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السبت، 27 مايو 2017
Fight for your rights: I switched supplier then got a shock £800 bill
I recently switched energy away from First Utility, but have now had a demand for more than £800 without explanation. The company says it will take the cash via the direct debit we set up. That will put us into an overdraft and we’ll incur charges. Can you help?
AM/London
This highlights one of the problems of switching – there can be an outstanding amount due, and suppliers are not shy about snatching it from people’s accounts.
We asked First Utility to explain why the final bill was so high.
There were two reasons. First, the company had been estimating usage for two years and the final meter reading revealed the bills had been underestimated. But it also turned out that you had been on a low fixed tariff which ended a year ago and had ignored its emails offering you a new fixed tariff. As a result, you ended up on the company’s highest tariff.
The good news is that First Utility has arranged for its best fixed rate to be backdated to the date your last one ended, which will cut the total amount you owe by around £400.
It also offered to let you repay the amount over the coming months.
However, First Utility should look at the way it communicates with departing customers. We put this to the firm and it replied: “We try to set fixed direct debits so that large credit or debit balances don’t build up. Where they do, we’re always there to speak to customers and look at ways to set up a payment plan. We’re looking at how we can make it clearer what the options are for customers who have an outstanding balance.”
OUTCOME: Energy bill cut by £400
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The little-known fund to help cyclists and pedestrians knocked down by uninsured and hit-and-run drivers
And while motorists should have insurance that protects them in the event of an accident, for pedestrians, cyclists or drivers without comprehensive cover, the toll of an accident with an uninsured or hit-and-run driver can be terrible.
It is easy to assume that most drivers are insured; however, there are a staggering one million uninsured drivers on British roads, according to estimates by the Motor Insurers’ Bureau (MIB). While this figure has halved since 2005 it is still astonishingly high.
Uninsured and hit-and-run drivers cause, on average, an estimated 26,000 injuries and 130 deaths each year on our road networks, according to the MIB. The Department for Transport, meanwhile, says hit-and-run drivers were responsible for 12% of all road traffic accidents in 2015.
Of course, a motorist with comprehensive cover should be able to make a claim through their own insurer for anything related to damage to the car or other property, or personal injury.
However, if you are not covered comprehensively, or you’re a pedestrian or a cyclist without cover, and you’re involved in an accident with an uninsured or hit-and-run driver, there is something you can do.
When the driver is uninsured
If you are involved in an accident with an uninsured driver, you have a few options.
First, if you have the details of the driver whose fault it was (because they’ve stopped), you can go to a solicitor to seek compensation through legal proceedings. Often this will be on a no-win no-fee basis, but if you win, solicitors typically take up to a third of the damages awarded.
If you don’t know the driver, you can make a claim through the MIB – more on what this is below.
The MIB handles an average of 26,000 claims annually involving uninsured drivers. It does, however, stress that you must make sure to obtain the driver’s details where the driver has stopped, and to report them to the police if they refuse to give you any insurance policy information.
When it’s a hit-and-run driver
Litigation is a lot trickier if you are involved in a hit-and-run accident. If the police are unable to trace the driver, effectively there is no one to claim against, leaving the victim in a difficult position.
This is where the MIB really becomes your only port of call. It is essential to report the incident to the police, who will attempt to identify the driver or the vehicle involved. Once all attempts to identify the person responsible have failed, then you can file a claim to the MIB.
As an example, law firm, Slater and Gordon, represented a pedestrian in 2016 who was the victim of a road traffic accident in which the driver failed to stop. As a result, the firm referred the victim to the MIB to seek compensation as the police were unable to track down the offending motorist. The woman was left with life-changing injuries, and received a settlement of £123,783 from the MIB as a result.
You can, however, represent and submit a claim yourself without using a law firm.
So what is the Motor Insurers’ Bureau?
The MIB is the back-stop for road users who do not have pre-emptive recourse in place for compensation in accidents. Cyclists and pedestrians in particular could stand to benefit from the fund, as not all cyclists are insured, while insurance policies seem to be non-existent for pedestrians (we checked a number of comparison websites to no avail).
The MIB fund is reliant on a levy imposed upon all law-abiding motorists. In 2017, the value of the levy paid into the fund by all insurers was £256 million. This means that every honest premium paying motorist pays around £7.34 annually towards the fund through their insurance policy. Cyclists and pedestrians, while able to benefit from the scheme, do not contribute to the fund through taxes or other means.
Cyclists can also get free legal advice following an accident from cycling organisation, Cycling UK.
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Don’t get burnt – the best cards to use abroad in summer 2017
Taking the right card abroad can cut your costs, as exchange rates offered by specialist cards are better than using cash. But take the wrong plastic and you could be left out of pocket.
Avoid sky-high charges
Most current accounts are not designed for overseas spending and charge high fees for doing so. The worst offenders are the Bank of Scotland Vantage account, Lloyds Bank Club Lloyds account and the TSB Classic Plus account. Use any of these abroad and you’ll be charged a 2.99% exchange rate conversion fee, plus a fl at £1 fee. This means a £10 purchase will set you back £11.30.
Cash withdrawals can also be expensive as a percentage fee is usually charged for using your card in a foreign cash machine. On a percentage basis, Clydesdale Bank and Yorkshire Bank’s range of current accounts are the most expensive with a whopping 3.75% fee charged (minimum £1.50).
Also watch out for those accounts that have a high minimum transaction charge, as this can make small withdrawals very expensive. Once again, Bank of Scotland Vantage, Lloyds Bank Club Lloyds and TSB Classic Plus are the cards to avoid.
Click chart to expand.
On top of the 2.99% conversion fee, these accounts also charge a 1.5% cash withdrawal fee, subject to a minimum charge of £2 and a maximum of £4.50. This means withdrawing the equivalent of £10 in cash will cost £12.45.
Similar fees also apply to many credit cards, so check your account details before setting off.
Don’t break the bank
Specialist credit cards are generally the cheapest way to spend overseas. Our top picks – Creation Everyday, Halifax Clarity and Santander Zero – all have no exchange rate conversion fees and do not charge for cash withdrawals.
Remember to pay off these cards in full each month to avoid paying interest on your spending. Also bear in mind that interest will be charged from the day of withdrawal for cash machine usage.
If you don’t want a credit card, then there are a couple of current accounts worth considering. For spending in Europe, the Metro Bank current account is unrivalled. It has no exchange rate conversion fee and there are no added charges for cash withdrawals across 33 countries. However, fees do apply in the rest of the world.
The Virgin Money Essential current account has no conversion fees anywhere in the world. However, it charges £1.50 per cash withdrawal, so just use this in shops and restaurants rather than at cash machines.
With all these cards, both debit and credit, you may still be charged by the foreign bank for using their cash machine – but this should be clearly explained during the transaction process.
Click table to expand.
For all cards, make sure you pay in the local currency rather than in sterling. If you choose sterling, shops and restaurants can set their own exchange rate which is usually less competitive than the rate applied by your credit or debit card provider.
You should also take local currency with you. Avoid buying your cash at airport kiosks, as these are likely to sting you with the worst exchange rates. Instead, use websites such as Compareholidaymoney.com and TravelMoneyMax.com to fi nd the best deals online and in your local area before you jet off.
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Money makeover: “Can we educate our three children privately and have enough left over for retirement?”
Kevin Short and Ruth Kirtland are long-term partners who live together in Essex with their three sons; Edward, eight, Jasper, six, and three-year-old Rupert (pictured below).
Kevin, 47, works as a manager at construction firm Tarmac, while 45-year-old Ruth works part-time as a nurse at an NHS hospital.
Kevin and Ruth’s key objectives are to understand whether they’re in a sound financial position to provide private secondary school education for their children, and to establish what pensions they’ve acquired over the years and if they’ll be enough in retirement.
The couple earn a combined £73,000 a year.
In terms of pensions, Kevin has:
- Two defined contribution pensions with Tarmac; one projected to be worth £443,000 at age 65, and another projected to be worth £206,000 at age 55.
- Two defined benefit (final salary) pensions – one with Tarmac, which is projected to give £10,520 a year income from age 65 and one with Hanson, which is projected to give £7,942 a year income from age 65.
Meanwhile, Ruth has two final salary pensions from the NHS – one projected to give £7,769 a year income from age 55, plus a cash lump sum of £23,208, and one projected to give £255 a year income from age 55.
The couple’s home is mortgage-free and they also own a buy-to-let (BTL) property, from which they receive £675 in rental income each month. The BTL property has an outstanding mortgage of £95,000 (£562 a month over the next 16 years). The mortgage has a connected offset savings account with £17,000 on deposit.
Kevin and Ruth have an additional £8,500 in cash and stocks & shares.
The children have about £64,400 between them saved in a mixture of Child Trust Funds, Junior Isas, and Virgin Stakeholder pensions. Kevin’s father also has a Discretionary Trust Fund set up for his grandchildren with each child currently set to get around £58,000.
This is where Paul Davis (pictured above), an independent financial adviser (IFA) at Clear Financial Advice in Billericay, Essex steps in. Paul was rated among the top 250 IFAs on advisory website, VouchedFor, in 2016. The firm he works for, Clear Financial Advice, covers everything from investments and retirement planning to protection and business advice. His advice for the couple is as follows.
Private school education will be unaffordable
The cost of private secondary school education is generally £15,000 to £20,000 a year, per child, from ages 11 to 18. Even assuming the fee remains the same for seven years, which is unlikely, this would cost between £315,000 and £420,000 in total for the three children.
From analysing the couple’s finances – they have a disposable income of £250 to £750 a month. Even with the help of Kevin’s father’s trust fund, there is clearly a shortfall. So this objective is unlikely to become achievable unless the couple have a significant increase in their income or receive a large capital sum.
Kevin says: “This has been a good exercise to undertake because while it’s every parent’s dream to provide the best for their children, the cost of that can be prohibitively expensive. I agree with Paul’s analysis and we’ll take on board his comments, but I’m not writing it off as an option just yet. One option, for example, could be for the children to go to a state school for the first few years and if it’s appropriate, change to a private school, which would save on costs.”
Click on the image to expand.
Kevin and Ruth should keep their pensions
I have analysed Kevin and Ruth’s attitude to risk using the Old Mutual Wealth Risk Questionnaire, which found their attitude to risk as ‘medium’. Including this in my evaluation of the couple’s pension schemes, I recommend Kevin continues with his two defined contribution Tarmac schemes. However, he should increase his monthly contributions to meet his retirement fund goal.
When it comes to the couple’s defined benefit pensions, our company is not authorised to provide advice on whether they should retain or transfer their pension schemes. If they wish to review these schemes, they should speak to a pension transfer specialist.
Moneywise says: Many IFAs remain wary about transacting defined benefit pension transfer cases and the potential future liability that comes with them. This is a complex area, and there is always a risk when somebody opts to give up a guaranteed income. To find a pensions transfer specialist, visit http://ift.tt/2rJZxb5 .
Change the kids’ pensions
I recommend they transfer their children’s Virgin Money Stakeholder pensions to Old Mutual Wealth’s ‘WealthSelect CRA 6 Active Managed Portfolio’ Collective Retirement Account. This is an advised investment solution, which means the couple can only invest in it if they retain the services of a financial adviser.
Click on the image to expand.
My reasoning for selecting this option is due to Virgin Money’s high annual management charge of 1% a year, for only five investment funds to choose from (Old Mutual has 1,450 funds available), and the fact that these funds don’t match Kevin and Ruth’s risk profile. Old Mutual’s portfolio has also performed better than Virgin Money’s over the same time frame.
It costs 0.64% a year, plus a 0.15% to 0.5% service charge depending on how much is invested. We would also charge 1% a year plus an initial 3.5% for managing these pensions. Based on the children’s current combined pension of £30,739, this equates to an initial 3.5% (£1,076 in this case) fee, plus a £297 annual charge, which will rise if the portfolio grows. There are no exit fees to transfer from the Virgin Money scheme to another provider.
Kevin says: In terms of the children’s pensions, I’m pleased Paul’s picked up on the high fees and poor performance. As a result, we will be giving Paul’s recommendations to switch provider serious thought. It could be worth the risk and higher charges investing with him to see if it will deliver improved returns for the children – although I’ll be watching the performance like a hawk.”
Protection planning needs to be considered
Kevin and Ruth are both members of their employer’s ‘Death In Service’ schemes and are eligible to receive sick pay but this cover ends once they leave their company’s employment.
They have no other life insurance policies, which would pay out in the event of their deaths, or critical illness, which would pay out if they were diagnosed with a critical illness. The couple have £19,000 in cash savings, but this will only offer short-term protection.
As they have a young family and their three sons are financially dependent upon them, I strongly recommend they consider taking out income protection policies should the worst happen. These would provide 50% of their salaries a month until the age of 67 with the cover starting once their employer’s sick pay ends. I recommend Legal and General’s policy, which would cost around £102 a month for Kevin and £32 a month for Ruth.
I also recommend that they take out a mortgage protection plan for the remaining BTL term. My recommended joint policy from Scottish Widows costs around £81 per month, while my recommended two single policies from Legal & General would cost around £49 for Kevin and £38 for Ruth. Two policies means you’ve got two separate sets of cover.
Last but not least, a Family Income Benefit plan would provide £1,000 per son each month in the event of either of the couple’s deaths, for a term of 18 years. Again, I suggest the £3,000 a month increases in line with the RPI.
My recommended provider Aegon has quoted a cost of around £67 per month. I would also strongly advise the mortgage protection and family income benefit plans are written in Trust. The main reason for this is trustees do not need to wait for probate to be granted before accessing the life cover proceeds, and it means the proceeds are likely to fall outside your estate for inheritance tax purposes.
Kevin says: “Ruth and I have discussed this at length, and what Paul is suggesting is entirely sensible, but we’re not sure we need it. We do have funds available if things go wrong and we’ve got two properties.”
Getting married makes clear financial sense
It is not within my personal capacity to formally recommend you get married. However, in my opinion as a financial adviser, it makes clear financial sense to do so.
There are a number of situations where being unmarried could affect your financial situation upon one of your deaths, namely:
You are not exempt from paying inheritance tax on your partner’s estate when they die. In your case, your home is owned in Kevin’s sole name, which means on Kevin’s death, the property would form part of his estate and potentially be liable to inheritance tax.
You are not entitled to inherit your partner’s nil-rate inheritance tax (IHT) band of £325,000.
Ruth would have to provide evidence of financial dependency to qualify for the widow payments from Kevin’s final salary pensions.
You are potentially liable for Capital Gains Tax on transfers of assets between you which produce a gain higher than the annual exemption amount of £11,300 for the 2017/2018 tax year.
Kevin says: “It’s not the most romantic thing to consider when deciding to get married, but it’s certainly something we’ll consider.”
Kevin concludes: “I think the process as a whole has been fantastic. I don’t think we would have ever got around to talking to all of our providers ourselves. Paul’s advice has provided us with the means to discuss planning for the future.”
Click on the image to expand.
None of the above should be regarded as advice. It is general information based on a financial report conducted by Paul Davis, an independent financial adviser (IFA) at Clear Financial Advice in Billericay, Essex.
Key recommendations for Kevin and Ruth:
- Shelve plans for private school education.
- Transfer their children’s pensions.
- Take out protection policies.
- Consider the tax benefits of marriage.
Would you like a FREE money makeover?
This article was written in response to a reader’s financial situation. If you would like a free money makeover, which will appear in Moneywise, email editorial@moneywise.co.uk. We will try to arrange a one-to-one meeting for you with an FCA-regulated independent financial adviser in your local area, who will discuss your financial concerns and goals for the future, and draw up a bespoke financial plan for you.
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Financial advice: is it worth it?
There are many reasons for taking financial advice. You might be looking for a better return on your investments, wanting pension advice to ensure you have security in retirement or simply trying to avoid financial decisions you may later regret.
While advice can give your finances a major boost, many people are put off by the charges. Others have shunned advice because they find it too intimidating and are left managing their finances themselves, or not at all.
Understanding advice
Advice can take many forms and it it is important to understand exactly what different kinds of adviser can offer.
Independent financial advisers (IFAs) offer the most comprehensive advice, as they consider every aspect of your financial situation before dispensing advice that is fully tailored to your circumstances.
IFAs make independent recommendations based on the entire market and don’t earn any commission from providers – they are paid directly by the consumer.
Other advisers are known as restricted advisers, as they are either limited in the type of products they cover – such as only advising on pensions – or can only offer products from a narrow panel of providers.
These advisers should tell consumers in what way their service is limited before offering any advice to a consumer, although many make this difficult to find out. Just 38% of restricted advisers made their status clear on their websites, according to a 2017 survey conducted by financial services marketing firm, the Yardstick Agency.
Note that those offering advice may not always call themselves advisers. For example, chartered or certified financial planner are ‘gold standard’ terms used to describe advisers who take a longer-term view of their clients’ situations and who hold professional financial planning qualifications.
Those advising on mortgages or protection are often referred to as brokers and while they offer regulated advice, they usually earn commission when they recommend a product. This should not affect the quality of their advice, although the Financial Conduct Authority (FCA) is currently investigating whether this could lead to a conflict of interest.
How much does advice cost?
High cost is often seen as the biggest barrier for people who want advice. Unbiased.co.uk, the adviser-finding platform, says that the average hourly fee in the UK is £150. Fees can be even higher depending on the level of service provided and where you live. Meeting face to face also tends to cost more than phone-based services.
Advisers could also charge a flat one-off fee, a monthly retainer or a yearly percentage based on your investments.
As an example, full at-retirement advice on a £200,000 pension pot should be expected to set you back £2,500 [based on around 16 hours’ work]. This is a significant outlay and for this fee an adviser should:
- collect and analyse information about your finances, tax status, and existing products;
- determine the most appropriate tax efficient wrappers and investment strategy to meet your goals
- talk to financial providers on your behalf;
- present a detailed report on your circumstances and objectives; and
- make recommendations and set up policies for you.
Yet wildly different charging structures have led to consumer confusion. Some advisers have been accused of not making it clear to clients what service they will receive.
There are no industry-wide standards, and the Yardstick Agency found that only 35% of IFAs actually displayed their fees clearly online.
The FCA has stated as recently as April that “relatively few advisers” are transparent about their pricing.
Click table to enlarge.
Even advisers themselves suggest costs are a big issue. A survey by the Association of Professional Financial Advisers in January 2016 found that 43% of financial advisers had turned away potential consumers because it would not have been economic for them to pay for advice.
Yet advice can also make sure you avoid mistakes. Matthew Harris, an IFA and owner of Dalbeath Financial Planning, says he was able to save John Clegg* thousands by making sure he didn’t take early retirement, even though his employer was recommending it.
John was offered early retirement at age 55, which would have resulted in an annual pension of £23,763. However, by delaying retirement to 65, his pension income would be £49,297 a year.
Mr Harris calculates for each year of early retirement John was sacrificing approximately £2,500 of additional annual pension income. By retiring at 65, taking into account charges, his overall pension income will be more than £250,000 higher by the time he reaches age 85.
“Decisions over when to retire are among the biggest financial choices a client will ever make,” Mr Harris says. “Without advice it can be tempting to convince yourself that things will be fine, when you could actually be walking into a financial mess.”
Go your own way
So when should you pay for advice and under what circumstances can you do it yourself? Some consumers use ‘robo advice’ firms, such as Moneyfarm, Nutmeg and Wealthify, which use algorithms to manage investments with little human intervention.
These firms promise to deliver financial advice at a cheaper cost than face-to-face advisers.
But Ian Else, independent financial adviser at Ovation Finance, says: “So far, the ‘advice’ in robo advice seems sadly lacking.” He argues: “Yes, it will tell you how to invest your money, but that’s just a small part of what a good adviser does. A robo system can’t coach or help tease out objectives; it can’t challenge; and it can’t pick up on body language.”
Meanwhile, the rise of sites such as ComparetheMarket, GoCompare and MoneySupermarket has been a boon for people looking to save cash.
Consumers can also use these sites to conduct their own searches and take out insurance products and secured loans with ease. But buying a product in this way is very different to taking advice. The clue is in the name as price comparison websites can tell you which products are the cheapest, but not whether they are suitable for you.
Cheaper products may have more restrictive terms and conditions and these are not always made clear. A cheap health insurance policy may not cover certain illnesses, and these complexities are not always easily understood.
Price comparison sites stay clear of areas such as pensions and retirement, but there is some free assistance out there.
Charity Citizens Advice and the Money Advice Service can offer some free guidance on general finances, while Pension Wise and the Pension Advisory Service are free services for those thinking about retirement.
Some people also manage their own affairs – including long-term investments – entirely, and their dealings with financial firms are on an execution-only basis, which means the consumer has chosen not to receive advice at all.
Click on chart to enlarge.
Patrick Connolly, chartered financial planner at independent financial adviser Chase De Vere, says these are consumers who already have significant financial knowhow.
“Those who are confident can make their own investment decisions and don’t necessarily need to pay for financial advice,” he says.
Who should take financial advice?
There is a common misconception that only people with large personal wealth should get financial advice. While those with a large amount of assets are the most common candidates for advice, it is wise to consider advice when you reach a key milestone in your life. In years gone by, salesmen – the famous ‘man from the Pru’ – would visit customers in their homes to stress the importance of insurance and pensions, but this is no longer the case.
“It never too early or late to get advice, each client is likely to have different needs at different life stages,” says Mr Else. “But with the demise of the ‘man from the Pru’, people are saving too little too late and don’t even think about protection needs. This must change.”
Advice is particularly useful if you have unusual circumstances. In the mortgage market, those who are self-employed or on an interest-only take out a loan with a high street provider. A mortgage adviser has indepth knowledge on which providers are most receptive to a borrower’s circumstances and can help find the right lender.
People nearing retirement are also good candidates for advice, especially with recent pension freedoms making it easier to take a pot of cash out as a lump sum.
Mr Connolly is concerned that consumers are making these decisions without appropriate help. “Too many people are making complex financial decisions without taking advice, which is potentially exposing themselves to great risks in the future,” he argues.
“A good example is the number of people who have gone into pension drawdown without taking advice. It could be that these people are gambling with their standard of living in their later years if they make the wrong choices, as many are likely to do.”
How do you pick a financial adviser?
The best recommendations come via word of mouth, so chat to friends and family who have taken financial advice.
Advisers often advertise locally and there are online databases such as Find an Adviser, Unbiased and VouchedFor, which can help you locate an adviser in your area.
You can check whether an adviser is regulated by using the FCA’s Financial Services Register and always ask what qualifications the adviser holds before you meet. Most importantly, ask them to set out exactly what they charge and what they will provide for the money.
Ask how often the adviser wishes to contact you and how advice will be given. This is often face to face or over the phone, but some firms offer written financial reports that can be sent by post or email. Make sure they outline exactly what services they offer as company names might not illustrate the full range of products. For instance, many mortgage brokers will also offer insurance advice. You should also ask if the adviser you are meeting will be the person managing your money or if other advisers at the firm will be involved in future.
Mr Else says: “Personal recommendations are always a good start and higher qualifications are a sign of the adviser’s commitment to professional standards, but neither of those things guarantees a great experience. Ultimately, it comes down to that first meeting. Does the adviser seem genuinely interested in you and not just your money?”
But when even the regulator is expressing concerns that “consumers who take advice may not be getting value for money”, then you need to make sure the benefits of advice will outweigh the cost.
If you can’t afford advice, then make sure you are doing the basics yourself. This means paying off debts, having insurance, building cash savings, paying off your mortgage and joining a pension scheme.
* Name has been changed.
What are the different ways advisers structure their fees?
Percentage charging – the adviser charges a fee, which is a percentage of your portfolio’s total value. This is typically between 0.5% and 1%, but some charge more.
Flat fee – an adviser charges a set price for a single service, such as setting up an annuity. Some advisers charge a fixed retainer fee each month for managing your assets on an on-going basis.
Hourly rate – an adviser charges an hourly rate for his/her services.
Commission-based – IFAs are not allowed to earn commission when they advise on investments and pensions. However, commissions are usually paid when advisers sell mortgages, equity release and general insurance policies. This means the financial provider pays the adviser a percentage commission for selling the policy.
“It gives us peace of mind”
Peter Davies (pictured below) is a 69-year-old retired former council worker who lives near Southampton with his wife, Sue. He first sought advice when he sold a property he had inherited and didn’t know how to invest the proceeds of the sale.
He previously received restricted advice from a building society, but his financial adviser today is Eunan Carr, who works at Chase de Vere in Basingstoke.
“I just wanted to know how best to invest the money,” says Peter. “I knew there were tax reliefs on some products, some of which I already had, but he gave me advice on the best way of doing it all.”
Even though Peter is retired, he was advised to continue investing in pensions, as they offer him the most tax-efficient solution. Tax relief of £720 has boosted his £2,880 pension pot, increasing his investment to £3,600.
Mr Carr has also transferred other investments into a tax-efficient Isa to reduce Peter’s liabilities and has helped set up life insurance policies and a lasting power of attorney (LPA) with his wife. Peter had been keen on funeral planning, but as he is healthy he was advised to take out a life insurance policy, which is cheaper in the long run.
While he pays a 1% fee to the adviser firm each year, Peter believes the money is well spent.
“It gives us peace of mind,” he says. “I feel like I’m better off, even after I’ve paid these fees. You don’t need a lot of wealth to make it worthwhile.”
The adviser also looked at the best way to gift money to his son, using allowances that are exempt from inheritance tax, such as the annual exemption of £3,000. As Peter made no gifts in the previous tax year, he was able to roll over this allowance as well, meaning an inheritance tax- free gift of £6,000 is allowed this year.
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Fight for your rights: easyJet refused to refund our flights after cancer diagnosis
My father and I booked flights with easyJet to go to Lisbon in Portugal, but sadly my sister was diagnosed with cancer and we were no longer able to go.
My father rang easyJet, which initially said he would only receive the airport taxes back. But once he explained the situation, the firm told him that if he could provide documentary evidence of his daughter’s diagnosis it was most probable that he would receive the total paid for the tickets back in easyJet vouchers.
A couple of days later, easyJet emailed to say that actually it would only refund the airport taxes and no vouchers would be given as the situation did not meet the criteria for its serious/terminal illness policy. This situation is causing my father additional stress at a difficult time. Can you ask the airline to reconsider?
CM/Rugby
We were very sad to hear of your sister’s diagnosis and response from easyJet. As a minimum, I reckon companies should be sympathetic and understanding to customers who are going through an upsetting experience. That means not sticking to company policy, but using common sense.
However, easyJet failed to do that. The company does have a terminal illness policy, which allows customers to cancel flights and get vouchers for replacement flights.
But the firm told me: “It is for customers booked on to a fl ight and other passengers within their booking. In this case, as CM’s sister was not one of the party travelling, the policy does not apply.”
But it conceded that CM’s father was given wrong information by one of its staff, so decided to offer vouchers to cover the £259 cost of the flights.
A spokesperson for easyJet said: “Unfortunately, it would appear that when CM’s father called our customer services department he was given incorrect information. It may well be that it wrongly assumed the daughter he was due to travel with was ill. Under the circumstances, we are happy to offer flight vouchers.”
That’s good news, but I reckon it’s time for the airline to revise its policy and widen it to include when immediate members of the family are diagnosed with cancer, not just those booked on flights.
OUTCOME: £259 easyJet flight vouchers
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How stocks and shares can help you beat inflation in 2017
While some are predicting that these rates may rise in 2017, it is unlikely to be by a significant amount as consumer debt remains high and the effect on the mortgage market would be damaging. However, what we are seeing at the moment is inflation return.
In October 2015, inflation had fallen to 0.2%. In just over two years, in February 2017, the rate had risen to 2.3%. In April 2017, it reached 2.7%, the highest level in over three years.
The government’s target for inflation is 2%, so this 2.7% rate is by no means alarming. However, the rate of growth has been steep and it is likely that it will continue to grow this year, creating a challenge for investors as they try to protect the value of their returns.
Henderson Managed Investment Trust’s research team analysed twenty years of data on income from bonds, shares and savings. The team assumed the income was taken and spent each year, not reinvested - this is a typical behavior for an income investor.
The research shows that increased inflation poses a risk to savers holding money in cash accounts, which could see the real value of their capital fall. Savings in cash have paid an average £138 per year on £10,000 since 1997. However, they are now returning just £22.
It’s a similar story for government bonds that were bought to mature after 20 years in 1997. These would have yielded investors a return of around 7.5% whereas a 20 year bond bought today will lock money into a low return of 1.4%.
By contrast, £10,000 of equities (shares) bought at the end of 1996 will yield £704 in 2017. This means that equity yields can provide a real income. The added benefit is that as both company profits and the economy grow, so do dividends (payments companies make to shareholders if the business has performed well), whereas bond interest does not. As such, equity income is somewhat protected from inflation and represents a genuine growth opportunity as business revenue and earnings should increase at around same pace as inflation, which means that the prices of shares should rise along with the general prices of consumer and producer goods.
Equity income grows in most years, so an investor in equities in any given year will expect his income to be sequentially larger in future years. This is why, for example, a 1995 investor in equities has an average income of £596 - £402 in 1995 rising to £946 by 2017.
Of course, investors’ capital is at risk if they choose to put their money into equities, whereas the nominal value of their savings is guaranteed with government bonds. However, in real terms, the ravages of inflation always take their toll.
Click on the table to enlarge.
Source: Henderson Managed Investment Trusts, May 2017. Data on bond and equity yields (returns) sourced from Bloomberg, and savings interest rates from the Bank of England. Inflation data was sourced from the Office for National Statistics (ONS), while other data came from the Debt Management Office.
- James Henderson is fund manager of Lowland Investment Company, a UK equity income investment trust.
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First 50 Funds: Marlborough UK Micro-Cap Growth
What is the Marlborough UK Micro-Cap Growth fund?
Giles: The fund was started in October 2004 because one of Marlborough’s other funds – the Special Situations fund – was focusing more on mid-cap [medium companies] investing. So we needed a solely small-cap [small companies] fund. It started with about £50 million and today it holds about £780 million. It’s been one of the most successful funds since that time and it’s a very consistent performer.
We tend to run a well-diversified portfolio, and we rarely have more than 3% in any one stock – 2% is normal – this is to prevent the impact if companies fail. We also do a lot of research on the companies we pick – we currently invest in about 250.
What do you look for when buying companies for the fund?
Guy: We’re looking for product, track record of the firm’s management, and market opportunities. I’ll look at a toilet company in Kazakhstan if I think it’ll make money.
Giles: We very rarely invest in a stock without having met a company. And as we’re one of the largest small-cap funds all the companies want to come and see us. We’re very popular.
What’s your investment style?
Giles: Our general style is to buy a small amount of stock initially to get used to the company and then gradually average up the position. If we know the company, we might add more to start with. So we start with, say, half a per cent of the portfolio or three quarters of a per cent.
Cilck image to expand.
What companies have you recently bought?
Giles: We’ve recently been buying IQE, a company that manufactures computer chips for mobile phones.
Guy: We’ve been buying Purple Bricks, an online estate agency. It’s a lot cheaper than traditional high street agents and it’s an example of an internet-based disruptor affecting an industry. This is what ASOS did for retailers. Now, Purple Bricks is going into the US, which is seven to 10 times bigger than the UK market.
Giles: We’ve also been investing in Impax Asset Management, a company that has ‘green’ portfolios that are becoming very popular. The stock was very underpriced, so this was more of a value buy than a growth situation.
What companies have you recently sold?
Giles: In terms of selling, we’ve sold a bit of Fever Tree [a tonic drink manufacturer]. It’s not because we don’t like it; it’s because of the size of the holding, and we’ve made an enormous amount of money on it already. It’s grown at a very rapid rate, but it’s unlikely to grow quite as fast this year.
Guy: Blue Prism – a software company that makes virtual robots. Where you’ve got backoffices with humans changing Sim cards or performing credit checks, you can replace that human with a piece of software, which is cheaper.
Huge companies love this as it saves money and machines are less likely to make mistakes or go off sick. But as the market got overexcited, we sold some of our holding.
What’s the fund’s best investment?
Giles: Fever Tree. It’s very popular, not just in the UK but worldwide. Its share price was £1.34 two years ago and it’s now [on 24 March] £14.70.
Click table to expand.
What’s the fund’s worst investment?
Giles: Lots of stocks have gone wrong on us, which I don’t want to mention. But the worst is to lose out, buy some more shares, and then lose some more; that’s something we try to avoid.
What’s your top tip for a beginner investor?
Giles: First of all, I’d recommend investing in small caps via a fund. Bear in mind that small caps are volatile, so don’t invest more money than you can afford to lose, and meet a financial adviser to work out the amount of risk you’re willing to take for your situation.
Click chart to expand.
In terms of individual stockpicking, that requires quite a lot of experience. Follow Jim Slater’s ‘Zulu Principle’ where you make yourself an expert in one sector in the market. You might go and see some estate agents, for example, and work out whether Purple Bricks is a competitor or a flash in the pan.
Marlborough UK Micro-Cap Growth Fund Key Stats
Launched: 2004
Fund size: £743.5 million
Ongoing charges: 0.80%*
Source: Marlborough
UK Micro-Cap Growth factsheet, March 2017
*Source: Moneywise
The team behind the fund
The team behind the fund Giles Hargreave has managed the Marlborough UK Micro-Cap Growth Fund since its launch and comanages the Marlborough Special Situations and Marlborough Nano-Cap Growth funds. He has also founded investment management company Hargreave Hale.
Guy Feld has over 20 years’ City experience researching and managing small- and mid-cap equities. He has worked on the Marlborough UK Micro-Cap Growth Fund since launch and was appointed co-manager just over five years ago.
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How to reclaim tax on pension withdrawals
Have you taken money out of your pension? If so, it’s important to check that you haven’t paid more tax than you need to and take action to reclaim your cash. One of the biggest attractions of the pensions freedoms is the ability to make lump sum withdrawals once you turn 55. You can use this money as you wish, whether you plan to blow it on a cruise, pay off your mortgage, invest it in a new business or simply help out your family.
However, the taxation of such withdrawals (snappily entitled uncrystalised pension fund lump sums or UPFLS), which are made before you start taking regular income from your pot or buy an annuity, is far from straightforward.
Although no tax is payable on the first 25% of any withdrawal (because you can take 25% of your savings tax free), the remaining 75% will be added to your income for the year and taxed at your marginal rate, that is the highest rate of tax that you pay. If your withdrawal is large, it may even be enough to put you into a higher-rate tax bracket.
For many over 55s – particularly those who pay the higher rate of tax – this is enough to put them off accessing their pension before they retire. However, for those who do proceed there is a further sting in the tail and that is the application of emergency tax.
What is emergency tax?
Emergency tax is applied when HMRC doesn’t have enough information about your income to use an accurate tax code and it will usually be applied until it has up to date details.
You might have previously paid emergency tax when you started your first job, got a company car or re-entered PAYE after a period of self-employment.
Click the table to enlarge.
It is also highly likely to be charged when you make your first withdrawal from your pension because your pension provider will not have an up-to-date tax code for you.
“The reason the government has to apply emergency tax is because when people come to take money out of their pension, their provider has no means of knowing what their income for the year is,” explains Richard Parkin, head of pensions policy at Fidelity International.
In such cases, emergency tax is charged on what is known as a ‘month 1 basis’. This means that even though your withdrawal is highly likely to be a one-off, it will be treated by HMRC as if it is the first of a series of monthly withdrawals and taxed as such. The tax you end up paying is therefore based on you withdrawing more than may actually be the case.
Self-invested personal pension (Sipp) provider AJ Bell gives the example of an investor who – trying to keep their withdrawal under this tax year’s £11,500 personal allowance – takes a lump sum of £10,000 out of their pension. Although our investor might believe no tax will be payable, they could end up paying as much as £3,099 in tax and getting a payout of just £6,901.
This is because the withdrawal would be regarded by HMRC as being the first of 12 monthly withdrawals and taxed on the assumption that you will take out £120,000 over that year.
This means that if there is a specific sum you need to raise from your pension, you may need to make a greater withdrawal than you planned to cover the cost of emergency tax.
How can I get my money back?
The good news is that if the application of emergency tax means you do end up over paying tax, you are entitled to get your money back. The bad news is that if you want to get your hands on it anytime soon, you’ll have to be proactive and apply for a refund.
Guidance from HMRC says that if people don’t apply for refunds, it “will reconcile their account and make any repayment owed as part of its normal PAYE process”.
However, it is not yet proven how quick and efficient this process is – particularly for those who aren’t working, paying tax or completing an annual tax return. When Moneywise asked HMRC how long this process would take it was not able to give us an answer.
Tom Selby, senior analyst at AJ Bell, says: “Just trusting HMRC to sort it out at some unknown point in future is unlikely to be something most people are comfortable with – it’s their money.”
Mr Parkin adds: “You’ll get your money back much faster if you fi ll out the forms – so that’s what we always encourage our customers to do.”
You can download the necessary form from http://ift.tt/2rJUoQB. But make sure you use the right form for your circumstances. Use form:
P50Z – if you have emptied your pension and have no other income in that tax year.
P53Z – if you have emptied your pension but have other taxable income.
P55 – if you haven’t used up your pension and you won’t be taking regular payments.
If you haven’t used up your pension but you do plan to take further regular payments, any mistake should quickly be corrected through PAYE.
Click the image to enlarge.
HMRC says that once it has received your completed forms, it will repay any money owed within 30 days.
Mr Selby adds: “How much you get back will depend on your income. It will be recalibrated to take the tax you should have paid into account.”
Can I avoid emergency tax?
HMRC confirmed that the best way to avoid paying emergency tax is to supply your pension provider with your P45.
Mr Parkin says: “If someone has their P45, we would, of course, urge them to provide us with it in order to prevent a costly emergency tax situation. However, there is an important thing to bear in mind: most people accessing their cash won’t have one as they haven’t stopped working and you only get a P45 when you leave your job. It’s therefore highly likely that most people won’t have anything current to provide, so it’s important that people know they could be incurring a tax bill and inform HMRC promptly.”
Yet while HMRC has processes in place to quickly refund victims of emergency tax, once they have been notified (with the aforementioned forms), many over 55s will understandably be frustrated that they have to shell out in the first place.
Mr Selby says: “A better method would be if HMRC just treated each individual withdrawal and tax it on a 12-month basis, that is as a single withdrawal and tax it accordingly.
“I’m not sure why HMRC is doing this – it feels so heavy handed, like people are punished for doing something they are being encouraged to do as part of the pension freedoms. It causes unnecessary pain and annoyance.”
Top Tip 1: A number of companies including Aviva, Hargreaves Lansdown, and Scottish Widows offer calculators on their websites that can give you an indication of the amount of emergency tax you’re likely to pay, based on the withdrawal you plan to make.
Top Tip 2: Check your tax code. If you think you have paid too much tax on a pension withdrawal, it’s worth checking the tax code on the paperwork you were sent when you received the money. If your withdrawal was taxed on a month 1 basis, you will see the code 1150L for the current tax year (2017/18). For the 2016/17 year, the code would have been 1100L and 1060L for the 2015/16 tax year.
“Tens of thousands of people will have paid too much tax”
AJ Bell reckons that tens of thousands of people who have accessed their pensions since the pension freedoms will have been stung by emergency tax, yet the latest data available suggests that few are actively reclaiming their cash.
Figures from the Financial Conduct Authority show that since April 2015, an average of 139,000 pensions have been accessed for the first time every quarter – the vast majority of which will have been taxed on the punitive ‘month 1’ basis. However, figures from HMRC show that during 2016, it only received an average of 10,998 claims for overpaid tax in each quarter.
Tom Selby, senior analyst at AJ Bell, says: “HMRC’s insistence that an emergency tax code must be applied to pension freedom withdrawals means tens of thousands of people will have paid too much tax on their withdrawals yet very few of them have reclaimed this tax. This might be because they don’t know they have paid too much tax or the process to reclaim it just seemed too complicated.‑Whatever the reason, there are likely to be millions of pounds sitting with HMRC that could be legitimately reclaimed.”
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Should you ditch Premium Bonds for the Family Windfall Bond?
From 1 May, NS&I cut the Premium Bonds effective prize rate from 1.25% to 1.15%. Plus, while the chance of winning any prize remained at one-in-30,000, the number of high value prizes in each month’s draw was reduced.
Family Building Society's Windfall Bond operates in a similar way to traditional Premium Bonds as all bond holders are entered into a monthly draw to win cash prizes.
The key difference is that the Windfall Bond also guarantees a return for savers, paying interest on your holdings at the level of the Bank of England base rate – currently 0.25%. This is paid annually on 1 August.
However, there are some drawbacks. Each Windfall Bond costs £10,000, making it much more expensive than a single Premium Bond - which costs £1, subject to a minimum purchase of £100.
The NS&I top prize is also significantly higher, with two top prizes of £1 million each month compared to a single £50,000 prize on offer with Family Building Society.
Each Windfall draw also includes 10 prizes of £1,000 and two of £10,000 whereas Premium Bonds offer a larger number of smaller prizes – over two million – each month, starting at £25. This means a Windfall Bond offers an effective rate of 1.21% (0.96% prize fund plus 0.25% interest). This compares with NS&I’s 1.15%.
There are, however, no limits on the amount of Windfall Bonds you can hold, whereas with Premium Bonds you’re restricted to £50,000.
Family Building Society offers protection up to £85,000 under the Financial Services Compensation Scheme (FSCS). With NS&I your deposits are fully secure as it is fully backed by HM Treasury.
What are the odds of winning?
If you hold a single £10,000 Windfall Bond you will have 12 chances to win each year, plus a guaranteed £25 in interest.
With 13 prizes on offer in each draw this means there is a one in 64 chance of scooping a prize worth £1,000 or more with the Windfall Bond.
By comparison, someone with the equivalent £10,000 in Premium Bonds has a one in 404 chance of scooping a £1,000 prize or greater over a year. Although, of course you can theoretically bag £50,000 with the Family Building Society and £1 million with Premium Bonds, even if the chances are miniscule.
With £10,000 saved in Premium Bonds you also have a one in three chance of winning £25 in each draw, meaning a person with average luck would be expected to earn £100 over the course of a year.
The choice you make depends on whether you want to earn some guaranteed interest and have a better chance at a £1,000 prize, or you would prefer to take a shot at winning a £1 million Premium Bonds jackpot.
The table below details a quick comparison of the two products.
| NS&I Premium Bonds | Family Building Society Windfall Bond | |
|---|---|---|
| Cost per bond | £1 per bond (minimum £100), up to £50,000 limit | £10,000, with no limit |
| Top prize | Two prizes of £1 million | One prize of £50,000 |
| Odds of winning £1,000 over a year (based on £10,000 holding) | One in 404 (based on estimates for August 2017 draw) | One in 64 |
| Interest earned | None | Base rate, currently 0.25%, paid annually on 1 August |
Source: Moneywise, May 2017.
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No One Owes You Anything
I recently ran across a letter written by the writer, investment advisor, and politician Harry Browne. It was a letter intended for his nine-year-old daughter and was published as part of his syndicated newspaper column. I want to share it in its entirety:
* * *
It’s Christmas and I have the usual problem of deciding what to give you. I know you might enjoy many things — books, games, clothes.
But I’m very selfish. I want to give you something that will stay with you for more than a few months or years. I want to give you a gift that might remind you of me every Christmas.
If I could give you just one thing, I’d want it to be a simple truth that took me many years to learn. If you learn it now, it may enrich your life in hundreds of ways. And it may prevent you from facing many problems that have hurt people who have never learned it.
The truth is simply this:
No one owes you anything.
How could such a simple statement be important? It may not seem so, but understanding it can bless your entire life.
No one owes you anything.
It means that no one else is living for you, my child. Because no one is you. Each person is living for himself; his own happiness is all he can ever personally feel.
When you realize that no one owes you happiness or anything else, you’ll be freed from expecting what isn’t likely to be.
It means no one has to love you. If someone loves you, it’s because there’s something special about you that gives him happiness. Find out what that something special is and try to make it stronger in you, so that you’ll be loved even more.
When people do things for you, it’s because they want to — because you, in some way, give them something meaningful that makes them want to please you, not because anyone owes you anything.
No one has to like you. If your friends want to be with you, it’s not out of duty. Find out what makes others happy so they’ll want to be near you.
No one has to respect you. Some people may even be unkind to you. But once you realize that people don’t have to be good to you, and may not be good to you, you’ll learn to avoid those who would harm you. For you don’t owe them anything either.
No one owes you anything.
You owe it to yourself to be the best person possible. Because if you are, others will want to be with you, want to provide you with the things you want in exchange for what you’re giving to them.
Some people will choose not to be with you for reasons that have nothing to do with you. When that happens, look elsewhere for the relationships you want. Don’t make someone else’s problem your problem.
Once you learn that you must earn the love and respect of others, you’ll never expect the impossible and you won’t be disappointed. Others don’t have to share their property with you, nor their feelings or thoughts.
If they do, it’s because you’ve earned these things. And you have every reason to be proud of the love you receive, your friends’ respect, the property you’ve earned. But don’t ever take them for granted. If you do, you could lose them. They’re not yours by right; you must always earn them.
A great burden was lifted from my shoulders the day I realized that no one owes me anything. For so long as I’d thought there were things I was entitled to, I’d been wearing myself out — physically and emotionally — trying to collect them.
No one owes me moral conduct, respect, friendship, love, courtesy, or intelligence. And once I recognized that, all my relationships became far more satisfying. I’ve focused on being with people who want to do the things I want them to do.
That understanding has served me well with friends, business associates, lovers, sales prospects, and strangers. It constantly reminds me that I can get what I want only if I can enter the other person’s world. I must try to understand how he thinks, what he believes to be important, what he wants. Only then can I appeal to someone in ways that will bring me what I want.
And only then can I tell whether I really want to be involved with someone. And I can save the important relationships for those with whom I have the most in common.
It’s not easy to sum up in a few words what has taken me years to learn. But maybe if you re-read this gift each Christmas, the meaning will become a little clearer every year.
I hope so, for I want more than anything else for you to understand this simple truth that can set you free: no one owes you anything.
* * *
There is a lot of very wise financial truth contained in that letter, principles that apply brilliantly to the personal finance journey (and life journey) that we all find ourselves on.
No one owes you anything.
No one owes you the money to retire on. Yes, you’re due some money from Social Security, but only if you’ve paid into it. If you’re lucky, your organization might have some kind of pension plan for you, but that’s part of your compensation for working there.
Everything else is up to you. It’s up to you to save for your retirement if you want to have a comfortable retirement. You need to be putting money aside in a 401(k) or a Roth IRA or a similar plan.
No one owes you great treatment. People are free to treat you however they like.
What you do control, however, is who you choose to associate with. You can choose to associate with people who treat you well in return for you treating them well. You can choose to associate with people who are doing great things and can inspire you to make better choices in your own life. You can choose to associate with people who are sources of great advice and wisdom and insight and knowledge.
You can also choose not to associate with people who don’t treat you well. You can choose to avoid people who offer paths full of poor decisions.
You decide who you spend your time with. No one else decides that but you.
No one owes you a job. A job means that someone is giving you money in exchange for your efforts. If you don’t want to put forth the effort, no one is required to put forth the money.
Remember, no one is going to give you a job unless the person paying you is going to, at some point, bring in more money than they’re paying you (and the cost of the items you’re using). Jobs aren’t charities. A job is a situation someone else has set up where you can both make some money – you invest your time and effort for some of that money, while the person who bought the location and all of the equipment and figured out all the job protocols for you is making some of that money. If you’re not an efficient part of that, you won’t have a job.
You decide whether you want a job or not, and you show whether you want that job with your efforts.
The same thing is true for a promotion. No one owes you a promotion. It’s up to you to make the case that you’re more deserving of that promotion than anyone. If you can’t make that case, then that promotion shouldn’t be yours anyway.
Yeah, sometimes people get promotions that don’t “deserve” them. Again, whatever the reason was for that other person getting the promotion, it comes down to the fact that you didn’t make a good enough case to earn that promotion for yourself. It wasn’t owed to you.
The same thing is true for business. No one owes you business success. You earn it by working your tail off and proving you have the knowledge and the talent to produce a product that people want and are willing to pay for in some fashion or another.
This is true for everyone from Bill Gates to a person making YouTube videos. They all make money from their business by making – or having made – things that people want. If you can’t put together some system for doing that, you aren’t going to have success in business. It is not owed to you.
No one owes you courtesy or friendship or respect. Those things are earned, not given. You choose for yourself whether or not you want to behave in a way that earns courtesy or friendship or respect. Even then, you might not necessarily receive it, though the odds go up greatly.
These statements may seem like negative things. They might seem like a list of hard truths about life.
However, the opposite is true.
For starters, things that you haven’t earned in some fashion are relatively valueless. Think about friendship, for starters. When someone that you barely know begins acting like your best friend, it feels completely unnatural. On the other hand, when you’ve known someone for years and they act like your best friend, it feels completely natural.
What’s the difference? Your real best friend earned that status. They have shown you friendship and kindness for a long time. This new person? They may have shown you friendship and kindness really recently, but the idea that you’ve got a long-term friendship feels hollow because it is hollow. That friendship – that thing that really means something and has real value in your life – has to be built up. It has to be earned. Things that have real value are things that you’ve actually earned.
That false friendship isn’t going to feel like a major loss to you if it disappears. However, if that close friend you’ve had for years disappeared, you’d know it. It would hurt. Why? Because that close friendship has value. That value isn’t owed to you. That value is built over a long period with a lot of little efforts that add up to something big.
Another truth: You are largely in control of your own destiny. Yes, outside events can and do happen, but you decide whether or not you have a good shot at that promotion or whether you’re never going to get it. You make that choice through your regular actions. Have you earned that promotion? Undoubtedly, decisions are made outside of your control that are sometimes completely unfair, but that still doesn’t make it okay for you to not make the best case for yourself.
You decide what you think about. You decide what you do with your time. You decide what you do with your money. You decide how much effort to put in. You decide whether to keep bearing down on that task or to get distracted by social media or to get into a conversation at the water cooler.
Those are your decisions. No one else makes them but you. Over the course of a lot of those decisions, you shape what kind of a life that you have.
A person with a great career has done things to build that great career. They’ve gone the extra mile to get their foot in the door. They’ve done their homework to keep their skills sharp. They’ve leapt at every opportunity to step forward and succeed.
Can you say the same about yourself?
A person with a lot of friends has done things to earn those friendships. They’ve put themselves in social situations. They’ve reached out to others with common interests and values. They’ve coordinated countless social events for themselves and others. They’re there when their close friends need them.
Can you say the same about yourself?
A person with sustainable wealth has done things to preserve that wealth and often to earn that wealth. They’ve spent less than they’ve earned over many years. They’ve made smart financial choices year after year after year.
Can you say the same about yourself?
A person with great fitness and a healthy looking body has done things to preserve that health and look. They’re careful about almost everything they eat – you might see them eating treats sometimes, but it’s likely that most of their other meals are extremely healthy. They devote time to exercise and getting in better shape.
Can you say the same about yourself?
A person who is considered wise has done things to cultivate that wisdom. They have spent a lot of time observing people and situations and then counterbalancing that with the teachings of great teachers and readings from great books. They’ve thought carefully about their own experiences and what they’ve learned and can combine all of that together into sage advice.
Can you say the same about yourself?
You see, the truth is that the big picture of your life is made up of how you use each day, each hour, each minute.
You decide whether you’re building a valuable career with nearly every workplace choice.
You decide whether you’re building a healthy financial portfolio with every dime you spend.
You decide whether you’re building a strong family with every single choice you make to spend time with them or to do other things.
You decide whether you’re building a strong social network with every single choice regarding whether you choose to be social or curl up in a safe ball in a comfortable chair.
You decide whether you’re building wisdom with every single choice regarding whether you reflect on life and face challenging materials and ideas or whether you watch a reality television marathon.
Those are choices that you make. No one else makes those choices but you. You decide whether you want to find success in the areas of your life that you want. That success is not owed to you. It is the outcome of all of your little choices about how you live your life, how you act toward others, how you use your time.
If you want to succeed at finances – or at anything else in your life – that success is going to be borne solely out of a long series of positive choices. That doesn’t guarantee success, of course, but it is a required ingredient. If you aren’t making positive choice after positive choice, if you aren’t taking positive action after positive action, the success you want isn’t going to happen. Success is not owed to you.
Whenever you feel unhappy about the state of things in some aspect of your life, remember that no one owes you anything. Instead, the things you want are largely earned. Yes, unfortunate events happen, but it is entirely in your court as to whether that cloud has a silver lining or not. Yes, great events happen, but it is entirely in your court as to whether that advantage does to waste.
The ingredient that matters is you. What are you going to choose to do?
Are you going to buy that silly thing at the gas station? Are you going to whip out your plastic at that big clothing sale? Or are you going to keep your wallet in your pocket? Making the right choice again and again is the foundation of financial success.
Are you going to sit there and browse social media for a while? Are you going to spend an hour pretending to work so that your boss will leave you alone? Or are you going to knuckle down and do the work? Are you going to spend some focused time sharpening your skills? Are you going to build some great workplace relationships or connections to people in your field? Making the right choice again and again is the foundation of career success.
Are you going to just toss the first idea you have out there and expect customers to come to your door? Are you going to instead hone that idea over and over again until it’s rock-solid? Are you going to research every single cost and write an effective business plan for your idea? Are you going to get feedback on your plans and revise them and get more feedback until you feel ready to launch? Making the right choice again and again is the foundation of a successful side gig.
Are you going to sit on your couch and wonder why your phone isn’t dinging constantly with texts? Are you going to go out to some kind of community event tonight? Are you going to make it your goal to connect with at least five people in the room well enough that you exchange contact info? Making the right choice again and again is the foundation of a great social network.
Even if bad events happen, you’ll overcome them with these steady good choices. If great fortune happens, then these little choices will just accelerate it.
On the other hand, if you make a steady flood of bad choices, unfortunate events will just accelerate the collapse. Even good fortune will eventually be devoured by lots of little bad decisions.
You are not owed financial success. You are not owed career success. You are not owed business success. You are not owed social success. You are not owed success. You make it with a flood of these little choices.
No one owes you anything. It’s up to you to make the things you want.
What are you going to do today?
Related Articles:
- Making Today a Part of Your Meaningful Life
- The Simple Secret to Sustained Financial and Professional Success
- It’s All About the Choice
The post No One Owes You Anything appeared first on The Simple Dollar.
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All of Your Personal Information is Just a Keystroke Away: New Websites Gather Personal Information
Is your sensitive information available online? Everything about you could be a keystroke away.
Source CBNNews.com http://ift.tt/2qZl5zo
Source CBNNews.com http://ift.tt/2qZl5zo
Stoked About That Apartment? Ask These 15 Questions Before You Sign a Lease
I remember fondly the day a few years ago I got the keys to the new house I was renting.
I carefully unpacked, decorated and got settled into my new place.
I loved that house.
I was so happy.
Six weeks later to the day, my landlord called to tell me he was selling the house and I had 30 days to leave. (What?!)
Oh, and did I mind he’d be bringing potential buyers around starting the next day? (Yes!)
“Don’t worry,” he said. “I’ll give you a good reference.” (Gee, thanks!)
I was crushed.
I thought I’d covered every detail before signing my rental agreement, but it never occurred to me to find out if the homeowner planned to sell the house any time soon. If I had, I would have saved myself a lot of trouble.
Fortunately, in the end I found an even better place. (Ha! Take that, former landlord!)
However, the experience taught me a valuable lesson: Ask a lot of questions before you sign that rental agreement.
15 Questions to Ask Your Future Landlord
This list is by no means exhaustive — there will always be things to consider that are unique to your rental situation — but these 15 questions are a good place to start.
1. How soon is the rental available to move into?
Ask this upfront to make sure your moving time frame is compatible with your future landlord. If not, you won’t waste each other’s time or risk becoming emotionally attached to an apartment that won’t be available when you’re ready to move.
2. What are the monthly rental, application and move-in fees?
Make sure to also ask about late fees and whether certain forms of payment come with a processing surcharge. For instance, you don’t want to get hit with a $10 charge every time you pay by check.
3. Are utilities included?
This is a really important question. A place with low rent may seem like less of a deal once you factor in fees for electricity, water and trash pickup.
On the other hand, a rental arrangement that includes utilities can help you budget your fixed expenses more easily each month.
4. What cosmetic changes can I make inside?
Landlords expect tenants to hang pictures and new drapes, but make sure you understand upfront what you’re allowed to change before you paint a bright blue accent wall in the living room.
5. What kind of outdoor decorations are permitted?
Your new home might be located in a deed-restricted area that limits the type or size of outdoor decorations.
Many apartment buildings also have strict policies on what renters can display on doors and windows that are visible to public areas.
6. What’s your pet policy?
There are a number of questions to ask about pet policies, including what types of animals are allowed and what breeds are permitted.
Be sure to ask about pet deposit fees and where on the property animals are allowed to do their business.
7. Is renter’s insurance required?
Renter’s insurance may seem like a frustratingly unnecessary expense, but it’s actually a really good idea whether your landlord requires it or not. It only costs about $20 a month to insure your stuff against fire, flood or theft — and the peace of mind is priceless.
8. What happens if I want to break my lease?
While you may be planning to stay put for a while, life has a way of throwing curve balls we don’t see coming.
Find out what happens if you want to break your lease and if you’re able to sublet so someone else can take over the rental contract until it expires.
9. Who handles emergency repairs?
Landlords are typically responsible for repairs and maintenance, but what happens if the air conditioning conks out during a holiday weekend?
Find out if you’re allowed (or expected) to pay for emergency repairs out of your own pocket and get reimbursed by your landlord.
10. What’s the parking situation?
Ask if your rental comes with a designated parking place and if there’s an additional fee to use it. Don’t forget to get details on guest parking before you plan your housewarming party.
11. What’s the laundry situation?
If you’ve ever lived in a place without a washer and dryer, you know how much it sucks, so this is probably one of the first things you’ll ask a potential landlord.
If you don’t have a washer and dryer in your rental, ask where the closest laundry facilities are. Don’t assume they’re somewhere on the property, only to find out you have to drive your dirty jeans all the way across town to get clean.
12. Is my deposit refundable when I move out?
Security deposits are usually refunded to tenants when they move out — assuming the place doesn’t look like an aging rock band threw a party in the place.
Get details on how to get your deposit back when you move out and be sure to document any existing damage before signing your lease.
13. What’s the policy for maintenance personnel or property managers entering my home when I’m not there?
There will be times when your landlord or a maintenance worker may need to enter your apartment when you aren’t there (a monthly pest control visit, for example).
Ask your future landlord how much advance notice you’ll get before someone comes into your apartment and under what circumstances you can delay or refuse the visit.
14. Have the locks been changed since the last renter?
You don’t want to have total strangers out there walking around with a key to your place. If the locks haven’t been changed, negotiate that into your rental agreement if you can.
15. What’s the long-term rental outlook for this apartment or house?
Take it from me — if the landlord only plans to rent for a short time, you’ll want to know that up front.
Lisa McGreevy is a staff writer at The Penny Hoarder. She once rented a studio apartment above a funeral home. It was weird, but it was also a really effective conversation starter.
This was originally published on The Penny Hoarder, one of the largest personal finance websites. We help millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. In 2016, Inc. 500 ranked The Penny Hoarder as the No. 1 fastest-growing private media company in the U.S.
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