes into account the Environmental, Social and Governance factors to create a more sustainable portfolio. These aspects form the base for conscientious investors to assess a company’s overall economic and social impact and how this will affect the business model over time. There is a wealth of different techniques that investors take to assess a company’s ESG issues and balance the risk and return. Different investment houses take different approaches when it comes to ethical investing. This particular approach is used by Parmenion but I find these profiles the clearest, just keep in mind that every investment house is different and their profiles differ.

There are 4 ESG profiles that are graded for risk, capacity and loss. There are:
Ethical Profile A: Responsible Leaders
Ethical Profile B: Sustainability Leaders
Ethical Profile C: Ethical Leaders
Ethical Profile D: Traditional Ethical Leaders

When considering ethical investment one of the first 4 profiles is:

Ethical Profile A: Responsible Leaders.

Investment’s criteria based on this profile typically focus more on the positive aspects of the company rather than the exclusions.
These companies represent organisations that are good corporate citizens. These companies are selected for their good corporate governance and business responses to environmental and social issues.

It’s a positive orientated approach to investing as the focus is on the company’s behaviour and approach to the ESG concerns.

Ethical Profile B: Sustainability Leaders

The second profile are the Sustainability Leaders, the aim is to support companies with leading sustainability practices and encourage improved behaviour. This portfolio invests in businesses which take a more active approach to help address environmental and social challenges. While still a positively orientated approach, it takes into account how they are actively pursuing positive ESG outcomes rather than simply responding like Profile A. Companies that sit in this profile offer products and services that help reduce the negative impact of our lifestyles on the environment and society.

Here are a couple of companies that rank highly as Sustainable Leaders: Unilever, Patagonia, and IKEA are among the Most Recognized Sustainability Leaders.

Ref: https://globescan.com/unilever-patagonia-ikea-sustainability-leadership-2019/

The 3^rd Profile for Ethical Investing is:

Ethical Profile C: Ethical Leaders

This portfolio takes a more balanced approach to investing that provide positive and negative screening. Unlike A and B these leaders must meet specified avoidance criteria to qualify for investment. This profile balances the pros and cons of investment opportunity and select only those that meet the strict criteria. Some of the screening may include avoidance of:
Armaments
Animal Testing
Human Rights Abuse
Environmental damage

To name a few, there are many different screens depending on the investor.

The fourth and final profile in ethical investing is:

Ethical Profile D: Traditional Ethical Leaders

Similar to ethical leaders but there is a much stronger emphasis on avoidance of controversial businesses and activities. The funding provisions are subject to the strongest ethical, social and environmental avoidance criteria and it runs an incredibly strict avoidance schemes.

People who have never invested before are now considering it due to ethical investing and the potential it has on the wider environment as well as bringing in financial gains. How you decide is based on your own principles and definitions of ethics.

Investing is an area where it is so important to speak to a financial advisor to ensure you and your money are well protected. Together, we can change the world!

Ethical responsibility is something we all face now. Want to know more? Get in touch.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED. PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.

How are pensions divided during a divorce?

Going through a divorce is incredibly hard and when the subject of finances arises, it can become even more stressful.

If you’re going through a divorce, agreeing the financial arrangements can seem like a huge task. Coming to an agreement in regard to who is entitled to what is nothing short of confusing.

Pensions are usually the largest or second largest financial asset and often one member of the party will have a larger pension than the other. For example, someone who has given up work to raise a family. The decision is then, should the pension pot be divided, or should that person receive more of another asset, like the marital home.

When it comes to dividing up pension assets, there is no simple solution. The best course of action is to have your pension reviewed by an impartial financial advisor who can help you decide the best course of action.

How do pensions get valued during divorce?

Divorce is an emotional and complex time and trying to split your financial assets can be a long process. Pensions are considered in the financial settlement and the universal valuation method for pensions is the Cash Equivalent (CE). Each party will be required to obtain a CE. While these are simple to obtain and provide a snapshot of the value of a pension, they can also be inaccurate. The calculations are done by the trustees and valued in accordance with their own rules and the value of the benefits can be very different for each individual.

Dividing pensions differs depending on where you live in the UK. In England and Wales, the total value of the pension you have built up is taken into account during divorce proceedings, not just when you were married, that is everything apart from your state pension. Yet in Scotland, it only takes into account the pension you have built up during the course of the marriage.

Methods for dividing pensions during a divorce

If you’re going through a divorce, you might be wondering about the method available for splitting a pension.

Pension sharing

This is generally the most common route in divorce courts as it gives back a certain amount of control of their finances. It allows one party to secure a percentage of the other persons pension rights and this is put into their own name.

Remember, a pension remains a pension and will be invested until that person reaches retirement age.

Offsetting

This involves balancing the pension fund against other matrimonial assets, like a house. It is worth remembering though that the value of pensions could be much higher than at the time of assessment.

Earmarking

This is when the court awards a percentage of the income from the pension to the former spouse. Sounds fair, but the income stops on the death of the pension holder or in the instance of remarrying.

Deferred lump sum order

This is an agreement that both parties will receive an agreed lump sum when the pension holder retires.

Pension attachment order

When the pension holder retires, a portion of the lump sum and pension income will be paid to the other party based on the funds value at the time.

The biggest question might be, do I really need to share my pension? There isn’t a definitive answer as it is dependent on a range of other circumstantial factors. Always seek advice regarding your pension assets and the best solution for you.

For more information regarding your pension, get in touch.

PENSIONS ARE NOT NORMALLY ACCESSIBLE UNTIL AGE 55. YOUR PENSION INCOME COULD ALSO BE AFFECTED BY INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS. THE TAX IMPLICATIONS OF PENSION WITHDRAWALS WILL BE BASED ON YOUR INDIVIDUAL CIRCUMSTANCES, TAX LEGISLATION AND REGULATION, WHICH ARE SUBJECT TO CHANGE IN THE FUTURE. THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED. PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.