CLIENT LOGIN

Month: February 2023

Categories
All Articles

Investing 101: A Beginner’s Guide to the Stock Market

Investing 101: A beginner's guide to the stock market

Investing in the stock market can seem intimidating and complex, but with some basic knowledge and
a little research, it is a valuable tool for building long-term wealth. In this beginner’s guide, we will
break down the basics of investing in the stock market and provide some tips for getting started.

What is the stock market?
The stock market is a collection of exchanges where stocks and other securities are bought and sold.
Companies issue stocks, which represent ownership in the company, and investors can buy and sell
those stocks on the market. The stock market is an essential component of the global economy and
provides a way for companies to raise capital and investors to grow their wealth.

 

How does investing in the stock market work?
When you invest in the stock market, you are buying shares of stock in a company. If the company
does well, the value of the stock may increase, and you can sell your shares for a profit. If the
company does poorly, the value of the stock may decrease, and you may lose money.

It is important to remember that investing in the stock market is not a get-rich-quick scheme. It
requires patience, discipline, and a long-term perspective. While the stock market can be volatile in
the short term, over the long term, it has historically provided strong returns for investors.
Tips for getting started in the stock market:

● Do your research: Before you invest in the stock market, it is essential to do your research.
Start by reading financial news and learning about the companies you are interested in
investing in. Pay attention to their financial performance, growth prospects, and competition.
● Start small: It is a good idea to start with a small amount of money when you first begin
investing in the stock market. This will allow you to learn and make mistakes without risking a
significant amount of money. You can gradually increase your investment as you become
more comfortable with the process.
● Diversify your portfolio: Diversification is the key to managing risk in the stock market. Instead
of putting all your money into one company, consider investing in a variety of stocks across
different industries and sectors. You can also diversify your portfolio by investing in other
assets, such as bonds and real estate.
● Understand the risks: Investing in the stock market comes with risks, including the risk of
losing money. It is essential to understand the risks involved and have a plan in place for
managing those risks. This may include setting stop-loss orders to limit your losses and
having a long-term investment horizon.
● Be patient: Investing in the stock market is a long-term game. It takes time to see the benefits
of investing, so be patient and stay focused on your long-term goals. Avoid making impulsive
decisions based on short-term market fluctuations and stick to your investment plan.
● Consider working with a financial advisor: If you are new to investing, consider working with a
financial advisor who can provide guidance and help you develop a personalised investment
plan. At AWM we are happy to talk over any questions you may have regarding investment –
get in contact today if you are looking to start investing.
In conclusion, investing in the stock market can be a valuable tool for building long-term wealth. By
doing your research, starting small, diversifying your portfolio, understanding the risks, and being
patient, you can start investing in the stock market with confidence. While investing in the stock
market requires discipline and a long-term perspective, it can provide significant returns over time and
help you achieve your financial goals.

Written by: George Kemp

Date: 27 February 2023

Get the Latest Finance News

Latest Updates

Categories
All Articles New Webinar

Mortgages Webinar: Navigating The Market

With Mortgages being a hot topic at the moment allow us to help you in “Navigating The Market”.

On the 23rd March, Nwabisa Janda, our trusted Mortgage Advisor, will be hosting an informational Webinar, aiming to equip you with the knowledge and understanding needed to tackle the current market.

Join us, as Nwabisa offers her insight and expertise on a range of subjects from The Buy to Let market to Later Life Lending, updates on House prices and more. 

An hour session including a chance for Q & A, in this turbulent time, arming you with as much information is our goal, so come along and we will Navigate together!

WHAT WILL BE COVERED:

  • Current Rate Market

  • BTL Market, Regulations, Landlords & Rental Yields

  • Later Life Lending

  • House Prices 

We hope to see you on 23rd March for 45 minutes to 1 hour to get a better understanding of the Market and what this means for you! 

Please email info@ascotwm.com for any questions.

Days
Hours
Minutes
Seconds
Register Here

Contact Us For More Info

Facebook Twitter Instagram Linkedin

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

Categories
All Articles

Buying more years for the new UK state pension

Buying more years for the new UK state pension

The UK State Pension is often overlooked as a reliable source of retirement income, largely due to the fear the Government will remove the benefit, or continue to push back the years until retirees reach the State Pension age. We know that from April 2023 the State Pension is set to rise by 10.1%, with the UK Government honouring the triple lock rules for 22/23.  Pleasingly this means the UK full State Pension will pay £10,600.21 a year from 6th April.

We deem the UK State Pension a valuable asset, given the current triple lock system for annualised growth, and the scheme guarantee 

as an income source to pay towards your essential outgoings. With this in mind we suggest all UK residents check their National Insurance Contribution history to ensure they are on track for a full 35 years of contributions before their target retirement age.

As per the new State Pension rules you must have a minimum of 10 years contributions to receive a State Pension. In April 2023 a retiree with 10 of the 35 years will get a proportional State Pension of £3,028.63. Versus a retiree with 9 years who would not qualify for any income. 

Until April 2023 you can buy back National Insurance years to 2006. This gives a huge opportunity to maximise your State Pension benefit before the rules change. After 6th April 2023 you are capped at buying back six years. Considering this, we urge investors to check their National Insurance history. If you have gaps between 2006 and 2017, it would be worth plugging these now.

The process of buying a year’s State Pension input is to make a Class 3 National Insurance contribution (NIC), often referred to as a voluntary contribution. The weekly cost for a Class 3 contribution is £15.85, or £824.20 a year. From April 2023 the Class 3 rate is rising by £1.60 a week to £17.45, making the annual cost £907.40. For a saver looking to buy back five years this is an additional cost of £416.

Applying this to an example, let’s assume you are 65 and approaching State Pension age. You are retired; therefore have no more Class 2 or 4 contributions to collect via PAYE. You have a 30 year NIC record, and thus a partial State Pension. The State Pension you’d receive using the 23/24 rates would be £9,085.89 per annum. The cost for you buying the five missing years before April 5th 2023 would be £4,121. It would take you just under three years to make back the cost of £4,121 thanks to the increase income of £1,514. This three year rule applies regardless of the number of years you are required to buy, therefore for a healthy retiree, maximising the State Pension income via Class 3 contributions is a ‘no brainer’.

A second area of understanding to note when it comes to the UK State Pension is the deferral rules. Often clients ask us if it’s worth deferring the State Pension, and the answer comes back to the horrible weigh up between cost benefit and longevity. Previously the rules allowed for a double digit escalation in income annually for deferring a year. This posed a more interesting argument, but today the deferral rate is 5.8%. On average, it takes a retiree 18 years in an increased State Pension (by 1 year) to recoup the benefits lost by not receiving a year’s income.

The final point I’ll make on the State Pension and associated planning is the inheritability. The rules changed in April 2016, meaning only additional or extra rates of State Pension are inheritable if the deceased was in receipt of the State Pension before 6th April 2016, or died before 6th April 2016 but would have reached State Pension age on or after that date. Given the lack of inheritability, it is sensible to plan as a household to maximise both NIC records to maintain this benefit.

Instead, widows should consider claiming Bereavement Support Payments, which is made up of a lump sum followed by 12 monthly payments.

Written by: Catriona McCarron

Date: 17 February 2023

Get the Latest Finance News

Latest Updates

Categories
All Articles

What is inflation?

What is Inflation?

Inflation is a measure of the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. In other words, it is the rate at which the value of money decreases over time. This can happen when the supply of money increases faster than the demand for goods and services, which leads to higher prices. Inflation can impact the cost of living, as well as the value of investments, and is typically measured by an index, such as the Consumer Price Index (CPI) or the Producer Price Index (PPI). Central banks, such as the Federal Reserve or the Bank of England, use monetary policy to control inflation by adjusting interest rates and the money supply.

 

Negative effects of inflation

Decreased purchasing power: As prices rise, the value of money decreases, which means that individuals have less purchasing power. This can make it more difficult for people to afford basic goods and services, such as food, housing, and healthcare.

Increased cost of living: Inflation can lead to an increase in the cost of living, which can put financial strain on households and businesses.

Reduced economic growth: High inflation can lead to economic instability, which can negatively impact economic growth and investment.

Decreased competitiveness: Inflation can make exports more expensive, which can reduce a country’s competitiveness in the global market.

Reduced savings: Inflation can erode the value of savings, as the purchasing power of savings decreases over time.

Decreased competitiveness: Inflation can make exports more expensive, which can reduce a country’s competitiveness in the global market.

Reduced savings: Inflation can erode the value of savings, as the purchasing power of savings decreases over time.

Protect your investments against inflation

There are no investments that are completely immune to the effects of inflation. However, certain investments may be less affected by inflation or may even benefit from it. Here are a few investment options that are often considered as a hedge against inflation:

Commodities: Commodities, such as gold, oil, and agricultural products, may benefit from inflation as their prices tend to rise along with inflation.

Real Estate: Inflation can have a positive impact on real estate prices, as higher inflation tends to drive up rental income and property values.

TIPS: Treasury Inflation-Protected Securities (TIPS) are a type of bond issued by the US government that offer a fixed rate of return adjusted for inflation.

Stocks: Certain types of stocks, such as those of companies that operate in industries with pricing power, may be less affected by inflation. For example, companies in the consumer staples or healthcare sectors may be better able to pass on increased costs to their customers.

It’s important to keep in mind that these investments still come with risk and may not always perform as expected. Additionally, it’s important to have a diversified portfolio that takes into account the potential impact of inflation, and to consult with a financial advisor to make informed investment decisions.

Written by: Jemma Long

Date: 10th February 2023

Get the Latest Finance News

Latest Updates

Categories
All Articles

The pros and cons of renting vs buying a home

The pros and cons of renting vs buying a home

Whether to buy or rent will depend on your financial circumstances, when it comes to your residential status. For the benefit of this blog let’s assume you could do both so the pros and cons can be more specific to differences and benefits.

Renting

Renting a property is generally regarded as a cheaper option than buying a home. That’s because the costs associated with buying are considerably higher, taking into account normally a rented property is supplied furnished for example.

However, mortgage payments are often cheaper than paying rent. This is still broadly the case but with the recent cost of living crisis and Bank of England’s rate rising to 3.5% to control inflation. New mortgage payments have been a lot higher and renting could be the way until the rates fall again.

The advantages of renting:

  • Renting a property gives you more flexibility to move quickly
  • Renting a property can be arranged quicker than buying a home
  • Renting carries a lower financial risk than buying
  • By renting, you won’t have to worry about maintenance or repairs
  • By renting, you may be able to live in an area where you couldn’t afford to buy
  • Renting allows you to use any money that would be tied into property for investments- making your money work for you.
  • Renting rather than buying keeps your wealth more liquid, allowing you take advantage of the market changes quicker without disturbing your living situation.

The disadvantages of renting:

  • By renting, you’re paying off your landlord’s mortgage rather than your own
  • It’s harder to put down roots and settle in an area when you’re renting
  • A rental property isn’t yours – so you can’t decorate or make major changes without Landlords consent
  • Your rent could increase when your tenancy is due to renew
  • You won’t benefit if the property grows in value over time
  • You will have rent liability going into retirement, keeping your essential costs higher when they should be reducing.
  • Less support when you fall on hard times especially vs a home that has been paid off

Buying a home

The advantages of buying:

  • Buying a property means you have an investment for the future, and inheritance to pass on.
  • You could benefit from capital growth in your home over the long term
  • It’s your home – so you can decorate it and make changes that suit you
  • You have the added security of owning your own home, with long term goal of paying of the mortgage completely therefore reducing your outgoing significantly.
  • The mortgage you pay may be cheaper than rent

The disadvantages of buying:

  • Buying a home comes with a lot of additional costs – Solicitor costs, stamp duty, mortgage fees, maintenance/decoration costs and furnishing costs for example.
  • Owning a property can make things complicated in the event of a spousal break-up
  • Interest rates can go up, which means you may end up paying more on your mortgage
  • Selling a home can take time, which means it can be difficult to move quickly when you own your property
  • Homeownership can be stressful and pressured due to the finances involved
  • Home ownership with low deposits, could leave you with negative equity (Owing more on the mortgage than the value of the house) this could cause you become mortgage prisoner stopping you fixing your rate or moving lender.

So, is it better to rent or buy?

If you’re a first-time buyer, you may find it financially easier to rent rather than buy your own home. That’s because the additional costs with renting a property aren’t as high as buying you may be able to pass tenant financial checks more easily than mortgage lender checks. In general buying home in the UK is better than renting especially for long term financial security. Although having a home could be considered a liability in the short term, but long term heading towards retirement a mortgage free home is valuable. The share notion in knowing your hard earned money has gone towards something you can physically see does have its own allure. Allowing you to set your roots and giving you full autonomy to have pets or smoke inside for example. Buying allows you put your own unique stamp on your home in regards to decoration and even design which is important to making it feel like a home. 

So, in the long term, you may be better off buying if you’re able to and if you’re not planning to move for a long time.

Written by: Manjinder Badyal

Date: 2 February 2023

Get the Latest Finance News

Latest Updates

Categories
All Articles

Inflation – Where on from here?

Inflation - Where on from here?

 

Inflation was unfortunately the buzzword of 2022 and the core driver behind market performance globally. 

While it is far easier to write about what has happened already and with the US Fed, Bank of England and European Central Bank all meeting on 2 February, let’s look at how the next 12 months is shaping up for inflation and central bank interest rates.

Easiest to discuss first is the US, where inflation has started falling rapidly (and is projected to 

continue for some time) and the economy is proving to be resilient to an increasing Fed Funds Rate (the US equivalent to our ‘Base Rate’).

The US was, in 2021, the first Western market where inflation was creeping up at an abnormally high rate. This was largely due to two factors, supply-side-inflation due to a still largely closed China and an abnormally tight labour market. At one point the labour market had two job opportunities advertised for every applicant, a highly unusual situation.

Three factors have meant that US Inflation is falling at a far faster rate than the rest of the developed world after being the first to peak. 

The US is, from an energy perspective, natural resource independent. As a result, the government have a greater ability to influence energy prices through the release of the Strategic Petroleum Reserves (SPR). This happened to an unprecedented amount in an effort to depress the high oil prices in the aftermath of the Russian invasion of Ukraine. Over 180 days, 180 million barrels were released from the SPR. For context, 17 million barrels were released after the outbreak of the First Gulf War. This has resulted in energy price rises being depressed domestically compared to the majority of the rest of the world.

Where-as pre-2007 nearly 35% of all mortgages were variable, in 2021 this figure was only around 3%. This factor, coupled with the fact that the vast majority of US fixed mortgages are 10 or 30 year fixes, mean that mortgage interest payment changes have had the ‘can kicked far down the road’ compared to the UK. As a result, consumer confidence isn’t being highly affected by increasing interest rates. In turn, this has meant that consumer spending has remained robust compared to the rest of the world (as housing costs have not increased at the same rate) and strong corporate balance sheets have meant that large corporations have remained largely healthy and stable.

Whilst it has proven to be rather ‘sticky’ the US labour market is finally showing signs of loosening. The tightness of the labour market is a key metric that the US Federal Reserve has been monitoring in their fight against inflation while setting interest rates. While this has not yet fed into the headline data, the preliminary data has been showing that the number of applicants are increasing. While it is too early to say confidently whether this will result in an increase in the longer-term unemployment rate, it at present does not yet look like this will be the case and the issue will result in a “soft landing”.

Markets have been rather excited so far this year as US inflation has been dropping rapidly with the thought that this may mean that the Fed Funds Rate may decrease at some point during the year. However, there is still the possibility that it remains above target throughout 2023. Should this prove to be the case, there will be little reason for the Fed to reduce rates. As a result, there is likely to be a see-saw of market optimism in the same way there was in 2022, though I/we would be very surprised if we saw the same overall performance picture of 2022.

Should you have any questions, please feel free to speak to one of our professional advisers.

Written by: Sam Hallett – Investment Analyst

Date: 31 January 2023

Get the Latest Finance News

Latest Updates

UK Financial Adviser
Facebook Twitter Youtube
  • enquiries@ascotwm.com
  • 01344 851 250
  • Scotch Corner, London Road Sunningdale, Berkshire, United Kingdom SL5 0ER

Copyright © 2022 | All rights reserved.

Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference number 551744.

Ascot Wealth Management Limited is a registered limited company. Company Number: 07428369