Three truly terrifying financial mistakes to avoid this Halloween

As the spooky celebration of Halloween approaches, learn three truly terrifying financial mistakes you could make this year, and how to cleverly avoid them.

As Halloween approaches, the world turns its attention to all things spooky, sombre and uncanny.

Ghosts, ghouls and goblins might be the stuff of nightmares, but their real-life impact is yet to be documented. Some things in your everyday life, however, could keep you up at night – though you won’t find them in any horror movie.

If you have found 2022 somewhat hair-raising when it comes to your finances, you are not alone. The Office for National Statistics (ONS) reported earlier this year that 77% of UK adults felt “very or somewhat worried” about the rising cost of living.

With the Bank of England (BoE) raising the base rate seven times since December 2021, and inflation reaching a 40-year high, you might not need to visit the cinema to experience a fright this Halloween.

Fortunately, if you want to look after your finances and continue growing your wealth despite this challenging landscape, there are ways to ensure you are doing all you can.

So, here are three “terrifying” financial mistakes you can avoid this Halloween.

1. Maintaining a narrow investment portfolio

If you keep a watchful eye over your investment portfolio, you may have noticed a downturn lately.

Indeed, market volatility – a result of the war in Ukraine and post-pandemic economic contraction, among other factors – could have reduced the value of your portfolio this year, giving you more of a fright than your favourite scary film.

In this time of frequent downturns, it is important to retain a diverse portfolio. Working with your Kellands financial planner to ensure you are investing across a range of asset classes and geographical regions can help minimise risk to your portfolio when volatility occurs.

Maintaining a narrow portfolio could place your investments in a high-risk environment – one where they are exposed to potentially debilitating downturns in a rocky era for the markets.

Luckily, you don’t have to be haunted by the prospect of losing significant wealth; diversification can help manage volatility, and provide you with the peace of mind you need.

If you have concerns about your portfolio while the UK economy remains unstable, speak to your Kellands financial planner today.

2. Shelving your retirement plans during the cost of living crisis

As the cost of living crisis looms over the UK, you might be tempted to bury your head in the sand when it comes to retirement planning.

Especially if you are not yet on the runway to retirement, you could consider it a far-away issue that doesn’t deserve much of your attention.

However, at this stage in your career, you are likely to be in a crucial stage of wealth accumulation. Despite the cost of living challenges we all face this year, avoiding retirement planning while you are at the peak of your earning potential could have consequences down the line.

Indeed, in May 2022, FTAdviser reported that more than 50% of Brits were failing to put more than the minimum into their pension pot due to the rising cost of living. As inflation has steadily increased throughout the year, this number could be even higher by the end of 2022.

While it may feel necessary to reduce pension contributions and halt your retirement plans to free up disposable income this year, this could cause more detriment than you realise.

Indeed, a study from AJ Bell claims that a 30-year old worker stopping pension contributions for three years could lead to a £25,000 shortfall in retirement. This is just one example of how halting your contributions for a seemingly short time could have a knock-on effect later in life.

If you are looking closely at your retirement plans in the coming months, it could be wise to speak with your Kellands financial planner. We can help you avoid a hair-raising financial error this Halloween.

3. Avoiding estate planning until you are already ill

Like any great horror movie, the estate planning process can be emotionally taxing. So, it’s understandable that you might want to avoid it as long as you can.

The estate planning process can include:

  • Writing a will
  • Completing an “expression of wish” form with your pension provider
  • Reducing the value of your estate in order to mitigate the Inheritance Tax (IHT) you might pay
  • Protecting your wealth with life cover, critical illness cover, income protection insurance, or a combination of the above
  • Registering a Lasting Power of Attorney (LPA) document
  • Discussing your wishes with your beneficiaries.

Although it can be challenging to think about what might happen if you pass away, waiting until you are sick to write your will and put the relevant protections in place could incur further financial and emotional stress.

On the other hand, planning your loved ones’ inheritance as early as possible could be the perfect antidote to this anxiety.

By discussing how to reduce the impact of IHT on your wealth with your Kellands financial planner, and ensuring your will is up to date on a regular basis, you might achieve the peace of mind you are searching for.

Don’t wait until you get a fright – start planning today with the help of a seasoned expert.

Get in touch

If you want to avoid making scary financial mistakes this Halloween, get in touch today. Email us at hale@kelland.co.uk, or call 0161 929 8838.

Written by Madeleine Goode.

Please note

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

 

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