- Financial planning
- 2 minute read
For those in their late 30s and 40s, you might be at or near the peak of your earnings. Whilst that’s clearly a good place to be, it certainly doesn’t mean you’ve reached financial nirvana - there are likely to be some significant costs you’re facing that may be daunting.
Making the most of your earning power
If you’ve started a family, while you may be enjoying the wonders of parenthood, it’s no secret that the costs of raising children can be high. Along with the basics, additional costs such as sending your children to private school or acting as the Bank of Mum and Dad, can rapidly balloon.
The best way of managing these costs is to make sure you’ve started planning in advance and a Junior ISA for children is a good option to consider. Interest and returns will be tax efficient, and your child will not be able to access the money until they are 18. This means, if you open the stocks and shares version of the account when they are born, there is a long timeframe where the peaks and troughs of the stock market need to be navigated.
A Junior ISA is an excellent long-term investment vehicle, which can hopefully result in your child having a valuable pot when they turn 18, that can be used for university fees or a house deposit. You should still remember that a stocks and shares Junior ISA will put the investment value at risk. As you hit your peak earning years, you should be keeping an eye on how you’re going to fund your retirement.
Most of us will now have been auto enrolled into a pension, but if you’re relatively progressed in your chosen career, you’ve probably been in a pension for some time. Regardless of what stage of your career you are at, it is certainly a good idea to consider paying as much into your pension as you can, to benefit from the generous tax relief you can claim. Essentially, money that would have gone to the government in tax goes toward funding your retirement instead. As with all tax-efficient investments, it’s worth checking how your own circumstances affect the benefits and allowances available to you. And make sure you check them regularly, as tax rules can, and do, change.
The more time you give your pension to grow, the more you’ll have to draw on in retirement. The magic of compound growth means that the earlier you pay into your pension, the more chance you have of those payments being worth more by the time you hit retirement age.
Keeping in touch with your financial adviser is highly recommended – think of it as a financial MOT. They will be able to give you a realistic appraisal of your financial situation, and flag anything you need to be aware of to ensure you meet your own financial goals.
To find out more or if you have any questions about financial planning, contact us to find out how we can help.
Please note that any tax benefits will depend on your personal tax position and rules are subject to change. The value of investments can go down as well as up, and you may get back less than you invested.