Hard times and risky retirement

Even the biggest fish on the advisory market cannot escape the fragile environment of investor confidence. St James’s Place releases third quarter results this morning, which show that gross and net inflows are down from the same period last year.

As always, SJP has seen enviable results in holding funds, and a rebound in the market has helped assets under management to a new record £ 119 billion.

CEO Andrew Croft Doesn’t Draw a Punch: Times are tough, yes, but the company still believes the demand for one-on-one advice will continue to grow to keep PGS models growing for years to come.

PGS reported decreased inflows in a “challenging” trading environment.

Results released this morning show that gross inflows stood at £ 3.05 billion for the third quarter of 2020, compared with £ 3.74 billion for the same period last year.

The net inflows were £ 1.44 billion after £ 2.11 billion in 2019.

An inspection of the PGS business breakdowns showed that there was indeed a net outflow of the £ 10 million investment product.

However, the annuities represented a net inflow of £ 1.19 billion with the equity trust / ISA and discretionary fund management business adding a further £ 0.26 billion.

As CEO Andrew Croft noted, the total outflow for the quarter was lower than for the same period last year.

The fund retention rate was 96.4% for the quarter, up from 95.9% for the same period in 2019.

Managed funds continued to end the quarter with a record £ 118.7 billion, up 5% from £ 112.82 billion.

Croft said, “In a challenging environment, our consultants, their employees and our entire community continued to demonstrate tremendous flexibility during this period, building and maintaining close relationships with customers and with each other.

“I am encouraged that the increase in activity levels will continue towards the end of the quarter in October and activity for this month will be at the same level as the same month last year. Going forward, increased uncertainty related to Covid-19 will affect investment confidence. customers and subsequent decision making.

“Our mid-term and long-term confidence in our business remains unchanged. We are seeing an increasing demand for solid and highly personalized financial planning advice and, given the broad geographic scope and quality of the partnership, we remain in an excellent position to capitalize on this. these opportunities and in To stimulate further growth over time. “

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If you want to retire early, read this

It’s not just a dream, there are ways you can stop grinding sooner than your friends
Over the years, men are eligible for state pension at age 65 and women at age 60, and everyone knows where they are. This was later judged due to gender discrimination and dubbed 65 for both sexes. Politicians claim this is not possible due to rising life expectancy and starting to raise the state pension age for everyone.

On 6 October 2020, the transition to age 66 has been completed. This will increase to 67 in 2028 and 68 in 2037, after which it will continue to increase. The result is that millions of people are working longer hours and retiring later than originally planned. While you can retire at a younger age, you won’t receive a penny from the state pension if you want. What can you do?

Save automatically

On the one hand, the answer is simple. Save your own money. That way, you can retire at will.

The state provides you with a lot of support to help you save for retirement. For the first time, an automated job registration system offered company pensions to millions of mostly low-paid workers. Employees are automatically registered, as the name implies, and contribute 4% to eligible income, with the government adding 1% tax break. Employers are required to pay a minimum of 3% which means that 8% of your salary between £ 6,240 and £ 50,000 will be used for your pension based on the 2020/21 tax year.

Please don’t give up. If you do, you are turning down free money and ruining your chances of building a decent retirement.

Don’t stop here!

You also need to invest with your own money. You can pay a personal pension and claim tax breaks on your contributions of 20%, 40% or 45%, depending on your tax category.

To pay £ 100, a taxpayer with a property tax rate only needs to pay £ 80 and a taxpayer with a higher tax rate only needs to pay £ 60.Each adult can also invest up to £ 20,000 per year in a non-taxable ISA in any form. cash or stock.

While there is no tax relief on your contributions, your money will add up without income tax and income tax for life. Those aged 18-39 should also check out the Lifetime ISA, which gives you a 25% government bonus for contributions of up to £ 4,000 per year, up to £ 1,000 worth.

Money is not good enough

You’ll never save enough for an annuity leaving money in a savings account, especially with interest rates near zero these days. People are saving for retirement for a work life that can last more than 40 years, and for long periods of time stocks and stocks must generate higher returns, albeit with volatility along the way.

Mix it up now

Let’s say you started investing when you were 26 and made £ 200 a month. If your after-expenses are growing at an average of 6% per year, you have an impressive £ 393,714 at age 66.

Your initial contributions are most valuable because they will benefit the most from growing connections.

If you wait up to 36 to invest £ 200 per month you will only accumulate £ 201,124 to £ 66. Try to increase your contribution year after year. If the 26-year-old increased his payouts by 3% a year, they would have £ 595,608 in 40 years.

It’s not that easy

Salaries are depressed and few people can afford to save large sums of money.

Especially young people who have other money calls, such as B. driving a car, saving money or just enjoying life. Retirement seems a long way off, but it will come sooner than you think. Do your best to find balance.

Invest, invest, invest

The increasing age of the state pension made it difficult for workers or those with health problems who would have struggled to work in the late 1960s. There is a campaign to give people in this situation early access to their state pension at a lower price.

Right now, the only way to retire comfortably, invest, invest, invest at the time you choose is the only option. Nobody said it was easy.

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Young men and workers are more likely to avoid saving for retirement during the Covid-19 pandemic

A quarter of savers stopped or cut their pensions during the Covid-19 crisis and are considering doing so, new research shows.

Men and younger workers are more likely than women and older workers to avoid saving on pensions to make ends meet in response to the turmoil in work and personal finances caused by the pandemic, the study showed.

Hargreaves Lansdown’s findings echo a separate study that found that many people cut or cut their posts because they needed money for basic, cut or taken away.

According to a recent survey of 2,000 adults in September, around 14% of people have cut their posts and 11% have cut their posts completely, while 8% could do so in the future.

This trend can have a serious impact on people’s retirement prospects because they own smaller vessels. However, automatic registration is associated with failed protection.

Employers must re-enroll employees who leave the company every three years unless they wish to remain.

However, employers do this on a schedule, usually on a permanent basis, starting with the introduction of automatic registration the first time, not when the employee has left the company.

Sarah Coles, a personal finance analyst at Hargreaves Lansdown, says younger people can stop contributing sooner as their retirement age seems farther away, making it easy to cut costs.

However, it does show that the money you bet on in your teens is the hardest for you – because the combined growth raises the pot more over a longer period of time – resulting in higher than expected prices. .

Coles adds that if you cut or stop paying your pension, the effect increases because you lose tax breaks from the government and receive money from your employer.

But he admits that if you are currently earning less, have cut back on luxuries and spent spending to minimize the cost of basic necessities, and are still in trouble, you may have to cut your retirement contributions.

“The good news is that the way automatic recording works has to keep payment breaks temporarily so as not to become a big gap,” Coles said.

“If you give up your retirement at work, you’ll automatically be rehired within three years. Even if you can’t start paying yourself, you’re more than likely going to do the right thing inadvertently.”

Coles, meanwhile, said that some would see their retirement backdrop of declining in value due to the sharp downturn in the market at the start of the Covid-19 crisis, but some were ahead of the start of the year depending on where they invested.

“Most pensions aren’t just invested in stocks.” Most will have balance sheets of various assets, so overall pension funds haven’t come down that far and have made a significant recovery, “he said.

“According to Moneyfacts, the average pension fund at the end of June fell only 4.4% since the beginning of the year.

“It’s good to check where your retirement is invested and how it is performing, not just to see how it is performing, but to make sure it reflects your goals.

“If you have a retirement at work and you’re not sure how to do it, talk to your HR department and ask them to send you the details.”

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