Brexit Shakes the Market

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Last weeks vote heralds a dramatic & profound change to the UK’s position in the world. However it is important to take stock of events.
The chart below shows the trajectory of the FTSE 100 Index since 2007 – and puts recent events into perspective when compared with events during the Great Financial Crash of 2008.

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The result was clearly a surprise with Sterling suffering a 7% fall in value against US Dollar to trade at its lowest level for 30 years. £200 billion was wiped off the value of the UK stock market in just 10 minutes of opening, as well as major falls in other global equity markets. We have now seen the market bounce back from its earlier intra-day lows, however volatility in the Sterling and equity market was to be expected, especially as these markets had been positioning itself for a Remain victory in the days leading up to the result.

More bounces in asset prices and currencies are to be expected over coming days, as the re-rating process of the markets takes its course. However, we have heard reassurances from the Governor of the Bank of England that this will not be a re-run of the Great Financial Crisis of 2008, as UK banks are much more highly capitalised and rigorously stress tested than then. Nor is there any expectation of a global trade collapse as then. The Bank of England has also announced an additional £250 billion of funding and to do what it takes to support the financial system, as the UK economy starts to transition its relationship with the EU.

Guide to Cash ISA’s

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dog-saving-moneyCash ISA’s are a great way of earning tax-free interest on your savings if you are a UK resident.

The limit for ISA contributions in the 2016/17 tax year is £15,240. In April 2017, your ISA allowance will rise to £20,000 a year.

You can only open one Cash ISA per year, but it is possible to transfer to another Cash or Stocks and Shares ISA.

If you withdraw money from your Cash ISA, you don’t reset your annual limit. For example, say in one year you saved up to the Cash ISA limit and withdrew £1,000. You can’t top up that £1,000 immediately – you’ll need to wait for the next tax year. From April 2016, ISA providers can offer a flexible facility which will let you withdraw and replace money from your ISA, provided it is done within the same tax year. Not all ISA’s will let you do this and you should check that your ISA has this function.

If you want to change providers – for example, if you find another ISA that is offering a better interest rate – then you must ask your new provider to sort the transfer in order to maintain the tax free status of your savings.
Although your current provider is required to let you to transfer your ISA to a new account, your new provider may not accept ISA transfers. Make sure your new supplier will let you transfer your ISA before agreeing to switch.
Your current provider may charge a penalty for transferring. Check for any fees or charges to make sure transferring is still worthwhile.

You can earn tax free interest on your savings as with a standard ISA. These new ISAs are limited to one per person rather than one per house. You can’t contribute to a Cash ISA in the same tax year.

Yisas_1891322bou won’t need to pay any tax on the interest you earn. But be aware that if you are a 16 or 17 year-old and the money in your ISA was a gift from a parent, they might have a tax bill under the parental tax settlement rules.
Not all Cash ISAs offer great interest rates. Shop around until you find a good deal.
Beware of teaser rates that are high for a short period of time before dropping off to a low level. If you find that you’re no longer earning a competitive interest rate, look for a higher rate Cash ISA to transfer into.

With instant access Cash ISAs you can withdraw money when you want to. With fixed-term Cash ISAs, you’ll get your money back at the end of the period you signed up for (‘the term’). Some accounts allow early withdrawals, but there may be a penalty.  Your provider may also charge penalties and fees if you transfer your Cash ISA to another provider.

A new ISA was introduced to help first time buyers save towards the cost of buying their first home in autumn 2015. Savers can make an initial deposit of £1,000 when they open a Help to Buy ISA and then receive £50 for every £200 saved up to a maximum of £12,000. The tax break is capped at £3,000.

Cash you put into UK banks or building societies (that are authorised by the Prudential Regulation Authority) is protected by the Financial Services Compensation Scheme (FSCS). The FSCS savings protection limit is £75,000 (or £150,000 for joint accounts) per authorised firm.

 

Cash ISAs are available online, through a branch or over the phone depending on the product and provider.

 

Half of UK Mortgage Holders Have No Life Insurance

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Life-InsuranceThe aim of a life insurance policy is to help your dependents cope financially if you die, so outstanding debts and living expenses are less of a burden on them. However, recent research by Scottish Widows has shown that only 50% of mortgage holders have a life insurance policy, and only 20% have critical illness cover.

You should consider the potential consequences if the unforeseen were to happen, such as death or serious illness. You could be at risk of losing your home if you were unable to work, and even more extreme would be leaving your partner with the burden of a debt they’re unable to pay on their own

Your mortgage lender may attempt to sell you life cover when you get your mortgage. You’re under no obligation to buy from them, and Warren & Co can also help you to find some appropriate cover.