Guide to Financial Planning: Part Four

Don’t believe the Hype

Rule 4: Avoid Greed

Most people have heard this basic rule of investing, which is to buy low and sell high. Yet, few follow this guideline. It’s  too easy for well-meaning investors to fall victim to their own emotions, thereby succumbing to the fear, hope and greed cycle.

When investments continue to rise, we get excited, and newspapers and television add fuel to the fire. People then start to worry they’re missing out and greed kicks in. Even though we’re buying something for far more than what we should. We become greedy and want some of this marvellous investment opportunity. The chance  has probably passed and our greed is exposing us to more risk than we should have had. We are buying high not low.

Investing is a strange business, Investor, businessman and philanthropist, Sir John Templeton, used to say: “Be greedy when others are fearful and fearful when others are greedy.” The irony is that many investors only want to buy when the price is high.

My advice is avoid greed, be what you are.


Guide to Financial Planning: Part Three


When investing the next box to tick is diversity. Most people are familiar with the don’t have all your eggs in one basket theory. Nearly every horror story I hear involves a lack of diversity. Whether its putting all your money into a property development or buying and holding onto shares in one  company.

As with timing the market, it’s often difficult to choose which asset class is going to outperform others. This year’s top performer may be next year’s crisis. This is illustrated in the chart showing each asset performance each year. It’s quite easy with hindsight to see where your money should’ve been invested , but not so much without the hindsight.Asset performance each year

By diversifying your portfolio, you can help manage your risk.

The goal of diversification is not necessarily to boost performance—it won’t ensure gains or guarantee against losses. But once you choose to target a level of risk based on your goals, time horizon, and tolerance for volatility, diversification can provide the potential to improve returns for that level of risk.

To build a diversified portfolio, you should look for assets—stocks, bonds, cash, or others—whose returns haven’t historically moved in the same direction, and to the same degree, and, ideally, assets whose returns typically move in opposite directions. This way, even if a portion of your portfolio is declining, the rest of your portfolio, hopefully, is growing. Thus, you can potentially offset some of the impact of a poorly performing asset class on your overall portfolio.

So, so far you’ve taken advice, given the investment time and diversified.



We interrupt our guide to financial planning to bring you our Spring Budget Special……..much ado about nothing!

Pensions & Savings
Money Purchase Annual Allowance (MPAA)
– The Government believes that an MPAA of £4,000 is fair and reasonable and should allow individuals who need to access their pension savings to rebuild them if they subsequently have opportunity to do so.
– The reduction in allowance from £10,000 to £4,000 will limit the extent to which pension savings can be recycled to take advantage of tax relief, which is not within the spirit of the pension tax system.
This is effective from 6th April 2017 for all individuals who have flexibly accessed income.

Tax –free Dividend Allowance
Reduction in tax-free dividend allowance for shareholders from £5,000 to £2,000 from April 2018

Personal taxation
The main rate of Class 4 National Insurance contributions to increase from current rate of 9% to 10% in April 2018 and 11% in April 2019, raising £145m a year by 2021-22 at an average cost of 60p a week to those affected

-£435m for firms affected by increases in business rates
-£300m hardship fund for small businesses worst affected
-Pubs with rateable value of less than £100,000 to get a £1,000 discount on rates they pay -Any business losing existing relief will not pay more than £50 a month.

– £300m to support 1,000 new PhD places and fellowships in STEM (science, technology, engineering and maths) subjects
– Free school transport extended to all children on free school meals who attend a selective school
– Increased investment in schools of £216m
– New T-Levels to be introduced to give parity of esteem for technical education
– Number of hours of training for technical students aged 16 to 19 to be increased by more than 50%, including a high-quality, three-month work placement

Health & Social Care
-£100m to place more GPs in accident and emergency departments for next winter
– Additional £325m to allow the first NHS Sustainability and Transformation Plans to proceed
– An extra £2bn for social care over next three years, with £1bn available in the next year
– Long-term funding options to be considered but so-called “death tax” on estates ruled out

– Transport spending of £90m for the north of England and £23m for the Midlands to address pinch points on roads
– £270m for new technologies such as robots and driverless vehicles, £16m for 5G mobile technology and £200m for local broadband networks


Guide to Financial Planning: Part Two


Time in the market, not timing the market.

It is very, very difficult to predict the best time to enter or exit the market. The speed at which markets react to news means prices have already absorbed the impact of any new developments. When markets turn, they often turn quickly.

Investors trying to time the market are suggesting that they know more than the market itself, you could argue that is near impossible. Those who try to time markets will often miss opportunities and growth. There will always be an occasional investor who times the market successfully, that doesn’t make it the right thing to do.

History tells us that markets move in cycles, but nobody rings a bell at the top or sounds a buzzer at the bottom. Over short periods, markets can be more volatile and result in a wide range of returns (positive or negative).

According to Fidelity Investments: “the longer you stay invested, the greater the probability your investment will generate a positive return”

I would concur with that view. My rule is that if you know more than the market itself then by all means try to time the market. If you don’t know more than the market (and trust me, you don’t). Then time in the market is key.


Guide to Financial Planning: Part One

Take advice

Financial Planning is often complex and the varied and ever-changing rules mean that it’s easy to make a mistake. If you take professional advice, in my opinion, you increase the chances of getting it right.

Now advice can come in many forms. Beware of false prophets, or should we say false profits!

Professional Advice does not include ANY of the following.

  • Dave at work
  • My friends Mum
  • Craig’s cousin or
  • A lady on the bus.

“I don’t know about these things, but……..”

Over the years we’ve heard lots of stories about why clients have followed a particular course of action with regards to Financial Planning. Often it can include a variation on the “Dave from work” approach.

Whoever is giving the advice needs to be qualified in that area and hopefully a specialist.

So, Part One Take Professional Advice.


Farewell to Nicola

After nearly 6 years of service with Trafford & Houghton, Nicola is leaving today to embark on a new and different career path.

We would like to thank Nicola for all her hard work and dedication shown to our company over the past 6 years. We will miss you and I am sure a lot of our clients will be sad to see you leave as well.

We wish you good luck for your future success.

From all at Trafford & Houghton



Unmarried woman wins automatic right to late partner’s pension in decision that could affect millions

Unmarried partners could be entitled to a “survivors pension” following a landmark Supreme Court ruling yesterday.

A case won by a woman who was denied access to her long-term partner’s pension after he died suddenly will improve the pension rights of millions of unmarried couples across the UK.

Denise Brewster, in her early 40s, argued she was discriminated against after being told she was not entitled to payments from her late partner’s occupational pension because he had failed to sign a form nominating her as a beneficiary.

Such forms are not required for married couples but until now public sector pension schemes and some private sector pensions have demanded them for couples who are not married.

Ms Brewster and Lenny McMullan had lived together for 10 years and owned their own home.

They got engaged on Christmas Eve 2009, but Mr McMullan died suddenly between Christmas night and the early hours of Boxing Day morning.

At the time of his death Mr McMullan had 15 years’ service with Translink, which delivers Northern Ireland’s public transport services. He was paying into Northern Ireland’s local government pension scheme.

Ms Brewster was denied access to her partner’s pension by Translink on the grounds that she and Lenny had been cohabiting and were not married.

She took her case to the High Court in 2012 and won.  But the Northern Ireland Local Government Superannuation Scheme appealed against the decision and in 2013 it was overturned by a two to one majority in Northern Ireland’s Court of Appeal.

In order to take her case to the Supreme Court, Ms Brewster turned to crowd-funding to raise the initial £4,000 required, since there is no Legal Aid available for such cases.

Giving the Supreme Court’s ruling, Lord Kerr said: “To suggest that, in furtherance of that objective, a requirement that the surviving cohabitant must be nominated by the scheme member justified the limitation of the appellant’s Article 14 right, is, at least highly questionable.” He ordered the nomination form to be “disapplied”, arguing there was “no rational connection between the objective and the imposition of the nomination requirement”.

What will the ruling mean for cohabiting couples?

The myth of the ‘common-law marriage’ still pervades, but in reality cohabiting couples have few of the rights of their married counterparts.

For example, should one partner die, the other has no automatic right to inherit from them, even if they have been together for years.

Similarly, if one partner dies, the other is not eligible for any bereavement benefits as they would be if they were married.

This applies even if the unmarried couple have children together.

Yesterday’s Supreme Court decision bestowed on Denise Brewster the same right to claim a ‘survivor’s pension’ as she would have done had she been married to her partner Lenny McMullan.

It’s seen as a landmark case because it could set precedent for future situations where a distinction is made between married and unmarried couples.

It remains to be seen how this will play out in reality, but the decision is bound to be used in future cases to strengthen the rights of unmarried couples, particularly in the case of pensions.