An interesting January 2025 report from Abrdn suggests culture could affect your financial decisions more than you think. Indeed, a lack of investing culture in the UK was linked to a relatively small portion of personal wealth being invested in equities when compared to other G7 nations, which could limit wealth potential.
The research looks at how your money decisions aren’t just affected by how much you have, but what country you grew up in.
For example, the study found:
So, what does the research tell us about the UK? A key finding is that individuals could be missing out on investment returns simply because investing isn’t part of our culture.
When compared to other members of the G7 – Canada, France, Germany, Italy, Japan, and the US – personal wealth in the UK has the lowest exposure to equity markets, outside of pensions, as a percentage of wealth.
In fact, only around 8% of personal wealth in the UK is held in equities. In contrast, the figure is 33% in the US.
The Abrdn research links the far higher figure in the US to a strong investing culture that dates back to the mid-20th century. A campaign called “Own Your Share of American Business” ran for almost 15 years.
The campaign encouraged the average American to take an interest in stocks and shares to support their long-term goals. It also associated investing in US businesses with patriotism as it was seen as supporting the economy. This helped ingrain a strong culture of long-term investing in the US.
By contrast, in the UK, investing campaigns have focused on single stocks and ran for only brief periods.
Interestingly, research carried out in 2018 by the Centre for Economic Policy Research (CEPR) that Abrdn cited in the report suggests that it isn’t investment risk that is holding back UK savers. Indeed, the CEPR said UK adults had an “above-average” risk tolerance to investing but this didn’t necessarily translate into holding investments.
Italians perceived investing in stocks, bonds, and funds as much riskier than UK adults. Yet, a similar number of adults in Italy and the UK are likely to hold investments.
Rather than financial risk putting off UK savers, it could be the culture that means many overlook investment opportunities.
So, if UK adults aren’t investing, what assets do they hold?
Around 15% of personal wealth is in cash
According to the Abrdn report, around 15% of the wealth held by UK adults is in cash.
While cash might seem like a “safe” option, inflation may erode the value of your money.
As the cost of goods and services rises, the value of your savings in real terms can fall over time. Let’s say you deposited £10,000 into a savings account in 2020. According to the Bank of England, to maintain your spending power in January 2025, your savings would need to have grown to more than £12,400.
If the interest rate your savings earn is less than the rate of inflation, your money could be decreasing in value in real terms.
Half of personal wealth is tied up in property
Perhaps unsurprisingly given rising property prices, around half of personal wealth in the UK is tied up in property – double the amount held in the US. As property prices have increased relatively consistently over the last few decades, it may seem like a “safe bet”.
Indeed, according to Land Registry, the average value of a UK property increased by almost £130,000 between January 2005 and January 2025. However, it isn’t guaranteed that prices will continue to rise at the same pace, and they could even fall.
One of the challenges of holding a large proportion of wealth in property is that it’s often illiquid, especially if it’s a property that you live in. If you want to access some of your property wealth it can be difficult – you might need to sell your home, take out a mortgage, or use equity release to do so.
A lack of investing culture could be holding back the wealth aspirations of UK adults.
While investment returns cannot be guaranteed, historically, markets have delivered above-inflation returns when you look at the figures over a long-term time frame. As a result, investing may deliver the opportunity to grow wealth in real terms and support long-term goals.
If the UK embraced investing to the same extent as the US, it could unlock up to £3.5 trillion for capital markets and potentially lead to greater financial security in the future for investors.
Of course, investing isn’t the right option for everyone, and it’s important to set out an investment strategy that suits your needs, circumstances, and tolerance to financial risk.
If you’d like to talk about your investment strategy and how it might help you achieve your long-term goals, please get in touch.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
How long do you leave essential tasks on your to-do list? If you’ve put off tasks because they feel overwhelming, you’re not alone, but delays could be harmful. Read on to find out how financial planning may help you overcome decision paralysis.
According to a January 2025 study from the Post Office, half of adults in the UK have delayed important tasks because they feel too overwhelmed. As well as potentially affecting your plans, procrastinating can harm your wellbeing. Indeed, 63% of survey participants said they feel “weighted down” by their to-do lists.
Commonly delayed tasks include writing a will (25%) and filling in tax returns (18%). For those under 35, managing a pension was also a common sticking point, with 87% feeling overwhelmed by the task.
For some, procrastination can be due to having too many options or worrying about making the “right” decision, leading to decision paralysis – where you know you should tackle a task but don’t know where to start or what to do next.
If it’s financial tasks you’ve been putting off, working with a financial planner could help you overcome decision paralysis.
If you have a long to-do list, one of the first challenges might be deciding where to start. Should you write your will first, or spend some time reviewing your pension options?
As your financial planner, we could help you prioritise the tasks depending on your circumstances and needs. Having a clear order could mean your list feels more manageable and give you the confidence to focus on one thing at a time, which could be more productive than trying to multitask.
Modern life often means you have a lot of options. While this can be a good thing, it may also feel overwhelming as well – how do you sift through all the different options and decide what’s right for you?
This can affect many aspects of your to-do list, including financial tasks. Perhaps you want to start investing but aren’t sure where to invest or how to create a balanced portfolio that reflects your goals. Or maybe you want to set up a trust to protect assets for your child, but you aren’t sure how to compare the different types of trust.
Working with a professional means you have someone to turn to when you have questions. It might mean your options are clearer and you feel empowered to make a decision.
With 30% of people telling the Post Office survey too much information was a barrier for them completing tasks, having someone who can simplify the details and highlight which parts might be important for you could be invaluable.
Financial decisions may be complex and could affect your long-term financial security. So, decision paralysis might occur if you’re worried about making the “right” choice.
Let’s say you’re ready to retire and access your pension. You may be concerned about withdrawing too much and running out later in life. Or you may be unsure if purchasing an annuity or taking a flexible income is right for your lifestyle.
A financial planner could help you understand the long-term effects of your decisions, so you can feel confident about the future.
This may include using cashflow modelling to visualise how your wealth might change depending on how much income you withdraw from your pension each year. You could even use it to model financial shocks to see how you might create a safety net, which may put your mind at ease and help you move forward with a decision.
43% of UK adults told the Post Office survey that they would hire a personal assistant to help them with life admin if they could.
If you want to take a hands-off approach to managing your finances, building a long-term relationship with a financial planner could be right for you. We’d take the time to understand your aspirations and how your assets might be used to support them to create a tailored plan.
With regular reviews, we can work with you to ensure your plan continues to reflect changes to your circumstances and wishes and make adjustments if necessary.
If you’d like to review your finances and how they might support long-term goals, please get in touch. We could work with you to create a tailored plan that suits your needs, offers a clear direction, and provide ongoing support should you have any questions or concerns.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate trusts or will writing.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The value of your investment (and any income from them) can go down as well as up and you may not get back the full amount you invested.
Reaching the minimum pension age and being able to access your retirement savings might mean new possibilities opening up. You may start thinking about giving up work, withdrawing a lump sum to pursue a goal, or using your pension to boost your regular income.
It’s an exciting time, but it’s also important to evaluate your decisions and consider how they could affect your long-term plans. Indeed, spending too much too soon could lead to a shortfall later in life.
Usually, you can access your pension from age 55 (rising to 57 in 2028). For many people, this milestone will come before their planned retirement date.
Yet, January 2025 research from Legal & General suggests 1 in 5 people access their pension at 55.
32% of those withdrawing from their pension at 55 said it was to cover essential expenses. However, 46% simply said they did so “because they could”.
Worryingly, 27% of UK adults aged over 50 make decisions about their pension without seeking any advice or guidance. It could mean a significant proportion of those accessing their pension as soon as possible don’t fully understand the long-term implications it could have.
If you’re thinking about withdrawing money from your pension, here are three potential risks to consider first.
Pensions are often among the largest assets people own. So, it’s not surprising that some look at the value and believe they have enough to splurge.
Yet, it’s important to consider why you’ve saved into a pension – to create financial security once you give up work.
If you start accessing your pension at 55, you could be at greater risk of facing a shortfall later in life as it’s likely to need to last several decades. Indeed, according to the Office for National Statistics, the average 55-year-old woman will live until they’re 87. For a man of the same age, life expectancy is 85.
Even if you don’t plan to take a regular income from your pension straightaway, withdrawing a lump sum can have a significant effect on the value of your retirement savings.
Your pension is normally invested with the aim of delivering long-term growth. Taking a lump sum could mean investment returns are lower than expected, which, in turn, may lead to a lower income when you retire.
That’s not to say you shouldn’t access your pension at 55, whether you want to use the money to travel or start reducing your working hours. However, understanding the potential long-term implications of doing so and how it might affect your retirement lifestyle is important.
You can usually withdraw up to 25% of your pension without facing a tax bill, either as a lump sum or spread across multiple withdrawals.
However, if you exceed the 25% tax-free portion, your pension withdrawals may become liable for Income Tax. According to the Legal & General study, around a third of those accessing their pension at 55 are withdrawing more than 25%.
The withdrawal above the tax-free amount would be added to your other sources of income when calculating your Income Tax liability. So, you might want to consider whether it would push you into a higher tax bracket and increase your overall tax bill.
It’s also worth noting that if you receive means-tested benefits, taking a lump sum or income from your pension could affect your entitlement – something a quarter of people didn’t realise.
Accessing your pension might reduce how much you can tax-efficiently contribute to your pension each tax year.
In 2024/25, the pension Annual Allowance is £60,000. This is remaining the same for tax year 2025/26. This is the amount you can personally contribute while retaining tax relief benefits. However, you can only claim tax relief on up to 100% of your annual earnings.
You can normally withdraw your tax-free lump sum from your pension without affecting the Annual Allowance, but if you take a flexible income, you might trigger the Money Purchase Annual Allowance (MPAA).
The MPAA is just £10,000 in 2024/25 and for the tax year 2025/26. As a result, it can significantly reduce how much you’re able to tax-efficiently add to your pension and it might negatively affect your retirement income.
One of the challenges of understanding whether accessing your pension sooner is the right decision for you is that you often need to consider the long-term effects.
Financial planning could help you see how accessing your pension at 55 might affect your long-term finances and review other options as part of a wider financial plan. If you withdraw some of your pension now, it could help you feel more confident, or you might decide an alternative option makes more sense for you.
If you’d like to access your pension, we’re here to help you calculate the potential long-term consequences and more. Please get in touch to arrange a meeting.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.
Those who have retired or are nearing the milestone are consistently overlooking the risk of financial shocks when compared to other generations, a survey published in PensionsAge in December 2024 suggests.
According to the report, 43% of over-50s had thought about financial shocks but not included the risks in their retirement plan. A further 32% haven’t considered risks at all.
Later in life, you might feel more financially secure than you did when you were younger, and if you no longer work, you don’t need to consider the risk of losing your job or being unable to carry out your role due to illness. So, it’s easy to see why weighing up financial shocks may become less of a priority in your later years.
However, financial shocks still have the potential to have a significant effect on your financial security and lifestyle. Read on to discover three shocks you may want to consider when you review your retirement plan.
During your working life, illness may have been a financial shock you incorporated into your financial plan as it could limit your ability to work. While an illness may not affect your income in retirement, it could still derail your finances.
For example, your outgoings could rise significantly. If you’re ill, you might need to factor in the cost of travelling to appointments and increased heating bills, or you might even choose to pay for private medical care. In some cases, a long-term diagnosis could lead to other large costs, such as needing to adapt your home or pay for a carer to provide support in your daily life.
If you haven’t budgeted for these outgoings or don’t have an emergency fund you can use, the cost of being ill could mean you deplete your pension and other assets quicker than you expect. This might leave you in a financially vulnerable position later in life.
Despite this, illness is something only 19% of over-50s considered when setting out their retirement plan. Similarly, just 17% had thought about the possibility of going into care.
The death of your partner can be difficult to think about. Indeed, it’s something only 18% of over-50s have fully planned for and almost a third have avoided the topic completely.
Yet, it may be an important part of creating long-term financial security for both you and your loved one. If one of you passed away, how would it affect the surviving partner’s finances in the short- and long-term?
For instance, if just one of you has an annuity that pays a regular income throughout retirement, this would stop when the person passes away, potentially leaving an income gap for the surviving partner. To mitigate this risk, you might select a joint annuity instead, which would continue to pay an income to the surviving partner for the rest of their life.
So, while these types of conversations can be emotional and challenging, having them and adjusting your retirement plan, if necessary, could offer peace of mind that you or your partner will be financially secure if the other passes away.
If your child, grandchild, or other loved ones faced a financial emergency, would you want to offer them support?
Many people will answer “yes” to this question. Yet, only a small proportion of over-50s have considered how they’d lend a helping hand in retirement. As part of their retirement plan, 16% of parents have included a provision in case their children need urgent financial support and 7% have thought about how they may need to support their parents.
If you haven’t thought about how you’d lend support, it could mean you’re unsure how to respond if a loved one approaches you for help. It may lead to a decision that’s not right for you and could affect your long-term finances.
For instance, if you were to withdraw a lump sum from your pension to gift to your child, you could be faced with a larger tax bill than you expect, and it might have an impact on the long-term investment returns of your pension. Instead, depending on your circumstances, depleting other assets, like savings, could be more efficient.
Making this type of financial shock part of your retirement plan could mean you’re able to feel confident in the support you provide.
While you’re weighing up how to support your loved ones, you may want to review your wider estate plan, which includes setting out how you’d like your assets to be distributed. For some, this will involve writing a will that will state how assets are to be divided when you die. You may also consider gifting during your lifetime.
If you’d like support when reviewing your estate plan, please get in touch.
While weighing up the risk of financial shocks might seem like a daunting task, it may lead to you feeling more confident about your retirement. Knowing you’ve taken steps to improve your financial security, even if something unexpected happens, could allow you to focus on enjoying the next chapter of your life.
Get in touch with our team to talk about which steps may mitigate the effect of financial shocks during your retirement.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.
The tax implications of pension withdrawals will be based on your individual circumstances.
The Financial Conduct Authority does not regulate wills, tax planning or estate planning.
Handling finances is a part of life and something that most people do, but that doesn’t mean it isn’t stressful. Indeed, many people don’t feel confident making financial decisions, and financial advice could ease their mental load.
Even when you’re relatively comfortable, managing your finances can be a cause of concern. Indeed, you might find it even more stressful as you may be considering how to reduce tax liability or how to make use of allowances to pass on wealth to your loved ones.
Worries about the future are common too. You may feel confident in your ability to handle your finances now, but what would happen if you faced a financial shock? Or how will you manage your finances when you retire, and you may no longer receive a reliable income?
Fears about the future could harm your mental wellbeing and mean you don’t enjoy the things that are important to you.
While you might think of financial planning as a way to grow your wealth, the non-financial benefits are often just as valuable. Establishing a relationship with a financial planner could reduce your mental load. Read on to find out how.
A survey published in IFA Magazine in January 2025 found more than half of over-55s – the equivalent of 10.5 million people – are worried their retirement savings won’t last their lifetime. Only 27% of those surveyed said they weren’t concerned about running out of money.
It’s not just retirement that can cause money worries either.
As a worker, you might worry about how you’d meet essential costs if you became too ill to work, or as a parent, you might want to set aside a financial safety net for your family in case the worst should happen.
As life is unpredictable, effectively managing your finances to ensure you’ll be secure in the future can be difficult. We can work with you to help you understand how the decisions you make now could affect your security in the future.
A cashflow model provides a way to visualise how your wealth will change over time.
You start by inputting the details of your assets now, and the actions you’re taking, such as how much you’re adding to your pension each month or the amount you plan to add to a Stocks and Shares ISA each year. In addition, you can estimate factors like investment returns.
With this data, a cashflow model can predict how the value of assets may change during your lifetime.
If you’re worried about your finances, a cashflow model can be particularly useful for calculating how financial shocks would affect you.
For example, you might use it to see how needing to retire five years earlier than expected due to ill health would affect your retirement income. Or, if you stopped non-essential outgoings, such as money into a savings account, because you’re unable to work, how that could affect long-term plans.
Understanding how your finances might be affected by these shocks could mean you’re able to take steps to secure your long-term finances. You might decide to take out appropriate financial protection or increase your pension contributions now to create a safety net and offer you peace of mind.
The outcomes of a cashflow model cannot be guaranteed, but it can provide a useful overview of how your finances might change and highlight potential gaps, which provides an opportunity to close them.
As a cashflow model relies on accurate information, regularly updating the data is important.
According to a February 2025 survey from Moneybox, just a third of UK adults said they feel very confident in managing their personal finances. In fact, 64% believe they’ve missed out on financial opportunities in life due to a lack of financial knowledge and low confidence.
The financial world can seem like it’s filled with jargon, acronyms, and complexities to wrap your head around. So, it’s not surprising that many people don’t feel confident making decisions.
By working with a financial planner, you have someone to turn to when you don’t understand something or aren’t sure what the right choice for you is. The reassurance of knowing someone is there for you could ease financial stress.
The cognitive and emotional effort to plan, anticipate, prepare, and organise your finances may create a mental load that you struggle to manage, even when you’re confident about financial matters.
So, you might choose to work with a financial planner in a way that allows you to take a hands-off approach, with them reviewing assets like your investments or pension on your behalf, with regular reviews.
Handing over these tasks might mean you’re able to focus on what’s most important to you, whether that’s spending time with your family, working your way up the career ladder, or pursuing a passion.
If you’d like to learn more about the benefits of financial planning and find out how we could support you, please get in touch.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The value of your investment (and any income from them) can go down as well as up and you may not get back the full amount you invested.
Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.
After reading headlines throughout February, you might be expecting a gloomy investment outlook. Yet, despite threats of trade wars and uncertainty around the world, there were market highs. Read on to find out more about some of the factors that influenced investment markets.
As investment markets are experiencing volatility, it’s perhaps unsurprising that some investors sought the “safe haven” of gold. On 10 February, the price of gold hit a record high of $2,900 (£2,288) an ounce.
While you might be tempted to follow suit and change your investment strategy, remember to focus on long-term performance. While returns cannot be guaranteed, volatility is part of investing and, historically, markets have delivered returns over long-term time frames.
The Bank of England (BoE) started the month by cutting the base interest rate from 4.75% to 4.5%, which may provide some relief to borrowers. However, higher than expected inflation could mean the Bank is less likely to make a further cut in March.
Office for National Statistics (ONS) data shows UK inflation was 3% in the 12 months to January 2025 – an increase of 0.5% when compared to a month earlier.
Additional data from the ONS was a mixed bag.
The chancellor will no doubt welcome news that the UK returned to growth in the final quarter of 2024 after the economy grew by 0.1% between October and December. However, GDP per head fell for the second quarter running and the manufacturing sector shrank for the fifth consecutive quarter.
The BoE also slashed its growth forecast. It halved its prediction made in November 2024, and now expects GDP to increase by just 0.75% in 2025.
In addition, a report from S&P suggests businesses are shedding jobs at the fastest pace in the last 15 years (excluding the pandemic). The trend was linked to higher payroll costs following increases to minimum wage and employer National Insurance contributions unveiled in the Autumn Budget.
Markets in the UK were rocky at the start of February. On 3 February, the FTSE 100 fell 1.25% when markets opened following talks of trade tariffs from the US and almost every share on the index was down.
Yet, just days later, on 6 February, the FTSE 100 hit a new closing high on the back of the BoE cutting interest rates. Then, on 10 February, the index hit another high, this time led by BP, which saw a 7% increase after activist investor Elliott Investment Management took a stake in the company.
Amid growing geopolitical tensions, on 25 February, prime minister Keir Starmer announced the government will increase defence spending to 2.5% of GDP by 2027. The news led to UK defence stocks rising, including BAE Systems, which lifted 4.2%.
Official figures from Eurostat show the eurozone narrowly avoided stagnation at the end of 2024 after posting growth of 0.1% in the final quarter. Growth varied across the bloc, both France and Germany contracted, while Spain grew 0.8%.
Figures from S&P Global’s Purchasing Managers’ Index (PMI) indicate the eurozone may have turned a corner. Indeed, the output index was above 50, which indicates growth, for the first time since August 2024. Spain was the main growth engine, but Germany, the largest economy in the bloc, posted its best monthly performance since May 2024.
Goldman Sachs warned the eurozone faced a “sizeable” hit from trade tensions.
Indeed, tariff threats are already affecting the business decisions of some companies. Beauty firm Estee Lauder announced plans to cut 7,000 jobs as it significantly expanded its restructuring programme to allow it to manage “external volatility, such as potential tariff increases globally”.
Similar to the UK, European markets opened in the red on 3 February. Germany’s Dax (-2%), France’s CAC 40 (-1.9%), Spain’s IBEX (-1.7%) and Italy’s FTSE MIB (-1.4%) were all affected by investor anxiety about the effect tariffs will have.
Again, the market didn’t experience a downturn for long.
European shares hit a record high on 12 February. The pan-European Stoxx 600 increased by 0.2% led by Amsterdam-based brewer Heineken, which saw a 12% jump after it revealed better than expected profits.
Following the US side-lining Ukraine during peace talks with Russia, investors anticipated a rise in military spending. On 17 February, more than €18 billion (£14.9 billion) was added to the value of European defensive stocks.
The headline figure for inflation was 3% in the 12 months to January 2025 after a slight increase when compared to a month earlier. The data may mean the Federal Reserve holds off cutting interest rates in the coming months.
Since taking office in January, President Donald Trump has implemented several trade tariffs and made threats to impose more. Trump has said tariffs will protect the US economy, but early signs might indicate it’s backfired.
The US trade deficit widened by around $19.5 billion (£15.3 billion) to $98.4 billion (£77.5 billion) as imports increased at the end of 2024. The jump may be driven by US companies trying to beat potential tariffs by shipping goods in larger quantities.
In contrast to initial speculation suggesting the Trump administration would boost US businesses, JP Morgan analysts said it was now leaning towards a “business unfriendly stance” due to tariffs.
Trump has also spoken about plans to cut immigration and deport those who are not authorised to live in the US. Global investment bank Goldman Sachs has warned these policies could harm economic growth. Indeed, the bank said in a baseline scenario, lowering immigration would result in losing 0.1% of GDP every quarter.
The report also noted that deportation could severely disrupt some industries. In the US, unauthorised immigrants account for around 4–5% of the workforce, but in some sectors, it is as high as 15–20%. The bank added losing these workers may lead to higher inflation.
The market volatility experienced in Europe on 3 February, affected the US too. Indeed, the Dow Jones – an index of 30 prominent companies listed on stock exchanges in the US – was down 1.26% at the start of trading. The broader S&P 500 index also fell by more than 1.6%.
After an initial post-election bounce, Elon Musk’s Tesla saw stocks tumble by 1.5% on 25 February after data showed European sales were plunging.
Markets in Asia started poorly in September as concerns about sweeping tariffs from the US weighed on exports across the region. Indeed, on 3 February, Japanese and South Korean automakers saw dips, including Honda, which fell by around 7%, and Toyota and Nissan, both of which slipped by more than 5%.
When China’s market reopened on 5 February following Lunar New Year celebrations, the CSI 300 index fell by 0.6% on opening.
The threat of tariffs is expected to affect economic performance too.
South Korean think tank Korea Development Institute now projects the country will grow by 1.6% in 2025 – 0.4 percentage points lower than it estimated in November 2024. The organisation said the lower pace of growth was due to a “deterioration of the trade environment”.
However, it wasn’t all negative.
In fact, Chinese technology stocks continued to perform well after receiving a boost in January following the launch of the AI app DeepSeek. The Hang Seng TECH index in Hong Kong was up 2.7% on 12 February and had increased by around 25% in the month to mid-February.
Among the companies that benefited from the boost was internet giant Alibaba and carmaker BYD, which boasted gains of 25% and 30% respectively for the month to mid-February.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
We’re only weeks into 2025, and it’s already been one filled with market volatility and uncertainty. At times like this, being part of a crowd might feel comforting, but following the investment decisions of others could lead to choices that aren’t right for you.
Political and economic uncertainty means investors may already have experienced the value of their investments falling this year. In fact, towards the end of January, you might have been affected by the value of US technology stocks falling sharply.
The sudden emergence of Chinese AI app DeepSeek, which rivals US AI technology at a fraction of the cost, led to some investors questioning whether the US’s dominance in the sector would continue.
According to the BBC, following the release, Nvidia, which makes chips for AI, saw share prices fall 17% on 27 January – the biggest single-day loss in US market history. The next day, the share price began to recover but remained significantly below where it had been the previous week.
It wasn’t only Nvidia that was affected either, many other US technology businesses experienced a fall in share prices. Indeed, the Nasdaq – a technology-focused US index – was down 3.5% when markets opened on 27 January.
With other investors seemingly selling off their US technology stocks, you might have been tempted to follow the crowd and do the same.
Herd instinct is a type of financial bias where people join groups to follow the actions of other people. When investing, it might mean you make similar investments to others or that you sell your investments when share prices fall. In fact, herd instinct at a large scale could lead to market crashes or create asset bubbles.
It’s easy to see why this happens. Being part of a crowd can offer a sense of comfort, especially during periods of uncertainty. In contrast, standing out from the crowd could mean you feel vulnerable or that you’re making a mistake by going against the grain.
So, following the crowd may feel like the sensible option. After all, if everyone else is doing it, it must be the right decision.
Yet, it’s not as straightforward as that. In fact, herd mentality could harm your long-term plans and wealth.
When following the lead of others, you might assume they’ve already carried out research, so you skip analysing the decision. The other investors could also be acting based on herd instinct or making a decision that’s right for them, but that doesn’t automatically mean it’s the right option for you.
While it can be difficult to not compare your investment decisions with those of others, remember, with different goals and circumstances a great investment for one investor isn’t right for another.
So, here are three useful strategies that could help you focus on following your own investment path.
1. Develop a clear investment plan
One of the key steps to reducing the effect of herd mentality on your decisions is to have a developed investment plan. By outlining your objectives, you’re in a better position to understand the types of opportunities that are right for you.
If you have confidence in your investment strategy, you’re also less likely to be tempted to make changes. For example, if you know your investments are on track to provide “enough” to reach your long-term goals, taking additional risk for a chance to secure higher returns might not be as appealing.
As a financial planner, we can help you create an investment plan that provides you with a clear direction.
2. Diversify your investments in a way that reflects your plan
One of the challenges of investing is keeping emotions in check. You’re more likely to follow the crowd when the market or your investments face a sharp fall or rise. It might mean you feel uncertain about the investments you’ve chosen, so you start to look at what others are doing.
Diversifying won’t shield you from all market movements, but it could mean you’re less exposed to volatility. By investing in different asset classes, sectors, and geographical areas, when one part of your portfolio experiences a dip, it could be balanced by gains in another. As a result, it may mean the value of your investments is less likely to experience large fluctuations and limit knee-jerk decisions.
3. Be aware of your investment risk profile
All investments involve some risk. However, the level of risk can vary significantly.
So, understanding risk could mean you’re able to confidently pass by opportunities that you know involve more risk than is appropriate for you even if it seems like everyone else is investing in it.
If you’d like to talk about how to invest in a way that aligns with your goals and circumstances, please get in touch. We can work with you to create a tailored investment strategy that may give you confidence in the steps you’re taking.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
Building a business can be exciting and rewarding, and it might play a key role in ensuring you’re financially secure now and in the future. Yet, focusing all your attention on your business could mean you miss alternative ways to provide security later in life, including overlooking a pension.
Indeed, according to a January 2024 report in This Is Money, around half of business owners aren’t regularly contributing to a pension.
Many business owners may plan to use their business to create an income once they’re ready to step away from work. You may plan to sell your business to a third party and live off the proceeds, or remain a shareholder of the firm and take a dividend income.
While your business could provide for you in retirement, it isn’t always a reliable option, and it might not be the right one for you. Read on to find out why and discover how a pension could support your long-term financial security.
Even if your business is thriving, there are some challenges you could encounter if you plan to use it to fund retirement.
The funds might not be readily accessible
While you might have enough money tied up in your business to fund retirement, it’s not always simple to access the money, especially if you plan to sell your company.
Finding the right buyer for your business can be a time-consuming and lengthy process. Delays may mean you need to push back your retirement date if you don’t have other assets you could use to create an income. This could be particularly challenging if changing circumstances, such as your health, mean you want to retire sooner than expected.
Selling your business for the “right” price isn’t guaranteed
Whether you plan to sell the business to a family member or need to find a buyer, you’ll often need to negotiate a price, and selling the firm for “enough” to support your retirement goals may not be guaranteed.
In some cases, a business owner might struggle to find a suitable buyer too. As a result, relying solely on your business could mean your retirement plans are uncertain.
So, even if you plan to use your business to support your later years, taking other steps to create a retirement income could help you feel more confident about your future.
It’s important to remember that you can’t normally access the money saved in your pension until you reach retirement age, which is 55 (rising to 57 in 2028). So, if you’re saving for short-term goals, alternative options could be better suited to your needs.
However, if you’re thinking about your long-term financial security and how to create a retirement income, a pension could be an option worth considering for these five reasons.
1. Your pension contributions could benefit from tax relief
To encourage you to save for your retirement, your pension contributions will benefit from tax relief, providing a boost to your savings.
The amount of tax relief you receive usually depends on the rate of Income Tax you pay. So, if you pay Income Tax at the basic rate and want to increase your pension by £1,000, you’d only need to add £800 as your contribution would benefit from £200 of tax relief.
To boost your pension by £1,000, the amount you need to add as a higher- or additional-rate taxpayer is £600 and £550 respectively.
Your pension scheme will often claim tax relief at the basic rate on your behalf. However, you may need to complete a self-assessment tax return to claim your full entitlement if you’re a higher- or additional-rate taxpayer.
2. Your pension contributions are often invested
Normally, the money you place in a pension is invested. This provides an opportunity for the value of your pension to rise over the long term.
As your pension contributions may remain invested for decades, the compounding effect could mean your initial contribution has significantly increased by the time you retire.
Of course, investment returns cannot be guaranteed and it’s important to weigh up what level of financial risk is appropriate for you. However, historically, financial markets have delivered returns over a long-term time frame.
3. Investments held in a pension are not liable for Capital Gains Tax
Returns from investments that you don’t hold in a tax-efficient wrapper may be liable for Capital Gains Tax (CGT).
Fortunately, investing in a pension means your returns won’t be liable for CGT. So, if you’re investing for the long term, a pension could offer a way to mitigate a potential tax bill.
4. Contributing to your pension could reduce your business’s tax bill
Employer pension contributions are often an “allowable expense”. This means your business could deduct contributions to your pension for Corporation Tax purposes, which might reduce your business’s overall tax bill.
Tax treatment varies and is subject to change. If you’d like help understanding how you could balance retirement planning with your firm’s finances, please get in touch.
5. Separate your business and personal finances
For some business owners, separating your personal finances and those of your firm could be useful.
Using a pension to save for retirement might offer you some security – even if the circumstances of the business or personal goals change, you may have a safety net to fall back on should you need to. For example, if ill health means you want to retire earlier than expected, having a pension, rather than relying solely on your business, could provide you with more freedom to choose what’s right for you.
As financial planners, we could help you build a long-term financial plan that considers your goals and circumstances, including using your business to support your aspirations. Please get in touch to arrange a meeting with one of our team.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
For many pensioners, the State Pension provides a foundation to build their retirement income. Whether you’re already claiming the State Pension or it’s still some years away, here’s what you need to know in 2025/26.
In the 2025/26 tax year, you can claim the State Pension from the age of 66. However, the age will gradually start to increase from 6 May 2026 to 67, and it’s expected to rise further in the future.
You won’t automatically receive the State Pension when you reach this age – you need to claim it. You should receive a letter a few months before you reach the State Pension Age and then you can apply online.
In some cases, you might decide to defer claiming the State Pension. For example, if you’re still in work and the State Pension income could push you into a higher tax bracket, you may delay claiming it. If you choose to do this, you’ll receive a higher income from the State Pension.
How much you could receive from the State Pension is based on your National Insurance contributions (NICs) during your working life.
To be eligible for the full new State Pension, you will usually need to have 35 qualifying years on your National Insurance (NI) record. Qualifying years may include periods where you’re working and paying NICs or you may be entitled to NI credits if you’re unemployed, ill, a parent, or a carer.
If you have between 10 and 35 qualifying years on your NI record, you’ll normally receive a portion of the new full State Pension. So, it’s important to be aware of your NI record before you reach State Pension Age so you can accurately forecast how much you’ll receive.
One of the reasons the State Pension is valuable is that it increases each tax year. As the cost of goods and services typically rises, this could help to preserve your spending power in retirement.
Under the triple lock, the State Pension increases by the highest of the following three measures:
For the 2025/26 tax year, the triple lock means pensioners who receive the full new State Pension will benefit from a 4.1% boost to their income taking it to £230.25 a week, or around £11,970 a year.
Understanding when you could claim the State Pension and how much you might receive is often important for creating a financial plan that suits your goals. You can use the government’s State Pension forecast tool, but keep in mind both the State Pension Age and how the income is calculated could change in the future.
As your NI record affects your State Pension income, you might benefit from filling in gaps if you don’t have the 35 qualifying years you need to receive the full amount.
So, if you’ve taken a career break in the past, you may benefit from checking your NI record now. The cost of buying a full NI year is usually £824 but may vary depending on the year you’re topping up and your circumstances. If you paid NI for a portion of the year you’re topping up, the cost will typically be lower.
Before you fill in any gaps, consider your long-term plans. In some cases, it won’t make financial sense to fill in the gaps. For example, if retirement is still several years away, you might eventually have enough qualifying NI years without making voluntary payments.
You only have until 5 April 2025 to voluntarily buy missing NI years between 2006 and 2016. After this date, you’ll only be able to fill in gaps from the last six tax years.
While the full State Pension might not provide enough income to retire comfortably on, even after the 2025/26 increase, it may be a useful foundation to build on.
Having a reliable income could offer peace of mind and mean you’re confident that you can pay for essential outgoings.
Many retirees will use other assets, from workplace pensions to savings and investments to supplement the income the State Pension delivers. Bringing together these different income streams in a retirement plan could help you understand how to create a sustainable income that meets your needs.
If you have questions about how to create an income in retirement to supplement your State Pension, please get in touch. We could help you manage your pension, whether you’re ready to start making withdrawals or plan to continue working for several years.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
While financial challenges often come up when those nearing retirement are asked about their concerns, emotional obstacles could be just as important. A financial plan might include looking at areas like your pensions and investments, but it could help you emotionally prepare for retirement as well.
Here are five ways a financial plan could improve your wellbeing and confidence when you retire.
One of the key concerns that weighs on those nearing retirement is a financial one. According to This is Money in January 2025, more than half of over-55s fear they’ll run out of money later in life. Just a quarter of people believe they have enough to see them through retirement.
Worrying about running out of money could mean you’re not able to fully relax and enjoy your retirement. A financial plan could help you understand how you might create a sustainable income that will last a lifetime.
So, taking control of your finances before you give up work could improve your overall wellbeing and mean you feel far more prepared emotionally for taking the next step.
A financial plan doesn’t just focus on your assets, but what you want to get out of life. A retirement plan is the perfect opportunity to consider what you’re looking forward to in retirement and address any apprehensions you might have.
You might start by setting out what your ideal week in retirement would look like – are you keen to see your family and friends more now you’re not working, or would you like to join a class to develop a hobby?
While you’re doing this, you might discover concerns as well. For example, some retirees may worry about feeling lonely if they enjoy the social aspect of work. As a result, they might ensure their retirement income provides enough disposable income to regularly go out with loved ones or try an activity that allows them to meet new people.
It’s not just the day-to-day retirement lifestyle you might be looking forward to, there might be one-off experiences or purchases that you’d like to spend some of your money on.
If you love to explore new places, you might dream about taking an extended holiday to exotic locations now you’re no longer tied to work. Or, if you’re a keen gardener, you might want to explore purchasing an extra plot of land to turn into an outdoor oasis.
Whatever your big-ticket plans, incorporating them into your financial plan could help you understand what’s possible and get you excited for the future.
Worrying about your future could dampen retirement celebrations. So, addressing these concerns and understanding how you might create a safety net could take a weight off your shoulders.
As you near retirement, you might worry about how your partner would cope financially if you passed away first, or how you’d fund care services if you needed support.
While a financial plan can’t prevent some things from happening, it could allow you to identify areas of concern and take steps to reduce the effect they could have. So, in the above cases, you might purchase a joint annuity with your pension so you know your partner would continue to receive a reliable income if you passed away and set aside some money to act as a care fund.
Managing your finances in retirement can be very different to handling your household budget when you are working. You might not receive a regular, reliable income, and, for retirees, the change can be difficult to manage or they simply want to take a hands-off approach.
Working with a financial planner means you can rely on someone else to handle your finances on your behalf and inform you if changes are needed.
It could lead to a happier retirement that allows you to focus on living the retirement lifestyle you’ve been looking forward to.
If you’re nearing retirement, get in touch to talk about what you’re looking forward to and concerns you might have. We could work with you to create a financial plan that gives you confidence and means you’re able to focus on what’s really important – enjoying the next chapter of your life.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
