Dental Tribune United Kingdom

W ith a fluctuating global market and with the Coalition Government making constant changes to the financial system as a result of the economic downturn, it becomes essential to watch your finances. For example, the latest plan pro- posed by the Government is to tax those earning more than £35,000. It is therefore especially important to keep reviewing your pension and investment funds to prevent them from going stale. A regular review plan of your pension and other investments can ensure you are setting aside enough money and are saving this revenue in the best methods possi- ble. There are some types of invest- ment that can offer the potential for financial growth, whereas others can provide you with an income. There are even types of investment that can offer a mixture of these. The investment you choose is very personal and dependant on what you want to achieve. However, many investors are not very clear about their objectives. There are two main areas to consider before you make your fi- nal decisions: • The length of time you want to in- vest for: The time frame you decide can seriously impact the rest of your policy. It is important to know whether you want your money to grow over time, or you need the income from it immediately. In ad- dition, it is worth thinking about whether you want to leave some of your savings to heirs or would pre- fer to spend it all before your death. • The most tax-efficient methods of investing: This can potentially in- crease the money you retain from your savings and investments tax. For example, pension plans are long-term investments and one of the most tax-efficient investment options around because the con- tributions receive tax relief based on the amount you earn. There are less stable options that also offer tax reliefs to encourage investors to participate. For instance, the Enter- prise Investment Scheme (EIS). Some investors have a ten- dency to hold bad investments too long; therefore, when choosing the most suitable investment option for you, seeking independent financial advice is invaluable. This can en- sure that you will invest in a repu- table company and be confident that your choice of investment is the most suitable for you. Reviewing your investment funds becomes even more impor- tant if your financial circumstances change, as this can affect your in- vestments. For instance, if you have had a gap in your employment for any reason, the pension you have saved may not be enough to pro- vide for you in your retirement. Changing lives, expectations and situations may call for a change in your investment strategies, but this can also be the result of a shift in attitude in regard to your finances, meaning that you may become more cautious or more adventur- ous in your financial decisions. To check up on how much your investment fund has grown, and for your own records, it is also vital you acquire an annual state- ment. This will help you to identify any shortfalls or performance is- sues in relation to your investment fund. It is also essential that profes- sional fund managers prepare a good Investment Policy Statement (IPS) tailored to the individual in- vestor. An IPS will help guide any investment decisions and solidify the aims and objectives of the in- vestor, as well as laying out a plan of how these aims are going to be met and how the investment will be managed. This policy should be written up and kept with your financial records and then annu- ally reviewed, evaluated and up- dated where necessary. As the risk tolerance of your investment funds is likely to change over time (and perhaps your investment goals will alter as well) your policy statement needs to be kept updated and re- flect this shift in viewpoint. It is also essential you balance the risk with reward: the greater the potential reward, the greater the chance of a serious loss. It is necessary to make a decision on how much risk you are willing to take. For some people, it does not matter how unstable their portfo- lio is as long as it grows over time. Nevertheless, your IPS should include a plan of action that can be undertaken in the event that something does not work out. For example, if interest rates fall below one per cent. This way, you will be secure in the knowledge that, no matter the problem, you will be able to see it through. It is important that profes- sionals seek out the best financial planning options to diversify their investments and to make certain that their investment options are the most appropriate for them. money4dentists has 55 years of ex- perience in providing the very best independent financial advice, spe- cifically for the dental profession. Their dedicated team of advisers have the most advanced software available to help you with your fi- nances, and can help ensure that you are making your money work for you. DT Focus on your finances Richard Lishman explains why it is vital to review your pension and investment fund analysis About the author Richard T Lishman of money4dentists, which are a spe- cialist firm of Inde- pendent Financial Advisers who help dentists across the UK manage their money and achieve their financial and lifestyle goals. For more information please call 0845 345 5060 or email info@money4den- tists.com www.money4dentists.com If you plan your pension well you could reap all the benefits August 1-7, 201110 Money Matters United Kingdom Edition May 2011 - December 2011 Register now for the 3 day smile design module