Author: Charles Mills

Wealth Management and Financial Planning Adviser

Categories
ESG Investing

Is ESG Still Relevant in 2025?

ESG

Is ESG Still Relevant in 2025?

“Sustainability is no longer about doing less harm. It’s about doing more good” — Jochen Zeitz

3 min read

ESG

Is ESG Still Relevant in 2025?

“Sustainability is no longer about doing less harm. It’s about doing more good” — Jochen Zeitz

3 min read

In 2025, sustainable investing (known as “ESG” or “ESG-SRI”) is facing new challenges, from shifting regulations to political opposition.

Although sustainable investing has seen rapid growth over the past decade and remains an area of interest for many investors, its role in financial markets is shifting.

So, now we are in 2025, where does it stand today?

Changing ESG Landscape

In recent years, ESG investing has come under scrutiny.

Some argue that it has not always delivered strong financial returns, while others suggest that it has been marketed in a way that overstates its impact. Concerns about “greenwashing” have led regulators to introduce stricter rules on how ESG investments are defined and reported.

While new regulations surrounding ESG criteria aim to improve transparency, they also increase compliance costs for companies. Meeting ESG standards often requires additional reporting, operational adjustments, and sustainability initiatives, all of which often add expenses. As a result, this can often make ESG investments a more expensive option compared to ‘traditional’ (non-ESG) options. Many ESG-centric companies do indeed perform well, though it can be more challenging to do this while managing these additional costs.

Another notable discussion around ESG investing and its relevance in business practices has been whether it creates unnecessary restrictions that could limit economic growth. This is particularly relevant in the US, where recent comments from President Trump have questioned the relevance and impact of ESG policies on businesses and markets. 

With Trump’s administration set to place less emphasis on ESG initiatives, companies may adjust their approach in the coming years, potentially reducing the prioritisation of ESG considerations in corporate strategies and impacting your investment returns.

How ESG Fits into Investment Strategies

A common criticism of ESG investing is that it may not always deliver competitive returns compared to non-ESG investments, particularly for the cost. In some cases, ESG funds have greatly underperformed, whilst in other cases it has significantly outperformed.

Interestingly, as many investment funds today include a blend of assets, this often means they can have some exposure to ESG-focused companies or funds themselves. If you do not stay updated about in what your funds are investing, you may be exposed to ESG investments and not even know!

In some cases, investment funds may have their own selection criteria which excludes companies with unsustainable practices or will have a minimum percentage quota for sustainable companies. While this is far from a full commitment to ESG practices, it provides a degree of exposure while ensuring access to the entire investment universe, which can be enough for a lot of people.

Those who invest exclusively in ESG stocks may find their investment universe significantly limited, as the range of companies meeting increasingly strict ESG criteria is naturally smaller compared to the broader market.

In this sense, ESG investing is commonly finding greater relevance as part of a diversified approach rather than a full commitment, especially for investors who do not wish to be restricted in their investment choices.

Is ESG Relevant in 2025?

For some of you reading this, ESG is your whole world, whilst for others, you want the best return whether that be ESG or not.

The real answer to this question, as it always has, lies in your own personal beliefs. Consider what you are setting out to achieve with your investments.

Are you looking to have a greater positive impact on the planet, or a greater investment selection aimed at enhancing returns?

ESG remains, and is likely to remain, relevant in the broad world of investments for 2025, but there are battles ahead. Only time will tell if ESG investments can continue to evolve and adapt to the market and retain its appeal to investors.

Do Your Research

No matter your thoughts on sustainable investing, the key is to be informed.

Understanding how ESG factors influence investment performance, knowing the costs involved, and recognising whether sustainable investing has a place in your portfolio or not is part and parcel of our service at Patterson Mills.

So, send us an e-mail or pick up the phone and let’s get you on the path to greater financial success, no matter your ESG preferences.

Get in touch with us today and you can book a no-cost and no-obligation meeting introductory meeting to find out more.

E-mail to contactus@pattersonmills.ch or call +41 (0) 21 801 36 84 and we shall be pleased to assist you.

Please note that all content within this article has been prepared for information purposes only. This article does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.

Categories
Financial Planning

Tax Fundamentals: What You Need To Know

Tax Fundamentals: What You Need To Know

“Efficient tax planning transforms obligation into opportunity” — Dave Ramsey

3 min read

Tax Fundamentals: What You Need To Know

“Efficient tax planning transforms obligation into opportunity” — Dave Ramsey

3 min read

Taxes are an integral part of managing your finances, but the complexity of tax systems can often be overwhelming. Whether you are filing as an individual, managing a business, or planning your financial future, understanding the basics of taxation can help you optimise your returns and avoid costly mistakes.

In this article, we explore some key tax concepts, from taxable income and deductions to the differences between marginal and effective tax rates, as well as common pitfalls to watch out for.

What Is Taxable Income?

As the name suggests, your taxable income is the portion of your earnings subject to taxation. This typically includes wages, salaries, bonuses, investment income, and rental income. However, tax systems often allow certain exclusions, like income from specific investments or allowances for retirement contributions.

For example, you might earn 50’000 a year, but after deducting eligible expenses or allowances, only 40’000 of that might be considered taxable. This is where deductions and credits come into play, reducing your tax liability.

Deductions and Credits: What’s the Difference?

Tax deductions and tax credits are valuable tools to reduce your tax bill, but they work in different ways:

  • Deductions lower your taxable income, reducing the amount subject to tax. Examples include contributions to a retirement plan or business expenses.
  • Credits, on the other hand, directly reduce the amount of tax you owe. For instance, a 1’000 tax credit lowers your tax bill by the full 1’000, offering a greater benefit than a deduction of the same amount.

Understanding the difference can help you better strategise your tax planning to maximise savings when it comes to filing your tax returns.

Marginal vs. Effective Tax Rates

A common area of confusion is the distinction between marginal tax rate and effective tax rate.

Your marginal tax rate is the percentage of tax you pay on your next unit of income (additional income earned, such as a raise, bonus, or extra earnings), determined by the tax bracket you fall into.

Your effective tax rate, however, is the average percentage of your total income that goes to taxes. For example, if your income puts you in a 30% tax bracket (marginal rate), you might find your effective rate is only 20%, depending on deductions and lower tax brackets applied to earlier portions of your income.

Foreign Income and the Role of Tax Treaties

If you have international income or assets, it is important to understand how different countries tax foreign earnings and the role of tax treaties.

These tax treaties between countries help to avoid double taxation on your income, determining what should be taxed when earned in one country and reported in another, such as through tax credits or exemptions.

Reviewing and understanding the terms of treaties applicable to your situation is particularly important for expatriates or individuals with international assets.

Common Tax Pitfalls to Avoid

Even with the best intentions, mistakes can happen! Here are some common errors to watch for:

  • Missing Deadlines: Failing to file on time can result in penalties or interest charges. Mark key dates and deadlines in your calendar to stay compliant and up to date.
  • Overlooking Deductions: Many people fail to claim all eligible deductions, such as work-related expenses, charitable donations, or pension contributions.
  • Not Keeping Records: Maintain organised records of your income, expenses, and receipts throughout the year to simplify tax filing.
  • Ignoring Tax Law Changes: Tax regulations evolve regularly, and staying informed can help you avoid unexpected liabilities, particularly if you hold assets abroad.

Why Tax Planning Matters

Taking the time to familiarise yourself with these tax fundamentals is not simply about compliance, it is about optimisation of your broader financial situation.

A little preparation goes a long way when it comes to ensuring a smoother tax season and maximising your savings.

If you want to create a clear and effective tax strategy, or learn more about optimising your financial position, get in touch with Patterson Mills today and book your initial, no-cost and no-obligation meeting.

Send us an e-mail to contactus@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.

Please note that all content within this article has been prepared for information purposes only. This article does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.

Categories
Pensions

Your Essential Guide to the UK State Pension

UK State Pension Credit Card

Your Essential Guide to the UK State Pension

“A generous basic state pension is the least a civilised society should offer those who have worked hard and saved through their whole lives” — George Osborne

5 min read
UK State Pension Credit Card

Your Essential Guide to the UK State Pension

“A generous basic state pension is the least a civilised society should offer those who have worked hard and saved through their whole lives” — George Osborne

5 min read

Receiving the UK State Pension is an important milestone for millions of people across the UK, and even those abroad. Reaching State Pension Age (SPA) represents the age at which individuals become eligible to claim their State Pension.

A State Pension is a government-provided financial benefit designed to help people during retirement.

Understanding the state pension, how it’s changing, and its implications is crucial for anyone planning their future finances.

UK State Pension Changes on 6 April 2016

The first important point about the UK State Pension is that it changed on the 6th April 2016 to become the “New State Pension” for those who reach State Pension age from that date onwards. This includes men born on or after 6th April 1951 and women born on or after 6th April 1953.

Before the 6th April 2016, there was the “Basic State Pension” which was for those who reached the State Pension age before that date.

As you will already be receiving the Basic State Pension if you were eligible (thus hopefully already know how much you should be receiving!), we will be looking at the New State Pension in this article.

Who is Eligible?

The New State Pension is a regular payment from the UK government to people who have reached the qualifying age after 6th April 2016 and have made sufficient National Insurance contributions (NICs) over their working life.

‘Sufficient’ NICs means that you have at least 10 qualifying years of contributions, with 35 qualifying years of contributions being required for the full New State Pension.

The UK State Pension is separate from any workplace or private pensions that you may have and, as of the date of this article, is not means-tested, so everyone with enough qualifying years, and has reached State Pension Age, is eligible.

What Is the Current UK State Pension Age?

Remember, the State Pension Age is not fixed; it has been gradually rising due to increased life expectancy and demographic changes.

In addition, each year that the State Pension Age is increased is a year that the UK Government does not have to pay the State Pension. Therefore, this saves the UK Government a significant sum of money over time.

 Currently, as of the date of this article, the UK State Pension Age is:

  • 67 years for both men and women

However, if you were born before 6 April 1968, please see the below table:

UK State Pension Age for those born before 1968
 

We expect the State Pension Age to continue increasing over the next decades.

How Much Do You Receive?
The amount you receive under the New State Pension system (as of the 2023/2024 tax year) is up to £221.30 per week although this amount may increase based on annual reviews (see the “Triple Lock” below).
 
For those receiving the Basic State Pension (before 6th April 2016), the maximum is £156.20 per week, but they may also be eligible for additional pension benefits based on factors such as earnings and NICs.
What is the “Triple Lock”?

The “Triple Lock” is a system that was implemented by the Conservative-Liberal Democrat coalition Government in the UK back in 2010 that ensures the UK State Pension kept pace with the rising cost of living.

Under the triple lock system, the State Pension increases each April in line with the higher of:

  1. inflation in the September of the previous year, using Consumer Prices Index (CPI)
  2. the average increase in total wages across the UK for May to June of the previous year
  3. 2.5%

Since July 2024, Chancellor Rachel Reeves has said the Labour government will keep the triple lock until the end of the current Parliament.

Can You Claim Your State Pension Early?

In general, you cannot claim your UK State Pension before reaching the qualifying age. 

The State Pension is not flexible like some workplace or private pensions, where early access may be available (albeit perhaps with certain reductions).

However, you are not obliged to claim your State Pension pension as soon as you reach the State Pension Age. Hence, you can defer it. This may increase your weekly payments when you do decide to claim it in future.

How to Check Your State Pension Age and Forecast

The easiest way to check when you will be eligible for the New State Pension and how much you may receive is to:

Can You Still Work After Reaching State Pension Age?

You can continue to work after reaching the State Pension Age.

Your State Pension will not be affected by your earnings.

Furthermore, once you hit this age, you no longer need to pay National Insurance contributions on your income, which can make working more financially beneficial.

What Happens if You Do Not Qualify for the Full Pension?

If you do not have the full 35 years of National Insurance contributions, you might still be eligible for a partial pension. 

If you wish to try and increase your pension entitlement, you can consider making Voluntary National Insurance Contributions.

These voluntary payments can fill any gaps in qualifying years you may have, therefore increasing your state pension entitlement. However, these are not suitable for everyone and you should take professional advice from Patterson Mills prior to making this decision.

The UK State Pension and Your Retirement Planning

The UK State Pension provides a foundational level of income in retirement, but it is unlikely to be enough to maintain a comfortable lifestyle in retirement.

Hence, it is crucial to think about additional savings, like your workplace pension, private pension(s), and general savings and investments to supplement the State Pension. 

With State Pension ages around the world rising at varying intervals, it is vital to talk to Patterson Mills. Get in touch today and book your initial, no-cost and no-obligation meeting to ensure you are making the right decisions for you.

Send us an e-mail to contactus@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.

Please note that all content within this article has been prepared for information purposes only. This article does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.

Categories
Investments

FOREX Trading Explained

FOREX-FOREIGNCURRENCY-FX-TRADING

FOREX Trading Explained

“Trading is very competitive and you have to be able to handle getting your b*tt kicked” — Paul Tudor Jones

3 min read
FOREX-FOREIGNCURRENCY-FX-TRADING

FOREX Trading Explained

“Small acts, when multiplied by millions of people, can transform the world” — Howard Zinn

3 min read

Currency exchange, often referred to as Forex (Foreign Exchange), is the world’s largest financial market.

It involves the trading of currencies against one another.

Every day, over USD 6 trillion is traded in the Forex market, making it the largest and most liquid financial market in the world.

How Does Forex Work?

Forex operates on a decentralised market where currencies are traded in pairs, such as GBP/USD or EUR/JPY. This means that when you buy one currency, you are simultaneously selling another.

The most popular currencies to trade include:

  • USD (US Dollar)
  • EUR (Euro)
  • GBP (British Pound)
  • JPY (Japanese Yen)
  • AUD (Australian Dollar)

Traders in the Forex market will often buy one currency whilst selling another, hoping its value will increase compared to the other in the pair, allowing them to sell it at a profit.

Conversely, they can also sell a currency expecting its value to drop, allowing them to buy it back at a lower price.

However, Forex trading can be highly risky due to unpredictable market fluctuations, economic events, and leverage, which can amplify both gains and losses.

Benefits of Forex Trading

Forex offers several key benefits:

  1. 24/7 Trading: The market is open 24 hours a day, five days a week, allowing traders from different time zones to participate at any time.
  2. High Liquidity: Due to its significant size, the Forex market is highly liquid, meaning trades can be executed quickly at any time without much impact on prices.
  3. Leverage: Many brokers offer high leverage, enabling traders to control large sums of money with relatively small investments, potentially amplifying returns.
  4. Low Transaction Costs: Forex typically has low spreads (the difference between buy and sell prices), making it a cost-effective way to trade.
Risks of Forex Trading

Whilst Forex has its perks, as with everything there are risks:

  1. High Volatility: Currency values can fluctuate rapidly due to economic data, political events, or market sentiment. This volatility can lead to substantial losses as well as gains.
  2. Leverage Risks: While leverage can amplify profits, it also increases the potential for significant losses, sometimes beyond your initial investment.
  3. Market Manipulation: As a decentralised market, Forex can be susceptible to manipulation, especially by large institutions or banks, impacting the value of currencies unpredictably.
Why Is Forex Important?

Forex trading plays a crucial role in international trade and investments.

It facilitates the conversion of one currency to another, allowing businesses to conduct cross-border transactions, tourists to exchange money, and investors to diversify their portfolios.

It also can present an opportunity for traders to make significant profit (or losses!) as they seek to grow their wealth.

Should You Trade FOREX?

If you want to find out more about how currency exchange impacts your personal investment strategy, get in touch with Patterson Mills today and book your initial, no-cost and no-obligation meeting to ensure you are making the right decisions for you.

Send us an e-mail to contactus@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.

Please note that all content within this article has been prepared for information purposes only. This article does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.

Categories
Investments

Your Guide to Dollar Cost Averaging

Dollar Cost Averaging Guide

Your Guide to Dollar Cost Averaging

“People do dollar cost averaging because they have regret of making one big mistake” – Kenneth Fisher

3 min read
Dollar Cost Averaging Guide

Your Guide to Dollar Cost Averaging

“People do dollar cost averaging because they have regret of making one big mistake” – Kenneth Fisher

3 min read

So you have a lump sum to invest. What now? Do you invest it all at once or bit by bit?

Will inflation, interest rates and further supply chain disruption fuel market volatility this year and impact on your lump sum?

Fear and worry are understandable, but trying to second-guess the impact of events – or even attempting to make a bet on them – rarely pays off and understandably can deter some people from investing.

What is Dollar Cost Averaging?

Dollar Cost averaging (or Franc cost averaging) involves investing a fixed amount of money at regular intervals, regardless of the market’s performance.

This means that, if you have 800’000, you would invest, for example, 80’000 a month for 10-months. Yes, even if the market is falling!

What this approach ensures is that you buy more shares when prices are low and fewer shares when prices are high. The aim is to lower your average ‘cost per share’ over time and smooth your returns by reducing the risk of buying on the ‘wrong’ day.

Creating Good Habits

Investing regularly is a highly effective way to benefit from Dollar cost averaging, but also instils good habits for saving and investing.

This comes from either the manual process of investing each month, or the far easier automation of your investments via a Standing Order or instruction.

Timing The Market

Investment professionals often say that the secret of good portfolio management is a simple one – market timing.

Namely, this means buying more on the days when the market goes down, and to sell on the days when the market rises.

As an individual investor, it is likely that you may find it more difficult to make money through market timing in quite the same way.

Historically, the overall direction of developed stock markets has been a continual rise in value over the very long term, punctuated by falls.

It is important not to let current global uncertainties affect your financial planning for the years ahead.

If you do stop or pause your investment planning, particularly during market downturns when people tend to panic, you can often miss out on opportunities to invest at lower prices.

Is Dollar Cost Averaging Useful If You Have Already Invested?

Actually, yes. Even if you have you have already invested your lump sum, Dollar cost averaging can be useful for you.

Dollar cost averaging can be used by those with an established portfolio to build exposure a little at a time to certain areas, whether that be more high risk or any sectors you wish to explore further.

How to Invest Your Lump Sum

Dollar cost averaging is a great strategy, though is not suitable for everyone.

Unfortunately, there is no one-size-fits-all solution when it comes to creating your investment plans.

Fortunately, Patterson Mills is here to discuss your investment goals and formulating the most effective strategy for you.

Why wait? A successful financial future awaits! 

Get in touch with Patterson Mills today and book your initial, no-cost and no-obligation meeting to ensure you are making the right decisions for you.

Send us an e-mail to contactus@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.

Please note that all content within this article has been prepared for information purposes only. This article does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.

Past performance is not indicative of future returns.

Categories
Financial Planning

Do You Need An Emergency Fund?

Emergency Fund

Do You Need An Emergency Fund?

“An emergency fund turns a crisis into an inconvenience” – Dave Ramsey

3 min read
Emergency Fund

Do You Need An Emergency Fund?

“An emergency fund turns a crisis into an inconvenience” – Dave Ramsey

3 min read

The concept of an emergency fund is often highlighted as essential.

But what exactly is an emergency fund, and why is it so important?

Perhaps more importantly, do you actually need one?

This article answers those questions and more, so make sure to read below.

What is an Emergency Fund?

An emergency fund is a reserve of money set aside to cover unexpected expenses or financial emergencies.

This could include sudden medical bills, car (or other) repairs, or job loss.

The primary purpose of an emergency fund is to provide a financial safety net, allowing you to handle unforeseen circumstances without resorting to high-interest debt or disrupting your long-term financial plans.

Why You Need an Emergency Fund
Financial Security

Having an emergency fund provides a sense of financial security.

It acts as a buffer against life’s uncertainties, reducing the stress and anxiety that come with unexpected expenses.

With an emergency fund, you are better prepared to handle financial shocks, ensuring that your day-to-day life is less likely to be disrupted.

Avoiding Debt

One of the significant advantages of having an emergency fund is avoiding debt.

Without a financial cushion, you might be forced to rely on credit cards or loans to cover unexpected costs.

This can lead to high-interest payments and a cycle of debt that’s difficult to break.

An emergency fund helps you avoid this pitfall, keeping your financial health intact and gives you peace of mind in the process.

How Much Should You Save?
General Guidelines

The amount you should save in your emergency fund can vary based on your personal circumstances.

A common recommendation is to save three to six months’ worth of living expenses.

This amount is generally sufficient to cover most financial emergencies, giving you enough time to recover from a job loss or significant expense.

Assessing Your Needs

Consider your lifestyle, job stability, and monthly expenses when determining how much to save.

If you have a more volatile income or higher expenses, you might aim for the higher end of the recommended range.

Conversely, if your job is very secure and your expenses are lower, a smaller emergency fund may suffice.

Building Your Emergency Fund
Start Small

Building an emergency fund can seem daunting, but starting small is key.

Begin by setting aside a manageable portion of your income each month.

Even small contributions add up over time, helping you gradually build a robust financial cushion.

Automate Savings

Automating your savings can make the process easier and minimise the effort required.

Set up a direct deposit or automatic transfer to your savings account.

This ensures that a portion of your income is consistently directed towards your emergency fund without requiring constant attention.

Why You May Not Need an Emergency Fund

Despite the usual need, in certain circumstances, having a dedicated emergency fund might not be necessary.

This could include situations where you have access to robust unemployment benefits, comprehensive insurance coverage, or other financial safety nets.

Understanding these alternatives can help you determine if an emergency fund is essential for your financial plan.

You Decide

Having an emergency fund is crucial for financial stability and peace of mind.

It provides a safety net that helps you manage unexpected expenses without falling into debt.

However, by assessing your needs, you can decide whether an emergency fund is suitable for you, or not.

Whilst it can still be suitable to have an emergency fund no matter what your circumstances, get in touch with Patterson Mills today and book your initial, no-cost and no-obligation meeting to ensure you are making the right decisions for you.

Send us an e-mail to contactus@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.

Please note that all content within this article has been prepared for information purposes only. This article does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.

Categories
Investments

Investing in Rare Wines: A Unique Blend of Passion and Profit?

Rare Wine Investing

Investing in Rare Wines: A Unique Blend of Passion and Profit?

“A bottle of wine contains more philosophy than all the books in the world” – Louis Pasteur

3 min read
Rare Wine Investing

Investing in Rare Wines: A Unique Blend of Passion and Profit?

“A bottle of wine contains more philosophy than all the books in the world” – Louis Pasteur

3 min read

For those with a refined palate and an eye for quality, the world of fine wines can be an enticing investment opportunity.

Today, we will look at how you can build wealth through rare wine investments, for whom such investments may be suitable and, importantly, for whom they may not be!

If you have considered investing in rare wines, it is not often as easy as you may think. Read below to find out why.

Understanding the Wine Market

The rare wine market operates differently from traditional investment markets. It requires a deep understanding of the product you are buying (wine!), including its provenance, vintage, and quality.

The value of rare wines can appreciate over time, driven by factors such as limited supply, increasing demand, and the wine’s ageing potential. These factors can make it a stable investment over the longer-term, though there are risks with this style of investing that are not present with traditional asset classes.

Key Factors Influencing Wine Value

Several factors influence the value of rare wines, with they key factors being:

  • Vintage Quality: Exceptional vintage years produce wines with superior taste and ageing potential, thereby increasing the value.
  • Provenance: The wine’s history and authenticity significantly impact its market value. Well-documented provenance ensures the wine’s legitimacy.
  • Storage Conditions: Proper storage is one of the most crucial aspects of maintaining the wine’s quality. Wines stored in optimal conditions are more likely to appreciate in value. This means that wines stored in your cellar at home, where the long-term conditions are unverifiable, may not benefit from large value increases.

Benefits of Investing in Rare Wines

Investing in rare wines offers several advantages such as diversification, the tangibility of the asset, and a relatively stable market.

Diversification into wines can be beneficial as the asset is not correlated with the returns of traditional assets. This helps you spread (and hopefully reduce) risk.

Furthermore, unlike stocks or bonds, you would be investing in physical assets, which means you are able to enjoy them whilst they appreciate in value.

Finally, the rare wine market is relatively stable, which can be a motivator for some.

Risks and Challenges

However, investing in rare wines also comes with risks and challenges about which you need to be aware before considering this asset.

Selling rare wines can be time-consuming, and finding the right buyer may take longer than anticipated. This means that, as with Real Estate for example, you may not be able to access your funds when you need them.

In addition, knowledge is power. This means that successful wine investment requires extensive knowledge of the wine market, vintages, storage conditions, and much more. This can be a difficult barrier to entry for an individual investor as it requires a large time commitment.

As with any physical asset, you also have costs that are not present with more traditional assets. In particular, storage costs, which are necessary to preserve the wine’s quality and value.

Building Your Wine Collection

To build a valuable wine collection, the following steps are vital:

  • Research, research and… research!
    • It is inadvisable to enter this market if you are not willing and able to gain the knowledge that is required. Conduct thorough research on wine regions, vintages, and market trends.  You may want to consider talking to professionals within the sector, too.
  • Purchase from Reputable Sources
    • Buy wines from reputable auction houses, wine merchants, or directly from wineries. It can be very easy to be mis-led in this area with complex jargon, so make sure you only deal with reputable vendors.
  • Proper Storage
    • Invest in a professional wine storage facility to ensure optimal ageing conditions. As mentioned, your home cellar will not cut it!

Cheers To Your Investments

Investing in rare wines can be a rewarding venture, though there are many risks and complexities that make this asset more specialist and far less common than, for example, stocks and bonds.

However, when done correctly, it is possible to profit from what could be a unique pathway to wealth.

Before you go diving into the world of rare wines, make sure to get in touch with us today and book your initial, no-cost and no-obligation meeting.

Our team are waiting to help you decide whether rare wines is an area in which you should invest, or not.

Send us an e-mail to contactus@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.

Please note that all content within this article has been prepared for information purposes only. This article does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.

Categories
Investments

Managing Stress and Anxiety With Your Investments

Reduce Stress and Anxiety in Investing

Managing Stress and Anxiety With Your Investments

“The key to winning is poise under stress” – Paul Brown

3 min read
Reduce Stress and Anxiety in Investing

Managing Stress and Anxiety With Your Investments

“The key to winning is poise under stress” – Paul Brown

3 min read

Investing can be a rollercoaster which is frightening for many, and it is not uncommon for market fluctuations to cause stress and anxiety.

However, understanding the nature of investing can help manage these feelings to ensure your investments cause as little stress and anxiety as possible.

This article will give you the key things you need to know to maximise the enjoyment of your investing journey.

Why Can Investing Be Stressful?

Simply put, investing involves risk and uncertainty, which can be scary.
 
The fear of losing money can lead to stress and anxiety, and watching market volatility and constantly monitoring your portfolio can amplify these feelings.
 
The pressure to make the right investment decisions adds to the stress, as does the overwhelming amount of financial information available.
 
It is also possible to come across people claiming to have an ‘easy investing secret’ to make sure your money ‘only goes in one direction’ (up!) and remove the complexity issue, which can just add to the stress. Have these people really come across a secret that nobody else knows and can solve all your investing problems? The short answer is, no.
 
There are no secrets in the investing world (or at least, very few…) that could have significant impacts on your portfolio. This means that, were such easy tricks to exist, everyone would already be doing it!

The Cyclical Nature of Markets

Markets are inherently cyclical. They go through periods of growth (bull markets) and decline (bear markets). 

If you wake up one day and see your portfolio has dropped by 1%, 3%, or 5%, but then increased by 1%, 3%, or 5% the next day (or higher / lower), do not worry. Behaviour such as this is normal.

Understanding that these cycles are normal and inevitable can help reduce stress.

Over Time Markets Have Gone Up

The good news is that, historically speaking, markets have trended upwards over the longer-term.

Naturally, past performance is not indicative of future returns, but it can be re-assuring for short-term anxiety and stress.

Remember, investing is a marathon, not a sprint.

Avoid Always Checking Your Portfolio

Constantly checking your investments can lead to unnecessary stress. Short-term market fluctuations can be misleading and may prompt impulsive decisions. 

It is easy to become worried if your investments fall for one continuous week (or more), but if your time horizon is in another few years (which it hopefully is!), take time to breathe and relax.

Instead of constantly checking your investment value, set periodic reviews of your portfolio. This approach allows you to stay informed without becoming overwhelmed by daily market movements.

Accept That Your Investments Can Go Down

If you are involved in investing, you will hopefully have been told that your investments can go down.

Accepting that investments can lose value is critical. Markets will have ups and downs, and no investment is risk-free.

By understanding this, you can better prepare mentally for potential losses.

Up, Down, Left, Right, In What Direction Are Your Investments Going?

Investing can be stressful, but understanding market cycles and adopting a long-term perspective is key to managing stress and anxiety from your investments.

In addition, having a trusted Patterson Mills Financial Planner to help you navigate your investment journey can provide much needed peace of mind, especially in periods of low (or even negative) growth.

Get in touch with us today and book your initial, no-cost and no-obligation meeting. There has never been a better time to secure your financial future with Patterson Mills.

Send us an e-mail to contactus@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.

Please note that all content within this article has been prepared for information purposes only. This article does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.

Categories
Financial Planning

How To Build a Strong Investment Portfolio in 2024

Building a Strong Investment Portfolio in 2024

How To Build a Strong Investment Portfolio in 2024

“Always keep your portfolio and your risk at your own individual comfortable sleeping point” – Mario Gabelli
 
3 min read
Annuity - Annuities - Should You Have One?

How To Build a Strong Investment Portfolio in 2024

“Always keep your portfolio and your risk at your own individual comfortable sleeping point” – Mario Gabelli
 
3 min read

Building a strong investment portfolio is essential for achieving your financial goals and ensuring you have the best possible chance to attain long-term wealth. 

With 2024 having brought it’s own challenges and opportunities so far, it’s crucial to stay updated with the best practices. 

So, today we are giving you our top 10 tips to building a robust investment portfolio.

1. Avoid Market Timing

Trying to time the market can be risky and often leads to suboptimal returns. Sure, you might get lucky, but sticking to a disciplined investment approach and avoiding making drastic changes based on market ‘noise’ is typically a sound strategy.

2. Assess Your Risk Tolerance

Before investing, take time to understand your risk tolerance. There is not a one-size-fits-all solution when it comes to investing, as opting for a 100% equity index might work for your friends or people in online forums, but not be suitable for you. Investing is a personal exercise, and your decisions should be based on your profile and yours alone. Your risk tolerance is often calculated based on factors such as age, financial goals, and investment horizon.

3. Maintain a Long-Term Perspective

Investing is a long-term game. Avoid making impulsive decisions based on short-term market fluctuations or the latest news headlines. Stay focused on your long-term financial goals.

4. Diversify Your Investments

Diversification is key to managing risk. Spread your investments across different asset classes such as stocks, bonds, real estate, and commodities. This strategy helps mitigate losses in one area with gains in another.

5. Understand Tax Implications

Be aware of the tax implications of your investments. Utilise tax-efficient investment accounts, such as occupational or private pensions, to maximise your after-tax returns. Proper tax planning and taking advantage of tax-efficient strategies can enhance your investment performance.

6. Consider Global Exposure

You don’t have to limit your investments to your home country. Global exposure allows you to benefit from growth in different economies from around the world. Investing in international stocks and funds can also help with diversifying your portfolio further. Remember, there are increased risks with global exposure that, whilst not inherently an issue, it is important to make yourself aware.

7. Focus on Quality Assets

If you are looking to pick specific companies, invest in high-quality assets with strong fundamentals. Look for companies with solid balance sheets, consistent earnings growth, and competitive advantages.

8. Stay Informed

We mention this a lot, but financial education and literacy is paramount to successful financial planning. Make sure you stay up-to-date with market trends, economic news and what is going on in the world. Being informed helps you make better investment decisions.

9. Rebalance Your Portfolio

Rebalancing your portfolio involves ensuring your desired allocation is maintained on an ongoing basis. Sometimes, you may find a well-performing asset becomes a more significant percentage of your portfolio than you would like. Hence, rebalancing ensures that your portfolio remains aligned with your risk tolerance and investment objectives.

10. Regularly Review Your Goals

Life changes occur quite frequently! Things like career shifts, children, or unexpected events can impact your investment strategy and your financial goals. Therefore, it may be more important to regularly review and update your financial goals than you might think. After you have done so, you could need to adjust your portfolio to reflect these changes and stay on track to meet your objectives.

Laying A Strong Foundation

Building a strong investment portfolio will usually require more than just the above list, though now you know the basics, you can work towards financial success with ease.

For bonus tip number 11, the best thing you can do to build a strong investment portfolio in 2024 is actually to get in touch with us today and book your initial, no-cost and no-obligation meeting. Our experienced Advisers will ensure you tick off all the above-mentioned points and more.

Send us an e-mail to contactus@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.

Please note that all content within this article has been prepared for information purposes only. This article does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.

Categories
Investments

The Pros and Cons of Real Estate Investing

Pros and Cons of Real Estate Investing

The Pros and Cons of Real Estate Investing

“Now, one thing I tell everyone is learn about real estate” ― Armstrong Williams
 
3 min read
Pros and Cons of Real Estate Investing

The Pros and Cons of Real Estate Investing

“Now, one thing I tell everyone is learn about real estate” ― Armstrong Williams

3 min read

Real estate investing is a popular strategy for building wealth that involves purchasing, owning, and managing properties with the expectation of generating income or value appreciation over time.

Like any investment, it is not guaranteed to increase in value, and also has it’s own set of advantages and disadvantages.

Read below to find out what they are so you can make more informed decisions as to whether real estate investing is right for you.

Pros of Real Estate Investing:

Let’s get straight into it.

Here are some of the advantages to real estate investing:

  1. Potential for High Returns: One of the primary attractions is its potential for high returns. Historically, real estate has shown steady appreciation in value over the long term, which in turn has provided significant capital gains. There is also the possibility to receive rental income from investment properties which can generate ongoing cash flow, thus further enhancing returns.

  2. Compounding Returns with Leverage: The ability to borrow a significant percentage of an investment property’s purchase price can greatly increase total returns. For example, borrowing 75% with a real estate mortgage, secured on both the property and the rental income, would result in a 100% return on your invested capital after just a 25% increase in the property’s value (before applicable taxes).

  3. Portfolio Diversification: Being separate from stocks and bonds, your investment portfolio can enhance its diversification with real estate. This is because real estate values often move independently of other assets, thereby helping to reduce overall portfolio risk and volatility.

  4. Tax Advantages: Real estate investors often benefit from various tax incentives and deductions that can lower their overall tax liability. Expenses such as mortgage interest (excluding the UK), property taxes and insurance can often be deducted from rental income, reducing taxable income. Additionally, profits from the sale of investment properties may qualify for preferential capital gains tax treatment (excluding the UK), depending on the holding period or rules in your relevant jurisdiction.

  5. Tangible Asset: Unlike stocks or bonds, which represent ownership or debt in a company, real estate is a tangible asset that you can see, touch, and control. Owning physical properties can provide a sense of security and control that can be appealing to those seeking more direct involvement in their investments. Along the same vein, real estate investments can offer the opportunity for hands-on management and improvement, allowing you to add value and increase returns.

Cons of Real Estate Investing:

We’re not here to waste time, here are the disadvantages!

  1. Lack of Liquidity: One of the major drawbacks of real estate investing is its lack of liquidity compared to other asset classes. Unlike stocks or bonds, which can be bought and sold quickly, selling a property can be a time-consuming process that may take weeks, months, or even longer. Illiquidity can make it challenging for those wishing to access their capital quickly in times of need or take advantage of new investment opportunities.

  2. High Upfront Costs: Real estate investments typically require a significant amount of capital upfront, including down payments, closing costs, and ongoing maintenance expenses. For many, this high barrier to entry can make real estate investing inaccessible or impractical. Financing real estate investments with mortgages can also introduce additional risks, such as interest rate fluctuations and leverage.

  3. Risks From Leverage: Whilst borrowing to invest in property is often seen as a positive way of increasing returns, interest rate risks need to be managed carefully. The risk of interest costs exceeding rental income over time can be very real, especially during periods of rapidly rising interest rates. In such circumstances, exiting the investment may not be possible (see point 1 above) and so maintaining good cash reserves is vitally important.

  4. Management and Maintenance: Owning and managing investment properties can be time-consuming and labour-intensive, requiring landlords to deal with tenant issues, property maintenance, and regulatory compliance. While hiring property management companies can alleviate some of these responsibilities, it comes with additional costs that can eat into overall returns. As well as this, vacancies, property damage, and unexpected repairs can negatively impact cash flow and profitability. Maybe not very ‘passive’ income after all..!

  5. Market Risk: Real estate markets are subject to fluctuations and cycles, which can impact property values and rental demand. Economic downturns, changes in interest rates, and shifts in local market conditions can all affect the performance of real estate investments. You must carefully assess market risk and conduct thorough due diligence before committing capital to real estate to ensure you are making informed investment decisions.

Buy In or Steer Clear?

There are ways to invest in real estate without having to buy a property, such as through REITs, which can help with upfront and management costs, though the majority of the pros and cons remain the same.

It’s important to carefully weigh up these pros and cons when deciding whether real estate investing is right for you. How does it align with your overall financial goals, time horizon, risk tolerance and more?

Patterson Mills are here to help you answer these very questions (and more!) when it comes to considering real estate within your investment portfolio.

Get in touch with us today and book your initial, no-cost and no-obligation meeting.

Send us an e-mail to contactus@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.

Please note that all content within this article has been prepared for information purposes only. This article does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.

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