Transact Cash Balances - Explanation!

A number of clients have asked us recently about Cash balances within their Transact accounts, so here is a quick explantaion.

Firstly, there will be times when a client prefers to hold a cash position with all or some of their investments. This may be due to the planning of taking an income or, as is the case at the moment, wish to remain safe with their investments for a time. Secondly, it is to ensure that there are funds to pay the charges.

When our portfolios are set up they always include a minimum of 2% as a cash balance. This is to ensure that there is cash available to pay to fees associated with the plan and service.

As charges are taken from the cash balance the level of ‘cash’ within the portfolio drops. This can then be pushed back up to the required level, through either receipt of income payments from investments and or, a regular automatic rebalance.

Any clients who would like some further information please contact us. Anyone interested in Transact please call us on 081 271 1280 or e-mail info@reevesifa.com

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What would happen if Greece defaulted?

With the Greek debt issue all over the media we thought we would share this article from the BBC website which gives a short outline.

Europe's banks are big holders of Greek debt, with perhaps $50bn-$60bn outstanding. An "orderly" default could mean a substantial part of this debt being rescheduled so that repayments are pushed back decades. A "disorderly" default could mean much of this debt not being repaid - ever.

Either way, it would be extremely painful for banks and bondholders.

What's more, Greek banks are exposed to the sovereign debts of their country. They would need new capital, and it is likely some would need nationalising. A crisis of confidence could spark a run on the banks as people withdrew their money, making the problem worse.

A Greek exit from the euro is seen by some as inevitable if the country defaulted. The big question would then be, what about other heavily-indebted nations in the eurozone?

 

It might be a repeat of the collapse of Lehman Brothers, which sparked the credit crunch that pushed Europe and the US into recession.

What does all this mean to the UK?

According to figures from the Bank for International Settlements, UK banks hold a relatively small $3.4bn worth of Greek sovereign debt, compared with banks in Germany, which hold $22.6bn, and France, which hold $15bn.

When you add in other forms of Greek debt, such as lending to private banks, those figures rise to $14.6bn for the UK, $34bn for Germany and $56.7bn for France.

However, any knock-on from Greece's troubles would exacerbate the UK's exposure to Irish debt, which is larger.

The UK's direct contribution to any Greek bailout is limited to its participation as an IMF member. But the indirect effect of a Greek default on the UK would be incalculable.

Source of article: BBC iPad application 04/11/11

Contact the office for a FREE no obligation appointment to discuss any of the above issues raised or who these may affect your investments on 0871 271 1280 or e-mail info@reevesifa.com NOW!



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Case Study - Wealth Matters: Joint holdings will help your husband

I saw this question asked in the Sunday Times & I thought I would Blog about it & give you my thoughts on the response.

I have shares, bonds, Isas and cancer. Is there anything I can do now to make my husband’s life a little bit easier when I die? I am 61, he is 69 and we are both retired.
I have £1,000 in shares, £41,000 in a bond due to mature in November and Isas worth £8,000. I have a full state pension plus a £960-a-year private pension.
My husband has a £50,000 two-year bond and Isas worth £24,000. He has a full state pension plus a £30,000-a-year private pension.
We have £16,000 in two current bank accounts in both our names.


If you are not concerned about maximising your legacy to your wider family, the simplest plan is not to have much money in your sole name.

Ensure your will is up to date and put all your holdings into one savings account in joint names with your husband. Jointly held accounts and investments revert to the survivor as you would legally be joint tenants.
Since the survivor owns the holding in his or her own right, there should be no problem dealing with banks and the like before or after the death of one of you. Your current accounts are held like this already, but you should add your husband’s name to your sole accounts.

Jason Butler at Bloomsbury Financial Planning said: “You could cash your holdings and give all the money to your husband. As long as his total taxable income remains below £35,000 (after deducting the basic personal allowance of £7,475 as his income is already above the income threshold of £24,000 for age allowance), he will not pay higher-rate tax.”

However, in giving your husband your capital now, you may be exposing him to so-called “hostile creditors”, such as the local authority if your husband eventually needs means-tested long-term care.

And if your combined estates are worth more than £650,000, inheritance tax would be payable when he dies. But this is not a problem unless you wish to leave assets to others.

The same applies if you own your home. As joint tenants, your husband automatically inherits your share.
But if you become tenants in common you can dispose of your share as you like. You could create a trust to put your share beyond the reach of hostile creditors.

Source of this article (http://www.thesundaytimes.co.uk/sto/business/money/investments/article803727.ecee)

There are a number of things highlighted in the answer given by William Kay (Sunday Times journalist) - all of which should be taken into consideration. This is unfortunately a very common situation for lots of people these days and obviously it's a very stressful & worrying time for all concerned. The main reason for putting this Blog up was to really hit home our important it is to get plans in place.

In summary anyone that develops serious ill health should seek financial help. It could well be that there are important decisions that affect significantly the financial well being of their partner or even the family in the longer term.

Contact the office for a FREE no obligation appointment to discuss any of the above issues raised on 0871 271 1280 or e-mail info@reevesifa.com NOW!

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CASE STUDY - I WISH I HAD PRIVATE MEDICAL INSURANCE!

Our colleague Liam Naulls had his Anterior Cruciate Ligament Reconstruction operation last week so we thought we would re-post an old blog to really hit home the point.

In January this year Liam sustained a serious knee injury playing football. After a bad tackle he ruptured his cruciate ligaments in his right knee, which required a full reconstruction.

If Liam had, had Private Medical Insurance (PMI) he would have had the operation a lot earlier . He could also be now recieving regular physio if he had added a few benefits to a PMI package.

The NHS has huge pressure on it, with long waiting lists, which is why Liam had to wait 9 months for his operation. With this in mind the number of people trusting in PMI and actually taking the option of PMI is on the increase (http://www.hi-mag.com/health-insurance/product-area/pmi/article370903.ece).

"This whole scenerio has made me realise the importance of PMI, and in hindsight I wish I had had some in place as I would be on the mend now." Liam acknowledged, "At 28, I thought why would I need it? But this has highlighted to me it is very much necessary".

At present we are working in conjunction with a PMI organisation, and from as little as £4 a week you can a basic plan that would enable you to use private medical faclities! If you would like to talk about PMI contact us on 0871 271 1280 or e-mail info@reevesifa.com now to speak to one of our experienced team!

Decisions to make! – Ill health as you approach Retirement

Our experience shows that ill health is something that affects all sorts of people at all sorts of times. It is something that we can not always predict. As we grow older the greater the chance of developing serious ill health.

As people approach retirement the best of plans may be thrown off track and never to recover. Ill health forces business sale maybe house sale, which are two common areas that we would all like to avoid. All serious retirement plans must have provisions and options for ill health.

Unfortunately ill health is something that becomes more likely as we grow older. What should you do if serious health comes to you before retirement?

First of all you need to seriously assess the seriousness of the condition or illness that you have.

You need to address the needs of your family both in the long term and short term. What will their needs be, how will they cope.

Having looked at that you need to assess the options on your pensions and assess the rules and how it affects the numbers and benefits on your pensions. What are the implications of taking benefits immediately compared to waiting to take the benefits.

Again depending upon your state of health you may seriously need to consider how the benefits are for your family upon death. Both immediately and if you have started taking the benefits.

In Summary anyone approaching retirement that develops serious ill health should seek financial help. It could well be that there are important decisions that affect significantly the financial well being of the family in the longer term.

Contact the office for a FREE no obligation appointment to discuss any of the above issues raised on 0871 271 1280 or e-mail info@reevesifa.com NOW!


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Case Study – Taking Income During Poor Economic Times

This is a case study based on a true story. It demonstrates how a good, well thought out retirement plan, supported by a diversified portfolio of pensions and other investments can deliver maximum opportunity for clients in their retirement – even in times of depressed market values.

Right now the client is faced with a decision of where they get their retirement income from. Their portfolio has lost money in the last 6 months which is reflected in their pension fund.

5 years ago we produced a flexible retirement plan for ‘Dave’ on the basis that he would be stopping work between 2010 and 2013. The date was flexible due to his and his employers needs. Unfortunately, he had no secure final salary pensions and his retirement plan was based totally on how and where his investments were placed. He needed growth on his investment to achieve an adequate sustainable retirement income for him and his wife. To do this meant that his portfolio would need to be exposed to some element of risk to his capital value.

We now know his retirement day is due in February 2012. He has been through a series of reviews and amendments to his retirement plans over the years. His portfolio has been reviewed and changed as part of the Reeves Portfolio management service.

His position right now is that he has a portfolio of investments that is held within the Transact Platform / Wrap (See previous Blog for description). He also has a portfolio of ‘savings’ held outside Transact which is predominantly cash held within Cash ISA’s and other low risk products.

The Transact portfolio is valued in 6 figures and administered and managed within the tax wrappers of personal pensions, ISA’s and a life insurance Bond. Across all wrappers he holds a mixed portfolio of investments ranging from cash, government and corporate bonds, property and equities. The equity portfolio also covers a mix range of markets including European and financial stocks. These latter investments have clearly been hit hard in recent months.

The issue as stated before is how and where the client now gets his income from. He is reluctant to cash in his pension with the fund value being lower than in was 6 months ago.

The flexible retirement plan that we put into place is now coming to fruition. Despite having significant amounts of cash in equities across all tax advantaged wrappers he still has options and opportunities of where he can draw his income from.

Since the client has no mortgage and owns his home the option of using equity release has always formed part of his retirement plan. At this time and as planned, the option is not one we wished to pursue. This may be accessed later in retirement.

Clearly spending a percentage of capital is an option to fund year ones income. Spending a percentage of the deposit money that currently attracts low rates of interest and is attracting no tax advantages would be a major option. This would avoid selling equity and other investments that were currently showing losses. Maintaining the pension funds in full would have added bonus of maintaining the maximum death benefits in his estate in case of the worse thing happening and avoid buying an annuity till he knows the best option to suit his family in the long term.

Upon closer inspection of the Transact Portfolio the benefit of a mixed investment portfolio was clear. Despite the whole portfolio going down in value over the past 6 months there are asset classes and funds that have showed gains. It will be possible to sell down these units which have gained ground to provide for the clients income. These were more cautious funds that were predominantly invested in corporate bonds and some of the portfolios also had cash elements too. These funds that showed gains / avoided losses were held within the pension and the bond accounts and provided an opportunity for providing tax free income as well as selling assets that had performed better than cash and an opportunity to sell at attractive rather than depressed prices.

The bond enables a client to draw a tax free income of up to 5% of the original investment each year. Hence the sale of the positively performing asset would be paid tax free. Since, this would not take up all the annual allowance for tax free income it would mean that there is provision for taking out tax free income in future years when the markets are generally in a better state.

Up to 25% of the pension fund is available as a tax free lump sum. With the balance the client can buy an annuity or take no income through the use of drawdown. To maximise the opportunity of selling the positive assets and avoid selling assets at a bad time the option would be to utilise a percentage of the tax free cash for an amount equal to the fund size of the positive assets. For example £5000 tax free cash would be taken and paid to the client; this would represent 25% of possible tax free cash available from a fund of £80k. £15000 would be switched to drawdown with no income being taken – leaving the badly performing assets untouched till there is change with the family health situation and or the assets start to show positive returns.

Having established how the client can achieve the required income for the next year we have minimised tax and retained flexibility for the future year’s income and eventual passing down the client’s wealth to his family. We have also maintained the portfolio in a position to continue to build value since the client may well have another 20 or 30 years to go.

The above may sound complicated to those that are not involved but the summary is that a well planned, flexible retirement plan can provide tax efficient, sustainable incomes that help keep wealth within ones family – even at times in depressed markets.

Due to the way Transact and the Reeves Independent portfolio management service work together the above can be done very easily, time efficiency and minimum costs to the client.

Please remember that all client circumstances are unique and advice should always be sought. Not all relevant information is shown and names and figures have been changed for illustrative purposes.

Key issues covered:

Broad Portfolio of assets

Working to a feasible plan

Transact Platform / Wrap

Mixed portfolio of pensions, isa,s , Bonds and Deposit accounts.

Phased use of pension Funds and tax free cash

Drawdown options

Annuity Purchase

Portfolio management

All of the above is what Reeves Independent use within their portfolio management service.

To find our more about Reeves Independent Portfolio Management Service contact us on 0871 271 1280 or e-mail info@reevesifa.com for a FREE no obligation appointment!


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*Please note this article is not provided for advice purposes but aimed at encouraging private investors to think and discuss their circumstances and how it is impacted by what’s happening in the world. Professional advice should always be sought before making any decisions.

Where should I invest right now?

There is no doubt that this is a worrying time for people with investments.

The markets have seen some huge daily losses and then gains. We have the possibility of the long talked about double dip recession which will have the impact of reduced sales, reduced dividend payments and reduced company valuations. This applies to the UK, Europe and the states.

Additionally we then have the European issues going on. Centred around the well recorded subject of the debts of certain countries (mainly Greece, but also including Spain, Italy and Portugal). There is now a growing voice from politicians that Greece will default – something that they have been in denial for months. Any defaults may have an impact on the banking sector and the wider economy.

The key uncertainty is how this will end up? How will the Eurozone respond? What impacts will this have on the Euro zone? What impacts will this have on the economy within the Eurozone and further a field? What impact will it all have on your pensions, your savings and your investments? What impact will it have on your jobs and business?

Forecasting what is going to happen is pretty much impossible – Making any decisions very difficult. We are suggesting a number of issues need to be considered when making your decisions.

First of all what options do you have with your portfolio?

This is dictated by where your investments are held and managed. If your portfolio is ‘tied’ up with a life insurance company or bank you will be restricted by the possibly restricted investment options available through that contract. There may be switch costs involved if you do have investment options and of course you need to consider the practicality of how you actually make a switch of funds. At Reeves Independent we encourage the use of platforms / wraps for people wanting to make the best from their investments. This enables an open ended huge choice of legally permitted investments and options.

Your retirement Plan – How close are you?

A critical issue before assessing any investment decision is how this affects your retirement plan. If your funds drop in value over the next 3, 6 months etc how will this affect your plans? What happens if you lose value with your pensions and investments and it does not recover? How does this affect you? Are you on target for your retirement planning without having to take risks? At Reeves Independent we help clients put together very real retirement plans and we help clients work at keeping them on track through regular reviews. Ideally none of our clients that are planning retirement in the short term are wholly dependant upon investments for their retirement plans. They have time for things to recover providing they are able to cope with the roller coaster that we are on.

Play Safe?

A serious option for risk adverse client right now is to switch everything to cash. Maybe its time to cut ones losses before the inevitable. How would you feel if your investment fell a further 25% from now over the next few months? Within our preferred wrap / platform provider we have the option of switching into a cash account which is held within the pensions, bonds and stocks and shares ISA Portfolios. This would place your investments temporarily within 4 selected banks.

This would place your money within 4 deposit accounts spreading your risk in case of banking default. Do we know which banks are under threat?

Within our platforms we have a number of managed funds that predominantly invest in cash deposits which provide an alternative to bank accounts and provide a broader spread of bank accounts and deposit funds.

Of course switching to cash means that you would miss out on any positive reactions that prove to be sustainable and rewarding for investors that remained positive and confident. At the time of writing this the markets are up at 0.8% today after news of France and Germany having reached agreement on how to support and protect the banks.

Remain invested and ride out the storm?

There is no doubt that there exists undervalued business within the world markets. This reflects the lack of confidence in the world markets and expectation of recession combined with expectation of Greek default. If and when it happens and is formally confirmed then the markets will generally fall. However, many of these businesses will remain good and the brave investors should expect to see gains and rewards as the world recovers moving forward. Of course this is new ground which adds to the caution. There are stocks especially in the Eurozone and Financial sectors that may well prove to be at ‘bargain’ prices right now. Through the platform our clients have access to a number of specialist funds that have objectives to invest in financial sectors and parts of the European sectors to help those clients that are able and willing to participate in the risks associated with investing at this stage.

Alternative strategies

The right solution for many clients will form a mix of playing safe whilst trying to maintain some investment options. For those clients that have already shown losses on their investments and do not expect to need access to all their funds may well right now decide that they can’t afford to miss out on any recovery. The golden rule to avoid selling at times of loss is something that we should remember – especially if we believe and have time to wait for better times. Of course the phrase ‘time to cut our losses’ also springs to mind. Through an appropriate discussion about clients individual risk profile and their retirement plans the best decisions can be made for the individual.

Clients that want to remain invested with all or part of their portfolios may wish to consider switching to alternative areas. We currently feel that there is opportunity to be had by investing in The US Property markets. There has been significant losses over the past 3 or 4 years and at some point the bottom will be hit. Some people believe that is now – others think it’s too soon. Warren Buffet world investor has recently made significant investments in this area backed with a statement that this can’t go much lower (The US Property market).

Corporate Bonds – ‘Loans to companies’ provide an opportunity to outperform cash. There is an increased risk of capital loss compared to cash but less risk when compared to equity investments.

The US markets were doing well this year up till August. Since then things have slipped back after their own debt issues and the other factors mentioned above. For clients that are remaining with their investing strategies we feel that US equity markets provide greater opportunity for growth than the UK Equivalents.

To find our more about Reeves Independent Portfolio Management Service contact us on 0871 271 1280 or e-mail info@reevesifa.com for a FREE no obligation appointment!

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*Please note this article is not provided for advice purposes but aimed at encouraging private investors to think and discuss their circumstances and how it is impacted by what’s happening in the world. Professional advice should always be sought before making any decisions.

Client 'WRAP Accounts' Explained!

Before taking an in-depth look at the principles of our investment philosophy, we thought it would be helpful to explain one of the important features of Reeves' investment proposition; namely the use of client 'WRAP accounts', which are designed to complement and assist the ongoing financial planning and wealth management process.

In brief, instead of the traditional and often haphazard composition of a client's assets, which might be dispersed amongst a variety of financial institutions, a WRAP account is an administration service offered by an independent, specialist provider, which enables you to hold all of your assets - be they your general investment portfolio, pensions, investment bonds, ISAs, etc - in one place.

You no longer need to deal with several different companies to achieve specific objectives in your overall financial planning strategy, nor do you have to receive masses of paperwork from each of them, nor find yourself wondering how your portfolio has been performing.

In our view, WRAP accounts are very cost-effective and essential to the improvement of your financial organisation, as well as being central to the provision of a professional wealth management service, both now and into the future.

A detailed appraisal of the features and benefits of your private WRAP account is not appropriate here, but in summary, it provides:

- Simplicity

- Transparency

- Consolidation of your financial affairs and statements

- The functionality to deliver the smooth, efficient management of your assets

- Quick and easy implementation or change of financial planning strategies

- Access to low cost, institutional investment funds

- Unrestricted tax planning opportunities / investment choices

- The ability to receive your income payments from just one source

- A significant reduction in paperwork and administration

- Immediate, secure access to your portfolio via Reeves' website
 
 
Increase your chances of having more income when you retire by working your investments!


To find our more about Reeves Independent Portfolio Management Service contact us on 0871 271 1280 or e-mail info@reevesifa.com for a FREE no obligation appointment!


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Salary Sacrifice FAQ's

Apologies for the lack of Blogs in recent weeks. It has been a hectic month at Reeves Independent, with various staff members taking their holiday's to warm climates, with the exception of the boss who had a week in Torquay (each to their own).

Recently we have done a number of salary sacrifice cases. Therefore we have done a Blog on some of the FAQ's we have been getting & provided answer to these.

What type of pension plan can salary exchange be used with?

It can be used with any type of UK registered pension plan – i.e. individual or group personal pension/stakeholder or occupational money purchase/final salary schemes. The main point to remember is that there must be an employer willing and able to make payments to the scheme after the exchange is made.

Can the self-employed use a salary exchange arrangement?

As there’s no employer to make a pension payment on their behalf, the self-employed cannot set up a salary exchange arrangement.

How can salary exchange be set up with a pension plan?

The employee exchanges an amount of salary that they would have otherwise paid to their pension plan. The employer then pays the amount exchanged to the pension plan as an employer payment. For example:
- Employee earns £20,000 gross yearly

- Employee currently pays 5% of salary to a pension plan – that’s £1,000 yearly

- Employee exchanges £1,000 of gross salary

- Employer pays this £1,000 (plus any employer payments) to the pension plan.

Can pension payments be increased just by using salary exchange?

Yes. Depending on how the NIC and tax savings generated are used, there are several options available. Our calculator can deal with the following four options:

None of the tax and NIC savings generated are used:

- Employer saves as they pay less NICs on a reduced salary.

- If it’s the current employee pension payment that’s being exchanged their take home pay increases as they are paying less tax and NICs, albeit on a reduced gross salary.

- Pension payments remain the same.

Employee take home pay remains the same:

- Employer saves as they pay less NICs on a reduced salary.

- If it’s the current employee pension payment that’s being exchanged, they can exchange slightly more so that their take home pay remains the same.

- The pension payment increases by the extra amount the employee exchanges.

The employer reinvests their NIC savings into the pension plan:

- Employer reinvests their NIC saving into the pension plan.

- If it’s the current employee pension payment that’s being exchanged their take home pay increases as they are paying less tax and NICs, albeit on a reduced gross salary.

- The pension payment increases by the amount of the NICs savings that the employer makes.

Employee take home pay remains the same and the employer reinvests their NIC savings into the pension plan:

- Employer reinvests their NIC saving into the pension plan.

- If it’s the current employee pension payment that’s being exchanged, they can exchange slightly more so that their take home pay remains the same.

- The pension payment increases by the extra amount the employee exchanges plus the amount of the NICs savings that the employer makes.

Higher rate and additional rate taxpayers can claim additional tax relief. Does this affect the salary exchange calculation?

This depends on whether the exchange is being set up in a personal pension/stakeholder pension plan or an occupational pension scheme:

Personal pension/stakeholder pension (relief at source)

In the vast majority of these plans, pension payments are deducted from net pay – i.e. after tax has been deducted. These pension payments are then grossed up by the pension provider at basic rate only. The amount that can be claimed back depends on the individual’s tax position and their total taxable earnings.

Occupational pension scheme (net pay arrangement)

In these schemes, payments are normally deducted from gross pay i.e. - before tax - this has the effect of giving full tax relief on any pension payments paid. Our calculator will show this where the individual is a higher rate or additional rate tax payer by showing the payment before the exchange as being deducted from gross pay.

Will HMRC restrict or remove salary exchange arrangements in the future?

Whilst there’s no straight answer to this as it’ll depend on Government attitudes going forward, HMRC have published guidance together with questions and answers on salary exchange. So it seems likely that at least in the short term, salary exchange will continue to be available.

How can any employer NIC savings generated through salary exchange be used?

The NIC savings the employer makes can be used in many ways. For example they can be used to provide other employee benefits, increase pension payments, shore up deficits in a defined benefit schemes, or the employer may simply keep the savings. Remember however that the actual amount of salary that the employee exchanges MUST be used to provide a non-cash benefit to the employee, such as childcare vouchers, or pension plan payments.

Anything else you need answering? Interested in talking to one of our financial advisors about the possibility of introducing Salary Sacrifice for yourself, key employees or even your whole workforce. Please contact us on 0191 281 9862 or e-mail info@reevesifa.com for a FREE initial chat!

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IMPORTANT MESSAGE TO OUR CLIENTS!

The market turmoil has triggered a wave of uncertainty across financial markets.


Like a lot of the city dealers and politicians I am currently on holiday. The events of the last week however require some urgent attention and I have spent some time sifting through a mass of market information to determine the best course of action for our clients. It would seem that there is a significant risk of losses on the world stock markets over the next few days. Whether this is a downward trend is far less clear.

The following extract / summary from an article by Tom Stevenson of Fidelity international (6th august 2011 - in perspective) would seem to be worthy of consideration.

Some conclusions from a turbulent week in the markets:

• When markets are volatile, all of them tend to be affected indiscriminately. We believe that Asian and emerging markets now look oversold versus developed markets thanks to their much stronger economies and lower debt levels.

• After such rapid and widespread market fall, this is probably not the time to sell and crystallise today’s low prices. Timing the market is notoriously difficult and investors can often bail out close to the bottom when they allow themselves to be swayed by a prevailing feeling of gloom.

• One consequence of this week’s volatility is that interest rates are likely to stay lower for longer than was predicted even recently. Cash returns, which will be eroded by inflation, will remain inadequate. Investors may be nervous about investing in markets for growth but they will still need to search for higher levels of income than cash markets can provide. Equities and corporate bonds can both provide this income.

• Indiscriminate selling creates opportunities. Despite the lacklustre economic outlook in the developed world, many companies continue to perform well, especially those with an exposure to the higher-growth markets in the emerging world. A research-driven stock-picking approach is well-placed to uncover the best investment opportunities in this kind market.

• As Anthony Bolton, portfolio manager of Fidelity China Special Situations, says: “history shows that normally extreme equity market volatility, as we are now experiencing, should be seen as a time of opportunity rather than a time to become more defensive.”

At moments like this the standard question of 'what would you do if your investments had lost 20%' comes to mind.The more switched on clients would normally respond with comments such as :

• What the future expectation of that investment is?

• How much further will it drop?

• What are the alternatives?

• How much of my portfolio is affected?

• Can I afford to lose more?

Generally, the standard answer for our clients that decide to invest in volatile investments is to hold the investments or to hold and buy more of he same. Generally I think we should all bear this in mind before taking any actions right now.

If we consider the issues that are raised above one may decide to look at the alternative actions:

What are the future prospects for our existing holdings: generally all world equity markets have been hit in the last week - including the emerging markets whose economies are doing well and are not exposed to high levels of debt.

Why?

The US politicians dragged their heels in a debt decision thats been known about for a number of months - this has caused loss of credibility for US markets and down grade of credit rating agency. Employment stats were more positive than expected however. There are serious concerns that a number of large investment funds will ditch US bonds due to the down grade and that us will now go back into recession. This will affect business and share prices around the world.

Eurozone instability continues with threat of Spain and Italian debt levels. Feasibility of bailing out both is being questioned and doubts about Greece seeing through the required austerity measures. Bailout can have impact on german thriving economy and the reported alternative of shrinking euro membership will have unknown impact on the world.

At centre of the debt situation is the banking sectors. Some banks are facing big losses whilst others are faced with down valued prices that can recover with time. The fund managers of the financial funds we support should be well placed to chose the best holdings that should recover valuations and avoid those banks with problems.

It seems likely that we are faced with more losses in the short term. After that remains great uncertainty in all equity areas. Big , good companies that trade in the world will continue trading - these are supported generally within our existing holdings whether UK. Euro or US based. Their earnings will be affected should we go into recession as some predict. Should things get worked out and recession avoided then prices could well recover.

In the recent recession period FTSE100 fell greatly (40% approx) as is well documented from peak to trough. Within 14 months valuations had recovered for most investors - providing a nice return for those who invested at the bottom and providing only marginal losses for those who had invested 3 years prior. The big losers were those that sold equities when they where down.

An alternative home for your investments right now are cash - but as we know with high inflation and low interest rates in real terms your money is guaranteed to lose real value.

Gold prices have been rising over past few weeks and have reached record levels. In times of trouble this is a safe haven - the risk of investing here right now is that if this the threat of recession recedes in the short term then you could see prices falling quite sharply.

If banks tighten lending again then corporate bonds could prove to be a Good place to be.

In general - most of our clients have portfolios that have exposure to equities but also include a proportion of none equities. No one should be in position of having to sell equities in depressed times unless a speculative approach had previously been established.

Most clients that are investing in equities do not require access to money in short term and should only sell if they feel tactically advantageous.

Clients that feel markets will drop significantly more may feel inclined to sell equities with view to buying again at cheaper prices.

Clients that do not want to face further losses should consider selling existing equities or a percentage of the portfolio. You risk selling at loss and missing out on recovering prices. Would you sell your home right now by choice?

Long term investors who do not wish to speculate on short term Market movements are advised to maintain portfolios. Be prepared for some immediate losses.

Clients who are wanting to be more active may wish to consider selling equities with view to buying cheaper later on. This is a speculative strategy and spotting the short term movements of the Market is historically difficult.

Clients that may have need to access equities in shorter term are well advised to check their cash position with view to considering impacts of losses from equities.

If any client needs to speak then please email me asap. If you wish to sell without discussion please email instruction to chris@reevesifa.com or send secure email to transact through your personal transact account. Remember that all collective investments are transacted at 1pm.

Reeves Independent's Monthly Portfolio Report!

We have now had our new portfolio’s up & running for a month and we are starting to see nice gains for our clients. Despite the drop in the markets last week due to all the uncertainty surrounding the Greek debt and US debt, the monthly gains have been promising.

The changes we made to our Aggressive portfolio have paid off with over half of our funds showing gains of over 4% and all 16 funds presenting positive returns. Our “Henderson Global Technology A” fund has produced the biggest returns with an extremely healthy 9.34% gain in just a month.

Our Balanced portfolio which was also revamped in June has struggled this week due to the factors mentioned above. However over the month it still showed an average return of 2.51% with all but two of our funds showing positive returns.

As is expected our Cautious portfolio showed the smallest gains as they are invested the least volatile funds. The monthly average return from the 10 funds we invest in was still at 0.8%.
 

If you would like to review your investment portfolio or you would like the opportunity to possibly make returns like those mentioned above then contact us on 0871 271 1280 or e-mail info@reevesifa.com

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Case Study - Taking Control of your Investments to achieve your Objectives!

Last month I received a referral from one of our professional connections based in Leeds, who had a client whose specific request was for someone to manage his Investment Portfolio.

This particular client was a 53 year old male from Nottingham with a well paid job within the IT industry. Mr B as he will be known had over 200k from all his investments and his OBJECTIVE was to retire at 60.

He wanted to do this by maximising returns from the before mentioned investments.

An initial fact find meeting with Mr B established he had 6 different pension funds totalling closer to 250k. These were roughly split with 50% in with profits funds & 50% in UK Equities.

After filling in an in-depth risk profiler questionnaires we had the following conclusions about Mr B;

• He was prepared to invest in overseas & specialist markets to maximize returns.
• He wanted to take an active role in the decision making about buying & selling of different investments in response to market changes.

What were Mr B Options?

Following some research it was clear to me that there was at least 100k that was inappropriately invested, which was not contributing towards his objective. In addition to this Mr B was paying a high amount of monthly fees due to this multi-policy arrangement. Mr B's had the following options;

• Switch into a lower charged pension arrangement, which offered reduced costs & greater fund options & significantly easier administration to assist in his investment programme

         or

• Bundle all 6 pensions into one that would provide the maximum range of investment opportunities & efficient ongoing portfolio management

Mr B choose the latter option, which whilst occurring higher initial costs would provide the opportunities to grow his pension fund over the next 7 years through Reeves Independent's Portfolio Management Service.

Does the above case sound similar to you? Here at Reeves Independent we would work closely with you to give you the best opportunity of maximising your investment returns. We would give you the strategies, help you make the right decisions & give you the tools to allow you reach your investment goals.

Contact us now on 0191 281 9862 or e-mail info@reevesifa.com NOW for a FREE initial consultation!

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Can you afford NOT to work your Investments?

A recent meeting with a prospective client has added further weight to the argument that if you want more money when you retire you have to really make your investments work.

Mr X was 50 years of age and had accumulated a value of 120k in his pension pot. He was planning to retire at 65 years of age.

What were Mr X's options?

• Pay more money into his pension - which was ruled out as this was not affordable      
• Make his investments work by being proactive - as this could really change the quality of his retirement

What could be achieved?

The table below shows what Mr X's investments could return in 15 years time at varying interest rates




*Projection source from Aegon Scottish Equitable for a Flexible Personal Pension 


As you can see even 2% interest rate intervals can have a MASSIVE impact on your pension fund & your income after you retire. Which result would you prefer? The left hand column or the right hand column? If it the right then you need to take action NOW!


How can you achieve this?

• You need to sit down a devise a strategy & a plan of how you are going to manage your investments
• Regularly review your investments to ensure the above mentioned strategy & plan are working
• Have a tool in place that gives you the following;
• Unlimited fund choice - to give you exposure to specialist sectors & investments
• Opportunity to move into & out of investments at the right time
• Control of what you have got 24/7 at the touch of a button
• Receive support from an expert, experienced & personable advisor

Here at Reeves Independent we would work closely with you to give you the best opportunity of maximising your investment returns. We would give you the strategies, help you make the right decisions & give you the tools to allow you reach your investment goals.

Increase your chances of having more income when you retire by working your investments! 

Contact us on 0871 271 1280 or e-mail info@reevesifa.com for a FREE no obligation appointment!

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Reeves Independent Weekly Investment Report - 01/07/11 - 07/07/11

Here at Reeves Independent we changed our portfolios this week to our new & hopefully improved version 7. The new portfolio’s experienced a fantastic maiden week; with ALL 35 of our funds showing positive results & therefore all 3 of our portfolio’s producing returns for our clients.

Our Japanese fund, which has seen double figure gains since the earthquake hit at the beginning of the year, continued to recover with a one week return of over 4%. This contributed to our Aggressive funds averaging a 3% return in just a week. It was also helped by our “Junior Oils Trust” fund which saw over 7% gains in the last 7 days.

The average return for our balanced portfolio for this week is 2.3% with our best fund being the “Gartmore US Growth” hitting over the 4% mark in the 7 days.

The portfolio with the lowest gains was our Cautious portfolio but even this showed an average of 1.4% return with our "Jupiter North American" fund surpassing 3% for the week.

If you would like to have a review of your investment portfolio or you would like to possibly make returns like those mentioned above then contact us on 0871 271 1280 or e-mail info@reevesifa.com


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Pension Reforms 2012 - What are the implications on Employers?

This week I have had a lengthy chat with a fellow professional about the much talked about Pension Reforms. As we know the Government is proposing to bring in new laws from 2012 that will have a significant impact on every employer in the UK.

What are the key points?

The framework for these new laws is already in place in the shape of the Pensions Act 2008.

• Employers will, for the first time, be required to automatically enrol eligible employees into a pension scheme.
• Employers will, for the first time, be required to pay pension contributions for any employees who join and stay in the pension scheme.
• The Pensions Regulator will police and enforce these new laws.
• Even if you have an existing workplace pension scheme, you may have to make changes so that it complies with the new laws.
• Employers can either use their own pension scheme to comply with these new laws or rely on a Government built scheme - the National Employment Savings Trust (NEST) scheme.

What did we conclude?

• 80% of all pension schemes in the UK are not fit for the new legislation in their current format
• That any employer should at least get initial advice even if they plan to do nothing in the short term
• In many cases time is not on the employers side
• Its so important for employers to be aware of their position and plan for any future action, as these will have may huge implications on budgetting & staffing
• There are large concerns that the industry will not have the capacity to deal w
  ith the huge rush to get schemes set up, therefore being ahead of the game would ensure you would met the legislative requirements in time.  

How can Reeves Independent Help?

Reeves Independent has set up & administered a large number of group schemes of varrying sizes throughout the last 20 years and therefore fully understands the challenges that businesses face.

We can:

• Help you review your existing workplace pension scheme to make sure it will comply with, or exceed, the new requirements

          or

• If you haven’t got a pension scheme yet, we can help you put one in place.
• And we can help with arrangements such as salary exchange that can save you money and offset the impact that these new laws will have on your business.

Here at Reeves Independent we would urge any employer to get some FREE initial advice! Contact the office NOW on 0191 281 9862 or e-mail info@reevesifa.com

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Reeves Independent Weekly Investment Report! - 25/06/11 - 02/07/11

This week has been a big week for the markets, specifically for Greece & Europe with the austerity package vote taking place on Wednesday. As your aware Athens erupted with riots from the proposed implications on the Greek Citizens.

In the lead up to the vote, due to economists speculating about the outcome, the European Funds in our three portfolios produced good returns. These helped our Balanced portfolio to an average gain of 1.46% across its 8 funds.

Our Aggressive portfolio also did well, with 75% of them showing gains. The Japanese fund that we invest in grew a further 1.35% in the last week meaning it has returned an impressive 3.8% in the last month.

Finally our Cautious portfolio also showed gains albeit not as much as the other 2, which however is to be expected. The portfolio averaged 0.24%, helped by our 6 Income funds*, which between them averaged a 1% return in just a week. Incredibly the Artemis Income Fund had a rise of 2.18% in just one week, over 4 times the average return of money invested in the bank annually.

If you would like to have a review of your investment portfolio or you would like to possibly make returns like those mentioned above then contact us on 0871 271 1280 or e-mail info@reevesifa.com


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* Definition of an income fund http://www.investorwords.com/2404/income_fund.html

Case Study - The Importance of Income Protection!

A recent meeting with a client once again highlighted the importance of having protection in place from the inability to work. Unfortunately this was a very severe case in which the client will not be able to work again.

Mr X was a healthy 47 year old with no previous medical problems who believed he had a mild chest infection. However sadly it was much worse and he was diagnosed with a very serious illness, which has meant he has to have both his heart & lungs replaced. This is a very extreme case in terms of the severity of the illness, but not an uncommon consequence as many people are not able to work due to ill health.

What makes this whole scenerio worse is that he had no protection in place to cover him against this situtation as he felt it was NOT needed. This means he has no money apart from his jobseekers allowance & associated disability benefits. He has also been given one month's wages from his employer as a gesture for his 15 years in employment, but this still a very small amount. As you can imagine he is very distressed about this, but he has recieved no councelling, which if had cover could also have been given to him.

There are a huge variety of protection policies available, which can be tailored to individuals circumstances. For example someone who is married with 2 kids & a mortgage will require a different plan to someone single with no mortgage. In the above case there were no dependents, but this is obviously a huge factor when choosing your plan.

Here at Reeves Independent we would gather a full fact find to fully understand your whole situation and research appropriately from this. This would then enable us to present to you the best options in respect to protecting the wellbeing of you & your family in the unfortunate event of ill health or even death.

For a FREE no obligation chat about your requirements then call 0191 281 9862 or e-mail info@reevesifa.com NOW!