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Young and looking to save for your future, then this article I found whilst researching for information for my blog is for you: For further independent advice go to http://pensionsadvicewales.co.uk/site/

Financial Planning In Your Twenties

This is the first in a series of articles about financial planning throughout your life. This first article focuses on your twenties, when you’ve gained the education and/or skills you need for the career you’ve chosen, and you’re earning money and learning how to handle it.

Even if you’re not in your twenties, if you’re just getting started on a financial plan, the advice offered here is still valid for you. You won’t have quite the time advantage of those in their twenties, but it’s never too late to start.

WHY IT’S IMPORTANT TO START IN YOUR TWENTIES

There’s no time like your twenties to start putting your money to work for you so that you can achieve your financial goals throughout your life. Developing good spending and saving habits, and learning to budget and invest during your twenties, can help you prevent needless debt, put away money for the things that are important to you, and take advantage of the power of compounding to amass a fortune for your future.

In fact, compounding of earnings is so powerful that those who start saving for retirement in their twenties can amass large nest eggs with relatively little effort, as long as they invest regularly.

For an example of the power of compounding, take a 25-year-old who invests $2,000 a year for eight years and never invests an additional dollar after the age of 33. He or she will earn more by the age of 65 than a 35-year-old who invests $2000 a year for 32 years, even though the 35-year-old invests four times as much.

IDENTIFYING YOUR SHORT, MEDIUM, AND LONG-TERM GOALS

The first step in financial planning is to identify your goals. Your short-term goals (five years or less) might include a wedding, a honeymoon, furniture, a new car. Next, think about medium-term goals, such as owning your own home and financing your kids’ college educations. Finally, list your long-term goals, such as retirement and travel.

Estimate how much money you’ll need to meet each of your goals, and use an online calculator to determine how much you need to save each month to reach that goal within your timeframe.

BUDGETING TO MEET YOUR GOALS

When budgeting, set aside money to go towards your short-term, medium-term, and long-term goals. Try not to sacrifice one for the other. For more information on budgeting, see “Budgeting 101

INVESTING TO MEET YOUR GOALS

It may be wise to invest in Certificates of Deposit or Money Market Funds for your short-term goals, and the stock market for your medium and long-term goals. Historically, the stock market has out-performed any other type of investment over time, but it’s not for the faint of heart. Its volatility makes it a less than ideal investment for short-term funds, unless you have a very high risk tolerance.

Find out if your employer has a 401(k) plan or other tax-deferred retirement plan, and if so, take advantage of it. Your contributions will be made with pre-tax dollars and taxes on earnings will be deferred until you withdraw them during retirement. Even better, many employers will match all or part of your contribution, which results in huge gains for you.

Pensions Advice Wales

There are three types of pension, listed below: For further independent advice go to http://pensionsadvicewales.co.uk/site/

Employment-based pensions (retirement plans)

A retirement plan is an arrangement to provide people with an income during retirement when they are no longer earning a steady income from employment. Often retirement plans require both the employer and employee to contribute money to a fund during their employment in order to receive defined benefits upon retirement. Funding can be provided in other ways, such as from ent agencies, or self-funded schemes. Pension plans are therefore a form of “deferred compensation”.

Social / state pensions

Many countries have created funds for their citizens and residents to provide income when they retire (or in some cases become disabled). Typically this requires payments throughout the citizen’s working life in order to qualify for benefits later on. A basic state pension is a “contribution based” benefit, and depends on an individual’s National Insurance (NI) contribution history.

For examples, see National Insurance in the UK

Disability pensions

Some pension plans will provide for members in the event they suffer a disability. This may take the form of early entry into a retirement plan for a disabled member below the normal retirement age.

Pensions Advice Wales

Fiftysomethings cash in on rules and dip into their pension pots

For further independent advice go to http://pensionsadvicewales.co.uk/site/

Increasing numbers of over-fifties short of cash from the recession or people made unemployed are withdrawing some of the tax-free cash lump sum from their personal pensions.

Not a lot of people are aware that the tax free cash can be taken not just from personal pension after age 50 but also from most employers schemes.

Most People aren’t aware that most final salary or even Civil Service, Public Sector, or Private Sector pensions can also be accessed before scheme normal retirement ages and from age 50 currently.
But time is running out for those aged 50 – from April 2010 the minimum age you can get access to your lump sums is increasing to 55.

Most people taking advantage of the rule change are relatively well-off, but are feeling the pinch in the current economic climate: the self-employed or estate agents or those who have lost their jobs, for instance, who earned well enough to build up a decent pension over the last decade but whose income has taken a dip lately.
Scottish Life, L V and the Prudential are among the insurers that have launched pension plans that make it easy and fairly inexpensive for investors to take out cash sums.
An Income Release plan, allows people to take a tax-free lump sum without the need to take income and then continue to save for retirement, giving them the opportunity to ‘accumulate as well as decumulate’. ‘Among people doing this in their mid-fifties, the majority take the lump sum and no income,’ says Keith MacPherson, Scottish Life’s head of individual business.
Before this kind of product came on the market, plan-holders were often hit with hefty charges and a lot of paperwork if they wanted to take the cash. The option to withdraw a lump sum without taking income was made possible on 6 April 2006 – ‘A-Day’ – when the UK’s restrictive pensions regime was suddenly made more liberal.
A number of insurers still have to launch pension plans that take account of this new freedom, but when they do they will be similar to those by Scottish Life, L V and the Pru.
The rules allow fundholders to take a tax-free cash lump sum worth up to 25 per cent of their total plan value once they have reached the age of 50 (or 55 when the rules change again in April 2010). In the past, most people waited until 60 or 65 and took the cash at the same time as they bought an annuity and started receiving pension income from it. Now, however, experts expect many more people to take advantage of the A-Day changes.
‘You can do this and still have growth prospects’. ‘By taking the cash, you have not ripped down the rest of your fund.’
Of course there are dangers associated with taking the tax-free cash early – in particular that the cash is not there for you to call on in future. No doubt, there will be people who take it, spend it and come to regret it 10 years later.
Therefore this is where appropriate advice becomes important an Independent Financial Adviser can review the appropriateness of withdrawing the cash and recommend the best contract on the market for an individuals circumstances. It is not without risk however and taking a lump sum from a pension will reduce overall pension benefits at retirement, a good financial adviser will discuss the merits and disadvantages of doing so.
To review circumstances initially and the potential of accessing money can cost no or little money – an adviser will point out how they get paid, or the fees can be agreed upfront before any work and recommendations are carried out, so essentially you can find out if it is possible to withdraw money from your pension before parting with any cash –alternatively the lump sum received can help pay for advice fees or fees can be taken from the pension pot, which is traditionally known as commission.

Pensions Advice Wales

Investments

ISAs

Navigating through challenging conditions

Your annual ISA allowance

For further independent advice go to http://pensionsadvicewales.co.uk/site/

It has been a hard few years for all investors but those who can see through the short term history shows that these investors who remain invested when markets are low will go onto achieve longer term success.

Although we cannot guarantee the tax benefits will not change, your annual ISA allowance remains a valuable, tax efficient part of your long term plan. But if you don’t use it, you lose it. You can currently invest up to a maximum of £7,200 in this tax year’s ISA, although if you are aged 50 or over, this increases to £10,200 from 6th October 2009. With effect from April 2010 the ISA annual allowance increases to £10,200 for everyone, although cash ISAs will be restricted to £5,100, half the allowance.
Please contact us to find out more about the investment opportunities open to you

Pensions Advice – Unlock a pension

For further independent advice go to http://pensionsadvicewales.co.uk/site/

For those of you who want to cash in your pension (or unlock your pension, as it is more commonly known), is a misleading phrase, as most of the time all it means is taking your pension early, taking a lump sum, and maybe instead of or as well as, taking an income.

For some, the above is not possible. However, provided you are over 50 there is usually a way we can help unlock your pension. How this happens will greatly depend on the type of pensions you have.

For many people, cashing in their pension is to help with paying off debts, paying for home improvements, using as a deposit to buy another property, support and increase their business, provide short term cash or a myriad of other reasons.

For others, all they want is their tax free lump sum. For some this is possible, but again depends on the type of pension you have. However, there are downsides to unlocking pensions:

The Dangers of Unlocking your Pension

There may be penalties for unlocking your pension early

Reduction in benefits if you cash in your pension early

A reduction in the amount you would get as opposed to leaving it till a later date.

Any imcome taken after you unlock your pension could possibly be taxed.

Unlocking your pension early will reduce the benefits you could take in the future.

If this article is of interest to you and you want to find out more, then click here

Pensions Advice – Invest for Income

For further independent advice go to http://pensionsadvicewales.co.uk/site/

Since the beginning of 2008 we have all witnessed the volatility of global markets, while seeing some improvements from the lows of the start of this year.

Interest rates unfortunately for people needing an income have fallen to their lowest ever levels leaving investors looking for income needing an alternative home for their capital.

We consider the following opportunities for income or capital growth for those willing to look at alternatives to bank or building society accounts:
• Fixed Interest – corporate bonds and gilts offer significant potential for increased income in times of low interest rates.
• Equities – whilst in the short-term equities can be volatile, history shows us that they have outperformed all other asset classes over the
longer-term. With share prices currently at low levels, equities offer the potential for capital growth and rising income over time.
• Commercial Property – the commercial property market offers a real opportunity to achieve capital growth over the longer-term.

This is another interesting article I had emailed to me.

Pensions Advice – Darling’s budget – older savers

For further independent advice go to http://pensionsadvicewales.co.uk/site/

The reality of Darling’s budget for older savers By Staff Writer Ruth Jackson Apr 28, 2009

Pensioners got a lot of attention in this year’s Budget. On the surface, it appears members of the older generation will get: paid by the state to look after their own grandchildren; a pension rise to counteract falling interest rates; and early access to higher limits on tax-free savings account.

It all sounds like great news, doesn’t it? Unfortunately, a closer glance reveals that, while older people might end up a little better off for the Budget, they’re hardly raking it in.

Paid to babysit?
Rumours about this Budget windfall started to circulate some days before Alistair Darling took his little red box to the House of Commons. Apparently, in return for looking after your own grandkids, the government was going to give you money.

Fantastic. Grandparents have been looked upon as a free childcare service for years, and finally their efforts were going to be rewarded. But unfortunately for granny, the reality is somewhat less exciting.

The reality is that from April 2011, grandparents who are of working age (under 65) who give up work to look after any young grandchildren (under 12) for more than 20 hours a week will receive National Insurance (NI) credits to help increase their state pension.

NI credits are given out to replace the NI contributions that the grandparents would have been making if they had been working. Over a working lifetime, NI contributions build up and decide the level of state pension you will receive.

The change is a good thing and has been welcomed by campaign groups. “We warmly welcome the introduction of the grandparent National Insurance credit,” says Sam Smethers, chief executive of Grandparents Plus in The Times. “We know that working age grandmothers on low incomes are the ones who are most likely to be providing that childcare. Until now they have done so with the risk that they could miss out on a full basic state pension.”

However, anyone who is actually working would still be better off simply using part of their wages to help their kids pay for childcare if necessary, rather than giving up their pay packet to help out. And as for those grandparents who are already above retirement age, I’m afraid this change doesn’t help you at all.

A state pension boost to make up for falling interest rates
The Budget also announced a boost to state pensions through an increase to the Pension Credit savings limit. The pension credit is a benefit that tops up a pensioner’s weekly income to try to ensure that no pensioner is living on less than £130 a week (or £198.45 for couples).

A pensioner’s means-testable weekly income includes interest from any savings they have, excluding the first £6,000 of savings. You are assumed to get £1 a week extra for every £500 of capital you have saved. The more income you have the less credit you will receive.

Because the collapse in interest rates has hit pensioners particularly hard, Darling has increased the savings limit from £6,000 to £10,000. This means that any interest you earn on up to £10,000 of savings won’t be included in your assessment for pension credits. This will put an average of £4 extra a week into 540,000 pensioners’ pockets, said Darling.

But what he has failed to do is address the ridiculous “assumed income” calculation. As noted above, this suggests that pensioners are getting £1 a week for every £500 in savings they have. But that’s an annual interest rate of roughly 10% – savings accounts earning even half that are impossible to come by these days.

Perhaps more to the point, many pensioners still don’t claim the Pension Credit because they are either unaware of it, or they simply find the idea of being means-tested humiliating and intrusive. Help the Aged and Age Concern (which merge this month) reckon that up to £2.8bn a year in Pension Credit goes unclaimed. This change won’t help them. Overall it would be better to scrap the credit altogether and simply raise the basic state pension to the level seen as the minimum necessary.

Darling gives the over-50s a whole £9 savings bonus
Last Wednesday, Darling also announced in his budget that he was upping the Individual Savings Account (Isa) limits, to £10,200 with £5,100 allowed to go into a cash Isa.

While the majority of the population won’t get to enjoy this boost to their tax-free savings until next April, the increase is valid from 6 October this year for the over-50s.

The increase is good news for savers, but it’s a shame that Mr Darling didn’t bring the change in immediately. The six-month head start for the over-50s is pretty pointless. On a cash Isa rate of 3%, an extra £1,500 saving will gain just £22.50 over the rest of the tax year, points out Carolyn Steppler of KPMG. That’s a tax saving of a whole £9 for a 40% taxpayer.

And even that rate may well be unattainable. Current rules mean savers can only open one cash Isa per tax year. So come October, savers will only be able to top up their existing Isa. Banks and building societies are not obliged to match their current Isa savings rates so many may pay “two-tier’ rates, with the top-up amount getting a smaller interest rate. “Providers will see this as captive business and some will take advantage of the situation,” says Kevin Mountford of Moneysupermarket.com in the Financial Times.

But the details of the Isa top-ups have yet to be sorted out, so here’s hoping the government will allow the extra allowance to be put in seperate Isas so the providers have to offer competitive rates.

Overall, with inflation still higher for retired people than the young, and interest on savings accounts entirely negligible, these measures aren’t going to go far to compensate pensioners for income lost elsewhere. The main reason they’re there, a cynic might suggest, is to stave off criticisms that, by slashing interest rates and printing money, the Government is bailing out the indebted at the expense of older savers.

Pensions Advice – About us

We understand that no one investment company has a monopoly of investment expertise and therefore adopt an effective solution to this problem.

In conjunction with some investment partners we undertake rigorous research in all areas of investments to ensure the chosen product is the most suitable for you:
Our role is to:
• Select a range of the best investment managers and investment funds
• Monitor the manager / fund to ensure they remain focused
• Change manager / fund if this becomes necessary
• Give clients diversification of risk by selecting managers and funds with different investment styles

To read more of this article, go to our website, www.pensionsadvicewales.co.uk/site

Pensions Advice Your Financial Plan

Another great article, which will help you start your start your financial plan

Starting a financial plan is a big step and it is great that you are doing so. There are many things you will need to do and all will help you out in the end. Make sure you don’t skip anything!

First of all, you need to make sure you have financial goals all ready first. If you don’t have any goals, you have nothing to plan for. The more goals you have, from huge long-term goals to tiny short-term goals, the more accurate and beneficial your plan will be.

You then need to figure out how much money you will need to save each month in order to reach each goal by a specific date. If you can, try to factor in inflation, rate of return on investments, and savings account interest rates where you can. This will allow you to get the most accurate number possible.

Then, you need to figure out if these goals are possible. Can you save this much each month based on your current spending habits? If not, you will need to set up a budget in order to decrease your spending. You should set up a budget even if you can save enough because this will allow you to be sure you’ll meet your monthly goal.

If you still can’t save enough, you’ll either have to find another way to make more money, or modify your goals. It may take some time to tweak, but you’ll have it set up soon enough. Once it is set, work towards your goals and refer back to them frequently to see how you’re doing.

Do you need to know more about financial planning? Learn all you need about planning and financial goals.

Article Source: http://EzineArticles.com/?expert=David_C._Paterson

Pensions Advice Over 65 Some Options

This is another interesting article, discussing a few money making options after retirement and pension age.

The current global financial crises has been particularly tough on those who are already retired and living on their hard-earned savings and investments. In some western countries investments in shares have lost 20% or more of their value in the last few years – and returns look set to stay low for a while to come.

If you are living on an income stream based on financial investments you will have seen a big drop in your income. The question is what can someone who doesn’t want to go back to work do about it?

In essence you have two options: live on less or sell some assets to improve your cash flow.

Some retirees may be tempted to sell the house – but that has issues as well in many parts of the world, particularly America and the UK, where property markets are still very depressed. Though it is worth bearing in mind if you have owned the property for a significant period of time and don’t have a mortgage against it, and you buy soon after selling – you will have also bought at a depressed price. The price difference is what you need to focus on rather than the actual sale price of your existing property.

Others will not want to take the drastic step of selling a much-loved home. Instead they will look to selling other items and financial investments they may have. Selling second and third cars, boats and art works can be highly profitable. In fact there is currently a mini-boom in selling gold and gold jewelery as gold is hitting high prices as once again investors see it as a safe-haven against troubled currency and stock markets.

Another item worth considering selling are insurance policies. These are often taken out and forgotten about -the original idea being that the payout will help pay funeral expenses and leave something for your heirs. The reality is that you may need that money yourself, and the good news is that there is a strong secondary marketing in buying and selling life insurance policies – particularly for those who are older and in deteriorating health.

Another option is to check if you have any of those now out of favour, endowment policies. Again, like life insurance policies, endowments were designed to provide a future lump sum – but you may be able to get a sizable amount for them now rather than waiting for their due date.

Although its no fun having a financial crises interfere with your well-earned retirement there is no reason to panic. Check out what options you have for selling endowment policy or for selling your life insurance policy.

Article Source: http://EzineArticles.com/?expert=Robert_H._Jones