Are you switching from Limited Company to Umbrella Employment? Click here to get your first 4 WEEKS MARGIN FREE>>
We have created an information hub to support our Orange Genie Accountancy clients, our Umbrella Employees and agencies where the the Covid-19 rules and legislation are explained for recruiters, contractors and the self-employed. Click here to find out more>>
If anything could indicate the benefits of a nice little savings pot, 2020 was probably the best indicator contractors could’ve asked for. Investments function not only as a safety net but can provide a rewarding return, a healthy portfolio to leave the kids and a financial security beyond that of your salary or income.
Whether you’re talking about a Cash ISA for rainy days or something bulkier, there’s some things you should bear in mind when you’re thinking about investing.
No two contractors or freelancers are the same, so a one-size-fits-all approach to your finances isn’t going to meet your needs – there’s no substitute to a plan that’s tailored to you and your needs.
It sounds cliched but it’s never too soon to start investing, the earlier in life you make a financial plan the more potential rewards you will reap out of it across your lifetime. Particularly when it comes to something like your pension.
Like starting out of a road trip, just having an idea of where you want to end up doesn’t always work, especially if you don’t know the terrain. Making a solid financial plan and sticking to it can help you achieve your goals.
There are different types of savings and investment accounts you can access which is why outlining goals and investment plan is a good idea – to give you an overview of some of the options available to you, there are:
These, simply put, are savings accounts where there is no tax on interest. They generally do not offer much capital growth opportunity and are suited to cautious investors.
This type of ISA provides the opportunity to invest in stock market shares within a tax efficient environment. The investments can be tailored to the individual’s appetite for investment risk.
Available to those aged between 18 and 50, Lifetime ISAs come with a government boost on annual contributions of up to £4,000 by 25%, resulting in an annual contribution of £5,000; additional contributions will be possible over this, but will not attract the government bonus.
The funds built up within the LISA accounts will only be able to be withdrawn if the proceeds will be used to purchase a first home or at the point of retirement.
You can find out more about the ISA allowance on the government website here.
It’s fair to say that as a general rule of thumb, lower risk usually leads to lower returns. Particularly in times on uncertainty it can be tempting to put all of your investments into the safety of cash however, longer term investment plans usually require the support of other asset classes in order to bolster returns.
When there is uncertainty it is tempting to withdraw your investments in an attempt to minimise your losses – the lesson here is that you cannot predict the market and it’s movements perfectly. Make a plan and stick to it.
Buy-To-Let mortgages, though often more expensive than regular mortgages, can be an excellent opportunity for contractors to boost their income.
It’s natural to have questions when considering an investment like Buy-To-Let, some key questions to ask yourself when thinking about opportunities like this are:
You can find out more in CMME’s free Buy-To-Let guide
As the tax year end approaches, it’s recommended that you start to think about how you want to optimise your investments, savings and pension potential in 2021. It’s also worth thinking about the changes to IR35 coming, now may be the opportune time to make sure your money is working hard so you don’t have to.
CMME's sister company, Contractor Wealth, are a dedicated team on hand to help our contractors and independent professionals like yourself in the following areas: Making sure you do not miss out on the tax relief that is available to you on pension and retirement planning.
Contractor Wealth can give advice and support to self-employed professionals and offer bespoke advice on your individual situation. When you're ready to make the most of your money - Speak to Contractor Wealth on 01420 592 667 or click here to arrange a call back
