ours ours Financial Planning Alace 2015
ours What this session will cover ours Won’t do: Will do: • Provide financial or • Making good pension choices tax advice • Key financial planning • Look at individual needs, principles objectives and planning • Overview of the world of • Promote any particular financial investments products • Tax hints and tax efficiency • Accessing advice/do it yourself and pros and cons of each Strictly confidential 2
ours Introducing Close Brothers ours Selected to deliver financial education Delivered financial education seminars • 40+ years • For > 200 UK’s best known employers • Speak to > 6,000 delegates each year • Specialist speakers Part of Close Brothers Group plc • Founded in 1878 • FTSE 250 company Strictly confidential 3
ours The need to plan ours c hild’s university estate retire from downsize nursing fees start settlement wedding work main home home LIFE PLAN children on mortgage grandchildren enjoy start wealth property ladder repaid hobbies transfer planning Strictly confidential 4
ours What do we need to plan & why? ours Key goals & timelines Level of Income & security, risk expenditure & protection Own, family & Lifestyle Assets & dependants, liabilities future generations Strictly confidential 5
ours Life expectancy Average life expectancy ours 29.5 years 26.4 25 years years 22.1 20 years 18.1 years 16.7 years 14.4 years years Age today 55 Age today 60 Age today 65 Age today 70 Source: Office for National statistics, based on data for the years 2009-2011 (March 2013) Strictly confidential 6
ours Making good pension decisions – at pension age ours • Timing when to take your pension At • One decision – 30+ years impact – important to get it right AT PENSION AGE • Recommend seeking professional advice pension age DC schemes DB schemes • Lump sum or higher pension? • NB Budget 2014 changes • Consider other pension benefits • Annuity or drawdown/UFPLS or e.g. dependent pension, life cover etc. combination? • Budget 2014 changes – • Choosing an annuity consider transfer but take advice Strictly confidential 7
ours Universal principles ours From one investment? Access From one asset? Income Growth One plan over time? Security Tax efficiency Same plan for everyone? Strictly confidential 8
ours Access ‒ choices ours • • Bank/ building society Mortgage offset • • Instant access Premium Bonds • Postal/ internet Traditional Alternative Strictly confidential 9
ours Income & growth choices ours Funds Stocks/ Shares Gilts Property Deposits Bonds Alternatives KEY: Invest in line with your own risk attitude & construct a balanced plan Strictly confidential 10
ours Security & risk Aspects to consider: ours • Risk inherent in an asset • Your attitude to risk / capacity to withstand financial loss • Risk of not acting RISK “If it looks too good to be true, it probably is” Strictly confidential 11
ours Inflation ours What £100,000 today could be worth in future years at different rates of inflation 3% annual inflation £100,000 5% annual inflation £90,000 £80,000 £86,260 £78,350 £70,000 £74,410 £60,000 £64,190 £61,390 £50,000 £55,370 £48,100 £40,000 £37,690 £30,000 £20,000 £10,000 £- 5 10 15 20 Years Strictly confidential 12
ours The importance of diversification Performance of individual asset classes (% in sterling terms) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Japan Eq. UK Small Cap Eq. Asia Eq. Global Gov. Bond Asia Eq. Gold UK Gilts UK Small Cap Eq. UK Small Cap Eq. US Eq. ours 42.14 24.18 38.17 49.16 58.19 34.15 10.99 28.15 33.1 20.87 Commodities Europe Ex UK Eq. Gold Gold UK Small Cap Eq. Asia Eq. Gold Asia Eq. US Eq. UK Corp. Bond 33.44 17.14 29.27 43.88 54.69 24.87 10.64 17.78 29.79 12.2 Gold Asia Eq. Europe Ex UK Eq. Global EM Bond UK Large Cap Eq. Commodities UK Corp. Bond Europe Ex UK Eq. Europe Ex UK Eq. World Ex UK Eq. 31.44 15.8 15.48 14.05 27.87 21.64 6.91 17.68 24.78 11.34 Asia Eq. UK Large Cap Eq. Commodities UK Gilts Global EM Bond UK Small Cap Eq. Global Gov. Bond UK Corp. Bond Japan Eq. Asia Eq. 30.64 14.82 15.23 7.38 22.4 19.85 6.74 13.05 23.77 10.48 UK Small Cap Eq. Gold Global Gov. Bond Cash(UK) Europe Ex UK Eq. US Eq. Global EM Bond Global EM Bond World Ex UK Eq. UK Gilts 22.69 8.16 9.29 5.49 21.16 19.17 6.33 12.81 20.37 9.98 World Ex UK Eq. Cash(UK) World Ex UK Eq. Japan Eq. World Ex UK Eq. Japan Eq. US Eq. US Eq. UK Large Cap Eq. Global EM Bond 22.25 4.85 9.01 2.55 17.67 19.1 2.65 10.76 19.05 9.65 Global EM Bond World Ex UK Eq. UK Large Cap Eq. UK Corp. Bond US Eq. Global EM Bond Cash(UK) UK Large Cap Eq. Asia Eq. Global Gov. Bond 21.83 4.08 7.75 -4.06 14.13 14.9 0.65 10.41 1.62 5.27 UK Large Cap Eq. US Eq. Cash(UK) Commodities Gold World Ex UK Eq. UK Large Cap Eq. World Ex UK Eq. UK Corp. Bond Gold 21.24 1.68 6.02 -12.95 12.25 14.87 -1.82 9.71 0.87 4.49 Europe Ex UK Eq. UK Corp. Bond Global EM Bond US Eq. Commodities UK Large Cap Eq. World Ex UK Eq. Japan Eq. Cash(UK) Japan Eq. 20.89 0.74 4.46 -14.3 11.43 13.01 -7.68 3.74 0.49 2.96 US Eq. Global EM Bond US Eq. World Ex UK Eq. UK Corp. Bond Global Gov. Bond Commodities Gold Global EM Bond UK Small Cap Eq. 16.94 -2.38 4.2 -17.89 10.78 9.67 -7.78 2.3 -4.57 1.08 UK Corp. Bond UK Gilts UK Corp. Bond Europe Ex UK Eq. Cash(UK) UK Corp. Bond UK Small Cap Eq. Cash(UK) Global Gov. Bond UK Large Cap Eq. 9 -4.3 1.81 -24.9 0.89 8.38 -12.31 0.63 -6.13 1.04 Cash(UK) Global Gov. Bond UK Gilts UK Large Cap Eq. UK Gilts Europe Ex UK Eq. Japan Eq. UK Gilts Commodities Cash(UK) 4.84 -6.65 -0.05 -27.99 -5.41 5.92 -12.55 -0.9 -6.89 0.49 Global Gov. Bond Japan Eq. Japan Eq. Asia Eq. Japan Eq. UK Gilts Asia Eq. Global Gov. Bond UK Gilts Europe Ex UK Eq. 4.63 -10.29 -7.78 -33.97 -5.59 2.79 -14.69 -2.63 -7.3 0.01 UK Gilts Commodities UK Small Cap Eq. UK Small Cap Eq. Global Gov. Bond Cash(UK) Europe Ex UK Eq. Commodities Gold Commodities 2.42 -18.68 -8.34 -42.62 -6.78 0.56 -14.82 -7.73 -29.44 -12.73 Source: Bloomberg, Close Brothers Asset Management as at 31 December 2014. The value of investments and the income from them may fall as well as rise and is not guaranteed. The performance information set out herein refers to the past. Past performance is not a reliable indicator of future Strictly confidential 13 results.
ours The importance of diversification Performance of individual asset classes (% in sterling terms) UK small cap UK small cap UK small cap ours 24.18 28.15 33.1 UK small cap 54.69 UK small cap 19.85 UK small cap 22.69 UK small cap 1.08 UK small cap -12.31 UK small cap UK small cap -8.34 -42.62 Source: Bloomberg, Close Brothers Asset Management as at 31 December 2014. The value of investments and the income from them may fall as well as rise and is not guaranteed. The performance information set out herein refers to the past. Past performance is not a reliable Strictly confidential 14 indicator of future results.
ours The importance of diversification Gold ours 34.15 Gold Gold Gold Gold Gold 29.27 43.88 10.64 27.74 10.45 Gold 31.44 31.4 Gold 8.16 Gold Gold 4.49 12.25 Gold 2.3 Gold -29.44 Source: Bloomberg, Close Brothers Asset Management as at 31 December 2014. The value of investments and the income from them may fall as well as rise Strictly confidential and is not guaranteed. The performance information set out herein refers to the past. Past performance is not a reliable indicator of future results. 15
ours Example asset allocation Example Portfolio Fund ours n Alternatives 1 0.09% n Cash 2.24% n UK Equities 5.1 8% n Fixed Interest 40.1 7% n Rest of the World Equities 42.33% Asset allocation is based on current market conditions and assumptions made by the investment manager. It is subject to change at any time without notice. This information is for illustrative purposes only and should not be construed as investment recommendations. Source: BNY Mellon 31/01/2015 Strictly confidential 16
ours Past performance is not a reliable indicator of future returns Ranking Ranking Fund 31/12/2004 – 31/12/2008 01/01/2009 – 31/12/2014 ours 1 1062 Scot Widow Latin American B in GB 2 919 CF Ruffer European C Acc in GB 3 1080 Schroder ISF Latin American A Dis NAV GBP TR in GB 4 752 JPM Latin America Equity A Dis NAV USD TR in GB 5 1033 Threadneedle Latin American Ret GBP in GB 6 1060 Baring Latin America A Inc NAV USD TR in GB 7 855 Invesco Perpetual Latin America Acc in GB 8 973 Neptune Japan Opportunities A Acc GBP in GB 9 1034 Neptune European Opportunities A Acc GBP in GB 10 1068 JPM Turkey Equity A Dis TR in GB Source: FE, Close Brothers Asset Management as at 25 February 2015. Universe of 1202 registered funds. * N/A are funds closed in the subsequent five-year period .Past performance is not a guide to future returns All returns in sterling terms; non sterling-denominated funds will also have been impacted by currency movements. Strictly confidential 17
ours Universal principles ours covered next Strictly confidential 18
ours Tax efficiency ours Tactics Tax Tax Allowances Reliefs USE THEM USE THEM Strictly confidential 19
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