This month, our personal finance columnist, Mitch Hopkinson, looks at ways individuals can make their finances work best for them and his top five tips for a successful 2015.
Mitch, a recipient of the ‘Financial Times Independent Financial Adviser of the Year Award’, is head of East Midlands at deVere United Kingdom, the UK division of deVere Group, one of the world’s largest independent financial advisory organisations.
Many people ask me for tips on how to make a success of their finances. I thought therefore that it would be a really great idea to start 2015 off with five tips for making this year a success.
1.Don’t procrastinate. I mean stop putting off planning for your future. I find this one word features heavily in most people’s initial review meeting with a financial adviser. People will often say that they ‘wish they had’ bought those shares when they were so cheap, invested in a second home when property prices were so low, put more money away when they were younger etc. So take some time now to sit down and make a list of your ‘if only I had done that’ goals, this should motivate you to see that there could be lots of times in your life that you were going to do something, but never got around to it, and time just slipped by. Focus on what you want to achieve, and get on with making a plan of ACTION, so that this time it will be different.
2.Dig out all of your old paperwork and get your finances up to date. Most people have old pensions that they have forgotten about, or just not kept up to date. With the new pension rules, these pension funds could be used to help you achieve some of your goals, particularly if you are in your 50s as you can access pensions from the age of 55. The new pension freedoms that are proposed for April 2015 mean that there is much more scope for you to access smaller pension funds. This may not be appropriate for all of your pension savings, but it is well worth checking to see if those policies from years ago actually are worthy of bringing up to date. We often help clients trace old pension funds and often there are quite amazing results.
3.Pay off or restructure expensive debt. This could be done from the proceeds of the policies you found in #2 above, if you are the right age. For younger people, consider reviewing any debt that costs you more than 10 per cent, with a decent credit rating you should be able to do much better than this.
4.Review your mortgage. For most of us, this is the biggest worry that we have and it is important that you ensure that you plan for the future so that you can comfortably afford your mortgage no matter what happens to interest rates. Interest rates have been at historically low levels for many years now. The next rate move is almost certain to be upwards. It is probably the best time ever to consider fixing your rate, particularly if you want to ensure your mortgage remains affordable when rates do finally increase. There are some great fixed rates on offer at the moment and the best five year fixed rate is well below three per cent. There are some lenders now looking at longer term fixed rates of up to 10 years, these may be attractive to some who want long term peace of mind. Be sure you read the small print and don’t miss the fact that these types of long term fixed rates will come with hefty penalties if you have to pay them off early.
5.Pay more in to your pension. Stop promising yourself that you will do it. Just do it, increase your pension. If you have not got one, get one. Aim to pay 20 per cent of your earnings in to a pension fund. It is likely that this year, if you have not had access to one, you will get the option to join a pension at work, make sure you join it. It will be one of the only ways that you can save and get the benefit of someone else paying in your employer and the tax man!
I hope that these tips motivate you to make 2015 your most successful year so far!
Mitch Hopkinson is a managing partner of deVere United Kingdom, part of the deVere Group, one of the world’s largest independent advisers of specialist global financial solutions to international, local mass affluent, and high-net-worth clients, through a network of 71 offices across the world and more than 1,000 staff. It has in excess of 80,000 clients and $10bn under advisement.