Your Personal Savings Report

Transcription

1 Your Personal Savings Report Prepared for An Example An Enquiry made via Future Start Independent Financial Planning Ltd Presented By: Future Start Independent Financial Planning Ltd th August 2016

2 Contents Synopsis An Overview of Effective Cash Management Introduction The Personal Savings Allowance Creating a Savings Portfolio Establishing Your Savings Portfolio Your Savings Portfolio Details Your Savings Portfolio Table of Accounts Summary Terms and Conditions Important Information Appendix 1 Savings Account Provider Details Appendix 2 Account Tables Top 5

3 Jan-95 Sep-95 May-96 Jan-97 Sep-97 May-98 Jan-99 Sep-99 May-00 Jan-01 Sep-01 May-02 Jan-03 Sep-03 May-04 Jan-05 Sep-05 May-06 Jan-07 Sep-07 May-08 Jan-09 Sep-09 May-10 Jan-11 Sep-11 May-12 Jan-13 Sep-13 May-14 Jan-15 Synopsis The effective management of cash is essential for anyone wishing to maximise the value of their wealth. Managing cash effectively is one of the most important activities to undertake to maximise the value of money. It should always be a consideration as part of the undertaking of any riskbased investment activity. The chart below shows the level of performance that has been available from cash deposits, over the 20 years (Jan 1995 Oct 2015) had they been managed effectively compared to those not managed effectively and to the performance of the FTSE 100 index Performance The performance of cash deposits when managed effectively in accordance with the principles outlined in this report. The performance of the FTSE 100 index. A leading global stock market index based on the economic performance of the UK. The performance of cash that is not managed effectively, which remains in a savings account offering dormant rates of interest. The flat Dormant Interest Rate line across the bottom of the chart is the level of performance savers have become accustomed to receiving on their savings. The volatile line show the comparable performance growth of the globally recognised FTSE 100 Index. The red line illustrates the performance that can be achieved from cash deposits if they are managed to best effect. This clearly adds significant difference to the overall value of cash deposits.

4 Jan-95 Sep-95 May-96 Jan-97 Sep-97 May-98 Jan-99 Sep-99 May-00 Jan-01 Sep-01 May-02 Jan-03 Sep-03 May-04 Jan-05 Sep-05 May-06 Jan-07 Sep-07 May-08 Jan-09 Sep-09 May-10 Jan-11 Sep-11 May-12 Jan-13 Sep-13 May-14 Jan-15 An Overview of Effective Cash Management The concept of Effective Cash Management simply regards making the necessary pro-active steps to maximise the value of cash deposits. The general behaviour of banks and building societies has led savers to become accustomed to receiving poor rates of interest and that generates little value to savings held on deposit. The reality is that this does not have to be the case. The chart (shown again) illustrates the difference that can be made to the value of cash when it is managed effectively Performance The basic principles of Effective Cash Management are: 1. Maximise the rate of interest earned on your deposits. 2. Maximise the level of FSCS protection obtained on all deposits. 3. Only keep the amount of money required to cover the next 12 months on instant access. 4. Build a portfolio of deposit accounts with the balance covering 1 to 5 years to suit your requirements. These principles have been applied to your portfolio to deliver the following results: Amount held on deposit: 100, Your existing annual savings return: Your recommended Portfolio return over the next 12 months is: 1, The percentage improvement (%): %

5 Introduction This report has been produced to illustrate the real value available for 100, of personal deposits held in a deposit based savings portfolio. It will demonstrate the real value you could obtain from your cash deposits. It has been designed around criteria you specified regarding your access to cash requirements and your preferred portfolio times frames. No account has been taken of your eligibility for Cash ISAs in the creation of this report. For a completely personalised report it is always recommended that the services of a financial adviser, that provides an effective cash management service, should be obtained. A savings account analysis system has been used to identify the best UK registered savings accounts. Savings portfolios formulated by the system focus upon the providers offering the best savings interest rates with the protection of the Financial Services Compensation Scheme. A portfolio approach will always deliver the best balance between interest rate returns and the best levels of Financial Services Compensation Scheme protection. The report will demonstrate how the portfolio delivers a gross return of 1, in the first year, depending upon prevailing interest rates and product availability, it may provide increasing, or reducing, returns thereafter. This report has been produced to illustrate the returns available from a managed portfolio of deposit accounts. The level of FSCS protection provided per individual is 75,000 per institution from 1 st January The level of FSCS protection provided by this portfolio is 100, The portfolio in this report is provided to illustrate the potential that is available from the best savings portfolio created utilising all savings accounts available from UK based savings account providers. This is not an advised process and should not be considered to have been provided as such. Additional support is available from Future Start Independent Financial Planning Ltd if required. Note: All savings products are provided for limited periods only. Those products shown in this report may be withdrawn at the time you wish to proceed. In this eventuality, the report will need to be run again to identify the new best savings account that suit your portfolio requirements.

6 The Personal Savings Allowance From April 2016 a tax-free Personal Savings Allowance has been introduced for savers who pay either the basic rate of income tax or the higher rate income tax on their earnings. This allowance is expected to remove the requirement to pay tax on savings for over 95% of people. A basic rate tax payer will be able to earn 1,000 per annum of interest on their savings before becoming eligible to pay any tax and the higher rate tax payer will be eligible to earn 500 per annum before becoming eligible to pay tax. This is called a Personal Savings Allowance. From April 2016, if income is less than 17,000 per annum, all savings will continue to be tax exempt; if taxable income is below 43,000 per annum the first 1,000 of interest earned per annum on savings will be exempt of tax and if taxable income is between 43,001 and 150,000 per annum, the first 500 of interest earned per annum will be exempt from tax. The following table shows the amount required to be held on deposit to take maximum advantage of these allowances for non-managed and effectively managed cash. Basic Rate Tax Payer Higher Rate Tax Payer Interest Rate 0.10% 2.45% 0.10% 2.45% Amount on Deposit 1,000,000 42, ,000 21,250 Interest Earned 1,000 1, Any amount of interest earned above the Personal Savings Allowance is taxed in the usual way at the same rate of tax paid on earnings. All portfolios should be constructed to maximise the value of this new, additional, tax benefit.

7 Creating a Savings Portfolio Effective Cash Management requires the following objectives to be met in order to maximise the interest rate returns and level of FSCS protection obtained on cash deposits: Make a financial decision every year. This enables advantage to be taken of new opportunities as interest rates and economic circumstances change. Protect your savings with the Financial Services Compensation Scheme and ensure there is no duplication of FSCS cover with the same savings account provider. Do not be over-loyal to any bank or building society because no bank or building society can offer the best rates of interest at all times. Have a structured program to enable savings to roll over into higher paying interest bearing accounts. Save for the longer term to access the highest rates of interest. Research the entire market to ensure the best rates are achieved. It is necessary to research the market to identify the best savings products available to create a balanced deposit based portfolio and to enable the maximisation of savings returns. Establishing a portfolio in the first place is very important, but the greatest benefit is obtained by the effective on-going management to ensure the position is maintained. This portfolio has been constructed with the following parameters: Only UK registered savings accounts are used. Only you will handle your money. All savings accounts are held directly by you with each savings account provider. Only you will have any access to the accounts once they have been established. Only savings account providers with the FSCS protection with a core trading proposition with the UK are used within the analysis. Savings account providers with is no significant and established commercial trading within the UK are not used for the portfolios (e.g. United National Bank, Bank of Cyprus, National Bank of India, Bank of Nigeria etc.)

8 Establishing Your Savings Portfolio The steps outlined below show how the savings portfolio is constructed and managed. Step 1 You must understand what you want to achieve from your savings. How much do you need available over the next 12 months and how much can you afford to place into fixed term savings accounts to get better rates of interest? Research the highest rates of interest on the accounts that best suit your requirements. You have requested the following balance to your portfolio on a total deposit amount of 100, Duration Amount Instant 10, Notice 10, Year 20, Year 20, Year 20, Year 20, Step 2 At the end of each year any easy access savings accounts, or maturing fixed accounts will need to be reviewed. The interest rate on easy access accounts will generally start to fall and fixed rate accounts will mature. The portfolio must therefore be reviewed and where appropriate, new savings accounts for these monies must be identified and established. This cycle is then repeated each year to maintain the performance of the portfolio and to maximise the returns that are available. This maximises the saving portfolio returns, depending upon the prevailing interest rates and types of accounts that are available at the time of the review. All savings account application forms must be completed by you and issued directly to each savings account provider to set up the accounts. A Cash Management system is available from Future Start Independent Financial Planning Ltd to help you monitor and manage your savings accounts. Please contact us for more details.

9 Your Savings Portfolio Details As already established, the best way to plan savings accounts to obtain the best value is to hold a portfolio savings accounts over as long a time period as possible. As the accounts mature each year, the money is rolled forward into new accounts to meet your on-going requirements for cash, and to maximise the overall return. Based on your selection for this portfolio, the overall gross return in year 1 is 1, At the end of each year, any money re-cycled into new accounts should be used to continue to target the best rates of interest available and to maximise the level of FSCS protection. The table, shown overleaf, provides details of the savings account providers offering the savings accounts that provide the best gross return available from deposit accounts registered and protected under the terms of the Financial Services Compensation Scheme. The level of FSCS protection offered by this portfolio is 100, Please contact Future Start Independent Financial Planning Ltd if you would like a fully advised solution to help you maximise the value of your savings, but please be aware that a fee for this service would apply. You are in control of your money at all times, as the accounts are held directly with each recommended institution and they are protected up to the maximum amount of 75,000 per person, per institution, which is provided by the FSCS. Only you have access to your money. Details of the savings accounts providing the best solution for your own savings portfolio are shown in the table overleaf. Note: The illustrated portfolio can be modified to suit your circumstances. Longer or Shorter terms are allowed and variable amounts can be held within each term if that better suits your requirements. Products are limited offer, subject to availability, and can be withdrawn at any time.

10 Your Savings Portfolio Table of Accounts Company Account Type Accessibility Interest Rate Deposit Accounts Deposit Accounts Deposit Accounts Deposit Accounts Deposit Accounts Deposit Accounts Amount Deposited Interest Paid Instant 1.16% 10, Notice 1.55% 10, Year 1.50% 20, Year 1.70% 20, Year 1.80% 20, Year 2.00% 20, On the above portfolio, the total annual return will be: 1, with 100, FSCS protection.

11 Summary There are many ways to manage savings, but care and attention must be paid at all times to maximise their value. In our objectives for Effective Cash Management we identified that remaining over-loyal to any bank or building society is the best way to damage the value obtained from cash deposits. Your portfolio has been recommended following a review of the interest rates offered by all savings account providers with a core trading proposition within the UK with the FSCS protection. Obtaining the highest level of FSCS protection provides additional security and can normally be obtained without over compromising the available interest rate returns. The table below summarises the value of this portfolio for the next 12 months, but please be aware that all products are all limited offer and could be withdrawn at any time. If an account is withdrawn, please contact Future Start Independent Financial Planning Ltd for assistance to re-construct your savings portfolio. The summary performance details of your new portfolio are: Future Start Independent Financial Planning Ltd Portfolio Amount on deposit 100, Interest Paid per Annum 1, FSCS Protection 100, Note: The portfolio has been constructed assuming the accounts will be held in the name(s) of An Example.

12 Terms and Conditions This report does not constitute the provision of advice by Future Start Independent Financial Planning Ltd. This report has been produced to illustrate the best savings accounts available from savings account providers with core trading propositions operating within the UK. A full list of the savings account providers reviewed for selection is available upon requested. Any decision to proceed with opening any savings account is solely your decision. It is your responsibility to fully read and understand the terms and conditions of each account, as provided by the savings account provider, prior to opening each account. All accounts offered via the system are deposit accounts with 100% capital protection, provided by the savings account provider. Where this protection is no longer available, due to the collapse of the savings account provider, the terms of the Financial Services Compensation Scheme will apply. The Financial Services Compensation Scheme offers protection up to 75,000 per person per savings account provider, held on deposit. The terms of this Scheme may change at any time. Future Start Independent Financial Planning Ltd is not responsible for the terms of the Financial Services Compensation Scheme. Full details can be found at: fscs.org.uk This portfolio is only indicative of the returns currently available as products on offer can be withdrawn, or introduced, at any time. Future Start Independent Financial Planning Ltd cannot guarantee the availability of any product or account recommended, nor can they take account of or accept any responsibility for the release of a better product after performing their whole of market research. Whilst Future Start Independent Financial Planning Ltd ONLY recommends accounts that are covered and protected by the Financial Services Compensation Scheme, they do not recommend ALL of the accounts protected by the Scheme as overseas banks without a core trading proposition within the UK are excluded from the account tables held within the system. Full details can be provided on request. The availability of some accounts will be dependent upon the purchase of another account or service. Future Start Independent Financial Planning Ltd has no control, and carries no responsibility, over these arrangements. In accordance with the terms of the Data Protection Act, Future Start Independent Financial Planning Ltd will not share your data with any other business or institution. No judgement or assessment of any savings account provider s financial strength rating has been undertaken when formulating this portfolio solution. All accounts opening will be held directly with each savings account provider.

13 All quoted interest rates and interest payments are gross Annual Equivalent Earnings and are subject to change at any time by the savings account provider.

14 Important Information The following information is important generic information relating to personal savings accounts. 1. This report is provided to give an indication of the savings portfolio that could be used to maximise the value of cash deposit accounts. 2. The report has been provided as a result of your own selection criteria. No advice has been provided by Future Start Independent Financial Planning Ltd in the delivery of this report. 3. The full terms and condition of each account must be read and understood prior to making any deposit. 4. All deposit based products are subject to income tax in the year that any interest is paid. 5. All deposit based products offer a guaranteed return of capital at the end term or maturity of the product, however your capital is at risk if the product provider ceases trading and enters bankruptcy and your deposit is not protected by the FSCS. 6. The Financial Services Compensation Scheme is a compensation scheme of last resort established under the Financial Services and Markets Act There are limits to the levels of compensation available and full details can be found at: 7. The terms and conditions of the Financial Services Compensation Scheme can be changed at any time, which may affect the levels of protection offered. There is no guarantee that a portfolio will remain fully protected if the level of protection offered by the FSCS reduces during the term of an established deposit account. 8. Future Start Independent Financial Planning Ltd is not responsible, and does not accept any liability, for any losses incurred as a result of the default of any product provider, or lack of any compensation paid. 9. To be protected by the FSCS, the terms of the FSCS must be met at the time of a claim. 10. All recommendations are based upon the information provided by the customer and on the prevailing taxation levels and economic climate, both of which are likely to change in the future. 11. Future Start Independent Financial Planning Ltd is not able to liaise on your behalf in relation to any of the products with any of the product providers without your written consent. 12. Future Start Independent Financial Planning Ltd is not able to follow or track the rate of interest received from any variable rate account and cannot therefore be held liable for any lost interest payments from the reduction of any rate of interest paid on an account. 13. It is the customer s responsibility to ensure that all postal applications are submitted on time to ensure the accounts remain available. 14. The Personal Savings Allowance is available to Basic Rate and Higher Rate tax payers. The terms and conditions of the allowance are not guaranteed and may be subject to change at any time.

15 Appendix 1 - Selected Provider Details The table below provides details of each savings provider utilised within the savings account portfolio. Provider Name Summary Provider Details Virgin Money An FSCS licence is either unique to the provider or shared within a Group. This provider s FSCS license is: Like all Virgin companies, Virgin Money was launched to give customers a better deal. They aim to offer a wide range of great value financial products that are easy to understand and sort out. In today's busy world their customers tell them it's why they choose to deal with Virgin rather than anyone else. Unique Shawbrook Bank An FSCS licence is either unique to the provider or shared within a Group. This provider s FSCS license is: Unique Established in 1944 and became a licensed bank in The Special Opportunities Fund managed by RBS Equity Finance bought the bank in January 2011, and provided substantial capital to help the business grow. In 2011 they changed their name to Shawbrook. The commercial mortgage product was built using the award winning team and infrastructure of Commercial First, which were acquired at the end of February 2011.In August 2011 a range of innovative secured loans were added to the portfolio, following the purchase of Link Loans. In March 2012 Singers Asset Finance became part of Shawbrook, bringing an established corporate asset finance business and medical equipment leasing provider to the Shawbrook offering. Shawbrook now has a new range of savings accounts, specialising in the savings markets where they have solid experience and knowledge. They provide a straightforward, no-nonsense alternative to the high street and combine traditional banking values with a modern approach. United Trust Bank An FSCS licence is either unique to the provider or shared within a Group. This provider s FSCS license is: Unique United Trust Bank is a specialist bank that provides a wide range of secured funding facilities and deposit accounts for individuals, businesses and charities. United Trust Bank was incorporated in 1955 and has many decades of lending experience. They are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Their focus is on their customers needs. As an entrepreneurial organisation, there are able to develop their business so that it continues to meet the evolving

16 needs of their customers and allows them to take advantage of new opportunities. Vanquis Bank An FSCS licence is either unique to the provider or shared within a Group. This provider s FSCS license is: Unique In 2002 Vanquis Bank was registered and set up by Provident Financial Group. Vanquis Bank is licensed by the OFT for Consumer Credit business. Vanquis Bank is authorised and regulated by the Financial Services Authority. In 2006, Vanquis Bank launches its first website and started advertising on the Internet. In a customer satisfaction survey over 80% of customers said they would recommend Vanquis Bank.

17 Appendix 2 Top 5 Accounts Tables The following tables provide details of the Top 5 savings accounts available for each account type requested in the savings accounts portfolio, based upon the selection criteria specified and sorted according to the highest rate of interest available on each account (i.e. not necessarily on the tiered rate of interest selected for your portfolio). NOTE: For larger portfolios, the top rate in any of the specific terms may not be the account shown in your portfolio because the account provider or group has maximised the FSCS limit through use elsewhere in your portfolio. Instant Access Accounts Provider Name Account Title Interest Rate Chorley and District Building Society Postal Account Annual 1.25% Sainsburys Bank esaver Special 1.20% Virgin Money Defined Access esaver/saver 1.16% Beverley Building Society Postal Account 1.15% Investec Bank E-asy Access Account 1.10% Notice Accounts Provider Name Account Title Interest Rate Shawbrook Bank 120 Day Notice Account 1.55% Shawbrook Bank 95 Day Notice Account 1.45% Charter Savings Bank 95 Day Notice 1.36% Hanley Economic Building Society 90 Day Notice Account 1.35% Hampshire Trust Bank 90 Day Notice Account 1.30% 1 Year Fixed Rate Accounts Provider Name Account Title Interest Rate United Trust Bank 1 Year Bond 1.50% Shawbrook Bank 1 Year Fixed Rate 1.40% Paragon Bank 1 Year Fixed Rate 1.35% Hampshire Trust Bank 1 Year Fixed Rate 1.35%

18 Investec Bank 1 Year Fixed Rate Savings 1.30% 2 Year Fixed Rate Accounts Provider Name Account Title Interest Rate Shawbrook Bank 2 Year Fixed Rate 1.70% Paragon Bank 2 Year Fixed Rate 1.65% United Trust Bank 2 Year Bond 1.60% Vanquis Bank 2 Year High Yield Bond 1.51% Tesco Bank 2 Year Fixed Rate Account 1.50% 3 Year Fixed Rate Accounts Provider Name Account Title Interest Rate Shawbrook Bank 3 Year Fixed Rate 1.80% Clydesdale Bank 3 Year Fixed Rate 1.75% Yorkshire Bank 3 Year Fixed Term 1.75% Vanquis Bank 3 Year High Yield Bond 1.71% Close Brothers Bank 3 Year Fixed Rate 1.70% 4 Year Fixed Rate Accounts Provider Name Account Title Interest Rate Vanquis Bank 4 Year High Yield Bond 2.00% Aldermore Bank 4 Year Fixed Rate Account 1.75% Julian Hodge Bank 4 Year Fixed Rate 1.70% Hampshire Trust Bank 4 Year Fixed Rate 1.65% Leeds Building Society 4 Year Income Bond 1.61%