Author: Charles Mills

Wealth Management and Financial Planning Adviser

Investments

How to Assess Investment Risk

Post author By Charles Mills
Post date 4 July 2025
No Comments on How to Assess Investment Risk

How to Assess Investment Risk

“The essence of investment management is the management of risks, not the management of returns” — Benjamin Graham

3 min read

How to Assess Investment Risk

“The essence of investment management is the management of risks, not the management of returns” — Benjamin Graham

3 min read

Investing always involves some level of risk, you know this.

Long-term success comes from understanding and managing that risk rather than trying to avoid it entirely.

Whether you are building wealth, planning for retirement, or preserving capital, assessing risk appropriately is the cornerstone of any sound investment strategy.

But, how do you do it? How do you assess risk in a way that enables you to invest appropriately to achieve your goals? You are in the right place to found out! Read on below.

Know the key types of risk

To start making progress, you first need to understand the key types of investment risk. It comes in many forms, and different types of risk affect different parts of your portfolio.

Remember, no investment is risk-free.

Recognising where these risks lie is the first step in managing them effectively.

You can read more about risk on our dedicated page: Investing and Risk.

Market (systematic) risk

Refers to the potential for broad economic factors to affect the value of your investments, such as inflation, interest rates, or geopolitical events. These are typically areas that you have no control over (with the exception being if you are in a government or policy decision making position).

Company-specific (unsystematic) risk

This arises when individual shares or bonds underperform due to issues specific to that organisation.

Currency risk

If you hold investments in foreign currencies, changes in exchange rates can impact the value of your returns. Even if the underlying asset performs well, currency movements can either amplify gains or reduce them.

Liquidity risk

This is the risk of not being able to sell an investment quickly without significantly affecting its price. Assets that are less liquid may be harder to convert into cash when needed, particularly in volatile markets. The most popular example here being a property sale that could take months or years.

Legislative risk

Changes in laws, regulations, or tax rules can impact investments. For example, a change in capital gains tax rates or pension legislation could alter the attractiveness or outcome of a particular strategy.

A well-diversified approach can help manage these risks more effectively over time.

Understand your risk tolerance and capacity for loss

Risk tolerance is your emotional comfort with the ups and downs of investing (the ‘investment rollercoaster’). It reflects how well you cope with seeing the value of your investments fluctuate (‘volatility’).

Some investors are comfortable with high levels of volatility if it means the potential for long-term growth, while others prefer more stable journeys even if the overall returns might be lower.

Capacity for loss, on the other hand, is your financial ability to absorb a downturn without it affecting your existing lifestyle. It is not about how you feel, but about for what your situation allows.

For example, how much value can your investments lose before you can no longer continue your lifestyle in its current state? Can you lose 10% and live normally? 20%? 30%? Perhaps you are you able to sell other assets to make up for the shortfall?

In simple terms, the larger loss you are able to absorb, the higher your capacity for loss (and the reverse is also true).

This means that you may not be in a position to take on significant investment risk, even if you feel emotionally confident doing so.

Risk tolerance and capacity for loss should be considered in tandem. Simply being comfortable investing in 100% equity does not necessarily mean it is appropriate if your financial circumstances cannot support the potential volatility.

Your portfolio should reflect both your mindset and your real-world limitations.

Align risk with your goals and time horizon

Investments are best tailored to your objectives. If your goal is to preserve capital for a short-term purchase, a high-growth equity strategy is unlikely to be appropriate.

Conversely, if your goal is to grow wealth over 15 to 20-years, holding too much in low-risk, low-return assets (cash for example) can be a risk in itself.

Matching the level of investment risk to your time horizon is a key part of maintaining discipline through market cycles.

Diversify across asset classes and sectors

Diversification is one of the most effective ways to manage investment risk. By spreading your assets across equities, bonds, property, and alternatives (further diversifying across regions and sectors), you can reduce the impact of poor performance in any single area.

Naturally, this is with the hope that the better performing assets increase by more than the poor performing assets decrease.

A well-diversified portfolio does not eliminate risk, but it does reduce the likelihood of significant losses from any one event or trend. If the economy is crashing and every asset class is falling, you will make losses.

Review regularly and adjust when needed

Now you have a basic understanding of the key factors at play when managing risk, you should know that it is not a “set and forget” exercise. Your financial situation, goals, and attitude towards risk are likely to change over time.

Reviewing your investment strategy periodically helps to keep your risk level consistent and remain aligned with your evolving needs, preferences and market conditions.

Luckily, such reviews are part and parcel of our service at Patterson Mills. You do not have to do it alone, get in touch with us today by 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.

Tags capacityforloss, finance, finances, financetips, financialadvice, financialadviser, financialadvisor, financialeducation, financialknowledge, financialliteracy, investing, investment, investmentrisk, Investments, personalfinance, risktolerance

Investments

The Cost of Waiting to Invest

Post author By Charles Mills
Post date 14 May 2025
No Comments on The Cost of Waiting to Invest

The Cost of Waiting to Invest

“The best time to plant a tree was 20 years ago. The next best time is today” – Chinese proverb

4 min read

The Cost of Waiting to Invest

“The best time to plant a tree was 20 years ago. The next best time is today” – Chinese proverb

4 min read

There is an old saying you have might have heard: “It is time in the market, not timing the market.” While this phrase is often repeated, its relevance remains strong as ever.

With market volatility an ever-present feature of investing, whether influenced by geopolitical events or economic headlines, it is tempting to delay investing until the ‘right moment’. Yet, what many people do not realise is that these delays can quietly erode their long-term outcomes in ways that are not always immediately visible.

This article explains why delaying making your investments may cost you more than you think, and how compounding, inflation, and market rebounds work against ‘timing the market’.

The influence of Global events

In early April 2025, markets experienced a sharp correction following a landmark US tariff announcement (‘Liberation Day’) that rattled global trade expectations. While the selloff was short-lived, with most major indices showing clear signs of recovery by month’s end, it served as a reminder of how quickly global events can shake markets. Fear and uncertainty can often lead investors to make reactive decisions, hoping to time their way around volatility.

But this event, like many before it, could have been related to almost anything, whether a geopolitical development, a central bank comment, or a natural disaster. The reasons and severity may vary, but the pattern is familiar, with short-term volatility triggering reactive behaviour, even as long-term fundamentals remain intact.

The result?

Historically, many people would delay investing, waiting for the “right time.” However, for those who remained invested, the brief dip ultimately became a small footnote in an otherwise upward trend.

The real cost of waiting

It is understandable why you may want to delay investing. Markets feel uncertain, headlines are unsettling, and it may seem safer to hold off until conditions feel more stable. But waiting, even for what feels like a justified reason, can come at a cost.

Let us consider two hypothetical investors:

Investor A invests 100’000 on 1 January 2025.

Investor B waits until 1 January 2026 to invest the same amount.

Assuming a 7% average annual return, Investor A ends up with 761’226 after 30 years. Investor B, who delayed by just one year, finishes with 711’426, a difference of nearly 50’000 due to purely waiting one year.

This gap exists not only because Investor B missed a year of growth, but because Investor A’s money had more time to compound, generating returns on top of returns year after year.

Even if the time you enter the market initially appears volatile, or it seems like a better opportunity is just around the corner, history has consistently shown that markets recover and those who stay invested through the noise tend to be rewarded.

Short-term movements often smooth out over the long-term and the cost of waiting tends to outweigh the perceived benefit of trying to time things just right.

Inflation never waits

There is another factor quietly working against those who wait to invest and that is inflation.

While your money may appear safe in a bank account or savings vehicle, it may be losing value in real terms. When the interest earned is lower than the rate of inflation, your purchasing power declines year after year.

For example, a cautious saver earning 2% interest while inflation runs at 3% is effectively losing 1% of their purchasing power annually. That erosion may not be immediately obvious, as the monetary balance of the account does not reduce, but your money will continue to buy less and less over time, diminishing its real world value.

This silent loss can be just as damaging as market volatility, especially when left unaddressed over many years. While waiting may feel like a safer option, doing so in a rising-cost environment steadily diminishes your wealth.

Market timing: A game few win

Research consistently shows that even professional investors cannot time the market with accuracy. More often than not, you miss out on the best days by being out of the market during times of volatility.

One of the greatest examples of this is with the S&P 500. If you had invested in the S&P 500 over the past 20 years but missed just the 10 best trading days, your return would have been cut by more than 50%.

It just so happens that these ‘best days’ often followed closely after market selloffs which is precisely when many investors choose to exit or delay entry.

If you do not wish to invest everything at once, you can use a staggered approach, such as dollar-cost averaging, to help manage risk and smooth your overall returns. This can be useful to manage risk through changing market conditions.

What this means for you

Timing the market is rarely effective and often costly. The most consistent outcomes come from staying invested, not from trying to predict market moves.

The cost of waiting can be easy to overlook, but between lost compounding, inflation, and missed recoveries, the long-term impact can be significant.

At Patterson Mills, we help you cut through the noise with long-term investment strategies that are built to weather market ups and downs. Rather than trying to time the market, we focus on creating a clear, structured plan tailored to your goals.

If you are not sure where to begin, get in touch with us today to learn more about how we can help.

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

Tags finance, finances, financetips, financialadvice, financialadviser, financialadvisor, financialeducation, financialknowledge, financialliteracy, investing, investment, Investments, markettiming, personalfinance, timeinthemarket, timingthemarket

Investments

The Hidden Threat to Your Investments: Currency Crises Explained

Post author By Charles Mills
Post date 31 March 2025
No Comments on The Hidden Threat to Your Investments: Currency Crises Explained

The Hidden Threat to Your Investments: Currency Crises Explained

“Money is my military, each dollar a soldier. I never send my money into battle unprepared and undefended” — Kevin O’Leary

4 min read

The Hidden Threat to Your Investments: Currency Crises Explained

“Money is my military, each dollar a soldier. I never send my money into battle unprepared and undefended” — Kevin O’Leary

4 min read

Currency crises have historically led to severe economic turmoil, eroding wealth, destabilising markets, and triggering inflationary spirals. For investors (likely such as yourself), these crises highlight the vulnerabilities of relying too heavily on a single currency or economic system.

While some markets are more resilient than others, history has shown that no currency is completely immune.

This article explains how currency crises unfold and how investors can mitigate risks in today’s interconnected global economy.

What is a currency crisis?

A currency crisis occurs when a country’s currency rapidly loses value, often due to economic instability, political uncertainty, or a loss of investor confidence.

This devaluation increases the cost of imports, fuels inflation, and can lead to severe capital outflows, often in the form of ‘capital flight’, whereby investors move their money out of the country, selling local assets and converting funds into stronger currencies.

As a result, the exchange rate deteriorates further, making it harder for the country to finance imports, service foreign debt, or maintain economic stability.

Currency crises can be highly disruptive to your investments. Market volatility increases, purchasing power declines, and governments often impose restrictions on moving money across borders.

What triggers a currency crisis?

Currency crises are often a symptom than a cause, and are a reflection of deeper economic weaknesses. They can arise from a combination of factors, including:

High levels of foreign debt
- Countries that borrow heavily in foreign currencies struggle when their local currency weakens, making repayments more expensive.
Political instability
- Uncertain leadership or sudden policy changes can lead to market uncertainty and capital flight.
Inflation and poor monetary policy
- Printing too much money or keeping interest rates too low can weaken confidence in a currency.
External shocks
- A global recession, drop in commodity prices, or financial contagion from another country can trigger a crisis.
Trade imbalances
- Persistent current account deficits, where a country imports more than it exports, can weaken its currency as demand for foreign currency exceeds demand for the local currency.

What can history teach us?

The impact of currency crises varies depending on the severity of the depreciation, government responses, and underlying economic conditions.

Several past examples highlight key risks and patterns about which you should be aware:

Turkey (2018-Present)

A combination of high external debt, political uncertainty, and unorthodox monetary policies led to a sharp decline in the Turkish lira. Inflation soared, the cost of imported goods increased significantly, and businesses with foreign-denominated debt faced rising repayment costs. Investors holding Turkish assets experienced considerable volatility, with capital outflows further weakening the economy.

Venezuela (2016-Present)

Economic mismanagement, including excessive money printing, led to hyperinflation and a significant decline in the value of the bolívar. As a result, the purchasing power of wages and savings declined rapidly, and foreign currency became the preferred medium for transactions. Those with investments tied to the local economy faced difficulty preserving value.

Argentina (2001 & 2018-Present)

Argentina has faced multiple currency crises, with sharp devaluations driven by debt defaults, inflation, and capital flight. Frequent shifts in monetary policy and currency controls have made it difficult for investors to predict stability, leading many to seek alternative stores of value outside the country.

Zimbabwe (2000s-Present)

Inflationary pressures, government policies, and economic instability resulted in severe currency depreciation. The Zimbabwean dollar was eventually abandoned in favour of foreign currencies to stabilise transactions. Those who had savings or investments in the local currency saw a significant reduction in real value over time.

These cases demonstrate that high inflation, excessive reliance on foreign debt, and investor confidence play a crucial role in determining a currency’s stability.

How do currency crises affect your investments?

When a currency collapses or experiences extreme volatility, investments tied to that currency can face serious challenges including:

Loss of purchasing power
- Inflation caused by currency depreciation reduces the real value of savings and investments. Even fixed assets like real estate can lose value in global terms.
Stock market volatility
- Domestic stock markets often suffer sharp declines as foreign investors withdraw capital and local companies struggle with rising costs.
Capital controls & restrictions
- Governments often implement measures to prevent capital outflows, making it difficult for investors to move money out of the country.

How can you protect against currency risk?

While it is impossible to predict every currency crisis, you can take steps to reduce your exposure and safeguard your wealth:

Diversify currency exposure

Holding assets in multiple currencies reduces reliance on any single economy. The Swiss franc, US dollar, British pound, and other historically stable currencies offer relative security when compared to ‘developing’ economies.

Invest in global equities

Companies operating in multiple regions generate revenue in different currencies, helping to mitigate the impact of any one local currency devaluation.

Consider currency-hedged investments

Some ETFs and investment funds offer built-in hedging to reduce the impact of exchange rate fluctuations. This can be particularly useful when dealing with currencies that are more volatile or historically less stable. However, it can come with costs and is not always a good idea.

Currency risk is an inherent part of investing, particularly during times of economic uncertainty. While these strategies can help manage exposure, the right approach will depend on individual circumstances, investment goals, and risk tolerance.

Managing currency risk in volatile markets

Currency crises can occur in any economy under financial stress, and their effects can ripple through global markets. While some currencies benefit from greater stability due to their status, no economy is entirely immune.

Managing currency risk requires careful consideration of where you invest and how you diversify. By spreading exposure across stable assets and making informed financial decisions, you can better protect your long-term wealth.

At Patterson Mills, we help clients navigate currency risks and the global world of investments with strategies unique to them. Whether you seek diversification, wealth protection, or a resilient portfolio, our team is here to assist.

If you are looking for a place to ensure your wealth is cared for, get in touch with us today to learn more about how we can service your needs.

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

Tags currency, currencyexchange, exchangerates, finance, finances, financetips, financialadvice, financialadviser, financialadvisor, financialeducation, financialknowledge, financialliteracy, fx, fxtrading, Investments, personalfinance

ESG Investing

Is ESG Still Relevant in 2025?

Post author By Charles Mills
Post date 6 February 2025
No Comments on Is ESG Still Relevant in 2025?

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

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.

Tags ESG, ESG-SRI, ESGinvesting, finance, finances, financetips, financialadvice, financialadviser, financialadvisor, financialeducation, financialknowledge, financialliteracy, investmentboost, Investments, personalfinance, portfolio, Sustainability, sustainableinvesting

Financial Planning

Tax Fundamentals: What You Need To Know

Post author By Charles Mills
Post date 9 December 2024
No Comments on 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.

Tags finance, finances, financetips, financialadvice, financialadviser, financialadvisor, financialeducation, financialknowledge, financialliteracy, personalfinance, swisstax, tax, taxadvice, taxation, taxplanning, taxservices, uktax, ustax

Pensions

Your Essential Guide to the UK State Pension

Post author By Charles Mills
Post date 7 October 2024
No Comments on Your Essential Guide to the UK State Pension

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

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:

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:

inflation in the September of the previous year, using Consumer Prices Index (CPI)
the average increase in total wages across the UK for May to June of the previous year
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 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:

Use the government’s State Pension Age calculator online by clicking here.

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.

Tags finance, finances, financetips, financialadvice, financialadviser, financialadvisor, financialeducation, financialknowledge, financialliteracy, pensions, retirement, retirementage, statepension, ukstatepension, ukstatepensionage

Investments

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 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:

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.
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.
Leverage: Many brokers offer high leverage, enabling traders to control large sums of money with relatively small investments, potentially amplifying returns.
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:

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.
Leverage Risks: While leverage can amplify profits, it also increases the potential for significant losses, sometimes beyond your initial investment.
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.

Tags finance, finances, financetips, financialadvice, financialadviser, financialadvisor, financialeducation, financialknowledge, financialliteracy, FOREX, forextrading, traders, trading, tradingexplained

Investments

Your Guide to Dollar Cost Averaging

Post author By Charles Mills
Post date 5 August 2024
No Comments on Your Guide to Dollar Cost Averaging

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

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.

Past performance is not indicative of future returns.

Tags dollarcostaveraging, finance, finances, financetips, financialadvice, financialadviser, financialadvisor, financialeducation, financialknowledge, financialliteracy, franccostaveraging, investmentsovertime, poundcostaveraging, smoothreturns, staggeredinvestments

Financial Planning

Do You Need An Emergency Fund?

Post author By Charles Mills
Post date 22 July 2024
No Comments on Do You Need An Emergency Fund?

Do You Need An Emergency Fund?

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

3 min read

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.

Tags finance, finances, financetips, financialadvice, financialadviser, financialadvisor, financialeducation, financialknowledge, financialliteracy

Investments

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

Post author By Charles Mills
Post date 1 July 2024
No Comments on Investing in Rare Wines: A Unique Blend of Passion and Profit?

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

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.

Tags buildingwealth, commodities, finance, finances, financetips, financialadvice, financialadviser, financialadvisor, financialeducation, financialknowledge, financialliteracy, financialplanning, independentfinancialadvice, investing, investmentmanagement, rare, rarewine, wealth, wine