After the past few turbulent months, lots of people are looking for ways to feel more secure and diminish their financial vulnerability. One of the ways you can begin to increase your stability and protect your financial situation is by spreading the sources of income.
There’s a wide range of ways in which you can earn income, both within your practice and through other means. However, if you’re not financially savvy it can be difficult to know what the best approach can be, both in terms of maximising your return and having a level of risk you’re comfortable with. And, of course, simply understanding what those sources of income could be.
To delve deeper into these issues, I asked Michael Copeland, Area Manager at Wesleyan Financial Services, What’s the best way to spread my sources of net income?
Michael: ‘Dentists across the country have had to adapt to the changing work environment due to the Coronavirus outbreak.
For many, it has been a period to reflect and update their financial plans, to ensure that their money is working as hard as they do.
From investing in buy-to-let properties – taking advantage of the current low interest rates – to dealing in shares and equities, it’s important that dentists evaluate how to best spread their sources of income.
Bricks and mortar
Following the easing of lockdown measures, the current housing market is varied and buoyant. With recent government announcements to reignite activity, there are a number of opportunities open for those who are keen to move to a new home or want to add to their current portfolio.
The stamp duty holiday up until March 2021, for homes up to £500,000, presents considerable savings for dentists across every stage of the property ladder.
Although property investors and second homeowners must continue to pay a three per-cent stamp duty surcharge on purchases, they now pay nothing else on the first £500,000 of the property’s value as a result of the holiday. For an investor buying a £500,000 property, this halves the rate of duty payable from £30,000 to £15,000.
If you’re looking to buy a property, you should first carefully consider the full range of mortgage options available to identify the right solution for your current, or future, circumstances. Here, your financial consultant will be a useful source of advice.
A low interest-rate environment makes now a good time to consider re-mortgaging – a process that could help you save money by securing a better mortgage deal or help you avoid facing potentially higher costs should your current deal be coming to an end.
Savings and investments
Coronavirus has had a significant impact on dentists’ savings and investment plans.
If you don’t need to access cash tied up in your investments immediately, it’s recommended that you leave invested funds untouched, giving them a chance to recover some value when markets improve. As with any investment activity, it’s important to remember that the value could go down as well as up, and that you may get out less than you put in.
If you have additional cash available, now could be a particularly good time to look at how you can make it work harder for you through investments.
Before investing, it’s important that you consider how current market conditions align with your appetite for risk, and consider whether you can afford to commit your funds. Investing is generally carried out over periods of five years or more, and may not be for you if you anticipate needing to access invested money in the immediate future.
Speak to your financial consultant before making any decisions to help understand the right course of action for you.
NHS versus private
Many dentists have experienced difficulties meeting their NHS contractual liabilities in a COVID-19 environment. With practice closures and patients reluctant to attend routine appointments for their own health concerns, dentists are looking at investing more in private methods of income.
Cosmetic treatment and implantology services are becoming increasingly sought after in the market and are a popular method of increasing net income availability.
By splitting a practice’s income more evenly across NHS and private services, dentists can mitigate against any future troughs in regular income streams – allowing for a safety net to be placed around future financial planning.
As with any financial decision, it’s important to consider the longer-term implications that this could have for you – your financial adviser will be able to help you assess whether it’s right for your individual circumstances.’
Thanks to Michael for sharing his advice about different ways to make sure your financial eggs are not all in one basket. Spreading sources of income can not only afford you a greater level of financial protection, but this in turn can also reduce stress and give you greater peace of mind, especially at times of crisis.
Whether you choose to make changes to your business model or invest in areas outside of the profession, it’s worth seeking expert advice to make sure you’re making wise decisions that will support your future goals.
Michael Copeland is an Area Manager for Wesleyan, who offers specialist financial advice and products to dentists. Michael has 30 years of financial services advising experience and has specialised with dentists and dental professionals since 2004. He specialises in the NHS pension scheme, annual and lifetime allowance calculations and headroom checks, business financial planning including partnership and keyman protection, exit strategies and succession planning, protecting your wealth, and estate planning. Should you need any further information visit www.wesleyan.co.uk or call 0800 980 2277.
Amy Hansford has been a Regional Support Manager at Practice Plan, the UK’s leading provider of practice-branded patient membership plans, for eight years and has six years’ experience in practice.