Wealth planning for you & your family
Financial planning is undoubtedly the bedrock of successful wealth management. It’s the first step in a lifelong journey of financial growth and security.
Naturally, it begins with a thorough look at your current financial situation, reviewing your assets, liabilities, income and expenditure.
This review isn’t just about the numbers, it’s to understand the story behind your financial decisions and how they align with your future goals.
Assessing your financial health
Assessing your financial health starts with your assets. This includes your savings, accounts, investments, property and other valuable processions.
It’s equally important to review your liabilities such as mortgages, loans and other debts which impact your financial flexibility.
Understanding these helps you to gauge your net worth, providing a clear snapshot of your financial standing.
Income and expenditure analysis
The next step is to scrutinise your income streams – whether from employment, self-employment, investments or other sources.
This helps to understand the stability and sustainability of your income, which is critical in planning regular savings and investments.
Alongside this, review your expenditures, categorising them into essentials and non-essentials. You may be able to find areas for potential savings!
Crafting a clear and comprehensive financial picture
The goal of this initial assessment is to develop a clear and comprehensive picture of your finances. This holistic view is essential as it forms the foundation for all further financial planning.
It allows you, along with your accountant and financial advisor, to identify opportunities and risks.
It enables you to set a realistic and achievable path towards financial security and growth, tailored to your lifestyle and aspiration.
With this solid foundation in place, you can move forward confidently, designing a strategy that meets your immediate needs and secures your long-term financial wellbeing for you and your loved ones.
Setting your financial goals
Goal setting is the next milestone. What are you goals, and how long will they take to achieve?
- A short term goal may be saving for a holiday
- A medium term goal may be funding a child’s education
- A long term goal may be securing a comfortable retirement
Each goal will require a tailored strategy to align your current budget and planning to your overall objectives.
Creating a budget that works
A well-structured budget is the blueprint for financial success.
It helps you manage your money effectively, ensuring you live within your means while setting aside funds for future needs.
We can assist you in categorising your expenses, understanding your spending patterns and identifying potential savings. This approach secures your immediate financial needs and reinforces your long-term financial stability.
Exploring investment strategies for different life stages
Young professionals and families: It’s important to adopt an investment strategy that combines growth with a degree of security for those at the beginning of their careers or starting a family. A diversified portfolio that includes a mix of equities and bonds, real estate investments and emerging market opportunities is often suggested, where possible. This mix aims to capitalise on higher growth opportunities while mitigating risk through diversification.
Approaching retirement: As retirement approaches, the focus naturally shifts towards capital preservation and generating consistent income. We advise on strategic asset reallocation, moving from more volatile investments to conservative options. These choices aim to maintain the value of your capital with reduced risk of significant fluctuations due to market volatility.
The importance of wills and estate planning
Estate planning transcends the simple distribution of assets; it’s fundamentally about controlling the management of your legacy according to your specific wishes.
A will serves as a critical legal instrument determining how your assets and responsibilities are addressed posthumously, thus ensuring peace of mind and security for you and your family. By clearly stating your intentions, a will prevents ambiguities and potential conflicts among your heirs, ensuring your estate is managed and distributed as intended.
Securing your family’s future
Drafting wills involves careful consideration of your personal wishes, and the complex legal factors that might affect those wishes. It’s important to craft these documents to clearly articulate your intentions while also considering potential legal challenges that could arise, and avoiding disputes among beneficiaries.
Trusts are another vital component of estate planning. They offer not only tax benefits but also vehicles for the ongoing management and protection of assets. Trusts can be structured to specify exactly how and when assets are distributed, providing long-term support and clarity for the future use of your estate.
Additionally, effective use of trusts, strategic gifting, and investing in inheritance tax (IHT) exempt assets can significantly reduce the inheritance tax burden on your estate. These tactics not only ensure that more of your legacy reaches your intended beneficiaries, but also that it does so in a tax-efficient manner.
Tax-efficient saving options in the UK
The UK’s tax system provides multiple strategies for reducing liabilities, improving your capacity to save and invest more effectively.
ISAs and pensions: Individual savings accounts (ISAs) and pensions represent two of the most effective tools for tax efficient savings. ISAs allow for income and gains without tax implications, offering options for cash savings and investments in stocks and shares. This flexibility makes ISAs particularly attractive for a wide range of financial goals.
On the other hand, pensions provide significant tax relief on contributions based on your marginal tax rate, while also allowing the pension funds to grow tax-free until the point of retirement.
Lifetime ISAs: Lifetime individual savings accounts (LISAs) are designed to help younger individuals save for retirement or a first home purchase. Contributions are made from post-tax income, but savers receive a 25% government bonus on contributions, up to a maximum bonus of £1,000 per year. Withdrawals can be made tax-free if used for purchasing a first home or after reaching 60 years old.
Venture capital trusts: Venture capital trusts (VCTs) offer individuals the opportunity to invest in small, higher risk companies while benefiting from significant tax reliefs. Investors can benefit from up to 30% income tax relief on investments made into VCTs, up to a certain limit, provided the shares are held for a minimum of five years. Additionally, dividends received from a VCT are tax-free, and any gains on the VCT shares are exempt from capital gains tax.
Seed Enterprise Investment Scheme: The Seed Enterprise Investment Scheme (SEIS) helps small, early-stage companies raise equity finance by offering tax reliefs to individual investors in return for investment in these companies. SEIS offers one of the most attractive tax breaks, including 50% income tax relief on investments and capital gains tax exemption on gains earned from the shares, if held for at least three years. If you buy a stake in a SEIS company and sell the shares at a loss or the business fails, you can offset that loss against your income tax or capital gains tax bill.
Enterprise Investment Scheme: Similar to SEIS but for larger and slightly less risky ventures, the enterprise investment scheme (EIS) offers 30% tax relief on investments in qualifying companies. It also provides capital gains tax deferral on investments, loss relief for income tax or capital gains tax if the company fails, and exemption from capital gains tax on any gains from the shares if held for over three years.
Charitable giving: Charitable donations can also provide tax efficiencies. Donations made to charity through Gift Aid allow the charity to claim an extra 25% from the government on top of the donation made. Donating through Gift Aid allows higher-rate taxpayers to claim back the difference between the basic rate and their highest tax rate, effectively reducing their donation cost.
Why you should consider an accountant for your wealth planning
An accountant does more than manage books; we serve as your strategic partner in wealth management.
Our knowledge and skills extend across financial planning, investment strategy, estate planning and tax optimisation, ensuring a holistic approach to managing your wealth. With our guidance, you can navigate the complexities of financial growth and safeguarding assets, ensuring you achieve your financial objectives and secure a legacy for your family.
Ready to grow your wealth?
Get in touch to see how we can support you with our dedicated Private Client services, covering personal accounts and tax planning.