Resolutions worth sticking with - Ginkgo Financial Ltd
January 3, 2023

Resolutions worth sticking with

With the economic situation still so volatile, it’s never been more important to be savvy with your money. Making sure your goals are clearly defined will make them easier to achieve.

Please be aware the below blog is older than 12 months, therefore the information may not be relevant or up to date.

With the economic situation still so volatile, this January really is the perfect time to give your finances a review and set yourself new resolutions to help achieve your financial goals

Set clear goals

It’s never been more important to be savvy with your money. Make sure your goals are clearly defined. Maybe you want to pay your mortgage off within a certain timeframe or perhaps you want your pension pot to be worth a certain amount by the time you’re 55, so that you can take early retirement.

Whatever your goal, make sure it’s something you can track easily so you know how you’re doing.

Check your mortgage

2022 saw mortgage rates rocket at the fastest rate in over 40 years and whilst they have started to settle down again, they are nowhere near the low rates we all became so used to in the last few years.

If you still have three or four years left on your lower rate mortgage, it’s worth investigating what your potential new monthly cost will be.

If possible, start making this extra payment now, or at least some of it, to reduce your overall mortgage balance before the interest rate hike. This will reduce the actual increase you are likely to face.

If you are lucky enough to have a shorter-term mortgage, say under twelve years, the rate change will have a much more muted impact. At these late stages in a capital repayment loan most of your monthly payment is capital rather than interest so you may not see the massive increases you were expecting.

Whatever your situation, if you think increased mortgage payments will be financially difficult you can look to extend your overall mortgage term. Most lenders will allow this up to (and maybe even beyond) retirement age. Bear in mind, this should always be a last resort!

If you think this could be the case speak to us as soon as possible, so we can help. Don’t wait until your fix rate ends.

Consider your cash

Once you have fully utilised your tax-free savings allowance, it’s important to consider how expensive it currently is to be ‘holding’ cash.

Interest rates are still only a fraction of the inflation rate, so cash is losing ‘real’ value fast.

Check up on your pension

Even if retirement feels a million years off, it’s never too early start preparing.

January is a great time to have a pension review. We use advanced computer systems to create a “shortfall analysis” – a detailed picture of how the contributions you’re making measure up against the contributions you need to make to hit your target income. If it turns out you need to start contributing more to your pension, the sooner you start the greater the return will be!

Diversify your investment portfolio

Diversification is key to protecting your investments. We use a mix of different asset classes to help protect your portfolio from any sharp downturns in the stock market which have been so common of late.

This system of portfolio diversification is further enhanced by our new model portfolio investment solution, Wealth Select. Investments are regularly moved/ rebalanced between fund managers and assets classes automatically. This helps manage risk within your agreed risk rating to ensure the correct balance of risk and reward.

Look at legacy planning

No one likes to think about their own death, but planning for the inevitable fact is one of the kindest things we can do for our families.

Having a will in place ensures loved ones – particularly children, step-children and unmarried partners – are looked after when you are gone. If you don’t plan, the part of your estate which exceeds the inheritance tax threshold of £325,000 could be taxed at 40%. Bear in mind this threshold includes property, meaning you don’t have to be particularly wealthy to leave behind a large inheritance tax bill.

It’s sensible to involve your wider family in this planning process to avoid unnecessary stress or even disputes after you are gone. Have you made a clear record of your financial affairs and do your family know where to find it?

We’re always happy to meet multiple generations of a family together to get to know you all, put everything down on paper and iron out any wrinkles, leaving you free to enjoy your time together.

2023 is set to be another difficult year but with careful planning and regular reviews, achieving your financial goals is still possible.

If you have any questions on any of the points raised, please get in touch with the Ginkgo advice team and we will give you detailed and individual advice to assist you.

By Daren Wallbank

Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited. 03/01/2023

The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.
Tax treatment varies according to individual circumstances and is subject to change.
The value of investments and the income they produce can fall as well as rise. You may get back less than you invested.
Will writing is not part of the Quilter Financial Planning offering and is offered in our own right. Quilter Financial Planning accept no responsibility for this aspect of our business.
Your home may be repossessed if you do not keep up repayments on your mortgage.

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