The Bank of Mum and
Dad is still playing an important role in the UK housing market, with young and
even some middle-aged adults continuing to receive financial support from their
parents for their first and subsequent property purchases.
Their assistance, however, has helped fund nearly 20% fewer purchases
than in 2018, a symptom of a general reduction in transactions across the whole
market. Those who have been helped have enjoyed an increase in lending – the
average contribution this year is £24,100 up from £18,000 last year2, a rise of over £6,000 which is double
the average UK house price increase to March, possibly reflecting the choice of
a house rather than a flat as a first home.
The Bank of Mum and Dad is set to lend £6.3bn this year, up
from £5.7bn in 2018, making it the 11th largest mortgage lender in
the UK and it has supported nearly 20% of transactions in the UK mortgage market
over this period.
This funding is set to become the norm with 35% of
prospective buyers who are planning to purchase a home in the next five years expecting
to rely on financial support from their family.
2Legal and General,
Figures released by financial software firm IRESS highlight
a substantial difference in protection sums assured across the gender divide,
raising concerns that women are at far greater risk of being underinsured than
their male counterparts.
While the analysis2
found no significant difference in the number of men and women arranging
protection cover, it did reveal large variations in the sums assured. For
instance, male sums for critical illness were typically 90% higher than
equivalent female ones, while for life cover, the difference was over 50%.
Given the gender pay gap, it may be expected that men will
have more protection cover than women. However,
IRESS Executive General Manager, Dave Miller, admitted to being ‘taken aback’
by the size of the differences.
Review your cover
If you’re concerned about your level of cover it might be
time to review your protection needs. Cover is relatively affordable and should
form an integral part of everyone’s financial planning. Get in touch.
2IRESS, July 2019
It’s no secret that,
in recent times, a combination of geopolitical uncertainties, weaker growth and
increased volatility has heightened awareness of risk amongst investors. And
this, in turn, has sparked fresh interest in multi-asset funds, as investors
try to manage risk and protect capital whilst also seeking growth
Why invest in
Multi-asset funds invest in a combination of asset classes,
which typically include equities and bonds, but can also cover a wider range of
assets such as property and commodities. Their appeal is that they provide
diversification and thus ensure investors ‘do not put all their eggs in one
Surge in sales
Increased interest in this sector has fuelled a surge of new
money into existing funds and a flurry of new fund launches too. According to Morningstar,
there are now 1,027 UK domiciled multi-asset funds, while Investment
Association data shows the mixed-asset sector was last year’s bestselling asset
class with net retail sales of £7.9 billion.
While the wide choice of funds is clearly great news for
investors, it has enhanced the need to seek advice.
What’s putting you
Setting aside a sluggish property market, it seems that, for
many of us, it’s the thought that the process is just too stressful. The costs,
finding a new mortgage, lack of certainty about a new area or a fear of the
unknown has put off 60% of homeowners1
placing their current home on the market and looking for a new one.
It’s often said that moving home is more stressful than
getting a divorce, having a baby, starting a new job or getting married. On the
flip side, 62% say they are happier once they have actually made the move, so
the key to a successful move is to identify the potential sources of stress and
uncertainty and do all you can to eliminate them.
Some of us like change in our lives but for others who like
familiarity it can be a source of anxiety. A new area, commute, schools and
healthcare can be enough to make you decide to stay where you are. So, in
preparation, spend time in the new area, talk to potential neighbours, check out
the local amenities and visit at different times of the day/week to check noise
levels. Addressing each of these issues will hopefully make you feel in control
and more positive.
Finding a new
The finances of a move may be your biggest worry. Whether
you need to increase the size of your loan, transfer your existing mortgage or
find a new provider, speaking to us early in the process, even before you have
identified your next home, allows you to consider your options and review the likely
repayment costs. Yes, there are some unknowns involved in a move but remember
that for many it’s a change for the better.
People on an average salary who wish to retire at the age of 65 will now typically require a pension pot of almost £450,000 in order to fund their retirement until they are 100 years old, recent analysis has found1.
Never too early to
The research also shows that an individual who starts saving
into a pension at 25 years of age will need to invest around £235 a month in
order to accumulate a retirement fund of that size. However, a delay of 10 years
would see this monthly figure almost double to £428, while someone who only starts
saving at the age of 45 would need to set aside £859 a month to attain a
pension fund of that size.
This analysis vividly demonstrates the benefit of starting
to save for retirement at the earliest opportunity, ideally from the day you
first start work. While other financial challenges can inevitably make this
difficult, investing regular amounts in a pension throughout your working life
provides the best chance of building up sufficient money to enjoy a prosperous
Better late than
Although it’s undoubtedly better to start saving for a
pension early in your working life, it’s never too late to begin saving for your
retirement. Employer contributions, including those made through automatic enrolment,
allied with the favourable tax treatment pensions enjoy and their potential for
investment growth means that any contributions you make later in life can also
still make a huge difference to your standard of living in retirement.
Make pension saving a
While it can seem a long time until retirement, it does come
round a lot faster than people expect. So, the sooner you engage with the
topic, the better the chance of enjoying the retirement you deserve.
1AJ Bell, June 2019
All successful gardeners will understand the need to
regularly tend their plants, shrubs and lawns in order to ensure a garden can flourish.
And, for investors, taking a similar approach with their financial affairs can also
bear fruit by ensuring their investment portfolios don’t become neglected and,
as a result, underperform.
As with a garden, your investment portfolio requires regular
careful attention in order to ensure it continues to grow. Typical tasks
include weeding out any perennially underperforming funds and switching to potentially
more profitable ones and, for those with new money to invest, sowing the seeds
of your portfolio with carefully selected additional new investments.
…pruning and trimming
Another important task is pruning. This will ensure your
investment portfolio stays balanced and continues to fully reflect both your
current and long-term financial goals as well as any changes in your appetite
for risk. It may also require taking profits at certain points in time to
ensure you are using any potential tax allowances.
However carefully your initial range of investments were
selected, your portfolio will also inevitably get out of shape over time. This
creates an ongoing need to regularly review the allocation of different asset classes,
such as cash, equities, bonds and property. And such a review may result in the
trimming back of certain assets in order to restore balance to your portfolio.
Help is at hand
Many people now seek professional help to create and
maintain their garden and it’s obviously wise for investors to do the same thing.
Indeed, with ongoing political and economic uncertainties causing increased market
volatility, there has arguably never been a more important time to seek professional
financial advice. Keep in touch, so that we can help you keep your investment portfolio
in full bloom.