Lockdown, COVID-19 and Personal Finances

January 26, 2021
Charlotte

Where do I start?! This is blog number one of 2021...I have no idea where the time has ran away to but my start to the year has been crazy busy - not that I’m complaining. Happy New Year to you all. 

How are you coping with the current lockdown? So many of you are having to contend with homeschooling, working, general life stuff. I can imagine how stressful this is for some. I thought this month I would keep it relatively light hearted and would really love more feedback about topics that could help you personally. I also want to get more interactive on my Instagram ‘@charwalters_finance’ so knowing what you want to hear really helps me. It’s quite difficult to keep the topic of money and financial planning exciting and interesting. 

There’s a few bits and pieces flying around that are related to Covid and the impact that this has had on our financial positions, so I thought it would be helpful to consolidate a few of these into a blog. Hopefully you’ll find comfort here. 

Some will have been furloughed, taken self-employed income support grants, bounce back loans or unfortunately a lot have fallen into the no support gap! Much like some of you, that’s me. Luckily my business has been able to be carried out online, therefore albeit very different, business has still continued to grow - now is an amazing time to invest as the markets are particularly volatile allowing for a greater potential on capital growth. 

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From recent conversations, people are interested in knowing some of the following:

What impact has Covid had on my pension savings? 

There’s a few responses here and ultimately the answer is yes. Back in March the stock market took a huge hit BUT and that’s a big but, they have recovered very very well and are continuing to do so. This means that some of my clients who actually invested at the beginning of March have ended up earning circa 19%* returns on their investments during this period. Any existing pension savings would have taken a bit of a dip but they should be well on their way to recovery and also any new money paid in since March will be being exposed to a market correction and should (depending where they’re invested and who they’re managed by) be generating a positive capital growth. 

*past performance is not an indication of future performance and can never be guaranteed

If you’ve had to stop your pension contributions and are self-employed, really start to consider when you might be able to start contributing again, the effect that compound interest has on your regular contributions is immense and missing out unnecessarily would be a silly thing to do. Although I do know that some people are preserving capital until we manage to get out of this very rubbish situation. 

Employed and furloughed? The government explicitly told employers that they still maintain the responsibility to be making pension and NI contributions for their employees. Therefore your current workplace scheme should still have its normal monthly amount being invested and will be being invested for potential capital returns.

It is important to remember that these investments are for the long run and a drop in performance is okay, historically over a period of 5-10 years of an investment period, the more likely the outcome is to be positive. Within a 10 year investment period I can almost guarantee that there will be 2 years which have been fully in a minus. Overall, this doesn’t matter because the positive years are more likely to outweigh those that aren’t. 

I’ve taken a mortgage payment holiday - what impact will this have?

I think lenders have gone through a bit of a wave here. To start with they were looking at it on a case by case basis and honestly, it was having an impact on some people who wanted to move 4-6months ago. Since this time the lenders seem to have taken more of a view on this and are helping more people than not to achieve their property purchase goals. 

My best advice with mortgages at the moment is to speak to a mortgage broker or myself. Don’t go to only your bank because they are only able to tell you their criteria guidelines where as somebody like a broker or myself are able to explore the whole of the market and check which lender would be most appropriate for you.

More lenders are coming back to the 90% lending space now which shows some positivities within the lending space. This shows that lenders have an appetite to lend its just more about you being fitted into the right lender that works for you. 

Considering the year that we have had I think pensions, investments and mortgages seem to be in a relatively positive position still. If you haven’t set some money goals yet for 2021, set some. Where do you want to be on the 1st January 2022? 

Are you saving for a house deposit? Paying off that credit card balance you built up previously? Do you want to start considering stocks and shares investments so that you are able to experience some potential capital returns? Are you self employed and want to start a pension contribution? Whatever this might be, get them written down and just start! 

The effect that delaying an investment has on compound interest is massive. Don’t miss out for no reason.

Thanks for checking in, please do let me now if you have any questions and I would love to hear more about what you want to hear more of.

Bye for now. 

Much love, Charlotte x

** YOUR HOME MAY BE AT RISK IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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