Wells Gibson

Are you a ‘Pension-Preneur’?

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It’s no secret that the nature of retirement is changing.  What used to be considered by many as a quiet, relaxing time in life, is increasingly becoming a period of greater activity – perhaps it’s a new retirementality.


New research from Charter Savings Bank reveals that, instead of taking it easy, millions of those approaching retirement are planning to reinvent themselves and start their own business.


The study surveyed 2,005 adults living in the UK between 11 and 15 October 2019.  These 3.5 million so-called ‘pension-preneurs’ across the UK have already started their own business or are planning to do so.  At the same time, some want to invest in another business during their retirement.


The nationwide study reveals that 14% of over-50s have entrepreneurial plans for the years ahead.  Of these, 2.2 million people have already set up their own business or have invested in another.  While a further 1.6 million are planning to do so.


Pension-preneurs collectively invest about £22 billion in their enterprises, equating to £6,300 per person over 50 years old.  15% are planning to invest more than £20,000 in their new enterprise.


The majority of the over 50s plan to use their own personal savings to fund their new business in retirement, but 11% plan to use a lump sum from their pension.


Other options for financing include loans from family and friends (8%) and business loans (7%) for their new venture.


It appears there are millions of people heading towards retirement who don’t want to just stop working and put their feet up.


The most popular plan is for retirees is to volunteer with an organisation or start a charity (33%), while a fifth (22%) plan to start a new job part-time.  Setting up as a freelancer or consultant during retirement is another popular option (12%).


Paul Whitlock, Group Managing Director, Charter Savings Bank said,


“The fact that so many people over the age of 50 want to create a new business or invest in one is inspiring and shows such an entrepreneurial spirit.”


“However, starting a business takes funds and the fact that so many people plan to use their own personal savings to do so highlights how important saving is.”


“Whether spending one’s retirement travelling the world or starting a business, saving as much as possible from as early as possible is vital.”


Professional services (13%); education (12%); hospitality & leisure (12%); and wholesale & retail (9%) are the most popular industries for pension-preneurs planning to start their own business.


Over a third (37%) bravely plan to start their new venture in a completely different industry, while almost half continues in the same industry they’ve worked in during their working life.


Are you planning to be a ‘Pension-preneur’?


Photo by Joel Filipe on Unsplash

Our thoughts on bonds

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“You don’t need bonds, until you need them!”Anonymous

Challenging times

Today, investors face some challenging choices when it comes to investing in bonds, not least because yields on bonds are at historical lows and currently below that of UK inflation.  In response to the very low yield on bonds, some investors have been tempted to chase higher yielding bonds, in an attempt to squeeze some return out of what feels like an unproductive portfolio allocation.  This is, unfortunately, an accident waiting to happen.  The phrase ‘picking up pennies in front of a steamroller’ comes to mind.

Other investors, including clients of Wells Gibson are asking whether they should instead be holding cash.  This has been a theme, on-and-off, for almost a decade since the era of low yields began, driven by quantitative easing by the Bank of England in response to the Credit Crisis.  Those taking the cash deposit route over this period have paid a heavy price, losing 15% of purchasing power compared to just 3% from being invested in short-term government bonds.

The challenge is to make decisions today that will help to protect, preserve and create wealth over time and, most importantly, allow investors to remain invested in the markets at the worst of times.

Why own bonds at all?

As investors, it’s our emotional and financial ability to suffer falls in the value of our shares, which tends to determine how much risk we can take on. Very few investors have the stomach for a 100% global equity portfolio.

Investors who cannot emotionally, or financially, afford to suffer falls in the value of their portfolio have to reduce their allocation to equities / shares and own more stable and therefore lower returning bonds to offset these falls.

We should be looking forward to yield rises

At some point in the future, yields are likely to rise to higher levels.  The problem is that no-one knows when, how quickly and with what magnitude it will happen.  Investors should be looking forward to yield rises, because in the future their bonds will be delivering them with a higher yield, hopefully above the rate of inflation.

When yields do rise, bond prices will fall, creating temporarylosses.  At that point bonds earn an investor more than they did before the rate rise and they reach a breakeven point when the new higher yield has fully compensated them for the temporary capital losses suffered.  The time to break even is equivalent to the duration (similar to maturity) of an investor’s bond holdings.  Short-dated bonds with a three-year duration will breakeven after three years.


Bonds are a very important part of most portfolios, providing lower absolute levels of volatility than equities and protecting portfolios from periods of severe equity market trauma that occur from time to time.  Be prepared for unexciting returns as yields – potentially – move back to a more normal level.  No one knows when or how quickly this will happen, so don’t try to second guess the guessers.  Sit back and remember: ‘You don’t need bonds until you need them!

Tuning out the Noise

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As an investor, it can be easy to feel overwhelmed by the relentless stream of news about markets. Being bombarded with data and headlines presented as impactful to your financial well-being can evoke strong emotional responses from even the most experienced investors.  Headlines from the ”lost decade”1 can help illustrate several periods that may have led market participants to question their approach.

  • May 1999: Dow Jones Industrial Average Closes Above 11,000 for the First Time.
  • March 2000: Nasdaq Stock Exchange Index Reaches an All-Time High of 5,048.
  • April 2000: In Less Than a Month, Nearly a Trillion Dollars of Stock Value Evaporates.
  • October 2002: Nasdaq Hits a Bear-Market Low of 1,114.
  • September 2005: Home Prices Post Record Gains.
  • September 2008: Lehman Files for Bankruptcy, Merrill Is Sold.

While these events are now a decade or more behind us, they can still serve as an important reminder for investors today.  For many, feelings of elation or despair can accompany headlines like these. We should remember that markets can be volatile and recognise that, in the moment, doing nothing may feel paralysing. Throughout these ups and downs, however, if one had hypothetically invested £10,000 in US equities / shares in May 1999 and stayed invested, that investment would be worth approximately £28,000 today.2

When faced with short-term noise, it is easy to lose sight of the potential long-term benefits of staying invested. While no one has a crystal ball, adopting a long-term perspective can help change how investors view market volatility and help them look beyond the headlines.

Picture11. For the US stock market, this is generally understood as the period inclusive of 1999–2009.

2. In GBP. As measured by the MSCI World Index (net div), May 1999-April 2018. A hypothetical £10,000 invested on April 30, 1999, and tracking the MSCI World Index (net div), would have grown to £28,033.46 on April 30, 2018. It is not possible to invest directly in an index.

The Value of a Trusted Adviser

Part of being able to avoid giving in to emotion during periods of uncertainty is having an appropriate asset allocation that is aligned with an investor’s willingness and ability to bear risk.  It also helps to remember that if returns were guaranteed, you would not expect to earn a premium. Creating a portfolio that investors are comfortable with, understanding that uncertainty is a part of investing and sticking to a plan may ultimately lead to a better investment experience.

However, as with many aspects of life, we can all benefit from a bit of help in reaching our goals. The best athletes in the world work closely with a coach to increase their odds of winning, and many successful professionals rely on the assistance of a mentor or career coach to help them manage the obstacles that arise during a career.  Why?  They understand that the wisdom of an experienced professional, combined with the discipline to forge ahead during challenging times, can keep them on the right track.  The right financial planner can play this vital role for an investor.

A highly qualified financial planner can provide the expertise, perspective, and encouragement to keep you focused on your destination and in your seat when it matters most.  A recent survey conducted by Dimensional Fund Advisors found that, along with progress towards their goals, investors place a high value on the sense of security they receive from their relationship with a financial planner.

Having a strong relationship with a financial planner can help you be better prepared to live your life through the ups and downs of the market.  That’s the value of discipline, perspective, and calm. That’s the difference the right financial planner makes.

WG Connect – Wells Gibson’s New Portal and App

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In our quest to bring clarity, contentment and certainty to the financial lives of our clients, Wells Gibson is delighted to announce that it will soon be launching WG Connect, a secure web-based portal and mobile app which will give our clients the opportunity to see their entire financial life in one place.

The app will be compatible with Apple / iOS and Android devices and will give you 24/7 access to your banking, property, pensions, savings & investments, mortgage & credit cards and insurances.  As well as providing a real time view of your finances, the portal and app will allow you to see your total net worth and spending via interactive and animated graphs and will provide a document store for your insurance policies, wills etc.

Two-way document sharing, and instant messaging alerts will make collaboration between you and Wells Gibson, secure and easy.  With an intuitive interface and familiar Facebook type notifications, you will find staying in contact with Wells Gibson simple.

In summary, your financial information will be accessible on demand and all your finances and associated paperwork will be organised and available at your convenience.

The launch of the portal and app is a giant step forward for clients who use professional advisers as it provides even greater transparency in your dealings with us; it’s your money after all, and if we’re both in possession of all the facts then we can make better decisions together.

Wells Gibson is delighted to be one of the first advisory firms in Scotland and the first in East Scotland, to launch the portal and app in partnership with moneyinfo which has developed the platform behind the portal and app.

Last and by no means least, Wells Gibson takes the security of your personal and financial information very seriously and moneyinfo makes sure that your data is safeguarded using bank level security and encryption.  Your mobile app will be further protected with your own six-digit pin and registered to your own personal advice.

We will let you know when WG Connect goes live.