This is one of the reasons why women in finance are more important than ever. In an article for Gallery Jersey, Anna Slater, a Paraplanner at Centurium Bank, shares her experience and insights on being a young woman in a male-dominated industry.

Anna discusses how she uses traits such as empathy and listening to create positive outcomes for her clients, and encourages other women to embrace their strengths and skills and succeed in financial services.

Click here to read the full issue.

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As we look back on 2023, we’ve put together a list of our five most popular insights.

1. What is cashflow planning?

Anna Slater, paraplanner at Centurium Bank, provides an overview of cashflow planning, explains why it’s important, and how it can be used as part of your bespoke wealth plan to help visualise your financial future.

2. How artificial intelligence shapes our investment decisions

Our Chief Investment Officer, Tom Caddick, and Investment Analyst, Madhushree Agarwal, talk us through how artificial intelligence influences markets, and why this can shape investment decisions.

3. Avoid dying with too much money

Having too much money left when you die means you could have used it better during your life and reduced a large inheritance tax bill. Having a good wealth plan in place could mitigate these potential issues and give you the confidence to enjoy your money in your later years.

4. Retirement – aka ‘post work living’

Have we moved away from traditional retirement? With more and more people choosing to taper the retirement phase of their life, should we be thinking about retirement differently – and planning accordingly?

5. Is your cash robbing you? Read the article

What is the price of sticking with ‘safe’ cash? Rebecca Cretney, Investment Counsellor, highlights four alternative areas that she sees as significant investment opportunities.

2024 is already shaping up to be another eventful year on the global landscape and we’ll be continuing to share our expertise and insights to help keep you informed throughout.

Clients of Centurium Bank can get in touch with their private banker directly to understand how wealth planning can help them achieve their financial goals and objectives, or call +44 (0)7488 845584 to speak to our Client Services team.

If you would like to find out more about how we can help you with wealth planning support, please contact us on the number above or via our Contact us page.

Any examples of investments and structures used are for illustrative purposes only. The inclusion does not constitute an invitation or inducement to buy any financial investment or service. None of the content constitutes advice or a personal recommendation. Centurium Bank does not provide individual tax advice, and instead works with clients’ existing advisers or can provide an introduction if needed. Individuals should seek professional advice, based on their jurisdiction and personal circumstances, before making any financial decision.

The post Looking back on 2023 with our top five insights appeared first on Centurium Bank.

Christmas is a particularly busy time for fraudsters, so to help you stay safe and remain vigilant this Christmas, we’ve put together 5 of the most common scams to watch out for.

1. Delivery Scams

Delivery scams are one of the most common frauds. December is the busiest time of year for postage, so fraudsters use this as an opportunity to impersonate delivery services and try to scam people into disclosing personal information or to pay additional fees to ‘guarantee’ delivery. To avoid getting caught out by this scam, don’t respond to or click directly on links included in email or texts. Instead, contact your courier directly, via their website or mobile app.

2. Purchase scams

Similar to delivery scams, fraudsters often try to take advantage of Christmas shoppers by advertising products at an ‘incredible price’. During the past year this has increased in frequency and is currently most often seen on Facebook Marketplace. Fraudsters often target in-trend items, such as air fryers, and will change these depending on demand. Only buy items through a recognised payment method (not bank transfer) or use a credit card, and always try to make purchases in person when collecting the item.

3. Impersonation scams

Fraudsters will impersonate a person in a trusted institution to authorise a payment fraud or harvest your information. Past examples of this have included:

• Members of bank staff including customer services and fraud teams
• National Crime Agency
• Local constabulary
• Utility providers
• Action Fraud.

They will often tell you your account has been compromised and ask you to transfer funds to a ‘safe account’. They may also request payments in the background (unknown to you) and ask for your one-time password (OTP) to authorise the payment. The rationale given for the OTP request will often be to prove that they are speaking to a genuine person. Under no circumstances download any software at their request (even if this is anti-virus software, or similar), and do not disclose personal information including full passwords or one-time passwords. If in doubt, end the call/communication and reach out to the institution using a safe method such as the telephone number on the card or bank statement, application or physically go into a branch.

4. Romance/trusted person fraud

Often taking place over a long period of time, fraudsters will connect with a victim through a variety of methods in order to extract funds. This does not always take the form of a romance fraud but can also be under the guise of a friend or a trusted adviser. Key to this is building trust over a long period of time and then extracting money from the person under various guises.

This scam is often difficult to detect and the impact can be devastating on the victim. The fraudster will gain a victim’s trust and pitch an investment opportunity or request a loan for a purchase, often using a sense of urgency to increase fear for someone else’s personal safety (medical treatment or emergency travel costs), or the fear of missing out (such as once in a lifetime investment opportunities). After convincing a victim to send them funds they disappear with the money. Cashout methods often include a request to send funds to a crypto currency exchange, a prepaid card provider, or an online-only bank.

5. Investment frauds

There has been a recent growth in investment frauds and advance fee scams. Examples of this have included the promise of a tax rebate for an upfront fee to organise administration, purchase of FX investments and crypto currency investment scams. Only use firms which are registered with your local regulator for the services that they provide. Fraudsters will often state they are regulated in a country where you are not based, but regulation in different countries can vary significantly. Companies will often be needed to be registered with your local regulator to offer financial products in the country they are selling services.

The average loss of a romance scam in the UK is £11,500, but an investment scam can be significantly more with losses often up to £100,000. To avoid getting caught out by this scam, don’t invest or send funds to people you have met online, and don’t invest in any financial product that is not regulated by your local authority. Always be aware of any attempt to register you to a brokerage site that is not regulated by your local regulator, and be aware when friends, colleagues or banking staff ward you that you may be a victim of a scam. Often people not as close to the situation can more clearly recognise the red flags.

Please ensure you remain extra vigilant, particularly at this time of year, as the mechanisms used to impersonate legitimate companies or steal personal information continue to evolve and are often very sophisticated.

For more information, visit our protect yourself from fraud page.

Stay safe and have a happy festive season.

Clients of Centurium Bank can get in touch with their private banker directly to understand how wealth planning can help them achieve their financial goals and objectives, or call +44 (0)7488 845584 to speak to our Client Services team.

If you would like to find out more about how we can help you with wealth planning support, please contact us on the number above or via our Contact us page.

Any examples of investments and structures used are for illustrative purposes only. The inclusion does not constitute an invitation or inducement to buy any financial investment or service. None of the content constitutes advice or a personal recommendation. Centurium Bank does not provide individual tax advice, and instead works with clients’ existing advisers or can provide an introduction if needed. Individuals should seek professional advice, based on their jurisdiction and personal circumstances, before making any financial decision.

The post 5 scams to watch out for this Christmas appeared first on Centurium Bank.

In the current digital age, it is often hard to go even a matter of hours without checking the news for the latest developments around the world. With so much being reported, we may often find ourselves asking whether more is happening or if we are just so interconnected with media and big headlines that it just feels that way. As humans we are by nature commonly risk-averse , and with so much time dedicated to reading the news, it’s valuable to recognise the power the media has on our emotions and decision making.

Our risk aversion impacts the way we handle our finances, and the more negative news we read, the more cautious we are likely to be with our personal finances. An impulsive, bad financial decision affects you more than just financially. The Loss Aversion theory perfectly explains how we are more affected by our potential financial losses than our potential gains – those are the ones we remember, and which can affect us emotionally. The overwhelming fear of loss or losing out can cause an individual to make bad, or sometimes impulsive decisions.

During a permacrisis, reminding ourselves that crises are not a new occurrence and have been happening for as long as time (and well before we had such easy access to live news updates) is important for both our financial decisions and emotional welfare. Markets adapt, and there will always be swings in volatility. There’s little we can do to individually manage or influence the macro environment; however, we can all put steps in place to manage our own financial situations and plan for our futures.

Three steps to finding comfort in a permacrisis:

1. Create and stick to your wealth plan
   Working with a wealth planner to create a bespoke wealth plan over the medium to long term will help bring clarity to your financial future, help you achieve your goals and objectives and provide a sense of purpose.It may sound obvious, but being influenced by the macro environment in the short term can have a significant sway on whether you meet your longer-term goals. Having a plan in place and sticking to it offers psychological comfort and helps you feel better prepared to face financial challenges. It can help to manage emotions by providing a structured and rational approach to your financial goals and wellbeing, often helping reduce anxiety and worry of the unknown.
2. Work with a specialist team of financial experts
   Having a specialist team working with you (a private banker, wealth planner, investment specialist) can provide emotional support and technical expertise during turbulent times, helping you make informed decisions, and avoiding costly mistakes driven by impulsive actions created through fear, worry, and anxiety.
3. Relax knowing your finances are being looked after
   A wealth plan can act as a psychological anchor in turbulent times, providing you with a roadmap for navigating what can feel like a permacrisis, to give you a sense of control over your financial future.Work with financial experts who make you feel supported. A permacrisis can feel like a never-ending period of uncertainty, so working with an experienced team who make you feel supported will leave you feeling at ease to go on holiday, relax, and enjoy time with family and friends.

While this permacrisis can start to feel like the new norm, we can’t predict the future. We can, however, prepare ourselves to expect the unexpected and plan for this. Don’t let the noise or external pressures influence your decision-making, or you may be left acting reactively and impulsively. Having a bespoke wealth plan that best suits your needs and working with experts you trust will help you achieve your financial goals. By doing so, you will feel more in control throughout periods of uncertainty.

How Centurium Bank can support you through a permacrisis:

Our dedicated team offers an award-winning end-to-end service, whatever your financial needs to leave you feeling ready for whatever the future holds.

Centurium Bank can provide education and awareness about your finances and investments. The more informed you are, the more confident you become, reducing emotional reactions.

Centurium Bank provides ongoing reviews to our clients. Our experienced private bankers, with the support of specialist teams, can help you adapt to changing circumstances, providing a sense of control and reducing fear of the unknown.

Clients of Centurium Bank can get in touch with their private banker directly to understand how wealth planning can help them achieve their financial goals and objectives, or call +44 (0)7488 845584 to speak to our Client Services team.

If you would like to find out more about how we can help you with wealth planning support, please contact us on the number above or via our Contact us page.

The post Navigating a permacrisis: Finding financial and emotional stability in a world of uncertainty appeared first on Centurium Bank.

Relocating to a different country involves various considerations from deciding where to live and settling into a new job to, perhaps, finding new schools for your children. While these can be daunting tasks, it’s important to consider your financial circumstances well in advance of your move to ensure you take full advantage of all the benefits available to you. In this article, we explore the financial aspects of relocating to the UK, with a particular focus on the tax implications.

In the UK, the way you are taxed by HM Revenue and Customs (HMRC) is based on your residency and domicile status. Your residency status is simply where you live, but your domicile status is a little more complicated. It’s generally based on where you originated – either where you were born or where your father came from – or it can be by choice, if you are over 16 and choose to live indefinitely in another country. A UK resident whose permanent home is outside the UK is known as a non-domiciled individual or ‘non-dom’, which is purely a description of their tax status and indicates they do not intend to live permanently in the UK.

The difference between residence and domicile is important. Individuals who are both UK resident and domiciled must pay UK tax on their worldwide income and gains. However, if you are a non-domiciled individual living in the UK you can choose to register your non-domiciled status, which means you will only be taxed on your income and gains earned in the UK. You will not have to pay UK tax on any income or gains earned overseas unless you bring that money into the UK.

A good understanding of UK tax legislation is essential, and your personal circumstances should be carefully considered with the help of tax professionals. Seeking expert advice will help you make more informed financial decisions when you relocate.

If you are living in the UK but don’t intend the move to be permanent, you can choose to be taxed only on your income and gains earned in the UK and those which you bring into the UK. This is known as the remittance basis of taxation, and it means any foreign income and gains remain outside of the scope of UK taxation, which can be advantageous if you have significant foreign income or assets. The remittance basis is only available for the first 15 years of living in the UK, but during this time it provides the potential to secure wealth and avoid tax erosion. After this period, you will automatically be ‘deemed’ to be domiciled in the UK and will have to pay tax on your worldwide income.

Choosing the remittance basis of taxation has wide implications, specifically for your investment strategies and foreign income management. In particular, separation of onshore and offshore bank accounts and investments plays a pivotal role in ensuring you are able to benefit from this planning opportunity. If your relocation will involve borrowing to buy a new home, or for other purposes, special regard must also be given to where the loan is granted from and how and where it’s serviced, in order to avoid any remittance issues. This is where a private bank with access to both onshore and tax neutral, offshore, capabilities can be very helpful.

At Centurium Bank, we can work with you and your tax advisers to help structure your banking, investment and borrowing requirements in the most effective way when relocating to the UK. In addition to this, we can assess your current circumstances and put a plan in place to help you achieve your goals and objectives. We use specialist software to model and help you visualise your financial future, exploring different scenarios and options, all to ensure you remain on track with your plan.

To ensure you are fully prepared for your UK move, we have created two guides, A guide for moving to the UK and A guide for South Africans moving to the UK which provide more detail.

Clients of Centurium Bank can get in touch with their private banker directly to understand how wealth planning can help them achieve their financial goals and objectives, or call +44 (0)7488 845584 to speak to our Client Services team. At Centurium Bank, multi-generational relationships are really important to us. So we work with you and your family to offer the appropriate support at whatever stage you and your family are in life.

If you would like to find out more about how we help with wealth planning support, please contact us on the number above or via our Contact us page.

Any examples of investments and structures used are for illustrative purposes only. The inclusion does not constitute an invitation or inducement to buy any financial investment or service. None of the content constitutes advice or a personal recommendation. Individuals should seek professional advice, based on their jurisdiction and personal circumstances, before making any financial decision.

The post Thinking ahead when moving to the UK appeared first on Centurium Bank.

• Over the last 15 years, Quantitative Easing (QE) has supported bond prices, supressed volatility and rewarded investors who adopted fixed income beta strategies.
• However, last year’s sharp rise in interest rates and market volatility has created opportunities for active bond managers to add value.
• In fact, our analysis reveals that in periods of high volatility, active bond managers have demonstrated a significantly higher likelihood of outperformance relative to periods of lower volatility.
• Interestingly, quality matters given the greater dispersion among manager returns during higher volatility. In other words, finding active managers with experience of navigating such market environments will be to key to investor success.

The end of QE marks a different approach to bond investing

It’s September 2008 and Ben Bernanke, the then Chair of the US federal Reserve, is about to lead the US economy into uncharted territory by using quantitative easing (QE) for the very first time.

A bold move, certainly. But he had little option other than to give it a try. The interest rate lever had already been pulled, and economies were at a juncture, with financial collapse or a dice roll the only options.

Thankfully, the dice roll paid off and economies have rebuilt themselves from their nadir, but not without a cost to market stability. The commitment to do “whatever it takes” had a profound impact on markets, where a doubling of core equity valuations, the longest running growth cycle, new highs for bond prices and bitcoin’s ascent to almost $100,000 are just a few examples of the resulting distortions.

Of course, lots has been made of the subsequent dialling up in risk across the industry – where asset managers tested the bounds of their mandates, overweighting risk wherever possible. A less explored area is the impact QE had on general bond market volatility.

But before we jump to that, let’s just first clear up what exactly we mean by volatility. A common misconception is that volatility is all about directionality. Instead, what we’d colloquially call “choppy” or “range bound” markets often exhibit greater volatility than aggressively moving, but directional ones.

Over the last 15 years, bond markets have mostly been directional, which is of little surprise when we think about the mechanics of QE. In its simplest form, QE is the process by which central banks buy longer term sovereign bonds in the free market. The impact of doing so pins down the yields of the bonds directly involved, as well as those bonds which are benchmarked against them (to which there are many thousands). With yields tightly controlled by central banks, price movement was positive, but limited – effectively forced to oscillate within constraints dictated by policy makers.

We can see this when delving into the data. If we focus on non-recessionary market environments since 1990, the average US government bond market volatility (as measured by the MOVE Index – the yield curve weighted index of the normalized implied volatility of 1-month Treasury options) is ten points lower during times of QE versus periods when QE was not in use (see Figure 1).

Figure 1: QE suppressed bond market volatility

Source: Bloomberg, Nedgroup Investments

Focusing in on the above chart, you can see that when the bond purchasing program began during the onset of the Great Financial Crisis, bond volatility was unsurprisingly elevated.

Central bank intervention resulted in a material reduction in market volatility, however the fragility of the market was such that central banks were forced to remain accommodative for some time, limiting supply. On the demand side, a lack of appetite for the meagre yields on offer meant that buyers were equally hard to come by, with purchases coming primarily from price-insensitive buyers.

The lack of excess on both sides acted as a lingering anchor on broader bond market volatility – but what were the implications of this?

Volatility’s link to active management

Imagine you compete on a weekly basis for your local ten-pin bowling team “Livin’ on a Spare”. You are a serious team, despite your questionable name, so rightfully aghast when Bernanke Bowl decides to leave the barriers up.

Your team is full of star bowlers and have become accustomed to winning a strawberry flavoured slushy after several podium finishes. This week is different though.

Instead of “The Gutter Gang” shrieking with excitement when one of their players notch a single pin, they have been able to reach a respectable score, ricocheting their way towards a strike or two. Indeed, so have all the other teams, with dispersion across the board a lot lower than normal and average scores much higher.

Having the barriers up in bowling, is akin to the impact of QE on fixed income, where we have already seen has the effect of significantly reducing volatility. With volatility low, individual bond returns become clustered around that of an index, making it incredibly challenging for even the most skilled managers to add value.

Let’s put some numbers to this. If you were to look at the proportion of active fixed income managers who outperform the benchmark, across closely tracked bond peer groups[1], you would find that only 49% of managers outperform in low volatility environments, versus 60% in high volatility environments.

Figure 2: Higher volatility has meant a higher likelihood of outperformance from bond managers

Source: Morningstar, Bloomberg, Nedgroup Investments

A huge swing, where during low volatility less than half of active managers outperform and in high volatility nearly two-thirds do. Naturally, focusing purely on average manager performance has its limitations, since it tells us nothing about the range of performances across managers.

Delving into this further, we found that manager dispersion increases by over 2-times during high volatility environments compared to low volatility environments.

Figure 3: Higher volatility has brought on greater dispersion of manager returns

Source: Morningstar, Bloomberg, Nedgroup Investments

Therefore, despite volatility tending to improve the prospects for the average manager, the gap between the best and worst widens significantly.

Implications for bond investing going forward

In the same way a barrierless bowling lane highlights a truly accomplished bowling team. Volatility creates opportunities for active managers to add value for clients, by using their skill to target the most attractive bonds, avoid the worst, and in doing so allocate capital to its most efficient use. The opposite is true, however, for the unskilled manager, whose fallibility is brought to the fore by volatility.

It is reasonable to expect the recent bond market volatility to continue, and with it the fortunes of a highly skilled manager. Over the last 18 months, markets have gone through a period of abrupt transition, with central banks across the globe raising interest rates at the fastest pace in decades.

Despite signs of taking effect, the cumulative impact of this tightening is yet to be fully reflected in areas such as growth, unemployment and inflation.

Progress has of course been made on the inflation front, helped in part by falling commodity prices and general base effects. However, it is arguably too early to call victory just yet, with imbedded stickiness probable, given labour market tightness.

Furthermore, out of fear of repeating the events of the 80s (taking their foot off the break too soon and allowing the inflationary flames to regain momentum) central banks are likely to veer on the side of doing too much, rather than too little. Rates will therefore stay elevated for longer, putting pressure on sovereign ratings as debt servicing becomes strained, with rates no longer at zero (or lower bound).

But perhaps equally important, is that we are moving from a sedative period of QE to one of QT, where central banks will no longer be mopping up excess bond supply, but instead adding its own.

Moreover, this will all be happening at differing rates and intensities across the globe, as countries find themselves in very different cycles, fuelling further market volatility.

Such a high volatility environment will undoubtably have its own challenges, but it should also act as an opportunity for a highly skilled active manager to excel. The task now is finding the right one.

Clients of Centurium Bank can get in touch with their private banker directly to understand more about how we manage money on their behalf, or call +44 (0)7488 845584 to speak to our Client Services team.

If you would like to find out more about how we manage clients’ investments, please contact us on the number above or via our Contact us page.

Investments can go down, as well as up, to the extent that you might get back less than the total you originally invested. Exchange rates also impact the value of your investments. Past performance is no guide to future returns. Any individual investment or security mentioned may be included in clients’ portfolios. They are referred to for information only and are not intended as a recommendation, not least as they may not be suitable. You should always seek professional advice before making any investment decisions.

The post Bonds are back: the return of the “old normal” and active management appeared first on Centurium Bank.

Cash might be particularly appealing given it comes after three long and difficult years. First, we had Covid-19, which felt like the world as we knew it was coming to an end. Then, just when we thought we were returning to normal times, Russia invaded the Ukraine and almost simultaneously, after years of ultra loose monetary policy, inflation assaulted our economies. Interest rates, which had remained at historically low levels since the financial crisis in 2008-09, suddenly started to rise as central banks increased their base rates to battle rampant inflation. With thirteen base rate rises in the UK alone since December 2021, cash now offers a decent rate of return, so can it be a welcome shelter from the turbulence of financial markets?

There is no straightforward answer that covers all scenarios. Much will depend on your financial circumstances, composure when faced with volatile returns, and time frames, but as a general rule cash is not a suitable long term investment. This is true in general, but particularly now.

Cash – the smiling knife

There is no doubt that cash feels safe. But what is the price demanded for that safe, comfortable feeling? Is it robbing you of opportunity?

Whether you’re invested and tempted to move your money into a savings account, or whether you’re a long-term cash holder who has been waiting for an opportunity to invest but now finds cash looks attractive, there are a few things you should consider:

• Cash is returning significantly less than inflation – you will be accepting a real term loss with immediate effect until inflation drops (at which point cash rates are also likely to drop). A gap as low as 3% between your returns and the inflation rate would halve the value of your money over 24 years.
• Ah, I hear you say, but I don’t intend to hold cash over 24 years. This is only temporary. OK, I would answer, but when you do decide to jump from cash back into the stock market, it’s likely you’ll pay a lot more for the shares you buy. Why? I’ll cite just two out of a number of reasons:

1. The maxim of “buy low, sell high”. Aside from a handful of technology stocks (Nvidia being the prime example) equity valuations are either fair value or cheap. This is the time to buy, not to sell. Would you sell in a housing slump? Probably, not. Neither should you sell in a stock market slump.
2. Markets are rising 80% of the time.* This means that when you can no longer get the current rate on your cash deposit, you might look back at today’s prices and wish you had invested more now.

If you’re currently invested, it’s also worth remembering that while the bottom number on your investment statement may have moved up and down rather uncomfortably recently, any losses are not locked in unless you decide to sell.

It’s also worth remembering that our portfolios are so highly diversified that the likelihood of significant, permanent loss of capital is minimal. In fact, the biggest risk to your capital is the human tendency to sell at the wrong time.

Capturing the opportunity

It’s easy to get caught up on the negative headlines, particularly as there’s a tendency not to publish positive news, but it’s inevitable that threats breed opportunities.

Our focus is on managing the threat and capturing the opportunity. Environmental change, an aging population, a shift in spending patterns, artificial intelligence – all of these are long-term opportunities which we are nurturing within your portfolios and can exploit, along with opportunities the market throws at us to buy cheaply.

Below are four key areas of change where we currently see investment opportunities:

Everyone’s circumstances are different and there might be good reasons to hold some of your assets in cash. But you should always consider this as part of a professionally thought-out financial plan, often in conjunction with your wealth planners, tax advisers and legal specialists.

If turbulent markets are causing you concern, or if you feel now might finally be the time you have been waiting for to invest, speak to your private banker. They can explore your options, including cash, and ensure they still match your appetite for risk and your long-term financial goals.

Clients of Centurium Bank can get in touch with their private banker directly to understand more about how we manage money on their behalf, or call +44 (0)7488 845584 to speak to our Client Services team.

If you would like to find out more about how we manage clients’ investments, please contact us on the number above or via our Contact us page.

Sources: Fidelity – Here’s how to defeat inflation, Centurium Bank: MSCI World, 12 month periods – March 1990 – December 2018

Investments can go down, as well as up, to the extent that you might get back less than the total you originally invested. Exchange rates also impact the value of your investments. Past performance is no guide to future returns. Any individual investment or security mentioned may be included in clients’ portfolios. They are referred to for information only and are not intended as a recommendation, not least as they may not be suitable. You should always seek professional advice before making any investment decisions.

The post The opportunity cost of cash appeared first on Centurium Bank.

Reaching the age of 100 may seem a rather fanciful prospect but if you were born in 1974 in the UK, as I was, your chances of becoming a centenarian are 20.4% if you’re a woman and 13.9% if you’re a man. Based on the latest estimates from the United Nations, there were 593,000 centenarians around the world in 2021 and it’s a fast-growing age group. Studies estimate there could be 3.7 million centenarians alive by 2050.

Better healthcare and lifestyles around the world, along with luck in the genetic lottery, play a big part in increasing longevity. Yet there is still no way to accurately predict how long any of us will live and this is a crucial factor when it comes to planning your finances. How do you ensure you have enough money to fund your lifestyle through a potential 30-40 year retirement?

Here are six things to consider when preparing your wealth for a long life well lived:

1. Define your long-term financial goals

Talking about money and your aspirations with loved ones is key to understanding what you want from life – for yourself and your legacy. Defining this will help build a framework for managing your wealth to achieve these goals.

2. Make your pension a priority

Pensions can be one of the most efficient ways to save for your retirement, so it may be worth ensuring you make the most of your pension allowances. In the UK, the benefits include tax relief on your contributions and tax free growth of the investments within the pension. In addition, pension funds do not form part of your estate when you die and are therefore free from UK inheritance tax. If you have a number of pensions, it may be worth consolidating them, although the associated risks and charges should be considered. Taking advantage of ISAs is another tax-efficient strategy for long-term financial planning in the UK.

3. Invest for the long-term

The power of compounding and diversification make investing for the long-term one of the best ways to grow your wealth. Make sure you are comfortable with the investment risk in your personal portfolio, and it is suitably diversified to meet your needs.

4. Contingencies

If you live to age 100, there are likely to be a few unexpected events along the way. However, the financial impact of these can be considered and options such as life insurance, income protection and critical illness cover can help to protect your wealth and provide peace of mind for you and your family. Life expectancy may be improving but it is no guarantee of good health, so the possibility of long-term care should also be considered.

5. Estate planning and gifting

As well as managing your wealth during your lifetime, it’s important to consider how it will be managed after you’ve gone. The first step is to ensure you have an up-to-date will or wills (if you have assets in more than one jurisdiction). Whether you plan to pass your wealth on to your family or have philanthropic ambitions, considering your options and putting the right structures in place is vital to ensure a smooth, efficient transfer. Structures such as trusts, family investment companies and donor advised funds may be appropriate.

6. Make a wealth plan

Having considered your goals and values, creating a wealth plan will allow you to visualise the financial route you need to take – right up to age 100. Using specialist cashflow software, a wealth planner will work with you to define your current and future financial circumstances and align them to your goals and values, enabling more informed financial decisions. We call it ‘investing with purpose’. The future is never certain, and your wealth plan can explore various scenarios to stress test situations. This means you can be as prepared as possible for the unexpected. Your wealth plan should be flexible and with regular reviews it can be adapted as markets, fiscal regimes and your personal goals and circumstances evolve.

At Centurium Bank, we can partner with you to understand your financial goals and create the most appropriate wealth plan. We work with clients and their families around the world, in tandem with their professional advisers, to help them achieve a life well lived – all the way to 100 or more!

Clients of Centurium Bank can get in touch with their private banker directly to understand how wealth planning can help them achieve their financial goals and objectives, or call +44 (0)7488 845584 to speak to our Client Services team.

If you would like to find out more about how we can help you with retirement planning or more general wealth planning support, please contact us on the number above or via our Contact us page.

Any examples of investments and structures used are for illustrative purposes only. The inclusion does not constitute an invitation or inducement to buy any financial investment or service. None of the content constitutes advice or a personal recommendation. Individuals should seek professional advice, based on their jurisdiction and personal circumstances, before making any financial decision.

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When I was first asked to write this article, I was hoping for signs of cautious optimism as spring is traditionally the season when the property market starts to pick up. Markets had appeared to settle following the upheaval of Liz Truss’s ill-fated mini-budget last autumn. Some stability and competition had even started to return on expectations that bank rates would begin to fall as soon as inflation started coming down later in the year.

However, the property market was thrown into turmoil again over recent weeks following the announcement of higher-than-expected inflation figures in May and then a stronger labour market, as both low unemployment and buoyant wage growth defied the forecasts for a loosening in monetary policy. The latest data just released for May shows that headline inflation has stuck at 8.7%, despite 12 consecutive interest rate rises since December 2021. As a result, the market outlook has changed dramatically, and mortgage lenders have pulled products at short notice and increased their rates leaving buyers and homeowners facing higher borrowing costs. With stubborn core inflation and renewed uncertainty over when rate increase will slow, the housing market now faces the challenge of mortgage affordability.

Part of the problem is that despite a 13th rate increase this June, only a third of borrowers have actually been affected by the higher mortgage costs, as the rest are still protected on existing fixed rate deals. For many it could be another two or three years before they need to remortgage, reflecting a considerable lag in the impact of high interest rates and their effect on the economy. Especially, when you also consider that only around 38% of the UK population have a mortgage or loan, and almost 28% of the population are mortgage free, so will not be affected by rising rates.

To many who are trying to get a foot on the UK property ladder or who bought a home for the first time after the 2008 crisis, the last six months or so have been quite a shock. Against a backdrop of rising interest rates, the cost of living crisis and growing fears of recession, the cost of servicing a mortgage has increased substantially.

The latest research from Moneyfacts showed that the average rate on a two-year fixed deal rose to 5.92%, and the average rate on a five-year fixed stood at 5.56% by 15 June. Significantly more than in May last year, when two-year and five-year fixed rates stood at 3.03% and 3.17% respectively.

The buy-to-let market is particularly challenging as most have interest only mortgages so someone paying 1.5% a couple of years ago is now looking at an average rate of over 6%. With monthly repayments up so significantly, the eroding of tax allowances and increased regulation in the pipeline, the economics of buying to let is a lot less appealing and could lead to more landlords pulling out of the rental market, putting more pressure on renters.

With so much volatility and uncertainty over the direction of interest rates, is it all doom and gloom for the UK property market? Maybe not. There are signs of the market cooling, as the value of gross mortgage advances in Q1 2023 was £58.8 billion, £22.9 billion lower than the previous quarter, and 23.6% lower than in Q1 2022. This was the lowest observed since Q2 2020. Most of the indices are also reporting an easing of average house prices, but these belie differences across property type and geographical regions.

It’s certainly increasingly difficult for first-time buyers with small deposits, but there are still cash buyers, international investors and those with support from the bank of mum and dad. Many experts believe the drop in the market is unlikely to be as dramatic as during the financial crisis, when house prices fell by 17.5% between November 2007 and April 2009.

Ultimately, house prices are likely to be buoyed by a number of factors, not least the robust labour market, historically low housing supply, and an improving economic outlook (the UK economy returned to growth, up 0.2% in April). With falling energy prices the economy is expected to avoid a recession but so much will depend on the Bank of England’s next move. Current inflation at 8.7% is over four times higher than the central bank’s 2% target, but the policymakers walk a thin line between driving down inflation and tipping the economy into recession. Current forecasts are for base interest rates to peak at around 5.75% by the start of 2024 and then come down. All eyes will be on the next round of economic data.

Clients can borrow against a UK, Isle of Man or Channel Island-based residence, be it a home or an investment property. We also lend against investment portfolios and loans can be denominated in Sterling, Euros or US Dollars. With clients in 160 countries, we often help clients based outside the UK, and have lent using the same approach across market cycles since 1987.

To find out more about Centurium Bank’s bespoke lending services, please visit our Borrowing page or email credit.enquiries@nedbankprivatewealth.com. You can also contact your private banker directly or call our Client Services team on +44 (0)7488 845584. Or you can get in touch via our Contact us page.

Sources: BBC News, The Times, Bank of England, Financial Times, Reuters

If you fail to keep up loan repayments, your assets used to secure the loan may be at risk and/or your home may be repossessed. Any examples are for illustrative purposes only. The webinars and Q&A do not constitute an invitation or inducement to buy any financial product or service. None of the content constitutes advice or a personal recommendation. Individuals should seek professional advice, based on their jurisdiction and personal circumstances, before making any financial decision.

The post Has it been a damp spring for the UK property market? appeared first on Centurium Bank.

Over the last few years, house prices have continued to rise much faster than income and the bank of Mum and Dad remains one of the UK’s top property lenders. According to analysis by property firm Savills, the bank of Mum and Dad paid out almost £8.8 billion in gifts and loans during 2022. An estimated 170,000 first-time buyers had family help in getting a mortgage, which amounted to almost half of all mortgaged first-time buyers. With increasing interest rates, stricter mortgage criteria and a cost of living crisis, it’s expected this number will jump to 61% in 2023. The desire to help your children onto the property ladder is strong, but could this support leave you with longer term and unforeseen ramifications?

The long-term impact will depend on how you choose to fund the gift or loan. While the use of cash savings or withdrawing money from your investments or pensions are all possibilities, they have the potential to cause problems for your future financial and retirement plans, not least because we are all living longer and annuities are no longer the automatic choice.

Taking money from your investment portfolio means you run the risk of losing out on any growth and the compounding benefits that investments typically carry, as well as any future benefits from bond coupons or equity dividend payments. The potential rates of return on investments are generally higher than the return on cash over the longer term, but it is always worth remembering that markets can go down as well as up and you may not get back the original amount invested.

Meanwhile, accessing your private pension pot may mean you don’t achieve all your retirement goals. The money taken out of your pension will not be there to grow and compound but, perhaps more importantly, if you access your pension, your annual allowance – the amount you can pay in while enjoying the government’s tax incentives – has reduced from up to £60,000 a year to just £10,000. This lower tax support may mean you need to defer your retirement date.

The good news is that there is another possibility. If you have investable assets over £1 million, you can access the bespoke lending options available through private banks. Not only can loans be secured against your property or investment holdings, but the support you receive will ensure you understand the full implications of any decision and the impact it will have on your long-term financial goals. As a result, you can retain your capital and continue to benefit from your wealth while helping your loved ones with their more immediate needs.

What are the benefits?

As private banks operate on a more personal case-by-case basis, they can offer a more flexible approach for larger loan amounts, usually over £250,000. The benefits include:

• A more tailored service with a dedicated relationship manager, who will take time to understand your current financial position and any long-term plans before providing the most efficient outcome for you.
• Less rigid criteria and a wider range of options:
  • Facilities in sterling, euro or US dollars
  • Interest only loans
  • Shorterrepayment terms
  • Scheduled repayments linked to a specific date.
• Borrowing against your UK, Isle of Man or Channel Island-based residential property.
• Borrowing against your investment portfolios, provided they are held with the bank.
• Quick, yet carefully considered, decisions to meet an immediate need for cash, without having to sell any of your investments.

A win for you and your family – in the short term and the longer term.

Clients can borrow against a UK, Isle of Man or Channel Island-based residence, be it a home or an investment property. We also lend against investment portfolios and loans can be denominated in Sterling, Euros or US Dollars. With clients in 160 countries, we often help clients based outside the UK, and have lent using the same approach across market cycles since 1987.

To find out more about Centurium Bank’s bespoke lending services, please visit our ‘Borrowing’ page or email credit.enquiries@nedbankprivatewealth.com. You can also contact your private banker directly or call our client services team on +44 (0)7488 845584. Or you can get in touch via our Contact us page.

If you fail to keep up loan repayments, your assets used to secure the loan may be at risk and/or your home may be repossessed. Any examples are for illustrative purposes only. The webinars and Q&A do not constitute an invitation or inducement to buy any financial product or service. None of the content constitutes advice or a personal recommendation. Individuals should seek professional advice, based on their jurisdiction and personal circumstances, before making any financial decision.

The post Can the bank of Mum and Dad work long term? appeared first on Centurium Bank.