To celebrate World Kindness Day (13 November) Moneyfarm has come up with seven kind things you can do that could secure your financial future, boost your family and friends’ wealth and help the environment.
- Be kind to your future self
Being kind to yourself means making sure you have saved up enough for retirement. The stark reality is that we don’t save enough for our retirement in Britain. According to the Financial Conduct Authority (FCA), the average pension pot in the UK is £61,897, which is very little once you start taking income from it.
Sorting out your own finances first may sound like a selfish thing to do, but by being kind to your future self in this way you’ll also be kind to others as you won’t be financially dependent on them as you reach your golden years.
If you make the right investment choices early enough, you could even retire before the UK retirement age of 66. Moneyfarm has recently highlighted that it’s possible to retire more than a decade earlier – at 55. Consult experienced investment advisors to invest your money wisely as soon as you can.
- Invest in your physical and mental health
Problems with money and health cause many people stress and anxiety. Many know that saving regularly and managing expenses are good things to do but anxiety and uncertainty prevent many people from achieving financial goals. It’s a vicious circle!
Many people become stressed by unforeseen expenses such as car repairs and, like we’ve recently seen, rising energy bills and hikes in mortgage repayments as interest rates increase and fixed rate deals come to an end.
Needing therapy may also result in unforeseen costs. In the UK, it is estimated that around 12.1% of adults receive some form of mental health care, with 10.4% using medication and 3% going to counselling. While you can get therapy treatment on the NHS, the waiting lists are long and you may find yourself in need of quicker access to counselling. Private therapy sessions can vary depending on where you live and how often you need it but individual sessions can cost between £120 and £180 for sessions that last between 50 and 60 minutes.
Ensuring you have an accessible nest egg available when unforeseen events occur will go a long way to ensuring you don’t suffer mentally (and eventually physically) when the strain of not meeting your financial obligations becomes too much or if another event occurs in your life that requires you to get counselling.
- Invest for your children
With Moneyfarm’s Junior ISA (JISA) you can start saving up to £9,000 a year on your children’s behalf. Investing in a JISA has a lot of added benefits. All returns are protected from income and capital gains tax – it’s a tax-free and very efficient way to save.
If you can save £750 a month in the JISA, this would result in a healthy nest egg worth over £280,000 when they turn 18. This is a good head start to fund university tuition fees or to put a deposit down on a house or pay for a wedding.
If you are concerned about inheritance tax, you can gift money to your children or grandchildren by investing in a JISA. This is a good way to avoid them paying tax to the government when you pass on.
Moneyfarm offers sustainable investment options to ensure that your child’s investments are also contributing to sustainability and the preservation of the environment.
To open the JISA you must be the legal guardian of the minor but relatives, such as grandparents, and friends can contribute as well.
- Be kind to your environment
It’s possible to help the environment by putting your money in the right types of savings vehicles. Investing in ESG (Environment, Social and Governance) funds allows you to use your funds for ‘good’. By investing in ESG funds you could help the environment, society and even benefit financially. This is because, in some cases, ESG investments outperform their traditional counterparts.
At Moneyfarm we believe that investors should play a role in serving society. As a result, we have added ESG portfolios into our product offering. Our portfolios are built by using ESG ETFs (Exchange Traded Funds) that have strict requirements on ESG ratings.
While it’s possible to do your own research on ESG funds, it can be a time-consuming exercise. Investing your money with Moneyfarm takes hassle out of doing it yourself, while guaranteeing effective diversification at low costs.
- Be kind to your family by sorting out your estate
It would be wrong to assume that you’ll live forever. Creating a valid will is something that many people put off. However, a will is a vital part of financial planning and ensuring that your estate gets divided up in the way you want and that your dependents get their rightful share. Getting your estate planning in place now is the best way to ensure that the government doesn’t have a say in how your assets are divided after you pass on.
- Donating to charity
Donating to charity can help the most vulnerable and can be a good way of supporting a cause that’s close to your heart. Even a small donation made regularly can make a big difference as it helps charities carry out crucial work consistently.
Giving to charities can also contribute positively to our mental health. There is some research that claims that being kind and compassionate benefits our wellbeing and happiness.
For example, scientists at the University of California in Los Angeles pointed to research showing that being kind could help us to live longer. This is because kindness can improve our mood and reduce symptoms of depression. Doing things for others is in our genetic make-up and when we do an act of kindness it makes us feel good, even if we’re feeling sad.
Another advantage to giving to charity is that you benefit from tax relief. You can claim back the tax on any donations through Gift Aid.
- Help yourself and others by encouraging them to invest and benefit from various incentives
By investing you can be kind to yourself as the money saved can help you achieve your life dreams. You can also indirectly help to educate others and even help to boost their savings.
This can be done, for example, through referral schemes like the one offered by Moneyfarm. If you refer a friend to Moneyfarm who then invests in one of our products you will benefit from a reduction on fees as the first £5,000 is managed free for the first six months. For example, say you invest £20,000 and refer a friend who also puts in £20,000 you will both only pay fees on £15,000 for the first six months. Both you and the friend you choose to refer can take advantage of the referral scheme by investing in any of our products, e.g. our stocks and shares ISA (Individual Savings Account), our JISA or our Self-Invested Personal Pension (SIPP).
A scheme like this is a great way to incentivise someone to save for their own future, a wedding, a holiday or to set up a fund for unexpected expenses like car repairs. What’s more you both get to benefit by saving on the fees you pay. So on this day, think about how you can help others. In a world where you can be anything, it’s best to be kind!
*Capital at risk. Tax treatment depends on your individual circumstances and may be subject to change in the future.