Keep one step ahead

Nearly a third of homeowners (31%) have said they would only consider purchasing protection insurance if they fell ill1 – which defeats the point as it’s already too late by then.

Other triggers for taking out protection include having an accident (24%) or a change in employment status (25%). A further 22% say there is no circumstance that would make them consider purchasing a protection product.

Other reasons given include:

•             Not thinking they need it (28%)

•             Believing it to be too expensive (25%)

•             Not being able to afford it (22%).

No regrets

Unfortunately, once people experience a change in their circumstances, it is often too late to protect themselves.

Protection policies rarely offer backdated cover, meaning that homeowners could find themselves in unnecessary financial difficulty as they try to meet their mortgage, bills and other essential payments.

Many of those questioned said they wish they had better understood the true value of protection, with one in seven people (14%) regretting not having financial protection in place that would have supported their mortgage payments in the past.

Get ahead

We can help explain the implications of having no protection insurance for you and your family, and advise you on suitable and cost-effective products to protect you financially – before it’s too late.

1MetLife, 2021

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.

Probate delayed by ‘hidden assets’

Probate software specialist Exizent has published its first Bereavement Index1, with some interesting findings. It shows that many people fail to organise their finances before death, leading to stress and anxiety for those left dealing with a ‘financial mess’.

According to the research, one in seven (14%) of those tasked with administering the estate of someone who has died, begin the process without full knowledge of all the deceased’s accounts and assets. In fact, so many people die without leaving behind sufficient financial information, that 37% of accounts only come to light during probate.

Secret accounts

No wonder, then, that nearly 90% of those who have recently lost a loved one found the probate process ‘stressful’ – or ‘extremely stressful’ for one in six correspondents. Secret or hidden accounts were associated with higher stress, with respondents in this situation twice as likely to be ‘extremely’ stressed, while for 40%, probate had mental health implications.

Get organised

Not only will organising your financial affairs and keeping an up-to-date Will ensure your wishes are carried out when you die; it will also save your loved ones a great deal of time and stress. For guidance on getting your finances in order, speak with us.

1Exizent, 2021

Thinking of privately educating your child?

Private school fees have once again increased this year, with an average termly fee of £12,000 (£36,000 per year) for boarding schools and £5,064 (£15,191 per year) for day pupils1.

A lifetime endeavour

As data from the Independent Schools Council shows, sending your child to private school is a significant financial commitment – for many families, it could be their biggest expense after their homes. So, having a saving mindset from day one (contributing regularly to savings accounts and encouraging family members to do the same, for example), or even building up an investment portfolio for those with longer to save, could soon help those funds build up. Investments have the potential – although this is not guaranteed – to outstrip the returns you’ll get from savings accounts.

Getting tax-efficient

Using up those tax-free exemptions and allowances (for example the £20,000 ISA allowance), enables parents to save or invest without paying tax on their interest or returns; they can also make withdrawals without incurring tax. Grandparents can also lower their Inheritance Tax (IHT) liability through lifetime gifts – and see the benefits their money is having while they’re still around.

Other money-raising methods  

Other ways of funding your child’s education include borrowing (either via  a personal loan or remortgaging your property) and withdrawing your 25% tax-free lump sum from your pension if you are over the age of 55. Remember that your own financial security is also important, so make sure you still have enough to fund your retirement.

When you are making a significant and long-term financial commitment, it really is advisable to consult a professional, who can help you achieve your savings goals without compromising your own financial future – so please do get in touch.

1ISC, 2021

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

In the News

Dividends making a slow recovery

It has been a rocky year for dividends, with data showing that investors lost almost £45bn in dividends between Q2 2020 and Q1 2021. Many will therefore be relieved to hear that, while dividends are still falling, they did so in Q1 2021 at the slowest rate recorded since the onset of the pandemic. This is according to the latest UK Dividend Monitor1, which also revealed that half of UK companies restarted, increased or maintained their dividends in Q1, against a third in Q4 last year. Looking ahead, underlying dividends are predicted to increase by 5.6% year-on-year to £66.4bn, and banking dividends are making a slow return with ‘positive signs from miners, insurance, and media companies.’ Ian Stokes, Managing Director of Corporate Markets EMEA (part of Link Group), stated, “During the pandemic, many companies that had been over-distributing permanently reset their dividends to more sustainable levels. Most of these now hope to grow their dividends from this lower base. For others, the effect of the cuts is more transitory so they will bounce back quickly.”

1Link Group, 2021

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

Has COVID changed our investment behaviour?

The mantra of ‘Keep Calm and Carry On’ is likely to have been a well-versed phrase for investors over the past year or so, as the pandemic profoundly impacted the investment landscape. The global impact of the virus has been the catalyst for a seismic shift in public behaviour. Investors should consider the implications of these changes when evaluating prospective investment opportunities.

Social and economic changes

While the pandemic’s impact was unprecedented in many ways, what it has done is to accelerate socioeconomic trends that were already bubbling away beneath the surface. Pointing to the labour market as an obvious example, with previously present, but rather sidelined, flexible and remote working practices rapidly becoming the norm over the past year.

Digital development

The internet has long been part of our lives, but the pandemic has accentuated the importance of digital literacy. Businesses that went into the pandemic with an established online presence and offering, did better than their less-digitally adapted peers, with web presence becoming vital for retailers as e-commerce took centre stage. It has caused typically ‘tech-averse’ groups to make the shift to digital, as older groups most at risk from the virus began shopping online.

ESG under the spotlight

ESG (Environmental, Social and Governance) investment has been around for many years, but the pandemic has sent it mainstream as consumers became more aware of the importance of supporting companies with a vested interest in corporate governance and sustainability issues. Over the past year, what businesses are doing to support ‘wellbeing’, and how they treat their employees and suppliers, have come into the spotlight like never before, driving a new commitment to ESG issues. Sustainability and governance issues have been propelled up the corporate agenda.

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

Economic Review – July 2021

UK growth forecast upgraded

The International Monetary Fund (IMF) has sharply increased this year’s growth forecast for the UK, although recent data does suggest the country’s strong economic rebound has begun to slow down.

In its latest assessment of global economic prospects, the IMF highlighted a worrying divergence in fortunes between rich and poor nations, due to differing access to COVID vaccines. Growth across all wealthy countries in 2021 is now predicted to be half a percentage point stronger than the IMF’s previous forecast published in April, but a similar-sized downgrade for other nations means the overall global growth forecast remains unchanged at 6%.

For the UK, the international soothsayer is now predicting growth of 7% in 2021 which, together with the US, is the joint-fastest rate among the G7 major advanced economies. This represents a sizeable upgrade from the previous forecast, which the IMF attributed to faster growth between February and April, when the success of the vaccination rollout and furlough scheme meant that the UK economy performed better than had been expected.

More recent data, however, does suggest UK growth has slowed across the past few months. The latest gross domestic product figures released by the Office for National Statistics (ONS), for instance, showed the economy expanded by 0.8% in May. While this was the fourth successive month of growth, the figure was significantly lower than April’s 2% rate and below market expectations.

Furthermore, survey data suggests the country’s economic rebound slowed again last month, with the IHS Markit/CIPS flash composite Purchasing Managers’ Index (PMI) dropping to 57.7 in July from 62.2 in June. While any value over 50 does still represent an acceleration in output, the latest reading was the lowest since March and suggests the rising wave of coronavirus infections and resulting ‘pingdemic’ has started to stifle business activity.

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Inflation views begin to diverge

While a majority of Bank of England (BoE) policymakers continue to expect current inflationary pressures to prove short-lived, some have voiced concerns that the recent leap in prices may require more immediate policy action.

Data released last month by ONS showed the Consumer Prices Index (CPI) 12-month rate – which compares prices in the current month with the same period a year earlier – rose to 2.5% in June, a sharp increase from May’s 2.1% figure. This was significantly above the consensus forecast in a Reuters poll of economists and the highest rate since August 2018.

ONS Deputy National Statistician, Jonathan Athow, said the rise was widespread, with price increases across a range of categories, including food, fuel, second-hand cars, clothing and footwear. He also acknowledged that “some of the increase is from temporary effects” and that much of the rise was “due to prices recovering from lows earlier in the pandemic“.

Survey evidence, though, does suggest the surge in inflationary pressures is set to continue. Preliminary data from July’s IHS Markit/CIPS PMI, for instance, reported input costs at an all-time high, with output charges rising at a near-record rate.

Over the past few weeks, most members of the BoE’s Monetary Policy Committee (MPC) have expressed a view on the likely future path of inflation. A majority still seem to feel that the recent jump in prices will prove temporary and that the Bank’s current monetary stimulus should therefore be maintained.

However, two members – Dave Ramsden and Michael Saunders – recently broke ranks, arguing that the time for tighter monetary policy may be nearing. Minutes from the next MPC meeting, along with updated economic forecasts, are due to be published on 5 August and will provide further insight into the committee’s thoughts on the future course of action.

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Markets: (Data compiled by TOMD)

London stocks ended lower on July’s last day of trading, following a weak session in Asia, weighed down by travel shares and miners, amid concerns that rising global coronavirus infections could derail economic growth. Markets in Europe also slipped back at the end of the month, with continuing concerns over China’s regulatory crackdown on tech stocks overshadowing upbeat earnings reports.

Overall, the FTSE 100 made very little progress in July, ending the month on 7,032.30, a slight loss of 0.07%. The mid-cap FTSE 250 index, which is typically made up of UK-focused businesses, reached record highs during July, as COVID-19 restrictions eased and the economy picked up, to close on 22,934.83, a monthly gain of 2.50%. The Junior AIM index closed on 1,251.11.

The Euro Stoxx 50 gained 0.62% in the month to end on 4,089.30. In Japan, the Nikkei 225 lost 5.24% as spiking COVID-19 cases, the crackdown by China on its technology sector, and mixed earnings from a range of companies reduced investor sentiment.

In the US, the Dow Jones ended July up 1.25% to close on 34,935.47, despite weaker than expected earnings results from heavily weighted companies including Amazon. The NASDAQ recorded a gain of 1.16%.

On the foreign exchanges, sterling closed the month at $1.39 against the US dollar. The euro closed at €1.17 against sterling and at $1.18 against the US dollar.

Gold is currently trading at around $1,813 a troy ounce, a gain of 2.51% on the month, having dropped back from a monthly high of over $1,829 on 15 July. Oil producing nations have agreed to increase output from August, with the aim of reducing prices and easing pressure on the global economy. Brent Crude is currently trading at around $75 per barrel, a gain of 0.57% on the month.


Index Value
(30/07/21)		   % Movement
(since 30/06/21)
  FTSE 100 7,032.30 0.07%
  FTSE 250 22,934.83 2.50%
  FTSE AIM 1,251.11 0.22%
  EURO STOXX 50 4,089.30 0.62%
  NASDAQ Composite 14,672.68 1.16%
  DOW JONES 34,935.47 1.25%
  NIKKEI 225 27,283.59 5.24%

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Labour market recovery continues

The latest set of employment statistics show the labour market continues to recover, with the number of employees on company payrolls growing by the largest amount since the start of the pandemic.

According to tax data, the number of people in payrolled employment rose by 356,000 in June, boosted by strong growth across both the food and accommodation sectors. While the data did show total UK employment remains below pre-pandemic levels, in some parts of the country – the North East, North West, East Midlands and Northern Ireland – payroll numbers have now actually risen beyond their pre-COVID levels.

The number of job vacancies is also now higher than before the pandemic struck. In the three months to June, there were 862,000 jobs on offer, 77,500 more than in the January to March 2020 period. Perhaps unsurprisingly, the recent increase was largely driven by rising vacancies within the hospitality and retail sectors.

Commenting on the figures, ONS Director of Economic Statistics Darren Morgan said, “The labour market is continuing to recover, with the number of employees on payroll up again strongly in June. However, it is still over 200,000 down on pre-pandemic levels, while a large number of workers remain on furlough.“

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Euro 2020 buoys retail sales

Official statistics have revealed that strong demand for food boosted retail sales in June, while more recent survey evidence suggests sales volumes remain at relatively healthy levels.

According to ONS data, sales volumes rose by 0.5% in June, with the food sector the principal contributor to growth. In total, sales at food shops rose by 4.2%, as football fans stocked up on food and drink to enjoy at home during Euro 2020. In contrast, sales at non-food shops fell, with furniture and clothing demand particularly weak.

Data from the latest Distributive Trades Survey, published by the Confederation of British Industry (CBI) suggests a slight dip in sales last month, with the net balance figure falling from a near three-year high of +25 in June to +23 in July. Retailers also said they expect sales to remain broadly in line with seasonal norms in August.

Commenting on the findings, CBI Principal Economist, Ben Jones, said, “Consumer demand continues to support the UK’s economic recovery. Retail sales have been at or above seasonal norms for the last four months now, although this picture is not universal, with the clothing and footwear stores in particular yet to see demand recover to usual levels.“

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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.

News in Review

‘It’s time we recognised the quality that other countries see in the UK’

In an open letter to UK institutional investors last week, Boris Johnson and Rishi Sunak urged pension schemes to invest more of savers’ money into UK assets, to help drive the economic recovery and boost long-term growth prospects. They believe the country needs an ‘investment big bang’ to unlock ‘hundreds of billions of pounds’ sat in schemes, and that UK institutional investors should invest a greater proportion of their capital in UK assets, such as infrastructure and pioneering firms.

In the letter, which comes ahead of an Investment Summit at Downing Street in October, Sunak and Johnson highlighted that UK investors are currently under-represented in owning these assets, whilst some of the world’s largest pension funds, including from Australia and Canada, have benefited from the opportunities that UK long-term investments afford.They wrote, ‘It’s time we recognised the quality that other countries see in the UK, and back ourselves by investing more money into the companies and infrastructure that will drive growth and prosperity across our country… we want to see UK pension savers benefiting from the fruits of UK ingenuity and enterprise, being given the opportunity to back British success stories, and secure higher returns and better retirements.’

MPC maintain policy

Last Thursday, the Bank of England’s Monetary Policy Committee (MPC) voted in favour of maintaining monetary policy, keeping Bank Rate unchanged at 0.1% and bond buying at current levels. Just one member of the eight-person Committee, voted to end the bond buying programme early.

In his accompanying economic outlook, Governor of the Bank of England, Andrew Bailey, spoke about the big news story – inflation. The Bank expects inflation to peak at 4% in Q4 and Q1 2022, before falling back to around 2.5% at the end of next year, returning to target in H2 2023. The prices of traded goods have contributed to the surge in inflation, reflecting several developments including oil prices, supply bottlenecks and a global upturn in the prices of basic commodities. Bailey concluded, “The MPC’s view is that there are good reasons to suggest that above-target inflation will be temporary. But if this outlook appears to be in jeopardy, the MPC will not hesitate to act.”

The Bank expects UK GDP to have risen ‘slightly’ faster than expected in Q2, offset by slowing momentum in Q3, ‘as suggested by higher-frequency indicators of card spending, consumer confidence and mobility, which have either levelled off or fallen slightly in recent weeks.’ Consequently, UK GDP is still expected to grow by 7.25% this year, followed by growth of 6% next year.

Sterling extends gains against euro

In recent weeks, sterling has performed strongly, as confidence gathers surrounding high vaccination rates, easing restrictions and although still elevated, declining virus cases. On Tuesday, sterling extended gains to hit its strongest level against the euro since February last year.

US indices reach highs on positive jobs data

Across the pond, better than expected jobs data boosted markets at the end of last week. The labour market in the world’s largest economy remains firmly in recovery mode, registering the seventh consecutive month of  jobs expansion. Nonfarm payroll employment rose by 943,000 in July, far outstripping the 870,000 jobs expected in a Reuters survey of economists. The unemployment rate dipped to 5.4% from 5.9%, also beating the median estimate of 5.7%. On Tuesday, the Senate voted to approve a $1trn infrastructure bill.

Cautious optimism for home markets 

At home, cautious optimism appears to be outweighing concern about rising Delta variant rates in Asia and to a lesser extent in the US, resulting in another record high for the domestically focused FTSE 250.

China’s export growth slows

New coronavirus infections in July have resulted in authorities in many Chinese cities imposing lockdown on affected communities, ordering millions to be tested and suspending some business activity, including factory work. This has resulted in an unexpected slowdown in export growth – exports in July rose 19.3% year-on-year, compared to a 32.2% gain in June – analysts polled by Reuters had forecast a gain of 20.8% for the month.

Here to help

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

News in Review

“Our economy is rebounding faster than initially expected”

Last week saw the International Monetary Fund (IMF) release its latest assessment of the global economy. Among the headline stories was a sharp increase to this year’s UK growth forecast, with the renowned international soothsayer now predicting a 7% expansion – 1.7 percentage points higher than its previous projection published in April. This uplift was attributed to stronger than expected growth between February and April, due to the success of the UK vaccination programme and furlough scheme. Responding to the upgrade, Chancellor Rishi Sunak said, “There are positive signs that our economy is rebounding faster than initially expected.”

Along with the US, the UK rate was the joint-highest among the major advanced economies. In total, growth across all rich nations is forecast to be half a percentage point above April’s prediction. However, the latest IMF assessment did highlight a worrying divergence in fortunes between rich and poor countries due to differing levels of access to COVID vaccines. As a result, the overall global growth forecast for 2021 remains unchanged at 6%, with a weaker outlook for many emerging market and developing economies offsetting gains across richer nations.

US growth below expectations

While the US economy is expected to witness strong growth this year, the latest gross domestic product (GDP) figures released last Thursday fell short of market expectations. According to the Commerce Department’s advance estimate, the US economy grew at an annualised rate of 6.5% in the second quarter. This was only slightly above the rate recorded in the first three months of the year and significantly below the consensus forecast of 8.5%. It did, however, move US output back above its pre-pandemic level for the first time since COVID struck.

Eurozone growth rebounds

GDP data published on Friday also showed the eurozone economy has pulled out of its pandemic-induced recession, with an initial second quarter growth estimate of 2%. This figure, which was better than economists predicted, was buoyed by a particularly strong performance from the bloc’s third and fourth largest economies, Italy and Spain, which posted quarterly growth rates of 2.7% and 2.8%, respectively. Despite the second quarter rise, the eurozone economy remains 3% smaller than its pre-pandemic peak. The first estimate of UK second quarter GDP is due for release on 12 August.

Eurozone and US inflation up

During the past seven days, both the eurozone and US statistics agencies published new inflation data. In the eurozone, an early official estimate suggests annual inflation rose to 2.2% in July from 1.9% in June. This was 0.2 percentage points above market expectations and the highest rate since October 2018; it also moved inflation above the European Central Bank’s 2% target.

In the US, the Federal Reserve’s preferred inflation measure (core PCE) rose to 3.5% in the 12 months to June, from 3.4% in May. While this leaves the rate well above the central bank’s 2% target, it was actually 0.2 percentage points below analysts’ expectations. A day prior to the inflation data release, the Fed announced its current monetary policy stance would remain unchanged, with Fed Chair, Jerome Powell, reiterating his view that higher prices were the result of “transitory factors” and therefore not an imminent risk to the US economy.

Furlough numbers fall

Official figures published last Thursday showed the number of people on furlough at the end of June stood at 1.9 million, more than half a million fewer than at the end of May. The news came three days before the next phase of furlough tapering was introduced, with employers having to contribute 20% towards employee salaries from 1 August. Research published by the British Chambers of Commerce on Monday suggests nearly one in five firms are considering staff redundancies in response to the furlough change.

Housing market cools

The latest Nationwide House Price Index, released last Wednesday, revealed that annual house price growth slowed to 10.5% in the year to July, down from a 17-year high of 13.4% in the previous month.

Stocks rally

After having been hit by concerns over China’s tech crackdown last week, London stocks rallied at the start of the week; the FTSE 100 rose to a three-week high on Tuesday afternoon, continuing its strong start to August, whilst the domestically focused FTSE 250 reached another record high.

Here to help

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

In the news – Money

Be wary of that holiday selfie

Now that many of us are able to make travel plans, remember to think twice before posting a holiday selfie on social media. Your insurer may consider this as telling people that you are away from home, leaving your property unoccupied and as a result, potentially invalidating or compromising your insurance cover. Unfortunately, more and more criminals are using social media posts to identify when a property might be empty.

Sustainable funds – a new record

Data from industry tracker Morningstar shows that 2021 started with continued European interest in sustainable funds, attracting all-time high inflows of €120bn in Q1, 18% higher than the previous quarter. Climate funds proved to be top of the preferred list, with six of them featuring in the top 10. The number of sustainable funds available continues to grow; 111 new sustainable funds launched in Q1.

Jabbed population are financially optimistic

Those who have already received their COVID-19 vaccination are reported to be more optimistic about their finances than those who are yet to have their jab1. As well as giving people a feeling that the worst of the pandemic may be over, the jab also seems to be providing people with financial optimism about both investing and their own financial position. Nearly half (48%) of those who have had the vaccine believe now is a good time to invest, compared to 39% who have not yet received the jab.

1Aegon, 2021

Lenders reassured by mortgage guarantee scheme

The government’s mortgage guarantee scheme, which launched in April 2021, is encouraging lenders to offer mortgage finance to buyers with smaller deposits. It has been welcome news for prospective home buyers.

The scheme works as follows. The government offers lenders a ‘guarantee’ on 95% LTV mortgages (i.e. those worth 95% of the property value, with a 5% deposit required from the buyer). The guarantee applies to the portion of the loan over 80%, with the government compensating the lender for a portion of the net losses suffered in the event of repossession.

To be eligible, you must:

•             Be a first-time buyer or home mover

•             Be buying a property to live in yourself

•             Pass all normal affordability checks

•             Be offered a mortgage between 91% and 95% LTV.

Get your foot on the ladder

Reassured by the guarantee, many high street lenders have now launched 95% mortgage deals. So, whether you’ve had to put your property dreams on hold during the pandemic or are just starting out on your homeownership journey, get in touch and we can assist you in getting the most suitable mortgage for your needs.

The scheme is due to end on 31 December 2022, subject to review.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments. You may have to pay an early repayment charge to your existing lender if you remortgage.