CJA Financial Planning

Global dividends – encouraging growth?

A new study1 analysing global dividend trends has highlighted that, in the third quarter of last year, 89% of companies chose to maintain their dividend levels or raise them. Despite this, it was noted that during the quarter, global dividends reduced by 0.9% (on a headline basis) to total $421.9bn.
The underlying growth of dividends, paid by the world’s 1,200 largest firms measured by market capitalisation, was recorded at 0.3% in Q3 2023; this follows adjustments for the strengthening US dollar and for special dividends. Interestingly, the overall growth rate was ‘significantly impacted’ by a diminutive number of large dividend cuts; the report noted that this ‘masked encouraging growth across the wider market.’ If you exclude the two largest dividend reductions, for example, underlying growth was 5.3%.
From a year-on-year perspective, the 2023 headline forecast has been reduced from $1.64trn to $1.63trn, also reflective of reduced special dividends and a stronger US dollar, and ‘not a cause for concern,’ according to the report. Head of Global Equity Income at Janus Henderson, Ben Lofthouse, signalled that, “dividend growth from companies generally remains strong across a wide range of sectors and regions,” adding that the data highlights “a globally diversified income portfolio has natural stabilisers,” as sectors in ascendance are “able to counteract those with declining dividends,” before concluding, “Dividends are typically much less volatile than earnings over time, providing comfort in times of economic uncertainty.”
1Janus Henderson, 2023

Preparing portfolios for resilience in 2024

The past few years have been challenging for investors with a series of unforeseen events and rising geopolitical tensions weighing heavily on global markets and, as a new year dawns, many issues remain unresolved. However, while such times are disconcerting for investors, the best way to achieve financial empowerment is by sticking to a sound strategic plan that optimises investment decisions and thereby tackles any potential issues head on.

Geopolitical risk
Although it may sometimes feel we are living through unprecedented times, geopolitical risk is not a new phenomenon – it has always been a feature of the investment landscape. Russia’s invasion of Ukraine and, more recently, the Middle East conflict, however, are both clearly major events most people did not foresee. And, when such events do occur, even the most well-informed investors find it difficult to accurately predict their impact on markets and investment portfolios.

Economic prospects
The global economy is currently in a relatively precarious position with the long-term consequences of the pandemic, war in Ukraine and the Middle East, and increasing geoeconomic fragmentation hindering prospects. The International Monetary Fund’s assessment, for example, produced just before October’s Middle East conflict erupted, points to an easing of growth across advanced economies this year, while China looks set to experience its slowest growth rate for years.

Investment pragmatism
While geopolitical events need to be closely monitored, investors must also be disciplined with any changes to investment strategy based on hard facts rather than knee-jerk reactions to the latest news headlines. The key to successful investing is undoubtedly to focus on long-term objectives and mitigate any potential risks by maintaining a well-diversified portfolio spread across different asset classes, industries and geographical regions.

New year, new opportunities
While geopolitical tensions are expected to present ongoing challenges, as 2024 unfolds new investment opportunities will inevitably become available. We’ll be on hand throughout the year to help you make the most of any opportunities, by carefully repositioning your portfolio and ensuring it remains firmly aligned with your financial objectives.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

We would like to wish you all a very happy, healthy and prosperous New Year, from everyone at CJA Financial Planning and we look forward to working with you in 2024!

IHT goes mainstream

Inheritance Tax (IHT) receipts have been consistently rising, with new data from HM Revenue & Customs (HMRC) showing takings for the 2022-23 tax year totalled £7.1bn, up a massive £1bn from the previous tax year (£6.1bn 2021-22). According to HMRC, this huge uplift can be attributed in part to ‘a combination of the recent rises in asset values and the government’s decision to maintain the IHT nil rate band thresholds at their 2020 to 2021 levels up to and including 2025 to 2026.’ The good news is that through expert planning you can legitimately mitigate this tax, so you can pass on assets to your family as you’d intended. There are various different strategies depending on your unique circumstances, including making gifts during your lifetime, considering placing assets into trust, making use of exemptions, and thinking about leaving something to charity, to name but a few.

Achieving real financial empowerment

Financial empowerment is about understanding the emotional relationship with money by focusing on an individual’s mindset as well as their finances. Taking time to strategize, by aligning spending and savings commitments with long-term goals while being prepared for life’s unexpected financial challenges, can provide a logical, ordered approach that brings satisfaction and pride to our financial lives. In effect, it creates control that affords a sense of financial freedom and thereby puts us on track to a fulfilling, well-lived life and retirement. Financial empowerment effectively derives from equipping ourselves with the right tools. With the clear, transparent advice and professional support our firm provides, we can construct a well thought-out, long-term but flexible plan that will allow you to live the life you want and thereby achieve true financial empowerment. It creates control that affords a sense of , putting you on track to a fulfilling .

HNWIs cutting pension contributions

HNWIs cutting pension contributions - research has highlighted that in an effort to alleviate daily financial pressures, including rising mortgage rates, one third of high-net worth individuals (HNWIs) have reduced their pension contributions or intend to do so in the next six months. Those with assets of £250,000 plus are more likely to have reduced their pension contributions in the last six months (14%), versus 9% across the UK population as a whole. Interestingly, the research has also shown that the majority of HNWIs are underestimating the requirements for a comfortable retirement, believing on average that a pension pot around £580,000 will do the job, but in reality a pot of nearly £700,000 plus the full State Pension will suffice, according to the research.

Striking a balance / Your Window on Wealth

While recent financial challenges have taken their toll on everyone’s pockets, it comes as no surprise that parents are putting concerns about their children’s finances above their own, as highlighted in a recent survey of advisers.. Over half (55%) of the advisers surveyed noted that adult children were taking priority in clients’ wealth planning at present, with many taking action to assist with their children’s financial struggles amid the cost-of-living crisis. Although people are understandably concerned about their children’s financial circumstances and are keen to help, it’s important to be mindful about striking the right balance and not to lose focus on your financial objectives for your own future. For help in striking that balance, get in touch, don’t lose focus on your

Signs of optimism in the global economy

Although the global economy continues to face significant headwinds, statistics released during the first few months of this year have revealed unexpected signs of resilience. This has led economists to begin upgrading growth forecasts. Persistent inflationary pressures and tighter financial conditions do remain key challenges for policymakers around the globe. A key theme at the World Economic Forum’s recent Growth Summit was ‘enabling resilient economic growth’ with discussions focusing on inclusive and sustainable growth, and equitable globalisation. The organisation’s updated forecast showed a notable strengthening in growth expectations, although it also highlighted sharp variations by region.
Read our article to learn more… summer newsletter 2023

Healthy dividends
UK listed companies paid out £37bn in shareholder dividends between April and June, up 38.6% from the same period last year, making Q2 the second largest UK dividend payout on record3.
Large one-off special payments were a key driver, but underlying dividends, which exclude these volatile specials, jumped by 27.0% to £32.0bn, boosted by weaker sterling.

The Growth Plan 2022
On 23 September, Chancellor Kwasi Kwarteng outlined a series of tax cuts and measures. Key personal tax announcements included:
• A reversal of the National Insurance contribution rise, which came into force in April. The 1.25 percentage point increase will be reversed from 6 November. The planned Health and Social Care Levy which was due to replace the National Insurance rise as a new standalone tax from April 2023 has also been cancelled
• A reduction in Stamp Duty Land Tax (SDLT) in England and Northern Ireland, raising the residential nil-rate threshold from £125,000 to £250,000, with immediate effect, and First Time Buyers Relief from £300,000 to £425,000. The maximum amount that an individual can pay for a home while remaining eligible for First Time Buyers’ Relief, was increased from £500,000 to £625,000. As SDLT is devolved in Scotland and Wales, the Scottish and Welsh Governments will receive funding through an agreed fiscal framework to allocate as they see fit
• The basic rate of Income Tax will be cut to 19% in April 2023 – one year earlier than previously planned. At present, people in England, Wales and Northern Ireland pay 20% on annual earnings between £12,571 and £50,270, different rates apply in Scotland
• The government is reversing the 1.25 percentage point increase in Dividend Tax rates applying UK-wide from 6 April 2023, so the ordinary and upper rates of Dividend Tax will revert to 7.5% and 32.5% respectively.

3LINK Group, 2022

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. The Financial Conduct Authority (FCA) does not regulate Will writing, tax and trust advice and certain forms of estate planning.

It is important to take professional advice before making any decision relating to your personal finances. Information within this newsletter is based on our current understanding of taxation and can be subject to change in future. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details.
We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.
The information contained within our Autumn newsletter is for information only purposes and does not constitute financial advice. The purpose of this newsletter is to provide technical and general guidance and should not be interpreted as a personal recommendation or advice.
The Financial Conduct Authority does not regulate advice on deposit accounts and some forms of tax advice.

Merry Christmas and Happy New Year!
Warm wishes from the whole CJA Financial Planning team

Our offices will be closed from 12pm Friday 23rd December 2022 and will re-open on the 4th January 2023.

Retirement – where’s your ‘happy place’?

If you’re in Wiltshire and about to retire, you’re doing it in the right place.
This is according to an online search engine1 that helps retirees and their families find the best retirement communities and care homes. The research found that Google searches for ‘retirement homes in Wiltshire’ have soared by 150% in the last year alone – and for good reason! With its beautiful countryside, historic towns and City of Salisbury, and great investment potential, Wiltshire is an ideal location to live out one’s later years. In close second and third places are Buckinghamshire and Dorset, scoring high on both investment potential and wellbeing.

Reaching your financial happy place
No matter where you’re located, though, the truth remains that you’ll struggle to achieve a happy and fulfilled life in retirement without an adequate level of income. So, how much money do today’s retirees need to live their best life after quitting work? According to a recent survey2, the average retired couple spends £2,333 a month (around £28,000 per year) to be ‘comfortable’ – i.e. having enough to cover their basic expenditure requirements in addition to some luxuries such as holidays, hobbies and dining out.

1Lottie, 2022, 2Which?, 2022