Having young children, I have really noticed how Halloween has become a really big deal in the UK. This past weekend my little ones were decorating the house, carving pumpkins, attending themed parties and that’s before the big ‘Trick or Treat’ onslaught on the village.

Thankfully we live in a village that really embraces the mixture of werewolves, witches, ghosts and ghouls that will be moving from door to door frightening us adults into giving up some treats.

In the spirit of Halloween below are some ‘Spooktacular’ bad decisions I have encountered in financial planning over the years:

1. Not reclaiming what is yours in respect of higher rate tax relief on pension contributions. A Citywire article in 2021 claimed that £830m of higher rate relief was unclaimed in 2017/18 alone.

This relief is generally claimed through completion of a self-assessment tax return, whilst these can be onerous to complete, it is your money so make sure you claim it!

2. Not understanding the pension withdrawal rules. Since the pension freedom rules it has been possible to entirely withdraw your (defined contribution) pension pot. Whilst this sounds great on the surface, be aware that in most cases 75% of the pension will be subject to income tax.

In addition, the pension income will also likely be taxed on a month one basis meaning the money you receive could be taxed higher than it should, and mean forms are required to reclaim the overpayment.

Understand the rules and drawdown appropriately.

3. Have a budget in place. This may sound obvious but things like the increased cost of food and energy means that not having a budget could see that surplus income disappearing without you knowing why.

By understanding your cost base and where your income goes you can better cope with changes to goods and services and know where changes or savings can be made.

4. Holding too much cash. This is a tricky one as those with invested assets will likely have seen significant drawdown in their portfolio values in 2022 and with cash rates of more than 4% available it can be attractive to be overweight in cash.

However, history will tell us that in the long run cash will provide a negative real return and whilst market volatility us uncomfortable being positioned for upside is vital for any long term plan.

5. Believing in something that sounds too good to be true. Programs like the recent Panorama show around unregulated bonds continue to highlight the issues savers have in trying to not fall foul of the latest scam

It is estimated by The Guardian that £583.2m was lost to scams in 2021, a 39% increase since 2020.

Fraudsters continue to evolve and become more sophisticated in their approach. Anything that sounds too good to be true likely is and some research should be carried out before believing the latest text message, phone call or email and certainly sharing personal details to untrusted sources is a big no.

Good quality financial planning can help to avoid scary mistakes and any of the team at WKM would be delighted to help so get in touch.

Thanks for reading.