Saving for the future you now have should be a priority, says finance expert Ivan Massow
It is not just since the inception of combination therapy that people with
HIV have had to think seriously about planning for retirement. Even when I
started this firm in 1990, my clients always wanted to look at the future
positively - almost as if it was an essential part of surviving the virus.
Now, it has never been more important to look to the future because it’s
more than likely that you’ll be there - healthy and fit.
Long-term thinking is now a reality. Unfortunately though, many people diagnosed
in the ‘80s and ‘90s have cashed in investments, traded down or
sold property. But, with changes in medication and lifestyle, most people
I speak to are feeling the need to rebuild for the future.
Finding the money
It can be tricky to get anyone to concentrate on long-term savings regardless
of their HIV status. Every £100 spent on a pension could be well spent
on something else. But savings do offer security. And the savings and pensions
gap we hear so much about in the papers can often affect gay people and others
without families if they don’t have kids to sort something out for them.
It may be boring, but we need the security a savings pot offers us.
But how do you go from spending everything you’ve got to saving? And
where does this extra cash come from? Even we can’t magic up the cash
for our customers. In fact, we have just as much difficulty as any other financial
adviser making the very idea of savings sound appealing.
The first step is to revisit your outgoings. Re-brokering your home or car
insurance, or just buying a monthly rail card instead of daily tickets are
probably all enough to find that bit extra to put to one side. Oh, and then
there’s that monthly subscription to a gym that you only go to twice
a year. Perhaps that’s just me.
The second step is usually working out a monthly budget after bills. Deduct
any rent or mortgage, utility bills and food and decide on the monthly amount
you can commit from the amount left. This should be an amount that you can
consistently commit, as it’s better to maintain payments than to over-commit
and fail to make them at all. Make sure this money comes out of your account
the day you get paid or receive benefits - if you never really had it you
can never really miss it.
Minis and Maxis
At this stage the best advice is to consult an independent financial adviser
(IFA) who can ensure you save in the most appropriate vehicle for you. This
depends on your age, health, aims, amount you have to save, risk you are willing
to take; whether you want access to your money in the short term. A professional
can put all these variables together and find a solution. In addition, a financial
adviser should be aware savings may not always be a positive thing, depending
on your tax situation or when applying for means tested DSS benefits such
as Income Support. But in the meantime here is some basic information on regular
savings.
Arguably, Individual Savings Accounts (ISAs) are the most tax-efficient and
flexible way to invest your money. They allow you to invest either into cash
savings or stocks and shares without incurring tax on your returns. You could
take a Mini ISA with a £3,000 limit into each (total £6,000 limit)
or a Maxi that allows £7,000 into just stocks and shares. The cash option
allows you to save without paying tax on interest you earn, but if you withdraw
funds you will lose that part of your annual limit. But they are complicated
and hidden in jargon.
For new investors it would be best to start with a cash ISA. As long as you
pick a CAT standard ISA which sets a minimum standard on charges, access and
terms you can’t go far wrong. However, remember interest rates can be
massively different between providers just like with deposit accounts.
It may be best to consult an IFA or do your own search on the internet. Intelligent
Finance is offering a competitive rate of 5.10 per cent gross at the moment
if you don’t want to do any leg work. But there may be better deals
out there if you shop around.
If you want something a little more exciting but easy to manage, a stocks
and shares ISA may be for you. Between 1918-2003, the UK stock market returned
an average of 11 per cent annum, or 7 per cent per annum, if you adjust for
inflation. Since 1869, the stock market has out-performed the returns from
cash in over 97 per cent of rolling 10 year periods. This said, charges may
be high and you really need to invest for at least five years to allow for
market fluctuations, but for people living with HIV this still may be preferable
to the commitment of a pension. If you are sold on stocks and shares but want
a lower risk, low-charged fund then saving money into an index tracking fund
is probably the best form of long-term investment. Doing this on a monthly
basis further spreads the risk.
Ditch the cash-point card
If this still sounds a little complicated then why not stick your cash into
a deposit account. This is pretty much risk-free but obviously the interest
rate will suffer for your caution. For someone living with HIV this will make
a flexible home for your money. Just make sure you don’t have a cash
point card for this savings account. Trust me its too tempting when you have
an empty wallet at 12:30 am and have to decide: home or club. Again, shop
around, watch the ads, speak to an IFA for the best rates and perks. While
you are at it check out your current account, as banks and building societies
are not obliged to tell you about new or better products you are entitled
to - you need to ask.
There are many other different types of investments to suit everyone and a
good IFA should point out all those relevant to you. It may be helpful to
see an IFA with specialist knowledge; for example many IFAs forget the advantages
of friendly society plans for individuals with HIV. These provide a small
amount of life cover without underwriting and you can normally save between £10 and £25 per month, which is affordable for most.
Ivan Massow
The Ivan Massow Group
0207 234 3314 or
www.massow.co.uk
