Investment myths

To many, the world of investing is shrouded in mystery; the realm of financial whizz-kids and the super-rich. In reality, however, this is not the case and, once myth is separated from reality, it should be clear that investing is actually accessible to all.

Can’t invest, won’t invest!
Research (HSBC, 2022) has highlighted several reasons why people are sometimes reluctant to invest. The main one, cited by 45% of respondents, is because they don’t have sufficient money, while 23% feel they are not knowledgeable enough about investing and 21% are worried about losing money.

Only for the rich?
These findings mirror a number of common misconceptions surrounding investing, one of which is that only wealthy people invest. However, while this may have been the case in the past, it is certainly not true nowadays, with investment options available for people with relatively small sums to invest.

Expertise and devotion required?
Other common investment myths include the idea that you have to be a stock market genius and monitor your investments on a daily basis. Both of these are untrue: advice is readily available to guide novice investors throughout their investment journey, while taking a long-
term approach is always advisable.

Too risky by far?
While it is true that all investing involves risk, not all investments are similarly risky. So, anyone who is worried about losing money can take a more cautious approach by holding a greater proportion of less-risky assets in their portfolio.

Help at hand
If you’re new to investing then get in touch and we can help get you started. We’ll show you that investing is not just for the very wealthy; but it does give everyone a chance to potentially secure a higher return on their hard-earned cash.

The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long- term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.

Residential Property Review

House Price Index (April 2023) – 150.3

Average House Price –  £286,489

Monthly Change – 0.50%

Annual Change – 3.50%

* (Jan 2015 = 100)

Average house prices in the UK increased by 3.5% in the year to April 2023

• On a non-seasonally adjusted basis, average UK house prices increasedby 0.5% between March 2023 and April 2023
• The average price in London was £533,687.

Source: The Land Registry Release date: 21/06/23 Next data release: 19/07/23

House prices Price change by region

Average monthly price by property type – April 2023

Housing market outlook

“The combination of high interest rates and inflation continues to be a heady mix, prompting buyers to remain hesitant. However, professional investors and landlords may find this an optimal time to add to their property portfolio, making the most of deals within the market. Despite all of these headwinds for landlords, demand for letting residential property remains high with tenants competing for limited stock.” – Emma Cox, Managing Director, Shawbrook

Source: property industry eye, June 2023

*Content is for informational purposes only. As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.

Pension News – Summer 2023

How up to date are you with your pension? Here are a few things to consider.

How much is in your pension pot?

According to research (Standard Life, 2023), three quarters of UK adults don’t know how much is in their pension pot. This figure rises to 79% of 55 to 64-year-olds who say they can’t put a figure on the value of their pension – especially worrying as this is a crucial stage for retirement planning. The research highlighted that women (81%) are more likely than men (68%) not to know how much they have accumulated in pensions saving.

Consider the gender gap

Research (Aviva, 2023), has again found a widening of the gender pension gap from the age of thirty-five. The gap between women’s and men’s contributions for 35 to 39-year-olds is 21%, up from 18% in the previous year. Other research (Scottish Widows, 2023) has highlighted how pension inequality is exacerbated for minority women, with over half (54%) of Black women saying they don’t have any retirement savings, compared to 40% of South Asian women and 35% of White women.

State Pension passes £10,000, but watch the tax

There was a welcome boost to pensioners’ incomes in April. The single-tier State Pension is now £203.85 a week or £10,600.20 a year. Those in receipt of the basic State Pension now get £156.20 a week, which may be topped up further by the Additional State Pension.

However, the freezing of the Income Tax personal allowance since 2021/22 means that the State Pension takes up 84% of the allowance, meaning pensioners will only need to earn £1,969.80 before they start paying Income Tax.

If would like to know more about how the latest news affects you, get in touch with our team. www.audleywealth.com/contact-us

*Content is for informational purposes only

Summer retirement lowdown

The last few years have created an increasingly complex backdrop for retirement planning. Not only has the post-pandemic era seen attitudes to work alter significantly, but macro-economic headwinds from Russia’s invasion of Ukraine and the cost-of-living crisis have created significant unhelpful market volatility. In combination, this has inevitably heightened the need for everyone to engage in retirement conversations at the earliest opportunity. Some recent research sets the backdrop for your summer retirement round-up, spotlighting key trends.

Changing face of retirement

A recent study (Aviva, 2023) of UK employees has shown how people are re-evaluating plans for work and later life, with evidence that partial retirement may become the new norm. In total, over half of all workers said they like the idea of continuing to work through retirement. The research also highlighted a strong sense of semi-retirement positivity, with nine out of ten saying they were ‘much happier’ after reducing their working hours.

Low levels of confidence

Another study (The Wisdom Council, 2023), however, has highlighted a distinct lack of confidence among 55 to 75-year-olds when it comes to financing retirement. Indeed, nearly a third said they were either not at all confident or not very confident they would enjoy a comfortable lifestyle in retirement, compared to less than one in five who felt very or extremely confident.

Mind the gap

The research also highlighted a sense of unpreparedness, with a notable divergence in anticipated levels of retirement income and expenditure. For instance, while average expected spending five years into retirement was predicted to be 92% of pre-retirement levels, average income was only expected to hit 78%; other evidence suggests this latter figure is an aspiration few pensioners are likely to achieve.

Planning is essential

These findings suggest many from the next generation of retirees will need support if their finances are to see them through retirement, and this vividly highlights the need to develop a sound strategy tailored to an individual’s unique circumstances long before retirement looms. Planning ahead can address potential income requirements and offer solutions that build resilience to ensure you enjoy the retirement you deserve.

The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.

Inheritance Tax (IHT) receipts have been consistently rising, with new data from HM Revenue & Customs (HMRC) showing takings for the 2022–23 tax year totalled £7.1bn, up

a massive £1bn from the previous tax year (£6.1bn 2021–22). According to HMRC, this huge uplift can be attributed in part to ‘a combination of the recent rises in asset values and the government’s decision to maintain the IHT nil rate band thresholds at their

2020 to 2021 levels up to and including 2025 to 2026.’

Reported estimates from the Spring Budget detail that over the next five years, IHT is expected to bring in £38bn for the Treasury, meaning annual receipts will exceed £8bn by 2027–28, with 6.7% of deaths expected to trigger an IHT charge. This compares with 3.76% of UK deaths in 2019–20.

Record receipts have prompted suggestions that the tax has now become mainstream. Previously dubbed a tax on the wealthy, this is certainly no longer the case, as frozen thresholds and elevated house prices impact.

The good news is that through expert planning you can legitimately mitigate this tax, so you can pass on assets to your family as you’d intended. There are various different strategies depending on your unique circumstances, including making gifts during your lifetime, considering placing assets into trust, making use of exemptions, and thinking about leaving something to charity, to name but a few.

Don’t go it alone

IHT is a complex tax, with reliefs and exemptions on gifts to consider and the interaction with other taxes. These days, with many more estates likely to be subject to IHT, taking expert advice could save your beneficiaries substantial amounts of tax. Get in touch.

*The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation. Inheritance Tax Planning is not regulated by the Financial Conduct Authority.

Although the global economy continues to face significant headwinds, statistics released during the first few months of this year have revealed unexpected signs of resilience. This has led economists to begin upgrading growth forecasts, while the World Economic Forum’s latest Chief Economists Outlook reported signs of ‘nascent optimism.’

Growth stronger than expected Uncertainty undoubtedly continues to be a key feature of the world economy with pressure being exerted from a number of issues. First quarter data, though, has shown that the global economy performed better than most economists had previously feared, with growth recorded across all regions amid signs of the green shoots of recovery.

Inflationary pressures set to fall 

Persistent inflationary pressures and tighter financial conditions, however, do remain key challenges for policymakers around the globe. Inflation has so far stayed stubbornly high and, while economists do expect it to continue falling over the rest of the year, this decline is predicted to be at a slower pace than previously thought.

Resilient economic growth

A key theme at the World Economic Forum’s recent Growth Summit was ‘enabling resilient economic growth’ with discussions focusing on inclusive and sustainable growth, and equitable globalisation. The organisation’s updated forecast showed a notable strengthening in growth expectations, although it also highlighted sharp variations by region. The most buoyant activity is predicted to be in Asia, with China’s reopening expected to drive a significant rebound, while growth prospects are thought to be noticeably weaker in Europe.

Diversification is key

An improving outlook should clearly create opportunities for shrewd investors. However, the relatively uncertain backdrop, along with divergent regional dynamics, inevitably means diversification will remain a vital component in any investor’s armoury. Spreading money in a globally diversified portfolio across a range of sectors and different size businesses should, as ever, prove an effective way to mitigate risk in the quest to build wealth.

*The value of investments and income from them may go down. You may not get back the original amount invested.

Although the global economy continues to face significant headwinds, statistics released during the first few months of this year have revealed unexpected signs of resilience. This has led economists to begin upgrading growth forecasts, while the World Economic Forum’s latest Chief Economists Outlook reported signs of ‘nascent optimism.’

Growth stronger than expected Uncertainty undoubtedly continues to be a key feature of the world economy with pressure being exerted from a number of issues. First quarter data, though, has shown that the global economy performed better than most economists had previously feared, with growth recorded across all regions amid signs of the green shoots of recovery.

Inflationary pressures set to fall 

Persistent inflationary pressures and tighter financial conditions, however, do remain key challenges for policymakers around the globe. Inflation has so far stayed stubbornly high and, while economists do expect it to continue falling over the rest of the year, this decline is predicted to be at a slower pace than previously thought.

Resilient economic growth

A key theme at the World Economic Forum’s recent Growth Summit was ‘enabling resilient economic growth’ with discussions focusing on inclusive and sustainable growth, and equitable globalisation. The organisation’s updated forecast showed a notable strengthening in growth expectations, although it also highlighted sharp variations by region. The most buoyant activity is predicted to be in Asia, with China’s reopening expected to drive a significant rebound, while growth prospects are thought to be noticeably weaker in Europe.

Diversification is key

An improving outlook should clearly create opportunities for shrewd investors. However, the relatively uncertain backdrop, along with divergent regional dynamics, inevitably means diversification will remain a vital component in any investor’s armoury. Spreading money in a globally diversified portfolio across a range of sectors and different size businesses should, as ever, prove an effective way to mitigate risk in the quest to build wealth.

*The value of investments and income from them may go down. You may not get back the original amount invested.

Commercial property currently for sale in the UK

• South West England has the highest number of commercial properties for sale
• Scotland currently has 1,156 commercial properties for sale with an average asking price of £1,229,250
• There are currently 1,778 commercial properties for sale in London, the average asking price is £1,229,250.

Source: Zoopla, data extracted 19 June 2023

Investment enquiries – broken down by sector

• The headline net balance for investment enquiries was -14%, less downcast that the previous quarter’s reading of -30%
• Investment demand for offices and retail assets came in at -26% and -27% respectively
• Industrial buyer demand appeared to stabilise, returning a net balance reading of +4% (compared to -9% last quarter).

Capital value expectations – broken down by sector

• Expectations turned from negative in Q4 2022 to slightly positive in both the prime and secondary portions of the industrial market in Q1 2023
• Across the prime office sector, values are now seen holding steady over the year ahead (net balance +6% vs -31% in Q4)
• Respondents still foresee further falls in retail values, both prime and secondary, posting net balances of -19% and -50% respectively.

All details are correct at the time of writing (21 June 2023)

Source: RICS, UK Commercial Property Market Survey, Q1 2023

*It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

Rebounding investor confidence

A recent survey (EToro, 2023) suggests investors are becoming more confident despite ongoing challenges on the economic front. While this is certainly encouraging, maintaining a long-term outlook and retaining a strong sense of discipline in investment positioning remains a prerequisite for any successful investor.

An air of optimism 

It’s fair to say 2022 was a turbulent year for global markets with the war in Ukraine, soaring inflation and rising interest rates weighing heavily on a difficult 12-month period. Towards the end of the year, however, markets did stage a cautious recovery despite ongoing fears of a looming recession.

Inflation expected to fall

The final quarter of last year also witnessed a rebound in investor sentiment, with the same survey reporting a seven-percentage point rise in confidence in the global economy, although this was before the recent woes in the banking sector. This optimism was driven by hopes that inflation has now peaked and is set to continue falling in the months ahead; a view reflected in the International Monetary Fund’s latest economic musings (IMF, 2023) which predict global inflation will drop from 8.8% in 2022 to 6.6% this year and 4.3% in 2024.

Young guns

Data from the survey also revealed a majority of investors were either positive or ambivalent about last year’s market volatility and its impact on their investing mindset. This was particularly true for younger investors with three-quarters of 18 to 34-year-olds either positive or indifferent compared to six in ten over-55s. This variation will partly reflect differing retirement time horizons, with younger investors more able to adopt a longer-term view.

Investor discipline is key

This is clearly encouraging as maintaining a long-term philosophy based on prudent risk management principles and avoiding panicked decisions has always been a key element for successful investing, maintaining discipline in investment positioning. In practice, this means achieving an appropriate level of diversification and understanding how to blend investments – that’s what we do.

The value of investments and income from them may go down. You may not get back the original amount invested.

HMRC has set up a new specialist team to target estates of wealthy deceased individuals in order to check whether a greater Inheritance Tax (IHT) liability may have been due than originally calculated by estate executors. This clampdown has seen record amounts of unpaid tax being clawed back by HMRC with levels

expected to rise further in the coming years.

Record sums recovered 

Data obtained through a Freedom of Information request has revealed that a total of £326m was collected by HMRC as a result of targeted IHT investigations in the year to March 2022. This was the largest amount ever recovered and represents a 28% increase on the amount raised by investigators in the previous 12-month period.

Threshold freeze 

The standard IHT rate is currently 40%, paid on the value of any estate above £325,000; in addition, homeowners benefit from an extra £175,000 allowance if they pass on their primary residence to a child or grandchild. These thresholds, however, have been frozen until 2028, which inevitably means more people are likely to be dragged into the IHT net. In 2021–22, families collectively paid £6.1bn in death duties, up from £5.4bn the previous year, and monthly data up to December suggests the figure for 2022–23 will be even higher.

Complex rules

More than 13,000 individuals have been embroiled in IHT investigations since 2019. While some of these bereaved families may have acted deliberately, others are likely to have made innocent mistakes and simply fallen foul of IHT rule complexities. Two areas where mistakes commonly occur relate to the provision of lifetime gifts and the valuation of personal possessions. 

We’re here to help 

If you have any concerns or need advice on any aspect relating to IHT then do get in touch; we’re always happy to help.

The value of investments and income from them may go down. You may not get back the original amount invested. Inheritance Tax Planning is not regulated by the Financial Conduct Authority.