Today I am looking at The Good Retirement Guide, an annual guide published by Kogan Page. I bought the current 2021 edition, which was published last month.
The Good Retirement Guide 2021 is 318 pages long. The text is fairly dense but broken up by plenty of headings and bullet-point lists. There are 14 chapters and an alphabetical index at the back. The chapter titles are as follows:
Are You Looking Forward to Retirement?
Money and Budgeting
Pensions
Tax
Investment
Your Home
Leisure Activities
Starting Your Own Business
Looking for Paid Work
Voluntary Work
Health
Holidays
Caring for Elderly Parents
No-one is Immortal
The chapter titles are pretty self-explanatory. The book attempts to cover every aspect of making the most of your senior years. The style is clear and readable, and additional resources are signposted as appropriate.
In contrast with Sod 60! which I also reviewed recently, The Good Retirement Guide covers the financial aspects of later life in some detail. I thought the information about pensions and benefits in particular was very good and tells you most of what you need to know.
Some of the other chapters are a bit less comprehensive. The one on leisure activities, for example, lists various things you might like to do – or take up – in retirement, but the information is frequently sketchy and can verge on stating the obvious. Here is what it has to say about poetry, for example:
There is an increasing enthusiasm for poetry and poetry readings in clubs, pubs and other places of entertainment. Special local events may be advertised in your neighbourhood.
And apart from a mention for the Poetry Society and a link to their website, that is all you get on this subject đ
I don’t want to appear too harsh. Obviously in a wide-ranging book like this, it can be hard to judge the degree of detail appropriate to any particular topic. At least by mentioning a wide range of possibilities, the book may give you some ideas about activities you might like to pursue further in retirement.
The health-related content is a bit of a mixed bag. Some subjects are covered in reasonable depth, others less so. There is just half a page devoted to keeping fit, for example, with a further couple of paragraphs about yoga and Pilates. On the other hand, there is some good information (and advice) on health insurance, long-term care plans, and so forth. Again, this illustrates that the book’s primary focus is on the financial aspects of retirement.
One thing that did surprise me is that although this 2021 edition of The Good Retirement Guide was only published last month, there is no mention of the pandemic in it. You will search in vain for Coronavirus or Covid-19 in the index. I know there can be long lead times in publishing, but in an annual guide you might think they could have inserted a section about it somewhere. Maybe we will have to wait for the 2022 version?
Even so, a lot of the subjects discussed in the guide – holidays, for example – have been seriously impacted by the pandemic. The advice and procedures for travel abroad in particular may be very different even after the pandemic is officially over.
Final Thoughts
Overall, I thought The Good Retirement Guide 2021 was a helpful book for people approaching retirement. As I’ve said above, it has a strong emphasis on financial matters, and is well worth reading for that alone. Some of the other content is a bit hit-and-miss, and the surprising lack of any mention of the pandemic means that at times it reads like a guide to an alternate world where Covid never happened. Of course, none of us really knows what the ‘new normal’ will be in future. We can but hope it will be not too far removed from the old normal we remember and which this book – despite the 2021 in its title – basically depicts.
As always, if you have any thoughts or questions about this post, please do leave them below.
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December is here, so it’s time for another of my monthly coronavirus crisis updates. Regular readers will know I have been posting these updates since the first lockdown started (you can read my November update here if you like).
As ever, I will start by discussing financial matters and then life more generally over the last few weeks.
Financial
Iâll begin as usual with my Nutmeg stocks and shares ISA, as I know many of you like to follow this.
As the screenshot below shows, since last month’s update my portfolio has been on a generally upward trajectory and is currently valued at ÂŁ18,008. Last month it stood at ÂŁ16,955, so it has gone up over ÂŁ1,000 in value since then. Considering national and world events at the moment, I am more than happy with this.
As you may recall, I recently put ÂŁ1,000 into a second Nutmeg pot to try out Nutmeg’s new Smart Alpha option. It is too early to comment on this yet, but I will include an update about it next time.
The news hasn’t been so good with my Bricklane Property ISA, which I talked about last time. As stated in in my blog review, Bricklane â not be confused with Brickowner â is a REIT (Real Estate Investment Trust). Investorsâ money is pooled to purchase properties. Rental income is then distributed to investors, who also stand to benefit if the value of the REIT goes up. Last month I was down by about ÂŁ80 on my ÂŁ5,000 investment, but this month – as you can see from the screen capture below – the figure is over ÂŁ600.
This is obviously disappointing, though not unexpected. As I said last time, the pandemic has hit property investors hard, especially investors in large commercial properties (as are most in the Bricklane portfolios). But, in addition, the current price factors in the liability of Bricklane and its investors to assess and where necessary replace exterior cladding in some buildings in light of the Grenfell Tower tragedy. I understand that almost half of the properties in the Bricklane Regional Capitals fund (in which I invested) fall into this category.
About the only good thing to be said is that right now Bricklane’s price reflects its liabilities in the worst case scenario. In particular, it has been argued that lease-owners should not bear sole responsibility for paying for this work, as the rules were only changed after Grenfell and it isn’t the owners’ fault that some properties were built to different specifications which were regarded as perfectly safe (and legal) at the time. If the government accepts that argument, in whole or in part, then Bricklane will not have to set aside large sums of money for remedial work, and the share price will rise accordingly. I have written to my MP about this, of course đ
As I said last time, if I was braver and had a longer investment horizon, I might look at Bricklane as a value opportunity just now. As it is, I am leaving my money where it is but wonât be investing any more with them for the foreseeable future. I am not planning to sell up as I donât currently need the money and that would only crystallize my losses. i just hope there will be some better news on this front soon.
I also wanted to say a word about Kuflink this month. This property loan investment platform is still performing well and returning the promised monthly dividends. A couple of loan terms have been extended due to the pandemic but interest continues to be paid and I am not unduly concerned about this. I also had a couple of investments repaid after the loans in question were paid off. So I decided to reinvest in a new six-month loan to help finance the construction of a children’s day nursery in Chorley. Some details of this project from my Kuflink dashboard are shown below…
As you can see, the interest rate being paid is 6.80%. When I invested yesterday the offer had only just launched, so it’s interesting to see it is already up to almost 42% funded now. Although the loan hasn’t gone live yet, as is Kuflink’s normal practice I will received cashback equivalent to the interest on offer until it does, so I am already making money from this loan đ
Incidentally, I am not saying this project has any special merit compared with others on the Kuflink platform. But I decided to invest on the basis that it looks reasonably secure with a loan-to-gross-development-value ratio of 36%. And from a more personal perspective, wherever possible I like to invest in projects that will have a socially beneficial outcome, and a new children’s day nursery certainly ticks that box.
i did want to mention as well that I recently updated my full Kuflink review. You can read it here if you like. I’d particularly like to draw your attention to their new and more generous cashback offer for new investors. They are now paying cashback on new investments from as little as ÂŁ500 (it used to be ÂŁ1,000). And if you are looking to invest larger amounts, you can actually earn up to a maximum of ÂŁ4,000 in cashback. That is one of the best cashback offers I have seen anywhere (though admittedly you will need to invest ÂŁ100,000 or more to receive this!).
My two Buy2LetCars investments are still delivering the promised monthly returns without any issues. As you will remember, investors with Buy2LetCars put up the money to finance a car for a key worker such as a nurse or police officer. They then receive 36 monthly capital repayments followed by a final balancing payment of interest and capital. If you are looking for an income-producing investment with a substantial lump sum payment after three years – and you like the idea of doing a bit of good with your money too – they are well worth checking out (and likewise if youâre a key worker looking for a lease car yourself). If youâd like to learn more, you can read my review of Buy2LetCars here and my more recent article about the company here. And here is a link to Wheels4Sure, their car-leasing website.
Otherwise, there is nothing especially notable to report on the financial front this month, so let’s move on to the more personal stuff…
Personal
Since my last monthly update England has been mostly in lockdown, so I haven’t been doing anything especially exciting đ
I went for my latest checkup at the eye clinic at Burton Hospital in the first few days of the new lockdown. As you may remember, I was diagnosed with a perforated retina after a routine eye test at my optician’s.
I wasn’t allowed to drive, as they put drops in your eyes which blur your vision for a few hours. The trip to Burton involved a bus ride, two train journeys and a one-mile walk, so it took up a whole day. The train journeys in particular felt odd and at times almost post-apocalyptic. I was literally the only person on Lichfield Station waiting for a train to Birmingham, and had the whole carriage (and possibly train) to myself. The train to Burton was a little busier, but you do start to wonder how long the railway network can go on with such minuscule passenger numbers.
It was very quiet at the hospital too, so I was seen straight away. The doctor seemed happy with what he could see, though it’s not easy to tell when he – and everyone else – was wearing a mask. I was told I will have to go back again in January, and if everything is still okay then, they will discharge me. So I guess that’s good news, although they did say that last time as well…
During the lockdown month I aimed to go for a walk every day, and apart from a couple of days of foul weather I achieved that. I have been wearing my new music hat – described in this recent post and pictured below – and enjoying listening to my choice of music. My preferred genre is prog rock (classic and current) but I enjoy jazz and blues as well. I do just find I have to be a bit careful when walking on the narrow country lanes where I live, as with my music playing I don’t always hear cars coming up behind me. Still, I haven’t had any really close calls yet!
I was pleased to be able to go for a swim again this week at my local David Lloyd leisure centre. It was very quiet, and all the staff, including those at reception, are now wearing masks. I suppose some people would find that reassuring. I just find it rather sad and dispiriting. Still, I really enjoyed my swim, and it was great to see a couple of members I know and exchange a few words with them. Even small social interactions like that offer a welcome morsel of normal life in these strange times.
Afterwards I ordered my usual hot drink from the centre’s coffee shop, but because I’m in a Tier 3 area I was told I couldn’t sit down to drink it. I was afraid I might be forced to take it to the freezing cold car park to consume, but was informed there was no objection to me drinking it while standing up in the centre, so long as I didn’t stay in one place for too long. You might think this is barking mad – I couldn’t possibly comment.
There has of course been some good news on the virus front in the last few weeks. As I said last time, new cases (in England anyway) are on a clear downward path. The government are of course trying to spin this as a success for lockdown, but I am sceptical about that. As I said in my November update, cases were already starting to decline pre-lockdown, so what we are seeing now is simply a continuation of that welcome trend.
It’s also interesting that the – admittedly shorter – Welsh lockdown appears to have failed totally, with cases there on the rise again. So they are now imposing even harsher restrictions, including a total ban on pubs and restaurants serving alcohol. I would therefore like to extend my sincere commiserations to Welsh readers (and especially those working in tourism or hospitality) at this time. It is a shame that the four nations of the UK couldn’t have come up with a more coherent, co-ordinated policy to combat the virus – although in my view lockdowns shouldn’t ever be a part of this due to all the collateral damage they cause.
There has been good news about vaccines this week, with the first one from Pfizer/BioNTech receiving regulatory approval in the UK and due to start rolling out next week. I am not an anti-vaxxer and will (probably) accept the vaccine when it is offered. There are, though, some reasons to be sceptical about some of the claims being made for vaccines, nicely summed up in this cautionary blog post by my old friend John ‘Platinum’ Goss. In particular, we still don’t know about any possible long-term side-effects of the vaccines. And with case numbers dropping dramatically in England, you have to wonder how much Covid will still be around in a few months’ time anyway…
In my view, this pandemic will only end when some sort of herd immunity has been achieved. That will be partly through growing numbers of people achieving immunity through contracting the virus, and in addition (hopefully) people acquiring immunity through vaccination. If that is the case, the virus will have nobody left to infect and will ultimately die out (though maybe returning occasionally in milder variants, as happens with other cold and flu viruses). That’s the best-case scenario, anyhow, and I hope it plays out that way.
Before leaving this topic, I would just like to include a quick shout-out for the excellent Lockdown Sceptics website. This site is updated daily and is the first thing I look at when I switch on my computer in the morning. It includes articles from a wide range of academics and other commentators, and offers a sceptical slant on official policies and announcements that is often missing in the mainstream media. Even if you don’t agree with all the views expressed, it’s well worth a read.
As for Christmas, I am expecting to have an even quieter one than usual. I don’t normally socialize a lot at this time anyway. My only remaining close family consists of my three sisters, but they are all in different parts of the country and have their own families and social circles. I have put up my lights and decorations, though, and am looking forward to receiving plenty of cards and letters. I shall also ensure I have a good stock of box-sets to watch!
Well, I guess thatâs it for now. I do hope you and your loved ones are staying safe and well and looking forward to the festive season. As always, if you have any comments or questions about this post, please do leave them below.
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A great number of people today need to transfer currencies, or receive transfers from abroad, for many different reasons. As globalization extends, this need has become more frequent as geographical borders become less relevant.
For example, our parents couldnât even dream about services like eBay or Alibaba, where you can buy anything and have it delivered from a dozen countries away. And the whole thing might be cheaper than buying it in your local store!
But here is where the matter of foreign currency transfers becomes important. Paying for something abroad or getting money sent to you might not be cheap. Thatâs because not only do you have to pay bank fees for the transaction, you also lose money on currency exchange, which is often a mandatory step in cross-border transfers.
Luckily, today there are alternative money transfer services that allow you to cut these costs. Youâll need to look into them if you require regular foreign currency exchange (FX or forex) services.
Why You Might Need to Make Foreign Currency Transfers
One reason you might need to make a large money transfer abroad is real estate. Buying property is an important part of the retirement planning process and many Britons choose to retire abroad. For example, the latest data indicates that there are about 466,000 British pensioners living in the EU. There are even more among the 5.5 million Brits living worldwide.
Even if you donât plan on moving or buying a vacation home on some tropical beach, you might consider investing. Investing in real estate is one of the less risky methods for growing your fortune. Of course, the coronavirus crisis has heavily affected this industry. But there are still some very promising prospects for the residential housing market.
Also, today youâll need to make international payments when booking your holiday accommodation. So, if you plan to travel at all, youâll need to look for cheap money transfer solutions.
Anyone involved in international business also needs to make and/or accept international payments. This also includes the simple process of buying goods through one of the many e-commerce platforms.
In addition to those reasons, if you are an expat or a traveller, youâll need to exchange money regularly. The same goes for dealing with transfers like inheritance or even accepting dividend payments from your investments.
All in all, living in the modern world makes you exposed to foreign currency exchange and transfers in many ways. Therefore, the knowledge of how to save money on these transactions is sure to be useful.
How Much Do Foreign Currency Transfers Cost in a Bank?
The cost of an international bank wire transfer is a very complicated issue. First of all, you need to understand that banks will advertise, and sometimes even show you, only the transfer fee. In the UK those range from ÂŁ8 to about ÂŁ40. That doesnât seem too bad, especially for large transfers, right?
However, the truth is that banks are deceiving customers most of the time. If they were fully transparent, you would understand that what truly matters is the FX rate margin. Thatâs the amount that the bank charges per currency conversion on top of the mid-market exchange rate.
Simply put, high FX margins are why you lose so much money on currency conversions. Different banks use different margins and thatâs why they offer different exchange rates. But if you compare the options offered by top UK banks, youâll see that they are all very close.
Therefore, you donât have much of a choice.
Also, there might be additional fees involved in a cross-border money transfer. The recipient bank might charge its own fees. If there are any intermediary ‘stops’ along the way, more fees will come.
All things considered, the real cost of an international money transfer can go up to 3-10% of the transfer amount. This cost will be higher for exotic currencies and transfers to remote locations. It will go down a bit for large transfers because banks might offer better terms to VIP clients.
However, the total will always be quite high.
Leading Money Transfer Service Alternatives From the UK
With bank transfer costs so high, a necessity for an alternative emerged. The solution came in the form of FX brokers and money-transfer companies. These businesses offer services similar to banks, but they have much lower overhead costs. Therefore, they are able to keep both the margins and fees very low.
In fact, many companies charge no transfer fees at all for the majority of transactions. However, they use different margins that often depend on the transfer size. Thus, you should always compare foreign currency transfers before choosing a service. This wonât be difficult as all top companies in the industry offer free quotes. They also have transparent pricing schemes.
On average, a transfer with one of these companies will cost you 1-3% of the total. Industry leaders even offer options that allow you to cut costs below 1% for large transfers.
The most notable UK-based FX companies today are TransferWise and WorldFirst. There are other notable businesses as well. However, they cannot compete with these two giants that have multi-million funding.
TransferWise
TransferWise launched not even a decade ago and it has already become a major disruptor in the banking industry. It took over the FX money transfer industry rather fast as well. The main selling point of this company was offering not merely cheap transfers but also a fixed margin scheme.
This means that TransferWise managed to offer its customers consistency and a chance to save a great deal of money. Because of the fixed margins, its services were the most affordable in the industry. The company is now valued at over $3.5 billion and itâs expanded to many countries, including the US.
WorldFirst
WorldFirst is another veteran in the FX transfer industry. This company built a solid reputation for its reliability and trustworthiness. Launched back in 2004 literally from a basement, WorldFirst became one of the industry leaders within a few years.
In 2019 this fintech business was purchased by Ant Financial of the Alibaba Group. This allowed WorldFirst to launch a major change in pricing. It had already been one of the top companies, but it could not compete with TransferWise in affordability. However, the new pricing scheme with fixed margins that go below 0.55% makes WorldFirst a cheaper alternative even to TransferWise. At the moment, there is no cheaper option for foreign currency transfers in the UK. Also, WorldFirst has a very wide reach due to its association with Alibaba, though itâs not yet available in the US.
In Conclusion: Do Your Research for Saving Money on Foreign Currency Transfers
FX money transfer companies today offer great opportunities for money saving. However, do not forget that the lowest cost doesnât necessarily mean the best offer. These companies have a number of requirements and additional services that you should research. For example, some have a minimum transfer limit. Others offer FX hedging tools that will be essential for reducing risks for businesses and investors.
Thus, be sure to compare all options you have available and research them thoroughly. Watch out for scammers, and choose only those businesses that have a good standing in the industry.
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As you may have heard, the BBC has now confirmed that from 1st August 2020 people over 75 in the UK will lose their automatic right to a free TV licence and have to pay the same ÂŁ157.50 a year as everyone else. This was originally due to happen in June 2020, but it was postponed due to the coronavirus pandemic.
For many old people, TV is their main (or only) source of company. Suddenly having to find this quite large sum out of (in many cases) a very limited income may cause them financial difficulties or downright hardship. Some may even have to choose between watching television and paying their heating bills.
This parlous situation has arisen because the BBC say they have to make economies, and continuing to subsidise free licences for the elderly would force them to cut back drastically in other areas. Meanwhile the government, despite their pre-election promises, has shown no sign of stepping in to preserve free TV licences for over 75s (which they could perfectly well do). Although charities such as Age UK have been raising petitions and applying as much pressure as they can, it now seems certain that this change is going to happen.
So what can people in this situation – or their relatives/friends/carers – do? The BBC have allowed just one concession – the poorest over-75s can continue to receive a free TV licence if they claim and receive pension credit. So let’s look at this in a bit more detail…
Pension Credit
Pension credit is a state benefit for people above retirement age who are on a low income. It can be paid to single people or to couples. It is usually paid weekly, though you can also choose to have it paid fortnightly or monthly.
Along with attendance allowance – which I discussed in this recent post – pension credit is one of the most under-claimed benefits. According to the Department for Work and Pensions, around 40 percent of eligible people, or two in five, fail to claim it. That’s an estimated 1.5 million eligible households in the UK who are missing out.
Pension credit actually comes in two parts – guarantee credit and savings credit. Guarantee credit boosts your weekly income to ÂŁ167.25 if you’re single or ÂŁ255.25 if you’re a couple (all figures correct as of March 2020). You may be eligible for guarantee credit if you have reached state pension age and your total income is less than these amounts (even if you own your own home). If you have under ÂŁ10,000 in savings and investments this will not be taken into consideration. If you have over ÂŁ10,000, it will be assumed that you earn ÂŁ1 a week per ÂŁ500 of savings and investments (equivalent to an interest rate of 10.4% – if only!). This will be added to your total income when working out your eligibility.
Savings credit is meant to be a reward for those who have saved for their retirement. It’s worth up to ÂŁ13.73 a week for a single person or ÂŁ15.35 for couples. To qualify, you must have a minimum income of ÂŁ144.38 a week if you’re single, and ÂŁ229.67 a week if you’re in a couple. For every ÂŁ1 by which your income exceeds this amount, you get 60p of savings credit â up to the ÂŁ13.73/ÂŁ15.35 maximum. If your income is less than the ÂŁ144.38/ÂŁ229.67 savings credit threshold, you won’t qualify. Savings Credit is only available to people who reached state pension age before 6 April 2016. Couples where only one partner reached state pension age before 6 April 2016 can also retain savings credit if the older partner had reached 65 and qualified for savings credit before that date AND they have remained continuously entitled to it ever since.
It’s worth adding that if you pay mortgage interest or have other housing costs, have caring responsibilities, are responsible for a child, or are severely disabled, you may be entitled to more pension credit. If you receive attendance allowance or carers credit, for example, this may boost the amount you’re entitled to. The rules surrounding all this are complicated, but the government has provided a free online calculator you can use to work out whether you qualify and how much you might get. This is for guidance only, however. You can’t apply via the calculator and there is no guarantee that you will receive the amount it shows you.
To actually apply you will need to phone the DWP’s Pension Credit helpline on 0800 991234. You will need your National Insurance number, information about your income, savings and investments and your bank account details. The person you speak to will then take you through the application process. This is a subject I discussed in more detail in this blog post, as I recently helped an older friend to do this successfully.
What Does Pension Credit Entitle You To?
As well as the money – which can amount to thousands of pounds a year – if you receive pension credit you will be entitled to a range of additional benefits. A free TV licence if you are over 75 is just one of them. You may also get:
reduced council tax (or free if you are awarded guarantee credit)
Even if you only receive a small amount of pension credit, you will be eligible for all of the above. So it really is well worth applying if there is any chance you may qualify. As mentioned above, you can check first using the free online calculator here and then apply by phoning the DWP’s Pension Credit helpline on 0800 991234.
Don’t delay, as there are now just seven weeks left before the free TV licence for all over-75s becomes a cherished memory.
Equity Release to Boost Your Income
If you’re still struggling to pay the bills even with pension credit, there are other methods to help boost your income. In particular, UK homeowners are fortunate to have opportunities to unlock their property value. An equity release loan could provide the security you desire if you require the means to pay for lifeâs simple pleasures or cover essential costs.
Whatâs more, homeowners can unlock up to 65% of their property value, with no compulsory payments required during their lifetime. Thereâs no limit on how you can use the tax-free cash you receive, so an income lifetime mortgage could be the ideal way to pay your bills and have a bit extra for luxuries as well.
Many older people find themselves asset rich but income poor. In other words, they own valuable assets such as their home but live on a modest income.
If that applies to you, equity release is an option you may want to consider, to release some of the cash locked up in your property.
There are two key requirements for doing this. The first is that you must be 55 or over (home reversion plans are only available to over 60s).
The second is that there must be equity available in your home. That means the mortgage must be paid off or the balance outstanding must be significantly lower than the houseâs current value. Of course, many older people do find themselves in this situation.
There are two main types of equity release scheme, home reversion plans and lifetime mortgages. I’ll cover each of these in turn.
Home Reversion Plans
With a home reversion plan, a company buys your home but guarantees to let you and your partner (if you have one) go on living there rent-free until you die or go into long-term care.
After this the company normally sells the house and take its profit. Your beneficiaries will not receive any proceeds from the sale or benefit from any rise in the propertyâs value.
Note that as the company is allowing you to stay in the house until you no longer need it, you wonât receive the full market value of your property. Home reversion plan providers will usually pay you only 30 to 60% of the value of your home. How much you are offered depends on how old you are and how long the company expects you to go on living at the property.
Lifetime Mortgages
Lifetime mortgages are similar to ordinary mortgages except no repayments have to be made until the house is sold.
You receive tax-free cash to do whatever you like with. Eventually of course this will have to be repaid with interest, and the interest rates charged are typically a little higher than standard mortgage rates. However, as you retain ownership of the property until it is sold, this cost may be partly or wholly offset by the propertyâs rise in value.
There are two types of lifetime mortgage, lump sum and drawdown. A lump sum lifetime mortgage is a loan secured against your home, giving you access to a one-off pot of cash. A drawdown lifetime mortgage lets you draw down cash in stages after an initial lump sum, with interest only payable on the money released. A drawdown lifetime mortgage is therefore likely to work out significantly cheaper overall than a lump sum mortgage.
In either case, how much you can borrow depends on a number of factors, including your age, the value of the property and in some circumstances your health. At 67 you can typically borrow around a quarter of the value of your home, rising to around a third in your mid-70s,
If you have certain medical conditions, you may be able to borrow a higher proportion of your property’s value or obtain a better interest rate via an ‘enhanced’ plan.
Both types of equity release scheme have their attractions, but lifetime mortgages are nowadays by far the more popular option. This is because of their greater flexibility and the fact that you retain ownership of the house and can therefore benefit from any rise in its value.
Negative Equity
With both home reversion plans and lifetime mortgages, you are protected from negative equity (i.e. the risk you or your beneficiaries will end up owing more to the scheme provider than the property is worth). Provided the company is approved by the Equity Release Council (see below), any shortfall at the end will be written off.
Opting for equity release is a major decision, however, and will clearly affect how much money will be left for your children and any other beneficiaries to inherit. Itâs important therefore to discuss it with them and get their views; although in the end it is of course your money and your right to do whatever you want with it.
More Points to Consider
Here are a few more things to bear in mind before opting for equity release.
Consider also downsizing to a smaller property and/or moving to a less expensive part of the country. This can be a cheaper way to release funds from your home if you donât mind the disruption. But do this sooner rather than later, since people typically become more reluctant to move as they get older.
As mentioned above, ensure that the company you deal with is a member of the Equity Release Council. Their members must abide by a strict code of practice, and all offer a no-negative-equity guarantee.
Taking cash using equity release may affect your eligibility for means-tested benefits such as pension credit. This applies especially if you take a large lump sum, as you may then exceed the qualifying limit for benefits such as pension credit and council tax reduction. With a drawdown lifetime mortgage – where you take money in chunks as required – you may be able to remain under the capital limits and therefore qualify (or continue to qualify) for these benefits.
Leave it for as long as you can. The later you take equity release, the less costly it is likely to prove overall.
If you donât have family or others you want to leave your wealth to, cost isnât such an issue, though. In that case there is much to be said for taking equity release to improve your quality of life and leaving the money be repaid out of your estate when you die.
If you have bought your house on an interest-only mortgage and donât have the money to pay it off, equity release can be a good way to repay the loan and reduce your monthly outgoings.
You donât have to do it all in one go. Lifetime mortgages in particular are very flexible, and as mentioned with a drawdown plan you can take money in chunks when you need it and interest will only accrue on what you have withdrawn so far.
Key Equity Release
While equity release can be a great way to free up cash to help you enjoy later life, taking it is a major decision with many potential ramifications. Itâs therefore very important (and indeed a regulatory requirement) to get independent professional advice before proceeding.
Key Equity Release [affiliate link] are leading equity release specialists who work with a wide range of financial service providers and provide no-obligation advice on the best options in your case.
Key Equity Release only arrange lifetime mortgages, but (as mentioned above) these are now by far the most popular option for equity release, with many advantages due to their flexibility and the fact you retain ownership of your home.
All advice from Key is free of charge, and due to the pandemic is now available in full over the phone. Key’s independent adviser will discuss your options with you, including checking that you are receiving all the state benefits you may be entitled to. They will recommend based on your needs and circumstances. For example, if you want to ensure some money remains for your descendants, however long you remain in your home, they have plans to cater for that. Equally, if your priority is getting the lowest interest rate or withdrawing the largest possible amount, they can arrange this too.
Key say that they have been able to access interest rates from as low as 2.45%, and most of their customers have received a fixed annual interest rate of 3.97% or lower.
The company also has mainly five-star reviews on Trust Pilot (average 4.9), which you can check out via this link. This is one of the highest average feedback scores I have seen on Trust Pilot.
Closing Thoughts
If you are looking for a way to release money from your property, whether to fund specific purchases or just to make later life more comfortable, equity release is definitely worth considering. The main downside is – of course – that ultimately there will be less money to pass on to your descendants. All reputable providers, however, offer a No Negative Equity Guarantee, and some such as Key Equity Release can arrange plans where a certain amount of cash is guaranteed to remain in your estate.
Equity release interest rates are at historically low levels, and in most cases are fixed for life. If equity release is right for you – and you will need to discuss this fully with an independent adviser before proceeding – now could be the ideal time to set the ball rolling. So why not get in touch with Key Equity Release today for a no-obligation discussion?
If you have any comments or queries about this article, as always, please do post them below.
Disclosure: This is a sponsored post. If you click through a link in it and arrange an equity release plan with the company in question, I may receive a commission for introducing you. This will not affect the service you receive or the terms you are offered. Please note also that I am not a registered financial adviser and nothing in this post should be construed as individual financial advice.
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In this recent blog post I discussed how over-75s may be able to avoid losing their free TV licence by claiming pension credit.
As I said then, I have recently done this myself on behalf of an elderly couple who are friends of mine. As promised, today I’ll be sharing my experience of the telephone application process. I hope anyone thinking of doing this themselves or on behalf of elderly friends or relatives may find this helpful.
But first, let’s recap on what pension credit is…
Pension Credit
Pension credit is a state benefit for people above retirement age who are on a low income. It can be paid to single people or to couples. It is usually paid weekly, though you can also choose to have it paid fortnightly or monthly.
Along with attendance allowance â which I discussed in this recent post â pension credit is one of the most under-claimed benefits. According to the Department for Work and Pensions (DWP), around 40 percent of eligible people, or two in five, fail to claim it. Thatâs an estimated 1.5 million eligible households in the UK who are missing out.
Pension credit actually comes in two parts â guarantee credit and savings credit. Guarantee credit boosts your weekly income to ÂŁ167.25 if youâre single or ÂŁ255.25 if youâre a couple (all figures correct as of March 2020). You may be eligible for guarantee credit if you have reached state pension age and your total income is less than these amounts (even if you own your own home). If you have under ÂŁ10,000 in savings and investments this will not be taken into consideration. If you have over ÂŁ10,000, it will be assumed that you earn ÂŁ1 a week per ÂŁ500 of savings and investments (equivalent to an interest rate of 10.4%). This will be added to your total income when working out your eligibility.
Savings credit is meant to be a reward for those who have saved for their retirement. Itâs worth up to ÂŁ13.73 a week for a single person or ÂŁ15.35 for couples. To qualify, you must have a minimum income of ÂŁ144.38 a week if youâre single, and ÂŁ229.67 a week if youâre in a couple. For every ÂŁ1 by which your income exceeds this amount, you get 60p of savings credit â up to the ÂŁ13.73/ÂŁ15.35 maximum. If your income is less than the ÂŁ144.38/ÂŁ229.67 savings credit threshold, you wonât qualify.
While for most people pension credit won’t be a huge amount, it has the big advantage that it acts as a gateway to a range of other discounts and benefits. The free TV licence for over-75s is just one of them. Pension credit recipients may also get reduced council tax (or free if awarded guarantee credit), free NHS dental treatment, help towards the cost of glasses, help with the cost of travel to hospital, cold weather payments, automatic entitlement to the Warm Home Discount, help with rent, free home insulation and boiler grants, and more. All of this means it is well worth applying for, even if you’re not certain whether you qualify.
Checking Your Entitlement
The government is keen that anyone eligible for pension credit should claim it. To that end they recently launched a free online calculator you can use to work out whether you qualify and how much you might get.
You can use the calculator anonymously to check your entitlement (or someone else’s), either as an individual or a couple. You can’t actually apply via the calculator, though. It is just for guidance, to help you decide whether it’s worth putting in a claim.
The calculator asks a variety of questions about your circumstances and current income, including any pensions or other benefits you may receive. The latter may actually improve your chances of getting pension credit. For example, if you receive attendance allowance and/or carer’s credit (as my friends do) this can improve your chances of qualifying. When I did this on behalf of my friends, the calculator showed that they should be eligible for a payment of just over ÂŁ10 a week.
As mentioned above, the results on the calculator are for guidance only, and there is no guarantee that you will receive the amount shown. However, in my friends’ case it definitely confirmed that applying would be worth doing.
Applying for Pension Credit
By far the easiest way to apply for pension credit is to phone the DWPâs Pension Credit Helpline on 0800 991234. You will need to have your National Insurance number, information about your income, savings and investments and your bank account details to hand.
If you’re applying on someone else’s behalf, the DWP like you to have the person concerned with you at the time. The call handler spoke briefly to my friend to confirm her personal details and that she was happy for me to take over the application process.
It turned out to be a two-stage procedure. Initially I spoke to a male call handler who asked a list of questions about my friends’ circumstances and their finances. This was basically the same set of questions I had answered on the online calculator. It was reasonably straightforward, and at the end he informed me that my friends did indeed appear to have a valid claim, so he was going to put me through to his colleague who would take me through the actual application.
This meant that I had to answer the same set of questions again from another DWP employee – a woman this time, as it happens. This did strike me and my friend as rather a waste of everyone’s time. We wondered why the answers I had given initially couldn’t just be passed on to the second person, but I suppose the DWP must have their reasons.
Anyway, we duly went through all the questions (and a few more) again. I would, incidentally, comment that the young woman I spoke to – who told me her name was Jenny – was extremely pleasant and helpful. At one point we went off at a tangent and started talking about our favourite cakes (well, it was tea-time by then). I felt she went out of her way to help us, and she certainly made the whole application process a lot less stressful.
After going through all the questions, Jenny said she would need information about how much exactly was in my friends’ bank accounts and when their (small) private pensions were paid in. This could have been problematic, as it involved logging in to my friends’ online bank accounts and finding this information there. But Jenny was patient and flexible about this, and in the end we found all the information she needed.
The whole process took a little over an hour. if you have to break off half-way through that is possible and you can ask for a reference number so you can complete the application another time. But I really wanted to get the whole thing done and dusted in one call, and thankfully – with Jenny’s help – we achieved that.
The Outcome
After about six weeks my friends received a letter from DWP saying their application had been successful and they had been awarded pension credit.
The amount was the same as had been shown on the online calculator. It was about ÂŁ10.50 a week, going up to almost ÂŁ12 in April (I’m sorry I can’t remember the exact figures). This money was savings credit rather than guarantee credit, but that makes no difference as far as the free TV licence is concerned. If you are over 75 and qualify for either type of pension credit (or both) you are entitled to a free TV licence.
We then submitted the short application form to the TV licence people, with a copy of the first page of the DWP letter confirming the award of pension credit. We haven’t heard any more since, but presumably my friends will receive their free TV licence in the coming weeks.
So that was my experience of applying for pension credit on my friends’ behalf. I hope it has encouraged you to proceed with your own application if you are considering making one. If you get to speak to the lovely Jenny in Scotland, do pass on my regards to her!
And if you have any comments or questions about this post, of course, pleased free free to leave them below as usual.
This is a fully updated repost of my March 2020 article.
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…that’s the question I was asked recently by a Pounds and Sense reader after I mentioned in this blog post that I had a financial adviser.
Of course I replied to her directly at the time, but on reflection I thought it would be good to provide a more in-depth answer to this question on the blog.
To recap, my financial adviser is called Mike and he works for a company called Integrity Wealth Solutions. I was recommended to Mike by my accountant, and he has been advising me for over three years now.
Mike actually looks after about half of my portfolio. He advised me about this initially and set up the recommended investments on my behalf, making maximum use of my tax-free allowances. He continues to monitor my investments and makes any recommendations for adjustments as required. I see Mike once a year in person to review how things are going (both with the investments and me personally). But of course, I can also speak to him by phone (or email) any time if required.
The other half of my portfolio I look after myself, and it is fair to say it is well diversified! As regular readers of PAS will know, I have investments in property crowdfunding, P2P lending, the robo advisory platform Nutmeg, and various others.
Why then do I need Mike? Here are just some of the reasons…
1. Mike is a trained and experienced independent financial adviser/planner who works full-time in this field. I am a money blogger and obviously have a special interest in financial matters, but I have no professional training or direct work experience in this field. I can ask Mike for his professional opinion on any investment-related matters, and while I am not obliged to follow his advice I do of course take it very seriously.
2. Mike has a backup team in his office and access to specialist investment research services and software. He uses these resources to inform his advice, and also to provide in-depth reports (with snazzy-looking charts and spreadsheets!) regarding how my investments are performing.
3. As a regulated financial adviser, Mike has to follow all the correct protocols and ensure that all advice he gives follows best professional practice and is appropriate for my needs and circumstances. He cannot cut corners, invest on a whim or hunch, or let himself be distracted by the latest ‘bright shiny object’ in the investment world. I have to admit that I have been guilty of all of these things myself in the past!
4. As a professional financial adviser Mike also has access to certain investment opportunities or platforms that are not easily accessible to the general public. I won’t go into detail about this here, but it is certainly something I have had occasion to be grateful for in the current coronavirus outbreak.
5. Mike is able to provide personalized but objective advice about my finances, based on information I give him. Money and investment can be emotive subjects, and it’s great to have a sympathetic – but at the same time sensible and detached – professional advising you. I am sure Mike sometimes sighs inwardly at some of my more exotic investments, but he is always interested in what I have been doing with ‘my’ half of my portfolio and happy to offer his thoughts as appropriate.
Are there any drawbacks to having an adviser? Well, of course, you have to pay them! In the case of Mike I paid an up-front fee initially and now pay a small monthly commission. Hand on heart I can say that Mike is well worth his fee, and even in the current exceptional circumstances his charges have been more than covered by the amount by which my investments have grown.
So that is why I have a personal financial adviser. If you are fortunate enough to have money to invest, I strongly recommend you consider engaging one too.
If you would like to find out more about the service offered by Mike and his colleagues at Integrity Wealth Solutions, you can check out their website and contact them on 02476 388 911, or email them at advice@integritywealth.co.uk. They are friendly and not at all pushy, and will be delighted to talk you through the service they offer without obligation. If you do get in touch, please mention that you were recommended by Nick Daws of Pounds and Sense blog. If you end up becoming a client they have said that they will pay me a small fee to say thanks. This will help to cover my costs and ensure I am able to go on sharing tips and advice to Pounds and Sense readers.
As always, if you have any comments or questions about this post, just let me know.
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Today I’m spotlighting a pension advisory service called AdviceBridge that may be of interest to any Pounds and Sense readers who are planning for their retirement.
There is no doubt that in recent years retirement planning has become more challenging. The pension reforms introduced by George Osborne in 2015 gave people much more freedom over how and when they can access their retirement savings. There are many benefits to those reforms – and I’m a fan of them myself – but it does mean most people now have big decisions to make over how to finance their retirement.
A further factor is the decline of ‘defined benefit’ pensions. These guaranteed a certain pension usually based on how long you had worked for an employer and how much you earned during your career. The great majority of working age people nowadays have ‘defined contribution’ pensions, where you build up a pension pot over the course of your working life. This then provides you with an income (alongside the state pension and any other investments) when you retire. Anyone with a pension of this type will have important choices to make over how, when and where to save for their pension, and what to do with it once they reach retirement age. Many people who are not financial services professionals understandably struggle with this and need some expert help (I did myself).
Getting professional financial advice can be expensive – typically pension advisers in the UK charge ÂŁ2,000-ÂŁ3,000 up front and then 0.5% a year. But a new service called AdviceBridge promises a personalized, affordable retirement planning service. Indeed, they say they can do this for as little as a tenth of the average adviser fee, partly by running the service online and over the phone (no face-to-face meetings required).
Although it is a low-cost service, AdviceBridge is staffed by fully trained and regulated financial advisers, and the company is authorized and regulated by the Financial Conduct Authority (FCA). AdviceBridge never holds investors’ money, even when they assist in the implementation of a retirement plan. The advice they give is though covered by the Financial Services Compensation Scheme (FSCS), which means clients can claim compensation of up to ÂŁ85,000 if they receive bad advice.
Who Is AdviceBridge For?
In order to keep their charges low, AdviceBridge say that at the moment they are only able to help clients who meet the following criteria:
You are resident and domiciled in the UK.
You are generally in good health.
You do not have any unsecured loans.
You are not currently contributing to pensions with safeguarded benefits such as a final salary pension.
You do not own any buy-to-let property or any non-standard investments.
You do not receive any means-tested benefits.
You would like to plan individually, not as a couple.
How Does It Work?
Assuming you meet the criteria above, you start by filling in an online questionnaire and completing some electronically-signed compliance documents.
As well as the usual contact information, the questionnaire covers such matters as:
your age
your employment status
your annual income
any existing private or company pensions
whether you will qualify for a full state pension
other savings and investments
your target retirement age
how much income you hope to have in retirement
any major outgoings in future you need to plan for
and so on
Once you have entered this information, you can create and log in to your account to see an overview of your financial situation. You can adjust the parameters in order to achieve a realistic and sustainable level of retirement income. Here is a screen capture showing part of this (an example account, not mine personally!).
Personalized Plan
Naturally, the above is just the first stage of the process. Once you have provided this information and set up your account, the AdviceBridge advisers will crunch the numbers and (with the aid of their specialist software) produce a personalized plan for you.
This is obviously a key document. The sample plan I saw came to 39 pages in PDF form. It was divided into three sections: About You, Our Recommendations and Advice, and Appendices.
About You sums up the information you have provided to AdviceBridge via the questionnaire. It covers your personal circumstances, your retirement savings and investments, and your progress so far towards achieving your retirement goals.
Our Recommendations and Advice is the longest section of the plan. It presents recommendations on every aspect of managing your finances for retirement, including restructuring your investment portfolio if required (with specific recommendations for low-cost personal pensions and ISAs). It also examines the likely outcome of following the recommendations, including both average and conservative projections. A sample page from this section of the plan is shown below.
Finally, the Appendices section includes a range of supplementary information, including more detail about the UK state pension, rules about annual pension allowances and taxation, your options for accessing your pension (drawdown, annuities, etc), and more.
It doesn’t end there, though. Once you have had a chance to read and digest your plan, you can arrange a call with a personal financial adviser from AdviceBridge to talk through the advice and recommendations and help you decide how to proceed. The advisers are not paid commission on product sales, so they are able to give unbiased advice about what investments may be best for you based on your specific circumstances.
So What Does It Cost?
For the basic AdviceBridge service as described above, there is a one-off fee of ÂŁ300 with no recurring charges. This service will suit people who are happy to arrange their own investments based on the advice given and the telephone call with an adviser.
If you want AdviceBridge to set up the recommended investments for you – to implement your financial plan, in other words – they will do this as well for an inclusive fee of ÂŁ500, again with no recurring charges.
Finally, if you opt for the Plan+Implementation service and want ongoing support and assistance too, including dynamic risk adjustment, an annual telephone review, ongoing telephone support, assistance putting your pension into drawdown, and the opportunity to monitor your portfolio online using a dedicated app, AdviceBridge offer all this for an additional ÂŁ100 a year or ÂŁ10 a month.
All of the above is summed up in the table below which I have copied from the AdviceBridge website.
My Thoughts
Overall, I have been very impressed by AdviceBridge, both in terms of what they are offering and the prompt and friendly support they provided while I was writing this article. Here are some of the main things I like about their service:
much lower fees than traditional financial advisers
all fees quoted include any taxes due – what you see is what you pay
range of options according to how much (or little) work you want to take on yourself
non-commission-based advisers, so unbiased advice on what investments will suit you best
advisers are free to recommend across the entire range of investment opportunities
all digital process – no need for personal visits or face-to-face meetings
fully FCA authorized company and advisers
advice is covered up to ÂŁ85,000 under the Financial Services Compensation Scheme (FSCS)
all personal information is securely encrypted
in-depth written advice and recommendations on your retirement finances backed up by telephone support
Any negatives? Well, the only real one I could find is that various groups are currently excluded from the service, e.g. buy-to-let landlords and holders of ‘non-standard investments’. I guess the latter might include me, as I have a proportion of my portfolio in P2P lending and property crowdfunding.
I do of course appreciate that to keep their service so inexpensive AdviceBridge have to streamline their service, but it is a pity if this excludes a significant proportion of people who could benefit from it. I understand that this is something that AdviceBridge keep under review and in future they may remove some of these restrictions. In the mean time, if you aren’t sure whether you are eligible, it is well worth giving them a ring or contacting them via the website to ask (without obligation).
In my opinion, if your circumstances match their criteria, AdviceBridge are well worth checking out. I particularly like their ÂŁ500 Plan+Implementation service, which covers not only researching and producing a retirement plan for you but implementing it as well. I would also seriously consider paying the extra ÂŁ100 a year (or ÂŁ10 a month) for the ongoing service. Obviously that brings the price up a bit further, but it is still far less than you would pay a traditional financial adviser for a similar service.
As always, if you have any comments or questions about this post, please do leave them below.
Disclaimer: This is a sponsored post for which I am receiving a fixed fee (but no commission). Please note also that I am not a professional financial adviser and nothing in this post should be construed as individual financial advice. Everyone should do their own ‘due diligence’ before investing and take professional advice as appropriate. All investment carries a risk of loss.
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Please be aware that this is a historical post. Bricklane is now closed to new investors and is winding down. Please see the comments below for the latest updates about it.
Today I am looking at another property investment platform, Bricklane.
Unlike Kuflink and Ratesetter, both of which I have discussed previously on this blog, Bricklane is not a platform for peer-to-peer loans. Neither does it arrange crowdfunded investments in specific properties like Crowdlords and Property Partner.
Bricklane is structured as a Real Estate Investment Trust, or REIT for short. For those who don’t know, REITs are property funds that use investors’ money to buy (and manage) property and provide returns in the form of rental income plus capital appreciation.
In order to qualify as a REIT in the UK, companies have to meet certain requirements. The most important are as follows:
At least 75% of their profits must come from property rental.
At least 75% of the companyâs assets must be involved in the property rental business.
They must pay out 90% of their rental income to investors.
In exchange for operating within these rules â and to encourage investment in UK real estate â REITs are not required to pay corporation or capital gains tax on their property investments. That helps make REITs profitable for the companies running them, and is how they are able to generate attractive returns for investors.
Normally rental income from REITs is treated as taxable income and taxed at your highest marginal rate. However, if you invest through an ISA or SIPP (Self Invested Personal Pension) no tax is due. You therefore get the best of both worlds – your money isnât subject to taxation while invested in the REIT, and when it comes back to you in the form of income distributions and profits on sales of shares, you donât have to pay tax on these either.
Types of Investment
You can invest in Bricklane as a stocks and shares ISA or a SIPP, or failing that in a standard investment account, where you will be liable for tax.
To maximize the benefits from investing in a REIT, I highly recommend going down the SIPP or ISA route, if you haven’t already used up this year’s allowance. As a reminder, everyone has a ÂŁ20,000 annual ISA allowance (for 2019/20) and you are also only allowed to invest in one cash ISA, one stocks and shares ISA and one Innovative Finance ISA (IFISA) in any one tax year. I invested in a stocks and shares ISA with Bricklane myself.
Bricklane has two property portfolios you can invest in. These are Regional Capitals, which includes properties in Birmingham, Manchester and Leeds. and London, with a portfolio of properties in the capital. The Regional Capitals portfolio has generated a return of 19.3% since it was launched in September 2016 and the London portfolio 8.9% since its launch in July 2017 (figures from the Bricklane website).
As a Bricklane investor, you can choose to invest in either or both portfolios, in any proportion you choose. I opted to put all my money into Regional Capitals, as I believe this is where the biggest growth potential lies. In addition, rental income in this portfolio is higher, and I am also concerned about the possible impact of Brexit on London. You might see this differently, of course!
Bricklane Pros and Cons
Based on my experiences so far – and some online research – here is my list of pros and cons for the Bricklane property investment platform.
Pros
1. Fast, easy sign-up.
2. Well-designed, intuitive website.
3. Low minimum investment of ÂŁ100.
4. Bricklane take care of all the work involved in buying and managing properties. You just choose which portfolio/s to invest in.
7. Possibility to access your money at any time (though this does depend on another investor being willing to buy your shares).
8. Customer service (in my experience anyway) is fast, friendly and helpful.
9. Charges are reasonable, comprising an initial 2% fee (though see my comment below on how you may be able to offset this) and 0.85% annual management fee.
10. Potential to profit through both capital appreciation and rental income.
11. Rental income is paid into your account every three months. You can either withdraw it or reinvest it to compound your returns.
12. Up to ÂŁ1,500 cashback is available for new investors of ÂŁ5,000 or more via my referral link (see below).
Cons
1. No detailed information provided about the properties your money is invested in.
2. Can’t invest in an ISA if you have already put money into another stocks and shares ISA this year.
3. 20% tax deduction from rental income at source if you don’t invest via a SIPP or ISA (and additional liability if you are a higher rate taxpayer).
4. Minimum ÂŁ10,000 investment for a SIPP.
5. Returns over the last few months have been disappointing (see below)
6. No absolute guarantee you will be able to sell your shares when the time comes.
My Experiences
I put ÂŁ5,000 into a Bricklane Stocks and Shares ISA in October 2018. As mentioned above, I chose to invest in the Regional Capitals rather than the London portfolio. The graph below – taken from my member’s page – shows the earnings generated since I opened my account.
As you will see, initially my investment performed pretty well. In the first nine months I made about ÂŁ150, which equates to an annual interest rate of 4% (tax-free). That’s not spectacular, but it still beats most bank and building society accounts by a considerable margin. It is similar to the top rate currently on offer with P2P platform RateSetter in their Max account, although in their case you have to pay a fee equivalent to 90 days’ interest if you wish to withdraw. There is no withdrawal fee with Bricklane.
Since July/August 2019, however, returns have diminished considerably. My earnings between August 2019 and February 2020 were only just over ÂŁ7, which is clearly a very low percentage rate. Of course, a large part of this is down to the depressed state of the property market caused by uncertainty over Brexit. I am hoping that now this is definitely happening – for better or for worse – my investment will get back on an upward trajectory again. Although recent results have been disappointing, at least the overall value of my portfolio hasn’t gone down (which has happened with some of my other property-related investments).
One other thing I should mention is that in October 2019 I withdrew ÂŁ1,000 from my account to help fund a new central heating boiler after the old one packed in. This has therefore also reduced my returns a little. Although even if I still had the full ÂŁ5,000 invested, earnings over the last few months would still have been nothing to write home about.
I should add that the withdrawal in question proved straightforward, although it wasn’t instant. I received the money in my bank account about a fortnight after putting in my request.
Conclusion
Clearly the performance of my Bricklane portfolio since last August has been disappointing, though overall I am still better off than I would have been if I had kept my money in a bank or building society.
I am hoping that things will start to improve in the property markets now that the Brexit issue has been resolved. There are some signs of this, although it remains to be seen whether the recovery in property prices will be sustained. For the time being, then, I am sticking with what I have in Bricklane, though I am not planning to top up my investment with them currently.
More generally, my experiences with Bricklane have been good. The sign-up process was fast and simple, and my ÂŁ125 referral bonus (see below) was credited to my account instantly, completely offsetting (with a bit to spare) the initial 2% charge.
I also like the fact that any investment with Bricklane is automatically diversified across a range of properties, thus reducing volatility and risk. By contrast, with many P2P loan and property crowdfunding platforms, you invest in one loan or property at a time.
It’s also reassuring that you can ask to withdraw your money at any time – this can be an issue with property crowdfunding platforms in particular. As mentioned earlier, this does depend on someone else being willing to buy your shares, but Bricklane say that to date there hasn’t been a problem for anyone wanting to sell. As I said above, I had no issues when I wanted to release ÂŁ1,000 from my own investment with them.
It is important to note that this is an investment rather than a savings account, and it does not therefore enjoy the same level of protection as bank and building society savings, which are covered (up to ÂŁ85,000) by the Financial Services Compensation Scheme (FSCS).
Clearly, no-one should put all their spare cash into Bricklane (or any other investment platform). Nonetheless, in my view it is worth considering as part of a diversified portfolio. Not only are the rates of return (other than the last few months) higher than those offered by most banks and building societies, they are less affected than shares by ups and downs in the stock market. Property investments arenât a way of hedging your equity-based investments directly, but they do help spread the risk.
In addition, the tax treatment of REITs make them a highly tax-efficient investment, especially if you can invest in the form of a SIPP or an ISA.
Welcome Offer
As an existing Bricklane investor, I can offer a special cashback deal for anyone signing up and investing on the platform via my link. If you click through this special invitation link, sign up and invest a minimum of ÂŁ5,000, you will receive ÂŁ125 in cashback (and I will get ÂŁ100). With a ÂŁ5,000 investment this bonus will cover your initial 2% charge and still leave you ÂŁ25 in profit đ
If you invest more, you will get even more cashback, as follows:
Over ÂŁ10,000 – ÂŁ250
Over ÂŁ20,000 – ÂŁ500
Over ÂŁ50,000 – ÂŁ800
Over ÂŁ100,000 – ÂŁ1,500
Not only that, once you are an investor with Bricklane, even if you only start with ÂŁ100, you will be able to offer the same cashback bonus to your friends and relatives and earn commission yourself as well. There is no limit to the number of people you can introduce through this scheme.
Obviously, this is a generous promotional offer by Bricklane and I assume it wonât be available forever. If you want to take advantage, therefore, donât wait too long. I will remove this information if/when I hear the offer is no longer valid.
If you have any comments or questions about this Bricklane review, as always, please do leave them below.
Disclosure: this post includes affiliate links. If you click through and make an investment at the website in question, I may receive a commission for introducing you. This has no effect on the terms or benefits you will receive. Please note also that I am not a professional financial adviser. You should do your own ‘due diligence’ before making any investment, and seek professional advice from a qualified financial adviser if in any doubt how best to proceed.
Note: This is a fully revised and updated version of my original Bricklane review from October 2018
UPDATE15 March 2020: Having said that my earnings from my Bricklane ISA over the last 6-8 months were disappointing, since the start of February they have shot up by over 100% (see below).
This doesn’t exactly cancel out the recent falls in my equity-based investments due to the coronavirus, but it does demonstrate the value of having a well-diversified portfolio. And I am obviously feeling more positive about Bricklane as an investment platform now đ
One other thing to note is that until the end of April 2020 Bricklane are waiving all investment fees for both new and existing investors. Visit the Bricklane website for more information.
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Today I have a guest post for you from James Mackay, a certified financial planner and regular reader of Pounds and Sense đ
In his article below, James addresses an issue that will be real and pressing for many readers of this blog – how to prepare for retirement and enter it successfully.
Over to James then…
If youâre starting to think about your retirement, these are three important questions that you need to ask.
1. Have You Had Enough?
Itâs Sunday evening and youâre winding down after a busy weekend with friends and family. As you sit back in your favourite chair and think about the week ahead, you canât quite get comfortable.
The thought of going back to work on Monday morning makes you feel a bit uneasy. In fact, the thought of doing it for another 5â10 years makes you feel sick!
If youâve ever experienced this, you might be approaching the point where youâve had enough (thatâs a technical term).
The question you need to ask yourself is whether the pain of going to work outweighs the benefit. If you find yourself in this situation; where youâre emotionally, physically and mentally drained and no longer excited to perform at the highest level, itâs time to do something about it.
Having had enough doesnât mean that itâs necessarily time to retire. It simply means that you need to change the status quo.
Maybe youâve had enough of your current role, but youâve got more to give in another capacity. Your years of wisdom could be very valuable in a different guise. Perhaps youâve had enough of having a boss and are ready to go it alone. With the years of experience, itâs no surprise that over 50s are the best entrepreneurs. Or maybe youâre happy to carry on but just want a little bit more flexibility around what you do and when you do it.
These are all useful options to explore, particularly if you havenât got enough to hang your boots up yet. Sometimes, the benefit of working for âjust one more yearâ can make a real difference to your financial situation.
2. Do You Have Enough?
If youâve had enough, and are ready to move onto pastures new, the next question is do you have enough?
Whenever I ask this question, people start telling me how much theyâve got saved up. But theyâve got it all wrong. Itâs like trying to build a house without the seeing the floor plans. You need to start with the end goal and work back from there.
Working out if you have enough requires knowing:
Your monthly number â this is how much a comfortable lifestyle is going to cost.
The gap â this is the difference between the two, and where your savings come in. Broadly speaking, if youâve got 20x the gap in savings, you should be fine. Any less and you might not be quite there yet.
But, thereâs more to retirement planning than just simply figuring out your ‘number’. Finding your purpose in retirement sounds wishy-washy, but without a clear purpose youâre likely to be one of the 25% of retirees who return to work.
3. Will You Have Enough to Do?
You need to ask yourself what you are going to do when you wake up on that Monday morning, free from the ties of work, and how are you going to fill your time.
If for the last 40 years youâve been busy being busy – chances are youâre going to get pretty bored sitting around the house for 40 hours a week. Iâve seen many successful individuals retire, only to get bored and return to work within five years. The newly-found free time that retirement provides can be overwhelming for some.
Retirement is about having enough money to sleep at night and enough purpose to get up in the morning. Itâs not just about the numbers, itâs about how youâre going to spend your time. Purpose will drive you in retirement, money will fund you. Try not to get those two mixed up.
The bottom line is this⊠retirement is the biggest transition youâre ever going to make. Itâs not the sort of thing you do regularly and not the sort of thing you want to get wrong. By asking yourself these three questions, youâll improve your chances of achieving a successful retirement.
Byline: James Mackay is a Certified Financial Planner at Frazer James. He has helped hundreds of clients to achieve financial independence and retire with confidence, clarity and purpose.
Many thanks to James (pictured above) for a valuable and thought-provoking post. As a semi-retired 63-year-old myself, I can identify with all of the points he raises.
Actually I think there is a strong case for phasing your retirement if possible, maybe reducing the number of days per week you work initially and/or moving to a less pressured role. This can make retirement feel more like going on an interesting journey rather than driving over a cliff!
I also think there’s a good case for continuing to do some work you enjoy during the early years of retirement at least, to boost your income, provide social interaction, and keep your mental and physical faculties sharp. Of course, voluntary work can do this as well (apart from boosting your income, which may or may not matter to you).
If you have any comments or questions about this article – for me or for James – as always, do feel free to post them below.
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