Many UK consumers are understandably unsettled by today’s economic climate.

The coronavirus pandemic alone has caused major unrest, particularly across the UK jobs market. Indeed, many UK households will see their income drop as a consequence of being furloughed or, worse still, being made redundant.

However, even more pressure has been applied to consumer finances throughout August. Firstly, the Bank of England deciding to keep interest rates at a low of 0.1%. This was swiftly followed by news that the UK had formally entered into a recession; whilst not unexpected news, it has still dealt a significant blow to consumer confidence.

In such challenging times, planning for the future may seem like an impossible task – especially when it comes to one’s retirement finances. This can create a significant deal of panic amongst consumers.

The driving force of pension panic

Economic uncertainty aside, one of the main driving forces of pension panic is a lack of knowledge of one’s own pension plan. Tellingly, a recent survey of over 2,000 consumers conducted by My Pension Expert revealed that almost a third (32%) of respondents have no idea where their pension is being held or how it works.

This is particularly worrying, given the rapidly changing employment status of many Britons nearing, or at retirement age. Almost one in ten (9%) of consumers aged 40-67 have been pushed into early retirement since March 2020. Worse still, two fifths (42%) of this age group have no retirement strategy in place.

A pension knowledge gap teamed with economic uncertainty inevitably breeds financial irrationality. Thus, many consumers are left vulnerable and more likely to make damaging financial decisions.

Damaging choices

For many people approaching retirement age, there is a fear that their pension pot is not as valuable as they might have hoped. Understandably, such fear has become more common in recent months, as markets decline, and the value of pension investments fall. Consequently, we see more consumers looking to shift some or all of their pension pots to extremely risky investments in a bid to increase its value. Indeed, one in eight (12%) of adults admit to doing this according to My Pension Expert’s research.

Others react differently to the pressure and attempt to remove some of their pension pot from investments entirely to avoid the value slipping even lower; as was the case for 6% of those aged 40-67, who did so without seeking financial advice.

These actions are particularly concerning, as they suggest that consumers are at risk of unknowingly draining their pension pot. What’s more, without adequate guidance, it may be too late before they realise there is an issue.

Protecting pension funds

Vitally, consumers must not panic and withdraw cash from their pension pot. Instead, there are steps which can be taken to ensure that their pension pot maintains a healthy balance.

Firstly, consumers might consider pausing their pension withdrawals. The majority of drawdown schemes allow clients to hold a few years’ worth of cash separately from the rest of their fund. This means that in economic downturns, retirees are able to manage cash flow, whilst leaving the value of their main pension pot to stabilise as markets recover.

However, this option will not suit everyone. In which case, it would be advisable to switch from fixed cash withdrawals to fixed percentage withdrawals. Consequently, consumers will only withdraw a percentage of what remains in their pension pot, rather than taxing out a fixed amount, regardless of the pot’s value. Thus, the pension pot declines at a slower rate. Admittedly, this will mean individuals’ income will be reduced for a short period of time. However, it will aid the longevity of their savings.

Available alternatives

Consumers must also remember that they are not wedded to their existing pension provider. On the contrary, they have the freedom to explore a wide variety of retirement finance options available to them.

Annuities, for example, could offer greater security to Britons who struggle to keep up with their investment portfolio. This product can be purchased with part or all of their pension pot and provides the retiree with a fixed monthly income for the rest of their lives (or for as long as is agreed with the annuity provider). This could offer some great peace of mind in times of uncertainty.

Another viable option could be equity release; particularly for homeowners looking to unlock some extra cash from their primary property. Equity release products come in the form of lifetime mortgages, which enable homeowners to takes out a mortgage on their primary residence while still maintaining possession; or home reversions, which allow people to sell part or all of their home to a reversion provider in return for regular payments, or a lump sum.

Of course, these options will not suit every individuals’ specific needs, therein highlighting the importance of seeking independent financial advice before committing to a financial product.

The value of advice

Britons must remember that, no matter their circumstances, they do not have to wade through retirement finance complexities alone. Independent financial advisers will assess all elements of an individual’s financial situation and determine the best retirement options to suit their needs.

What’s more, consulting an FCA-regulated financial adviser ultimately safeguards consumers’ financial positions. This means that, if a consumer follows guidance from an adviser which ultimately leaves them worse off, said adviser is obligated to reinstate their original financial position. With such protections in place, consumers should feel empowered to investigate their various financial options.

In such challenging times, consumers are understandably nervous about their financial futures. But they mustn’t panic and rush into poor financial decisions. Rather, they should remain calm and seek independent financial advice. Doing so will ensure that their retirement finances remain resilient throughout economic downturns.

About the Author

Andrew Megson is the Executive Chairman of My Pension Expert, the UK’s number one Advised Retirement Income Specialist. Founded in 2010, My Pension Expert specialises in providing independent advice to UK consumers about their pension plans – it arranges millions of pounds worth of retirement income options each week.

Notes to Editors

MPE recently conducted research to investigate how consumers are managing their retirement finances in the wake of the coronavirus pandemic. The market research was carried out between 24th and 28th July 2020 among 2,003 UK adults via an online survey by independent market research agency Opinium. Opinium is a member of the Market Research Society (MRS) Company Partner Service, whose code of conduct and quality commitment it strictly adheres to. Its MRS membership means that it adheres to strict guidelines regarding all phases of research, including research design and data collection; communicating with respondents; conducting fieldwork; analysis and reporting; data storage. The data sample of 2,003 UK adults is fully nationally representative. This means the sample is weighted to ONS criteria so that the gender, age, social grade, region and city of the respondents corresponds to the UK population as a whole.

Owning and running a car can be a costly business. But for many people, it is an expense they cannot avoid. Indeed, over three quarters (78%) of motorists claim that their car is essential to sustain their current lifestyle – according to a survey of 1,460 UK car owners commissioned by KnowYourMoney.co.uk.

Despite the importance of cars to consumers’ day-to-day lives, there remains a surprisingly large knowledge gap surrounding the actual cost of running and maintaining them. In fact, while the majority (64%) of drivers realise that their car is their most expensive monthly outgoing, after rent or mortgage payments, almost the same number (65%) admit to not knowing how much they spend on their car each year.

So, the big question is: what is the true cost of car ownership?

The full costs revealed

The total cost of owning a car may come as a surprise to many consumers; on average, a UK car owner spends £284 on their vehicle every single month. For those who bought their car on finance, this figure increases to £479 when the monthly repayments are included.

Delving further into the KnowYourMoney.co.uk research, we discovered that car finance payments are the priciest monthly expense, with repayments averaging £195 per month. This is followed by fuel (£75), car insurance (£53) and maintenance, such as cleaning, replacing parts and general upkeep (£45).

So, why is it important to note all of these costs? Put simply, keeping on top of monthly outgoings will ensure that consumers do not find themselves burdened with hidden costs – and given the current economic climate, savvy management of one’s finances has never been more important.

Avoiding financial burdens

While it might seem like an obvious point, tracking car expenses will help consumers to avoid any nasty financial surprises later down the line.

Interestingly, many car owners are actually taking on additional financial burdens beyond the regular outgoings. For example, in the case of an accident, 44% of car owners said they would prefer to pay for the repairs themselves, so that their car insurance quote is not negatively affected.

What’s more, almost a fifth (19%) of UK car owners admitted to taking on debt within the past 12 months to pay for a service, repair or MOT. These figures highlight that failure to understand their car expenses and put aside an emergency fund is resulting in consumers driving themselves into an unsettling financial situation.

Following the devastating economic impact of COVID-19, many households’ finances are tighter than ever. So, it is vital consumers get to grips with their car expenditures and manage their bills more effectively. Positively, it is much easier to do this than some would assume.

Empowering savvy consumers

It’s curious that, despite the majority (61%) of car owners believing that the price of car ownership has increased significantly over the past five years, over a fifth (22%) fail to shop around to lower the price of one of the largest expenses: insurance.

It is of the utmost importance that consumers feel empowered to do so and investigate all options available to find the best deal. Consumers should make a habit of researching the market for various financial products, whether that is a car finance plan, fuel card, insurance or breakdown cover – this includes when they first purchase the vehicle and also when these policies come up for renewal. Doing so can save car owners hundreds of pounds each year.  

Many consumers – not just car owners – fail to shop around for better deals from providers due to the perceived time and effort involved. But this need not be the case.

The best place to start is often a comparison website. Indeed, they take into consideration all requirements of the car owner and search the internet to find the most suitable options. They then present all options in a clear way, enabling consumers to choose the best option to suit their needs.

In these challenging times, it has never been more important to keep track of monthly outgoings in order to balance budgets; and car maintenance should be high on the list of expenses to review. Not only will it help consumers to avoid any nasty surprises, but it will also enable them to identify where potential savings could be made.

About the Author

John Ellmore is Director for KnowYourMoney.co.uk. Know Your Money is an independent financial comparison website, launched in 2004. Run by a dedicated team, Know Your Money’s goal is to provide clear, accurate and transparent comparisons for a wide range of financial products, such as business loans, mortgages and car insurance. 

When you’ve had to cancel long planned holidays or business trips it is can be frustrating to come across leftover currency from your last trip whilst tidying up.  I know, I feel your pain! 

Perhaps you found the currency at back of a drawer. It’s clear that many people hang on to bits of currency as an estimated £4 billion of currency is sat around in the homes of UK households going to waste.

If you decide to get rid of the spare currency you have what can you actually do with it?

Let me share a sample of very different ways to get something back from that leftover foreign lolly:

GET SOME MONEY BACK

Buy-back

This is where you exchange your unused currency for sterling. Much as when you exchanged it originally, you will be offered an exchange rate. Unfortunately, many providers do not specify on their websites how much they will buy your currency back for. This means you either have to take your chances or spend time investigating, although it may be worth looking at a comparison website such as www.comparetravelcash.co.uk

Also, some providers offer a guaranteed buy back service, where they will buy back your currency sometimes at the rate you bought it. However, be aware that this can come at an extra charge and you would have had to have exchanged it with them initially. Also, there is usually a time limit on this offer, so if it’s been sat in a drawer for a while you may we be too late to take advantage of this. Maybe one to consider for next time but do check the T&Cs!

Bidwedge

Bidwedge offers a very straightforward way to exchange your currency. You simply create a free account, state the amount of currency you have, hit ‘show me the money’ and they will tell you the price they will pay for your currency. If you agree, you post your currency to Bidwedge and the agreed amount will be paid direct into your bank account. There are no additional fees, postage is free, and all transactions are insured.

Bidwedge is a community-based service and their approach means that they don’t need to trade with currency wholesalers and banks, allowing them to offer you competitive sell-back rates – even for very small amounts.

www.bidwedge.com

Sell it privately

If you have friends or family members who have, perhaps, booked for later in the year and it’s looking good for them that they will be able to get away, you could always sell your leftover cash to them and cut out the commissions for both of you. You could perhaps even have a deal to buy their spare currency when they get back for your next trip, and so on.

Donating to charity

Of course, many airlines will take spare coins on your return journey. Not much use to you now but worth considering for future trips!

For now, if you have a favourite charity, it’s worth getting in touch with them and asking if they will accept your currency and how to donate it. Otherwise, when the high street charity stores, such as Oxfam and Mind, are open you can always pop in there. Most will take foreign currency as a donation. Others, such as Retina UK, will accept donations by post.

Donate to a school

It’s well worth getting in touch with your local school and asking whether they can make use of your currency in lessons. Teachers may be able to use coins and notes in geography lessons, to stick to world maps so children can see the different currencies used. If you have any pre-Euro coins you are likely to be even more popular! For older children, they could be used when talking about exchange rates and different currencies.

Make jewellery

If you have a drill, why not make some funky, chunky jewellery with the coins?  Do you have two matching coins? Why not turn them into drops for earrings? Or a large coin could be used as a pendant on a necklace. These could make an unusual and interesting gift, while potentially saving you the cost of a birthday present. Or go the whole hog and join all your coins together in a jingly bracelet that will remind you of your holidays whenever you wear it!

In most cases, as long as you don’t attempt to pass of the jewellery as legal tender, there aren’t any rules to stop you making your coin jewellery. But it is worth checking first for the particular currency you intend to use. See: https://coinsblog.ws/2016/04/coin-jewelry-is-not-legal-everywhere.html

Make a souvenir

Instead of sitting ruing your missed holiday, why not get crafty and make a souvenir to remind you of your last foreign trip. Pinterest is flooded with ideas – even going as far as to using it as flooring – but you don’t have to be a DIY expert or talented artist to have some fun. Arm yourself with a glue gun and stick your unused coins to a photo frame, which can then hold your favourite holiday snap. Alternatively, frame the coins themselves, perhaps representing where you went; the shape of Italy in Euro cents or FLORIDA written in nickels, dimes and quarters.

It is so much better to do something with your leftover foreign cash currency than to leave it languishing. It’s doing no good to anyone stuck in a drawer.  Whatever you decide; to donate it, to have some creative crafting fun, or change it into sterling – do something with it!

ABOUT THE AUTHOR

Shon Alam is founder of Bidwedge. Bidwedge makes it easy to change your left-over cash currency back into Sterling – at great rates for even the smallest amounts. Just enter the amount, see the rate you’ll be paid, post the cash and watch the money appear in your bank account. It’s easy to do.

Website – www.bidwedge.com

Facebook – https://www.facebook.com/Bidwedgecom-109169113819592/

Twitter – @bidwedge – https://twitter.com/bidwedge

LinkedIn- https://www.linkedin.com/company/bidwedge/

The importance of maintaining good investor relations can’t be over-stated; they can be the lifeblood for so many small businesses.

Here are five key reasons why:

1. Follow-on investments as your company evolves

If somebody had enough faith to invest in your start-up, chances are they will continue to support you as you grow, and therefore fund rounds with cash injections. Avoid making your investor feel like an ATM. If you are forever turning up with a begging bowl, the chances of investors participating in follow-on rounds or investing in a follow-on company (if the first company fails) decrease to zero.

• The investment community is small

Neglect your original stakeholder and they’ll be reluctant to fund your next round.  The investment community is built on relationships and reputation.  Good investor relations (IR) is all about honest communication and it’s crucial to keep these ideals in mind to prevent you from damaging your brand and integrity.

• Your biggest champions

Investors can become your biggest champions. Many identify with the brand and its ideology; they are not just investing, they’re joining a brand they care about. If you don’t keep them informed, they will quickly start to feel as though they don’t matter to you.

• First in-line to help

A 2018 British Business Bank survey stated that 39% of angels invest in a start-up to contribute their knowledge and experience in that sector. Tony Goodwin, CEO of recruitment giant Antal International, says he only invests in recruitment start-ups, as it’s his sector and he enjoys the mentoring.  If your business struggles, don’t hide it from them; chances are, they’ll be able to help. 

• It prepares your business for exit

When the time comes to exit, potential buyers will conduct due diligence on an unprecedented scale. Providing regular updates to investors with everything about your business in one place – via an IR tool – enables you, and your investors, to be better prepared.

Here are three top tips: if you want to keep investors happy and on your side:

1. Go digital

The easiest way to look after your investors is to go digital; Envestry for Scale-ups, for example, offers everything you need to keep your investors happy, including a secure data room and a Q&A facility.  Even if you decide to go it alone, ensure that you have a dedicated IR section on your website – which can be password protected – having all the relevant information in one place shows how much you value them.

• Be upfront, honest and consistent

An investor won’t appreciate having to dig deep to uncover potentially critical information.

Fintech app Revolut, for example, has faced off accusations of fabricating data, money laundering and most recently misplacing a £70,000 money transfer.  Pity their investors, however, as they had to read about it in the press.  Had they regularly and scrupulously shared everything with them, they might find themselves facing a less uncertain future.  Quite simply, investors need regular updates. 

It’s easy to make the Shareholder’s Report – particularly if it’s not as healthy as you’d like – less of a blow if you add a personal touch: if you make t shirts, send them a t shirt.  If you’re a tech company, give them a discount – anything to keep them happy to be on your team. A small gesture can make a big difference. Ombar send chocolate with their updates – a great way to keep your investors feeling good.

Ombar demonstrating great IR

• Reach out to your investors

Good IR enables your investors to help when things are tough – the same goes for the good news: communication enables them to identify possible growth opportunities, partnerships or new business angles.  If they’ve given you money, they care and it’s your duty to keep the dialogue ongoing and mutual, so that when you need advice, an opinion, an introduction to new investors or simply to help promote a new product, you just have to ask.

Understanding the whys and ways to building a great relationship with your investors will keep them rooting for you through the good times – and the tough times.

About the Author 

Scott Haughton is COO of Envestors. Envestors is a fintech company that connects investors and scale-up companies.  With our fundraising platform Envestry for Scale-ups, companies get a personalised site to promote deals, raise finance and engage with their investors 24 hours a day, 365 days a year. 

We know first-hand Envestry delivers—we’ve raised £100m+ for over 200 companies through our own private investor network. 

Founded in 2004, Envestors is regulated by the FCA and has offices in the UK, the Channel Islands, the UAE and strategic partners across China.

Web: https://www.envestors.co.uk/

LinkedIn: https://www.linkedin.com/company/envestors-llp/

Twitter: @EnvestorsLondon

Facebook: https://www.facebook.com/pg/envestorslondon/posts/