Everything You Need To Know
- PIPSIO – Protection, Income Protection, Pensions, Savings and Investments then Other
- Why the order is like it is. It helps us to get the foundation right, so the building on top is secure. Protection first – primarily about loss of income, which is the means by which most of us build wealth.
- The distinction between savings and investments. Saving is short-term, investing is long-term. Saving is about interest, investing is about total return. Cash is NOT an investment – we should only keep money in the bank (or Premium Bonds, cash ISAs etc) that we intend to use in the next 2- 3 years.
- What comes under Other? Some people have maxed out pensions and ISA. Have the risk appetite for EIS and VCT, or could benefit from Investment Bonds.
Everything You Need To Do
- Assess your protection needs – REGULARLY. We have a Protection calculator which will help give you a steer to how much protection you might want to consider. Asks some questions about income, outgoings, debt levels etc and provides good > better > best suggestions for levels and types of cover.
- Regularly assess balance between pensions and Savings/investments. Once emergency fund is sorted and you’ve worked out how you’re going to save for short-term things like next year’s holiday, then think about pension vs investment.
- Take advice if you fall into the Other category. If you are a very high earner and find your pension contributions tapered down, or like the idea of very tax-efficient investment vehicles even though they come with significant risks, then you should seek advice. Talk to your accountant, or get one if you don’t already – there’s often quite a bit you can do before resorting to high-risk investments.
