Five Financial Regrets

We all make financial mistakes but some can be more expensive than others.  The biggest financial regret, mentioned by 1 in 6, was not having started saving earlier….

Meanwhile, almost 1 in 10, say their biggest financial mistake was not having started a pension sooner and more than 1 in 20 regrets not putting more into their pension.

Here are five financial mistakes that could cost you dearly and how you can avoid them:

1 Free Pension Cash

Consider increasing your pension contributions or you could miss out on what is essentially free money from your employer, as they will add to your pension fund on your behalf.

2 Savings

Figures have shown that stocks and shares ISAs, for instance, delivered positive growth in 14 out of 21 tax years since they were introduced in 1999. By investing as much as you can in tax-efficient vehicles such as ISAs, you can avoid tax.  Everyone in the UK over 18 has a £20,000 annual ISA allowance.  Furthermore, you will not pay any income tax on the interest or dividends you receive from an ISA and any profits from investments are free of capital gains tax.

Holding your money in a savings account, rather than investing, can seem like the safe option. In reality, your money is likely to be losing value in real terms.  The interest rate you earn on savings is likely to be lower than the rate of inflation.  This means your spending power will decrease over time.  According to a recent study that uses data going back to 1899, the probability that shares outperformed cash savings was 75% over five years, increasing to 90% over 10 years and 99% over 18 years.  While all investments carry some risk and the value can rise as well as fall, they can help your wealth grow over the long term.

3 Tax Relief

Are you making full use of allowances that could cut your tax bill?  The rules around allowances can be complex and may depend on your situation so it can be difficult to understand which ones apply to you.

The marriage allowance, for instance, means that spouses and civil partners can transfer some of their unused personal allowance, the amount of income you can earn tax-free, to their partner.  For this tax year, the personal allowance is £12,570 and you can transfer up to £1,260 to a partner.  It can reduce your tax bill by up to £252.

5 Writing A Will

It may seem obvious but anyone with assets such as a house, savings or even a workplace life insurance scheme should have a Will.  But the sad fact is that about half of us die without one.

Dying intestate means the state gets to decide who will inherit your possessions and a huge chunk will be scooped up by the taxman.  If you are in a relationship but not married, you need a will as the law doesn’t recognise “common-law marriage” so you could wind up with nothing if your partner died.  Those who are divorced may want to stipulate what happens to their assets if an ex-partner remarries.

Also, if you have a small business and you die without naming executors in your will, nobody can authorise payments (or wages) so your business could collapse and your staff could go unpaid.

6 Financial Protection

Figures show that one in 10 of us is likely to need to take over six months off work due to ill health.  We are three times more likely to go on long-term sick leave than we are to die during our working life.  But you can protect your income should you develop health problems with Critical Illness Cover.

We at Iceni Financial Advisers are well placed to help you with all your financial, protection and will writing needs.  Call us today to see how we can best help you on 01603 957599.  


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