COVID-19 (Coronavirus) – Gemini Update - January 2021

In line with current Government guidelines, we have taken the decision to reduce the numbers of staff at our Head Office in Sutton Coldfield with the majority of staff returning to working remotely.

However, to reassure you, it is business as usual and we are still available to contact by phone and email as all our systems can be accessed and operated remotely.

Indeed, it is times like these where you may need to seek additional advice from financial services professionals. Both our Wealth Managers and Estate Planning Consultants remain available to assist you and are able to offer guidance on the phone, by email or by video technology.

Please contact us FREE on 0800 255 0123 or email info@gemini-wm.com where we will do our best to assist you.

We would also like to extend our offering to your family, friends or colleagues so please do pass on our details. We are here to help!

Please scroll for more information.

6 Key Pillars of a Financial Plan

Back to News & Views

Financial planning can be complex, and the best solution for one person often doesn’t work as well for someone else. It’s easy to become focused on investment returns, when really, this forms only part of the picture.

The first step is to decide what you would like to achieve. Once you have clear goals in mind, the decisions become a little easier.

Remember, financial planning is not a single event, or something to tick off your to do list. There is no deadline or end point. It’s an ongoing process that maps your financial decisions for the rest of your life. Just as your circumstances evolve, so does your financial plan.

Some people prefer to deal with all of their financial planning needs at once, requiring only an annual check-in thereafter to make sure everything is ticking along. Others may find this overwhelming, and prefer to address one area at a time, with one eye on the wider strategy.

The starting point is to break it down into 6 key areas.

1.     1.  Budget

The first step in creating your financial plan is understanding how much you are earning, spending, and saving.

To calculate your income, total up:

  •          Salaries
  •          Self-employed income
  •          Dividends
  •          Rental
  •          Any benefits you receive
  •          Other income

Remember to account for tax and other deductions, as you need to work out your net spendable income. You may also prefer to ignore any interest or investment income that accumulates within your accounts, as this isn’t readily available for you to spend.

Next, total up your expenditure. Remember to include:

  •          Monthly bills
  •          Any bills that are paid less frequently, e.g. annually renewed insurance
  •          Grocery shopping
  •          Children’s costs
  •          Travel
  •          Repairs and maintenance
  •          Subscriptions and memberships
  •          Holidays, gifts, and treats

It can be helpful to split the amounts into Essential and Discretionary categories. You can even set up additional accounts with your bank so that you can fund each category separately.

If your income exceeds your expenditure, this is a good start. You should think about what to do with the surplus, for example:

  •          Building up savings
  •          Clearing debt
  •          Topping up your pension
  •          Making regular investments

If your expenditure is more than your income, you should act now to avoid this becoming a problem. Consider:

  •          Cutting back on luxuries
  •          Shopping around for a better deal on your bills and groceries
  •          Transferring expensive debt to a 0% interest credit card or lower cost loan
  •          Finding a way of earning a second income

As you work on your budgeting skills, you can start to save and plan for the future.


2.      2.  Protection

Protection is a vital part of financial planning. Things can so easily go wrong, and a good financial plan has contingencies and risk management built in.

The main types of protection to consider are:

Life insurance – this pays out a lump sum on death. This is essential if you have any debts or if you have a family who are reliant on your income. Life insurance can also be useful later in life to help with estate planning and mitigate Inheritance Tax.

Critical illness cover – this pays out a lump sum if you are diagnosed with a serious illness. In some cases, you might simply need to cover your expenses for a short period while you receive treatment. Other conditions may be life changing, and the lump sum can help to pay for home adaptations or special equipment.

Income protection cover – this pays out a regular income if you are unable to work due to a longer-term condition. Income protection complements critical illness, as it can pay out for conditions which are not otherwise covered, or which persist for a longer period.

Most people should have all three, although the right combination will depend on circumstances and budget.


3.      3.  Tax

Tax should not be the sole driver of a financial plan. However, tax reduction is usually a bi-product of any sensible financial plan. For example:

  •          Making ISA contributions can reduce income and capital gains tax over time.
  •          Other investments can be managed according to capital gains allowances, avoiding large gains rolling up and becoming taxable in the future.
  •          Pension contributions are highly tax-efficient up to a point, although with heavy taxation if limits are exceeded. The key is to maximise your pension within these limits.
  •          There are numerous ways of mitigating inheritance tax, for example making gifts, setting up trusts, or arranging insurance to cover the liability.
  •          Certain higher-risk investments offer significant benefits in terms of income tax, capital gains tax and/or inheritance tax. However, these will not be suitable for everyone.

The skill is knowing how to combine the various allowances, reliefs, and exemptions, and understanding which investments to fund and which to withdraw from. Tax planning should be viewed holistically, rather than as the end goal.


4.      4.  Investing

Investment planning is only one component of your financial plan, albeit an essential one. A strong investment plan is based on the following main principles:

·        Investing is for the long-term.

·        The risk level should be appropriate, bearing in mind your goals, risk tolerance and capacity to sustain losses.

·        The portfolio should be diverse, investing across a wide range of asset classes, regions and sectors.

·        Costs should be kept under control.

·        The market is efficient and it is usually counter-productive to react to world events. For example, if you withdraw money after a market crash, you risk missing out on the recovery.

·        Regular monitoring is important.


5.      5.  Pension

This can be a complex area, but in general, it is a good idea to fund your pension. Pensions have the following benefits:

  •          Your contributions receive tax relief.
  •          Your employer may match your contributions.
  •          No tax is paid within the pension fund or when you switch investments.
  •          You can withdraw a tax-free lump sum of 25% at any time from age 55.
  •          The remaining fund can provide you with a flexible income.

However, higher earners or those with substantial pension funds can usually benefit from advice to avoid breaching the Annual Allowance or the Lifetime Allowance. Other investment options, such as ISAs or investment bonds may be appropriate for investors who have contributed the maximum to their pension.


6.      6.  Giving

Once you have secured your own financial future, you may wish to think about how you can help others. For example:

·        Gifts to family

·        Gifts into Trust

·        Charitable donations

·        Bequests via your Will

While making gifts can be satisfying on a personal level, you can also benefit from a tax point of view. For example:

  •          Gifts of up to £3,000 per year are immediately outside your estate.
  •          Larger gifts drop out of your estate after 7 years.
  •          Charitable gifts are immediately exempt and can also benefit from income tax relief.
  •          Charitable donations made via your Will can reduce the inheritance tax on your residual estate by 10% (providing at least 10% is given to charity).

By addressing these 6 key areas, you will soon be on track to achieving all of your financial goals.

Please do not hesitate to contact a member of the team to find out more about financial planning.

Book your FREE, no obligation discussion today. Schedule Appointment

Sign Up to our mailing list - Receive regular news, tips and financial commentary from the Gemini Team.

Latest News

  • Sustainability is an important measure of a company’s credibility, whether the industry is food production, travel, or fashion. It has become increasingly relevant to the investment process, as companies aim to operate more ethically, and consumer appetite for sustainable investing has risen. [...]

  • Just over a month since the Budget, what does it mean for you? We have highlighted the key points to note, following Chancellor Rishi Sunak's announcement [...]

  • Getting divorced is one of the most stressful life events you can experience. You need to consider living arrangements, splitting of assets, custody of children – and that’s before thinking about the emotional toll it can take. [...]

  • A strong estate plan can help to reduce tax, protect your legacy, and ensure that more of your money passes to your loved ones. The decisions can be difficult, but once in place, your estate plan will make things easier for you and your family later in life. [...]

  • In financial planning, we often have to prompt our clients to think about worst-case scenarios. This is not always a pleasant exercise, as no one likes to think about their own mortality or the loss of a partner. [...]

  • Delivering the Budget in Parliament on 3 March 2021, Chancellor of the Exchequer Rishi Sunak said, ‘This Budget meets the moment with a three-part plan to protect the jobs and livelihoods of the British people. [...]

  • While no one likes to think about death or ill-health, a few simple decisions now can help you keep control of your assets and reduce stress for you and your loved ones later in life. [...]

  • The concept of buying low and selling high is well known. Achieving this consistently will inevitably result in profit. The ‘secret’ is knowing when to buy and sell. An investor may believe that a particular company is likely to do well following an event in the news. The consensus is that the share price will increase and that the investment will perform well if bought at the right time. [...]

  • Tax planning does not stop at retirement. When you have spent a lifetime working, it’s only natural to want to make the most of your hard-earned money. [...]

  • Financial planning can be complex, and the best solution for one person often doesn’t work as well for someone else. It’s easy to become focused on investment returns, when really, this forms only part of the picture. [...]

  • The UK has been out of the EU since 31st January 2020, however it took almost a further year to reach agreement over a deal. While this has been a source of relief, there are some areas still to be finalised, and no guarantee that the terms agreed now will continue indefinitely. [...]

  • After the (more or less) steady market growth over the past five years, the recent volatility has come as a shock to many investors. The economy is cyclical, and downturns are a feature of investing. We have to assume they will occur, just as we understand that they are usually followed by a recovery, during which any losses are more than recouped. It’s impossible to predict the timings, but over a lifetime of investing, it’s reasonable to assume that short periods of volatility will be ironed out. [...]

Gemini Wealth Management Ltd is Authorised and regulated by The Financial Conduct Authority Registered in England & Wales No. 5919877 Registered Office: Gemini House, 71 Park Road, Sutton Coldfield, West Midlands B73 6BT The Financial Conduct Authority does not regulate tax and trust advice, will writing and some forms of buy to let mortgages. The guidance and/or advice contained in this website is subject to regulatory regime and is therefore restricted to those based in the UK.

Website by Mellow Marsh Software
© Gemini Wealth Management Ltd
Privacy Notice | Cookie Policy