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The Current Cost Of Living Crisis

UK Inflation has hit a 30 year high of 6.2% in February 2022, the highest since 1992 when inflation reached 7.1%. Although Rishi Sunak’s OBR predicted inflation to average 7.4% this year, analysts speculate inflation could rise to 8.1% during 2022, meaning companies will likely reflect the increased costs of materials on consumers via more price hikes.

Pleasingly, unemployment has fallen to 3.9%, but real regular pay fell by 1% – the biggest fall for eight years. Given this, it is a vital time to think about inflation proofing personal finances and budgeting on a tighter annual income.

Energy Bills

The chancellor announced that there will be 0% VAT for energy efficient improvements which means that you could see a price drop of £1,000 for a solar panel installation. Although this may be a nice discount Mr Sunak did not mention anything about the most prominent illustration of the ‘cost of living crisis’ we’re up against, the rising energy bills.

Energy costs are expected to rise at least 14 times faster than wages in 2022. Trades Union Congress (TUC) expects gas and electricity to go up an average of 54%, with an expectation that the energy price cap will be £1,500 by October 2022. TUC have called on government officials to reduce household costs by introducing windfall tax on energy firms, offering rapid home insulation programmes and giving a boost to universal credit. With such movements likely to be slowly explored, it is important to consider how personal finances can be managed to assist the increased costs of living for all households, but especially lower income households.

Households can save on energy costs by considering some of the following:

• Have structured products linked to different indexes. For example, the FTSE 100, Euro Stoxx or the S&P 500.
• Use different counter parties. By doing this, if the counter-party does default, then you don’t lose the money held in all your plans. While it is important for a counter-party to have a good credit rating, this is not regularly updated. Therefore we also look at credit default swap pricing which gives a real time indication of the reliability of the counter-party.
• Vary the type of plan. This can be done through choosing between deposit, income or kick out plans. It can also be done through choosing between types of kick out plans.

Whilst the market for shopping around between energy providers has diminished greatly, it is always worthwhile using comparison sites to compare your existing deals and ensure you are using smart meters correctly.

Tax Planning

For those who work from home, it is important to remember the working from home tax credits that can be claimed via self-assessment to help cover the costs of home office use. Whilst this £312 tax relief won’t combat the increased costs of using electricity at home, it will take some of the edge off!

However, if you claimed the working from home tax relief in 2020/21 or 2021/22 and have since returned to the office, it is important to check your tax code to ensure this has been removed. This will avoid the risk of receiving a liability at the end of the tax year. As a reminder, a ‘standard’ tax code for a full personal allowance should be 1257L for 2021/22 and 2022/23.

Asides from checking your tax code, you may also have employer benefits worth exploring to reduce your monthly costs. For example:

• Ensure pension contributions are set up as salary sacrifice. This will save you the 12% national insurance tax or £12 for every £100 you save, unavoidable via net pay or personal contributions.
• Think about your benefits in kind. If you no longer use the C02 heavy company car on the driveway, can a more environmental and cost effective vehicle be used to reduce your earnings and thus tax due?
• Maximise company benefits – consider the use of corporate gym packages, cycle to work schemes and life assurance in place of this being a personal cost.

Fixing your Mortgage

Usually the biggest household cost is rent or mortgage repayments. With interest rates on the rise, this is a good time to review variable rate mortgages, especially those with no early repayment charges. At present mortgage rates of 1.5% are still available for borrowers with a sub 50% loan to value. We’d suggest looking into your existing mortgage six months before the end of your term, as we do not expect these low borrowing rates to continue into 2023.

Savings

The Bank of England has recently announced their third rate rise since December 2021, with current rates at 0.75%. This is to try and combat soaring inflation, which the MPC target to be 2%. The recent rate rise of 0.25% will not drastically improve family finances, but it is set to try and dampen demand whilst not draining the UK economy.

High-street banks are reportedly offering interest rates sub the Bank of England base rate, despite illustrating record years for mortgage interest received. Therefore, this is an important time for savers to increase family finances by shopping around for different savings rates.

For those looking to start saving, Cambridge Building Society are offering 5% on its extra reward savers account, with deposits of £250 a month for 12 months. During this period savers will gain an additional £81.58 in interest.

For those with larger sums to save, Aldermore are offering 0.6% on easy access, with Paragon offering 0.8% with £10,000 savings or more. If a notice account suits you, Investec offer a 32 day notice account with 1.1% annual interest.

In recent research from Paragon, over 75% of personal savings earn a rate of 0.1% or less, which given the UK savings reached £1.7 trillion according to the Bank of England, shows there is a significant amount more interest savers could be achieving.

Importantly we’d always encourage savings to ensure they have full FSCS protection with their bank or building society before depositing funds. Current FSCS limits are £85,000 per person per deposit taker.

Please contact us if you need any advice on tax planning, savings rates or mortgage offers given the cost of living crisis identified.

Written by: Catriona McCarron

31 March 2022

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Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference 551744. Our registered office: Scotch Corner, London Road, Sunningdale, Ascot, Berkshire, SL5 0ER. Registered in England No. 7428363. www.old.ascotwm.com Unless otherwise stated, the information in this document was valid on 3rd February 2017. Not all the services and investments described are regulated by the Financial Conduct Authority (FCA). Tax, trust and company administration services are not authorised and regulated by the Financial Conduct Authority. The services described may not be suitable for all and you should seek appropriate advice. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Ascot Wealth Management Limited. The information and opinions expressed herein are considered valid at publication, but are subject to change without notice and their accuracy and completeness cannot be guaranteed. No part of this document may be reproduced in any manner without prior permission. © 2017 Ascot Wealth Management Ltd. Please note: This website uses cookies. To continue to use this website, you are giving consent to cookies being used. 

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In Light Of Women’s Day

“In the future, there will be no female leaders. There will just be leaders.”

International Women’s day was first celebrated in 1910 during an International Socialist Women’s conference in Denmark. The main purpose of this day is for women to bring awareness to the gender inequalities that still exist across the world, but to also celebrate how far they have come.

So, what does international women’s day mean today? The theme for international women’s day in 2022 is “Gender equality today for a sustainable tomorrow”, meaning that we need to give women the opportunity to be included and lead the conversations around global and national laws and policies. It follows the idea that the sooner everyone from diverse backgrounds and experiences are able to get involved, the sooner we will be able to reach a solution.

Decline of the Dave’s

Believe it or not, for the past two years there have been more fund managers called Dave than the total amount of women in the role. However, this year there has been a major breakthrough, with female fund managers totalling 11%, compared to 3% of Dave’s. One of the reasons for this advance is thought to be the ability to work from home. Women are no longer being forced to choose between progressing in their career and being available to help with their families.

Invest Like a Woman

In the past 5 years, there have been an increasing number of women seeking financial advice. Although previously women were seen to take on less risk with their investments (potentially due to the fact they were more likely to be steered towards more conservative, low risk/low growth options) they are now changing this narrative and taking their finances into their own hands. They want to be less dependent on their husbands/partners in terms of money for their future, and want to build and maintain financial security of their own. This will have huge benefits for women as they are already at a disadvantage; women live longer than men but statistically earn less, meaning they need to find ways to make their money last longer.

Closing the Gap

There is lots of research pointing towards the benefits of businesses actively pursuing a commitment to gender diversity, as companies with greater gender diversity perform better. Mckinsey’s research has shown that companies in the top quartile for gender diversity on executive teams were 21% more likely to outperform less diverse teams on profitability. Financial services need diversity to generate fresh ideas and perspectives, and to lead in establishing new trends. To achieve gender equality in finance, the financial services industry must do more to help women join companies, stay in their jobs and have the opportunity to be promoted to leadership roles.

Written by: Jemma Long

08 March 2022

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Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference 551744. Our registered office: Scotch Corner, London Road, Sunningdale, Ascot, Berkshire, SL5 0ER. Registered in England No. 7428363. www.old.ascotwm.com Unless otherwise stated, the information in this document was valid on 3rd February 2017. Not all the services and investments described are regulated by the Financial Conduct Authority (FCA). Tax, trust and company administration services are not authorised and regulated by the Financial Conduct Authority. The services described may not be suitable for all and you should seek appropriate advice. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Ascot Wealth Management Limited. The information and opinions expressed herein are considered valid at publication, but are subject to change without notice and their accuracy and completeness cannot be guaranteed. No part of this document may be reproduced in any manner without prior permission. © 2017 Ascot Wealth Management Ltd. Please note: This website uses cookies. To continue to use this website, you are giving consent to cookies being used. 

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Predictable income in an uncertain world

Savers and Investors are currently facing double headwinds. With inflation running at a 30 year high, deposit accounts are a complete non-starter if looking for real returns after inflation. However, current market volatility may make some investors nervous about investing in the financial markets at the current time. So, is there a way to generate real returns in the current climate with relative security? The simple answer, is yes. Asset backed lending.

What is Asset Backed Lending?

The concept of asset backed lending is simple. Traditional lending involves you depositing capital at a bank, the bank  finding opportunities that earn THEM money and then lending it out to them. Ascot Wealth Management are able to advise on opportunities where you lend directly to the lender, cutting out the bank and generating you far greater potential returns than is possible from bank bonds. What makes these particularly great for a large variety of clients, is the degree of asset backing. We have loans that clients currently hold that earn 9.52% per annum and the amount lent is equal to 50% of the security backing the loan (Loan to Value, LTV). In basic terms, this would mean that the value of the underlying security (often property) to halve before capital is at risk.

Who Will Benefit?

Lending principally appeals to 3 main client types; those in or near retirement, Higher Net Worth (HNW) clients & clients with Inheritance Tax (IHT) considerations. Retirement age clients particularly value the contracted interest payments while retaining the capital value of their portfolios, unlike annuities & defined benefit pensions. HNW clients benefit from the diversification of their portfolio beyond traditional, more volatile asset classes. Finally, those concerned about taxation at later life may be able to benefit from removal of IHT concerns through possible lending through a Business Relief (BR) qualifying entity.

What Are My Options?

At Ascot Wealth Management, we advise asset backed lending via 3 methods.

1 – We work via our sourcing partners to discover lending opportunities, backed by either property and/or a charge on business assets, which pass our lending criteria.

The opportunities then pass through our due diligence process, which typically involves analysis of the valuation report(s), report on title, analysis of borrower accounts, site visits and comparison with similar assets in order to check the validity of provided analysis.

If we are then happy to recommend the opportunity, we recommend each one individually to you, whereby we outline:

• The total loan amount
• Interest Rate offered
• Loan Term
• Value of the asset backing
• Reason for lending
• Exit Plan

2 – If the first option feels too administration intense, Ascot Wealth Management are able to offer a discretionary management service whereby we allocate your capital in to loans that have passed our due diligence processes.

The loans that we allocate your capital in to are the same as those advised in option one, we just remove the need to respond quickly to first-come-first-served opportunities so that we ensure that you are allocated to these opportunities.

3 – We manage a client-owned limited company that is dedicated to lending to asset backed opportunities and Small & Medium Businesses. This company is able the operate across many more sources simultaneously; this reduces the time spent in between lending opportunities whereby returned capital is spent idle. Furthermore, all of the administration is handled by the company management, thereby minimising your administrative burden. Through the dedicated management of this approach, last year the portfolio generated a return of over 7%.

Summary

In summary, no matter what your situation, Ascot Wealth Management could have a solution for your needs that can involve asset backed lending and help you reduce or eliminate the headwinds of inflation and market volatility.

Contact us today to see how we can help your needs.

Written by: Sam Hallet

25 February 2022

Please note that these types of products are not suitable for all clients and that this should not be taken as personal advice. All investments can go up and down in value and therefore you could get back less than you invest. Past performance is not a guide to the future.

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Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference 551744. Our registered office: Scotch Corner, London Road, Sunningdale, Ascot, Berkshire, SL5 0ER. Registered in England No. 7428363. www.old.ascotwm.com Unless otherwise stated, the information in this document was valid on 3rd February 2017. Not all the services and investments described are regulated by the Financial Conduct Authority (FCA). Tax, trust and company administration services are not authorised and regulated by the Financial Conduct Authority. The services described may not be suitable for all and you should seek appropriate advice. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Ascot Wealth Management Limited. The information and opinions expressed herein are considered valid at publication, but are subject to change without notice and their accuracy and completeness cannot be guaranteed. No part of this document may be reproduced in any manner without prior permission. © 2017 Ascot Wealth Management Ltd. Please note: This website uses cookies. To continue to use this website, you are giving consent to cookies being used. 

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Positive returns in negative markets, is it possible?

The current market climate is volatile. Equity market returns over the past year are close to zero, with any gains in 2021 lost over December and January. So, how are we able to generate returns of over 7% for our clients when faced with high market volatility?

Structured Products

AWM are well versed in the research and advice of Structured Products. At the most basic level, these contracts derive their returns from prescribed conditions on an underlying asset or index  (such as the FTSE 100). At present, plans are available with up to 13.25% return per annum and products that generate a return even if the underlying falls by up to 40%. This can all be attained while having complete capital protection (up to £85,000 per counterparty) if investing in a deposit plan.

Who Will Benefit?

2 popular types of clients who would benefit from Structured Products are those in retirement (or nearing retirement) and high-net worth clients. A large reason for this is the degree of market protection offered in the plans. There are currently plans on offer that require the market to fall by more than 40% at the end of the contract before your capital is at risk due to market movements. As a result, clients can be more certain about the value of their portfolio in this volatile environment.

What Are The Different options?

Structured products either pay out their returns based on the value of the contract at certain dates (capital growth) or as income throughout the plan. Income plans are particularly popular with retirees. Unlike annuities, income plans allow retirees the possibility to receive an income while retaining the benefit of maintaining the capital value of their accumulated pension. While capital growth plans tend to have higher return potential and are therefore popular with clients who have utilised all of their annual allowances due to the differences in taxation.

Plans can either pay out returns at the end of the contract or mature early (Kick-Out). Kick out plans tend to be the most popular type of plan as they are the most likely product to generate a return. This is because they have opportunities during the plan length to mature early with positive returns, rather than risk market conditions at a later point. The increased likelihood of positive growth makes these particularly popular with clients.

Is Now A Good Time For Structured Products?

So, why is now a particularly good time to invest in structured products? Volatility feeds in to how Structured Product is “priced” by the counter parties. When volatility increases, so does the potential returns written in to the contracts. Furthermore, as central bank interest rates are increasing, this tends to feed in to the interest charged between banks (and therefore the capital at risk structured products). As both of these factors are high or increasing in the immediate future, Structured Products are proving to be a popular method of defined returns with a degree of capital protection.

How Can We Help?

Portfolio diversification and a degree of certainty can help investors gain positive returns in flat or negative markets. There are certain ways in which investors should aim to diversify their structured product portfolio. This is done by looking at features of the plans:

• Have structured products linked to different indexes. For example, the FTSE 100, Euro Stoxx or the S&P 500.
• Use different counter parties. By doing this, if the counter-party does default, then you don’t lose the money held in all your plans. While it is important for a counter-party to have a good credit rating, this is not regularly updated. Therefore we also look at credit default swap pricing which gives a real time indication of the reliability of the counter-party.
• Vary the type of plan. This can be done through choosing between deposit, income or kick out plans. It can also be done through choosing between types of kick out plans.

At Ascot Wealth Management we can look at your risk appetite and financial aims to choose the Structured Products best suited to you. We will  do the research to find the best return rates in the market for the products we would recommend and help you fully understand your investments.

Written by: Alice Frost

14 February 2022

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Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference 551744. Our registered office: Scotch Corner, London Road, Sunningdale, Ascot, Berkshire, SL5 0ER. Registered in England No. 7428363. www.old.ascotwm.com Unless otherwise stated, the information in this document was valid on 3rd February 2017. Not all the services and investments described are regulated by the Financial Conduct Authority (FCA). Tax, trust and company administration services are not authorised and regulated by the Financial Conduct Authority. The services described may not be suitable for all and you should seek appropriate advice. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Ascot Wealth Management Limited. The information and opinions expressed herein are considered valid at publication, but are subject to change without notice and their accuracy and completeness cannot be guaranteed. No part of this document may be reproduced in any manner without prior permission. © 2017 Ascot Wealth Management Ltd. Please note: This website uses cookies. To continue to use this website, you are giving consent to cookies being used.