Roy Wood, who from humble beginnings in the East End of London, started his working life with Barclays Bank rising to be a business manager. He was invited to join Jacob Rothschild to form a financial advice partnership. This became known as St James’s Place and in the last twenty five years has seen this partnership rise to be one of the leading wealth management companies in the world. In addition Roy spends five days a month in Dubai advising British ex-pats.
Roy highlighted the benefit of compound interest on any savings plan. As an example he started a pension plan for his two daughters investing the family allowance from their birth and reinvesting all the proceeds. He has calculated that provided the monthly investment keeps up with inflation then by the time they each are 55 they will both have a pot of over £500,000. The average UK retiree has a savings pot of only £30,000. Members of the police service, compulsorily save 14% of their salary, retire after thirty years with a pension of 2/3 salary which is index linked.
He went on to explain the basic rules of money advocated by business magnates Warren Buffet and Jacob Rothschild. Keep money in a bank sufficient for 6 to 9 months of expenditure. Any remaining funds should be invested, with the fear of loss managed by following two rules. Firstly, the investment pot should have 20% in each of Equities, Property, Precious Metals and Commodities, Government Gilts & Corporate Bonds and cash in Building Societies and banks. Secondly, it should be invested for a minimum of 6 years as all groups relate to each other. As one rises another reduces.
Roy outlined four big challenges in life that impact directly on finances. They are divorce, inflation, longer life but poor health and inheritance tax.
Wills should be updated and Powers of Attorney (health and wealth) drawn up. Assets should be in joint names, allowing instant access to the surviving spouse. Assets within an Investment Bond are protected both from Inheritance tax and care home costs if you survive for seven years.