2025 has already been eventful for investors. Many factors are influencing market volatility, and one cause you might have overlooked is the emotions of investors. Read on to find out why fear and anxiety might lead to the value of investments falling.
US president Donald Trump entered the White House for a second term in January. Since then, his policies have caused global uncertainty, particularly the introduction of tariffs on goods imported into the US.
Indeed, Forbes reported in April 2025 that during the first 90 days of the new administration, the S&P 500 (an index of 500 leading companies) had tumbled 15% from its peak. The Nasdaq, a technology-focused index, had fallen 20%.
It’s not just US markets that have been affected. Markets around the world have experienced volatility.
While the overall trend has been a downward one, there have been points where the market has picked up.
For example, on 10 April, Trump paused his tariffs against most nations except China. The Guardian reported markets surged following the news – the S&P 500 was up 5.6% and the Nasdaq jumped more than 8% – as investors hoped there would be a renewed focus on trade deals.
So, over the last few months, investors have experienced larger swings in the value of their investments than they might usually.
It’s easy to look at the news and think that volatility is something that happens to investors. Yet, how investors react to news drives volatility, too.
Emotional investment decisions may result in market declines
At times, investor emotions, like fear and anxiety, may play a major role in market volatility.
When investors are worried, they’re more likely to react based on emotions, even if they usually make logical decisions. Listening to the news about geopolitical tensions could spark large numbers of investors to sell their assets because they’re worried the value could fall.
If enough investors panic sell, it can lead to a downturn that creates yet more uncertainty, which, in turn, might lead to the value of assets falling even further. So, sometimes, short-term market swings are due to investor fear, rather than economic data.
It’s not just negative news that might lead to investors making knee-jerk decisions either.
If the government indicated it might make an investment in Artificial Intelligence (AI), you could see technology stocks benefit from a rise due to excitement about the potential boost, even if the investment doesn’t materialise.
Data from interactive investor highlights how announcements might prompt investors to act.
On 7 April, Trump announced so-called reciprocal tariffs on many nations. This led to market volatility and a record number of people buying and selling assets through the investment platform. In fact, trading volumes were 36% higher than the former record, which was set just a week earlier during a similar period of volatility.
While some of these investors may have made decisions based on worries about the future, others might have been excited at the prospect of being able to buy when the market is low. These decisions made by individual investors will have played a small role in the volatility the market experienced.
While investment returns cannot be guaranteed, reviewing the historical data suggests markets deliver a return over a long-term time frame. Remembering this during periods of volatility could help ease your nerves.
Here are three quick tips that might enable you to keep your emotions in check when investing.
If you have any questions about what the current market volatility means for your investments and financial plan, please get in touch. We’re here to help you tune out emotions like fear and focus on how to achieve your long-term goals.
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.
Financial protection could provide you with a cash boost when you need it most, and there’s more than one type to consider.
Last month, you read why financial protection provides a crucial safety net should you face an unexpected shock. Now, read on to find out more about some of the key options.
Your income suddenly stopping is likely to have an immediate effect on your short-term finances. In addition, it may harm your long-term plans too. For example, you might halt pension contributions or dip into a savings account you’d earmarked for another goal.
If an illness or accident means you can’t work, two types of financial protection could be valuable.
1. Income protection
Income protection would pay you a regular income if you were unable to work due to an accident or illness. The income it provides would continue until you return to work, retire, or the term ends.
So, if you can’t work, it could take a weight off your mind and allow you to focus on recovering.
Usually, income protection would pay a proportion of your usual salary, such as 60%. According to figures published in September 2024 by the Association of British Insurers (ABI), in 2023, more than £177 million was claimed through individual income protection. The average successful claimant received £22,270.
2. Critical illness cover
Critical illness cover would pay out a lump sum if you’re diagnosed with a covered critical illness. This cash injection might allow you to take an extended period off work while remaining financially secure.
The ABI figures show the average person who made a successful critical illness claim in 2023 benefited from a £68,354 lump sum.
You should note that critical illness cover will not pay out for every diagnosis. It’s important to check how comprehensive your cover would be and understand what would be excluded.
You can combine types of financial protection
As income protection and critical illness cover pay out in different circumstances, it may be beneficial to consider whether both options could be right for you.
Thinking about passing away is difficult, especially if you have dependants. Yet, taking steps to ensure their financial security could make a huge difference in their life should the worst happen.
Here are two types of protection that could improve the financial security of your family.
1. Life insurance
Life insurance would pay out a lump sum to your beneficiaries if you pass away during the term. The money can be used however your beneficiary chooses, such as reducing debt, paying school fees, or covering household bills.
However, according to a Which? report, 39% of parents don’t have life insurance. This oversight could potentially leave your family in a vulnerable position if they rely on your income.
When assessing whether life insurance could be appropriate for your family, you might want to consider how their lifestyle would change if you passed away. For example, if you’re the primary caregiver to young children, would your partner need to reduce their working hours? If so, life insurance may enable them to do so without worrying about money.
On average, ABI figures show life insurance paid out £80,403 in 2023.
2. Family income benefit
If your loved ones may struggle to manage a lump sum or they would prefer a regular income they can rely on, family income benefit might be more suited to your needs.
Rather than a one-off payment, family income benefit would pay out a regular amount for a defined period if you passed away during the term. You might choose for the income to continue for a set number of years or tie it to a milestone, such as when your youngest child turns 18.
You can take out both life insurance and family income benefit
Again, depending on your family’s circumstances, you might choose to take out both life insurance and family income benefit. This combination could provide your loved ones with an immediate cash injection and a long-term income stream.
For instance, you may choose to take out life insurance to pay off debts, such as your mortgage. Then, family income benefit could provide enough to pay for day-to-day expenses until your children reach adulthood.
As part of a wider financial plan, we could help you create a financial safety net that considers your needs and concerns. Please get in touch to arrange a meeting with our team.
Next month, discover what you might consider when calculating the level of cover you need when taking out appropriate financial protection.
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.
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.
Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.
Once again, US president Donald Trump’s trade tariffs have affected investment markets throughout April 2025 and could have far-reaching implications over the coming months.
Indeed, UN Trade and Development now predicts that global growth will slow to 2.3% in 2025, compared to 2.8% last year.
While experiencing volatility can be daunting as an investor, remember to take a long-term view. Historically, markets have recovered from periods of downturn. However, it’s important to note that investment returns cannot be guaranteed.
Since Trump took office in January, uncertainty around trade policies has affected global markets, and these announcements continued to have an effect in April.
On 2 April, markets prepared for key tariff announcements from the US, dubbed “Liberation Day” by the White House.
The speculation led to a European stock sell-off gathering pace, with pharmaceutical shares being particularly affected. The Stoxx 600 healthcare index, which is composed of European businesses in the healthcare sector, fell by around 2.5%.
On “Liberation Day”, Trump announced sweeping two-tier tariffs. A baseline 10% tariff was applied universally to imports from all countries (except Mexico and Canada) and then additional country-specific “reciprocal” tariffs were also applied.
As a result, on 3 April, markets around the world plummeted when they opened – from Tokyo’s Nikkei (-3.4%) to London’s FTSE 100 (-1.4%). In fact, Wall Street recorded its worst day since 2020 as the S&P 500, which tracks 500 leading companies in the US, closed 4.9% lower.
On 4 April, Beijing retaliated and announced 34% tariffs on the US.
As the market continued to fall, it didn’t stop there, with both the US and China increasing their tariffs several times. By 11 April, China’s tariff had reached 125% and the US’s was 145%.
Amid this tit-for-tat trade war, Trump announced a 90-day pause on reciprocal tariffs for most countries, which led to markets rallying.
Despite the uncertainty experienced throughout April, the market began to settle towards the end of the month. On 24 April, the FTSE 100 closed 0.65% higher than it opened and was back to the level it was on 3 April before the tariff volatility. It was a similarly positive day for the main indices in Germany and France.
Headline data was mixed for the UK in April.
Figures from the Office for National Statistics show the economy unexpectedly grew by 0.5% in February. While this will certainly be welcome news for chancellor Rachel Reeves, experts predict a downturn in March due to the tariffs.
Inflation also fell in line with expectations to 2.6% in the 12 months to March 2025, compared to 2.8% a month earlier. The Bank of England hinted it could cut the base interest rate at the next Monetary Policy Committee meeting, and did so in May 2025.
However, readings from S&P Global’s Purchasing Managers Index (PMI), which provides an insight into the health of businesses, aren’t optimistic.
The PMI indicated manufacturing production fell at a faster pace in March as new orders declined at the sharpest rate in 19 months.
In addition, the private sector went into decline for the first time since October 2023 due to exports falling at the fastest pace in almost five years.
Eurostat data shows inflation was down across the eurozone to 2.2% in the 12 months to March. There was a significant variance between countries, from France (0.9%) to Romania (5.1%).
The figures paved the way for the European Central Bank to make its seventh cut to interest rates in the last 12 months. The main interest rate fell from 2.5% to 2.25%.
PMI data was more positive for the eurozone than the UK.
Factory output increased for the third consecutive month and crossed the threshold that indicates growth for the first time in two years. This boost is linked to orders rising as businesses tried to beat incoming tariffs.
Perhaps unsurprisingly given market volatility, a survey from the ZEW Economic Research Institute found German investor morale plunged to the lowest level since the start of the war in Ukraine. The president of the institute pointed to the “erratic change in US trade policy” as a reason.
There could be difficult months ahead for the US. The International Monetary Fund increased the probability of a US recession occurring in 2025 from 25% to 37%.
Tariffs affected more than the markets too. Uncertainty around trade policy led to factory production stalling, according to S&P Global’s PMI. However, at 50.2, the reading remained just above the 50 mark that indicates growth.
Similarly, the PMI showed US business activity fell to a 16-month low.
Some of the largest businesses in the US have suffered a setback due to the tariffs.
On 3 April, Apple shares were down by 9%, wiping $300 billion (£225 billion) from the company’s value. The business relies on imports from Asia and is likely to face higher costs as a result.
Tesla’s quarterly sales also indicated challenges as they slumped 13% in the first three months of the year. The fall was linked to strong competition from rivals and owner Elon Musk’s involvement with Trump’s presidential campaign.
Exports from China climbed by 12.4% year-on-year in March – a five-month high. The jump was caused by factories rushing to get shipments out before tariffs took effect.
There was a blow to China when Fitch downgraded its credit rating from A+ to A. The organisation said the decision was made before tariffs were considered and is due to China’s rising debt and deteriorating public finances.
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.
Financial planning is all about helping you to reach your life goals. Ultimately, the objective is for your wealth to allow you to achieve all the things you want to do now and in the future.
That might be as simple as being able to relax and enjoy a comfortable retirement or helping your children through education or onto the property ladder. Alternatively, you may want to start a business, retire abroad, or leave a legacy to causes you care about.
When making a financial plan, you could be looking several decades ahead. During that time, a variety of unknowns could crop up, altering your ability to meet your goals.
Unfortunately, there’s no such thing as a crystal ball. However, when it comes to your finances, cashflow planning could help you visualise how your wealth may fluctuate as you progress through life, and reveal answers to a variety of “what if” questions.
Find out more in this insightful guide, which covers:
Download your copy here: ‘How financial planning could help you answer essential “what if?” questions’ to find out how cashflow planning could help you answer questions, ease worries, and give you confidence in the future.
Please get in touch if you’d like to speak to one of our team about how we could work with you.
Please note: This guide is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate cashflow planning.
This guest blog was written by Chris Budd who wrote the original Financial Wellbeing Book, and also the Four Cornerstones of Financial Wellbeing. He founded the Institute for Financial Wellbeing and has written more than 100 episodes of the Financial Wellbeing Podcast.
Our approach to money can be a great enabler of wellbeing. It can help us to spend our time doing the things we want to do. However, it can also act as a barrier.
Money should be our servant, but it often acts as our master. Understanding this aspect of our relationship with money, and where it acts against our wellbeing, can allow us to create a financial plan that will help us to be happier, not just wealthier.
There has been a lot of research over the centuries – and religious and philosophical teaching over millennia – about the sources of wellbeing in life. Financial wellbeing is firstly about understanding some of what has been learnt over the centuries. It is then about applying those principles to our own lives, a process we might call “know thyself”.
In this piece, we will look at some of what we have learnt about how money can sometimes get in the way of our wellbeing.
The comparison theory of happiness suggests that if you compare yourself with your peers, then this will either make you happy or unhappy, depending on whether you are better or worse off than them.
This can have a significant impact on our self-regard. Research shows that comparing ourselves with someone worse off can increase self-regard. It also helps to appreciate what we do have as we see people less fortunate than ourselves.
However, comparing ourselves with someone wealthier than us reduces our self-regard. It can also drive spending that doesn’t add to our wellbeing, and slows down progress towards achieving our financial goals.
Society encourages us to compare upwards. We tend to present the very best of ourselves on social media, for example. When we compare upwards, we are often comparing ourselves with people who appear to be happier and more successful than perhaps they really are.
Your definition of success may be a significant factor in your wellbeing. We are surrounded by images of success, and they invariably involve money and fame.
To see success in such terms is not conducive to wellbeing. A materialistic, or extrinsic, purpose, such as owning expensive things, relies on the approval of others. Achieving such a goal will only bring wellbeing as long as it is being noticed.
If you have a purpose or objective that is meaningful to you – known as an “intrinsic purpose” – then achieving this will give fulfilment and wellbeing.
“Know thyself” is about understanding what makes you happy, and what success means for you. Having clarity over your future, and a financial plan to get you there, will make a significant contribution to your wellbeing.
We all have our own view of money. Think of the many phrases about money:
Many of these phrases contradict each other. What phrases come into your mind when you think about money? For example, is it: “I’m not very good with money”.
It is worth taking some time to understand your own money stories, and asking yourself whether they are leading to you making good decisions. Perhaps discuss this with your financial adviser.
As we travel down life’s stony road, it can be hard enough just concentrating on the day-to-day. Taking a step back to “know thyself” is often a luxury many of us cannot afford.
This is why the role of a financial adviser is so important. It gives us time and space to think about what a happy future might look like – and then to create a financial plan for how to get there.
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.
An incoming change to the way pensions will be taxed when they’re inherited might mean you’re rethinking how you use your pension. Before you dive into updating your retirement plan, it’s important to understand what the changes could mean for you and how to balance passing on wealth with your retirement aspirations.
During the Autumn Budget in October 2024, chancellor Rachel Reeves announced that from April 2027 unspent pensions are likely to be included in Inheritance Tax (IHT) calculations. The government predicts the move will affect around 8% of estates each year.
In 2025/26, if the value of your entire estate is below £325,000, no IHT will be due. This is known as the “nil-rate band”. In addition, if you leave your main home to direct descendants, you may also benefit from the residence nil-rate band, which is £175,000 in 2025/26. Both thresholds are frozen until April 2030.
Your estate covers all your assets, such as property, savings, and material items. Currently, pensions fall outside of your estate, but you may want to consider how the value might change once pensions are included ahead of the new rule in 2027. Reviewing your retirement and estate plan could help you identify ways to improve long-term tax efficiency.
According to a February 2025 survey from interactive investor, 54% of UK adults are already planning to adjust their retirement or estate plan in response to IHT changes.
If the inclusion of your pension in your estate could increase the amount of IHT due, you might decide to update your retirement plan. Here are three options you could consider.
1. Spend more in retirement
The IHT changes could provide an excellent opportunity to update your retirement plan and consider what’s possible. Spending more of your pension during your life may bring the value of your estate under IHT thresholds or reduce a potential bill.
In the interactive investor survey, 19% of respondents said they plan to withdraw more money from their pension and gifting it (more on this later). What’s more, 6% are thinking about retiring earlier than previously planned.
So, if you want to deplete your pension during your lifetime, rather than leaving it as an inheritance, what would you do? You might start to think about a once-in-a-lifetime trip or how an income boost could allow you to do more of the things you enjoy, whether that’s visiting the theatre, supporting good causes, or keeping active.
Of course, spending more often needs to be balanced with long-term sustainability. A financial plan could help you understand if increasing pension withdrawals in retirement may lead to you running out of money later in life.
One thing to keep in mind is how increasing pension withdrawals could increase your Income Tax liability in retirement.
Your pension withdrawals will be added to other sources of income when calculating your Income Tax bill. As a result, taking a higher income from your pension could unexpectedly push you into a higher tax bracket.
2. Use your pension to gift wealth to your loved ones
If you’d previously planned to leave your pension to loved ones as an inheritance, gifting during your lifetime could provide a solution. You might withdraw a regular income or a lump sum to pass on to your beneficiaries.
A gift during your lifetime could be more beneficial to your loved ones than an inheritance later in life. It may allow them to purchase their first home, get married, pay education fees, or simply improve their day-to-day finances.
When gifting wealth, you may need to consider the “seven-year rule”. If you pass on assets and die within seven years of the gift being given, the asset could be included in your estate for IHT purposes. So, gifting during your early years of retirement could make sense if your goal is to reduce a potential IHT bill.
Again, keep in mind that withdrawing lump sums from your pension might increase your Income Tax liability and that gifting could affect your long-term financial security.
3. Reduce your pension contributions
8% of participants in the interactive investor survey suggested they planned to cut pension contributions due to the IHT changes.
For some people, this might be the right decision. For example, if you’ve already built up enough pension wealth to support yourself throughout retirement and you’d like to divert your money to other assets you could pass on tax-efficiently. However, it’s important to carefully assess your options to prevent knee-jerk decisions.
While your unspent retirement savings could become liable for IHT when you pass away, pensions are often tax-efficient in other ways. For instance:
So, while your pension’s value may affect your estate’s IHT liability, maintaining, or even increasing, pension contributions could be tax-efficient when you look at them in the context of your wider financial plan.
If the incoming changes mean you’re unsure how to manage your pension or pass on wealth to loved ones, please get in touch. We can work with you to create or adjust a tailored financial plan that considers your circumstances and goals as well as regulation.
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.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
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.
The Financial Conduct Authority does not regulate estate planning or Inheritance Tax
When people think about financial wellbeing, they often link it to frugality or building wealth. Yet, an effective financial plan isn’t always about that, sometimes, it might make sense to spend more.
It can be difficult to get your head around. After all, as a child, you’re often taught that being sensible with money means putting it in a savings account rather than spending it. Yet, this approach only focuses on growing your wealth, rather than using it in a way that helps you reach your goals.
So, here are three scenarios where your financial plan might involve increasing your outgoings.
At the heart of your financial plan should be your lifestyle goals – how do you want to use your time and what makes you happy?
To reach these goals, you might need to spend more. Perhaps you enjoy getting creative and want to attend regular art classes, or maybe you love to attend gigs across the country so want to boost your disposable income to see more of your favourite bands.
Of course, simply increasing your spending could lead to a shortfall later in life. This is why making it part of an effective financial plan is important.
Working with a financial planner could help you assess how the decisions you make today, including spending more to reach your lifestyle goals, could affect your future income.
You might find that you’re in a position to boost your disposable income to spend more on the things you enjoy.
If spending more to reach lifestyle goals could affect your long-term security, a financial plan may help you assess where compromises might be made so you can strike the right balance between enjoying your life now and being secure in the future.
There might be times when spending more money now could boost your finances in the long run.
For instance, if you’re thinking about returning to education to pursue a career change, you might need to fund the costs yourself. Or, if you’re an aspiring entrepreneur, you may choose to increase spending to get your idea off the ground.
In both of these scenarios, you might hope that the initial outgoing will lead to a higher income and greater financial security in the future.
Making this decision part of your financial plan could help you assess if it’s the right option for you and understand the potential short- and long-term implications it may have on your finances.
Often, when people speak of a legacy, it’s what they’ll leave behind when they pass away, but it might also be something you do during your lifetime. Indeed, there could be benefits to creating a living legacy.
Your loved ones might have a greater need for financial support now than they will in the future. For example, a helping hand to purchase a home when they want to start a family could be more useful in terms of creating long-term financial security than an inheritance later in life.
Alternatively, you might want to leave a legacy to a charitable cause during your lifetime.
Again, a benefit is that you have the potential to see the impact your gift will have. You might choose to support the charity in other ways too, such as acting as a trustee or organising a fundraiser.
If your estate could be liable for Inheritance Tax (IHT), creating a living legacy might be one way to reduce the potential bill. As well as reducing the value of your estate through gifting, if you leave more than 10% of your entire estate to charitable causes on your death, the IHT rate your estate is liable for would fall from 40% to 36%.
When gifting to reduce IHT, it’s important to note that not all gifts are immediately outside of your estate for IHT purposes. Indeed, some may be included in calculations for up to seven years after they were gifted. If you’d like to discuss how to pass on wealth tax-efficiently, please get in touch.
If you’d like to create a financial plan that’s tailored to your goals and circumstances, please get in touch. We could help you balance short-term spending with long-term aspirations so you can have confidence in your future.
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 tax planning or estate planning.
Worrying about your finances in retirement could dampen your excitement as you start the next chapter of your life. As you’ll often be responsible for generating your own income once you give up work, it’s not surprising that a February 2025 report from Which? revealed half of over-55s are worried about running out of money.
Indeed, just 27% of those who have retired or are nearing the milestone said they weren’t concerned about draining their pension or other assets in retirement.
Some apprehension about your finances as you retire is normal.
Retirement is likely to represent a significant shift in how you create an income. No longer will you receive a regular wage for your work. Instead, you’ll often start depleting your assets, such as your pension, savings, or investments. As you can’t predict how long your assets need to last, it may be difficult to assess if the income you create is sustainable.
Here are five strategies that could give you confidence in your retirement finances, so you’re able to focus on what’s most important – enjoying this next stage of your life.
A key obstacle when planning your finances in retirement is that inflation often means your outgoings will increase.
According to the Bank of England, between 2014 and 2024, average annual inflation was 3%. So, an income of £35,000 in 2014 would need to have grown to almost £47,000 to maintain your spending power in 2024.
As a result, if you planned to take a static income throughout retirement, you could face a growing income gap in your later years or deplete assets at a faster rate than you anticipated.
As part of your retirement plan, a cashflow model could help you visualise how your income needs might change, and the effect this would have on the value of your assets. While the outcomes cannot be guaranteed, it could highlight where you might face potential shortfalls and allow you to take steps to improve your long-term financial security.
It’s not just inflation that could affect your outgoings. Lifestyle creep, where you spend more on luxuries, could have an effect too.
As you may be in control of how much you withdraw from your pension, it can be easy to slowly increase the amount so you can indulge in an exotic holiday, new car, or regular days out. Over time, these luxuries can become new necessities in your mind and part of your normal budget.
Spending more in retirement isn’t necessarily negative. However, increasing your spending without considering the long-term consequences might mean you face an unexpected shortfall in the future. Regular financial reviews during your retirement could help you keep an eye on lifestyle creep that may be harmful.
In the past, it wasn’t uncommon for retirees to take their money out of investments to reduce exposure to market volatility. However, keeping some of your money, including what’s held in your pension, invested might make financial sense for you.
Retirements are getting longer. With the average life expectancy of a 65-year-old now in the 80s for both men and women, you could spend three decades or more in retirement. So, continuing to invest with a long-term time frame during retirement could help grow your wealth and mean you’re at less risk of running out of money.
It’s important to choose investments that are appropriate for you and recognise that investment returns cannot be guaranteed. If you’d like to talk about investing in retirement, please get in touch.
While you might no longer be working, you’re very likely to still pay Income Tax in retirement. Indeed, according to the Independent, in March 2025, retired baby boomers were paying more Income Tax than working people under 30.
If your total income exceeds the Personal Allowance, which is £12,570 in 2025/26, Income Tax will usually be due. With the full new State Pension providing an income of £11,973 in 2025/26, most retirees will pay some Income Tax even if they’re only taking small sums from their personal pension.
It’s not just Income Tax you might be liable for either. You might need to pay Capital Gains Tax if you sell assets and make a profit or Dividend Tax if you hold shares in dividend-paying companies.
An effective retirement plan could identify ways to reduce your tax bill, so you have more money to spend how you wish and are less likely to run out during your lifetime.
During your working life, you may have had an emergency fund in case your income stopped or you faced an unexpected expense. In retirement, a financial safety net might still be important.
Having a fund you can fall back on in case you need to pay a large, unforeseen cost, like property repairs, could be essential for keeping your retirement finances on track.
In addition, it may be prudent to contemplate how you’d fund the cost of care if it were needed. According to an August 2024 report from the Joseph Rowntree Foundation, the number of older people unable to perform at least one instrumental activity of daily living without help will increase by 69% between 2015 and 2040.
This rise is partly linked to a growing population of elderly people and rising life expectancies leading to more people relying on informal care, such as family members, or formal care, like a nursing home.
Whether you need to pay for care will depend on a variety of factors, such as the value of your assets and where you live. However, in most cases, you’ll often need to pay for at least a portion of the costs if you require formal care.
So, considering care when you assess your emergency fund could be essential. Knowing you have the savings to pay for care could provide you with peace of mind and mean that should it be required, you have more options to explore, such as choosing a care home with facilities you’d enjoy or one that’s easily accessible for loved ones.
As your financial planner, we could work with you to build a retirement plan that reflects your circumstances and goals. Whether you’re worried about running out of money or you have other concerns, we’re here to listen and discuss your options. 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.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
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. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The Financial Conduct Authority does not regulate Tax planning.
Geopolitical tensions have led to a bumpy start to 2025 for investors. If you’re worried about volatility and what it might mean for your long-term finances, there are reasons to remain calm despite the uncertainty.
The ongoing war in Ukraine has resulted in some anxiety in Europe, with the UK and other countries committing to increasing defence spending. In addition, the new Trump administration in the US has imposed several trade tariffs on partners and suggested more will follow.
As a result, many companies and sectors have seen share prices rise and fall more sharply than usual.
Indeed, according to the Guardian, the euro STOXX equity volatility index, which tracks market expectations of short- and long-term volatility, reached a seven-month high at the start of March 2025. The index has almost doubled since mid-December 2024, suggesting investors are feeling nervous.
As an investor, these external factors are likely to have affected the value of your investments over the last few months.
Uncertainty is one of the key factors that contributes to volatility in investment markets.
Unknown policies or other events can make it difficult to understand how a company will perform financially over the long term. This uncertainty can affect the emotions of investors, who may be more likely to make knee-jerk decisions as a result.
Imagine you hold investments in an electronic goods company based in China. In the news, you read the US will impose a 10% tariff on all Chinese goods. As a major export market, this decision by the US could significantly affect the profitability of the company.
After hearing the news, you might worry about your finances and whether you should still invest in the company. If enough investors act on these concerns, it may result in the value of the shares in the company falling.
With so much global uncertainty at the moment, your investments and the wider market could experience more volatility than usual in the coming months.
While it may be difficult, remaining level-headed during times of uncertainty could make financial sense. Here are four reasons to remain calm.
1. Periods of volatility have happened before
When markets are volatile, it may feel unusual or unexpected. However, market volatility is a normal part of investing.
While investment returns cannot be guaranteed, historically, markets have delivered returns over a long-term time frame. Even after downturns, markets have bounced back.
Remembering this could help put your mind at ease and allow you to focus on the bigger picture rather than short-term market movements.
2. Diversified investments could smooth out volatility
Newspaper headlines are designed to grab your attention, and they’re likely to focus on the parts of the market that are experiencing the greatest volatility. For example, you might read that “technology stocks have plunged 10%” or “markets in Japan are booming”.
While these headlines aren’t inaccurate, they don’t tell you the whole story.
In reality, a balanced investment portfolio will typically include investments across a range of assets, sectors and geographical locations.
So, while a fall in technology stocks might affect you, it may not have as large of an effect as you expect if you only read the headlines. Gains or stability in other areas of your investment portfolio could balance out the dip.
3. Market volatility may present an opportunity to buy low
If you’d previously planned to invest a lump sum or you invest regularly, market volatility may cause you to rethink. However, halting your investments might mean you miss an opportunity.
When markets fall, you might have a chance to invest when the price of stocks and shares is lower, allowing you to buy more units for your money. Over the long term, this could lead to better yields.
While investing during a low period could result in higher returns over the long term, you should ensure investments are appropriate. You may want to consider your financial risk profile and wider circumstances when deciding how to invest your money.
4. Trying to time the market can prove costly
Finally, if you’re focused on what the market is doing today, it can become tempting to try and time the market – to buy low and sell high.
However, with so many external factors affecting markets, it’s impossible to consistently time it right. Even professionals, who have a team and resources, don’t always get it right.
Rather than trying to time the market, remaining calm and sticking to your long-term investment strategy is often a better course of action.
If you have any questions about how your investments are performing or would like to review your investment strategy, please get in touch. We’re here to answer your questions and help you feel confident about your financial future.
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.
Trade wars and fears that tariffs could spark recessions meant investment market volatility continued in March 2025. Read on to find out more about some of the factors that may have affected the value of your investments recently.
The Organisation for Economic Co-operation and Development slashed the growth forecast among advanced economies this year due to concerns about trade wars. The organisation now expects the global economy to grow by 3.1% in 2025 – down from the previous forecast of 3.3%.
As investors sought to move money into “safe” assets, the price of gold increased. On 14 March, it exceeded $3,000 (£2,324) per ounce for the first time.
While switching an asset that’s experiencing ups and downs to one that’s more stable may seem like a sensible move, remember volatility is part of investing. Historically, markets have delivered returns over long-term time frames, even after periods of downturn, and often sticking to your investment plan makes financial sense.
Chancellor Rachel Reeves delivered the Spring Statement at the end of March, setting out the government’s spending plans, against a challenging backdrop.
The UK economy contracted by 0.1% in January 2025 when compared to a month earlier following a decline in factory output. In addition, while the rate of inflation is declining, at 2.8% in the 12 months to February 2025, it’s still above the Bank of England’s (BoE) 2% target.
The news prompted the BoE to hold its base interest rate at 4.5%, which will have disappointed households and businesses that were hoping for a cut to ease the cost of borrowing.
Data from Purchasing Managers’ Indices (PMI) was pessimistic too.
According to S&P Global, the manufacturing sector continues to face tough conditions. The headline figure was 46.9 in February. It’s the fifth consecutive month that the reading has been below the 50 mark which indicates growth. There were declines in output, new orders, and employment.
The construction data was similar, with the headline figure falling to 46.6, the biggest downturn since 2009 aside from the 2020 pandemic. There were steep declines in housebuilding and civil engineering activity.
Despite speculation that Reeves would increase taxes and reduce tax thresholds or exemptions, the Spring Statement focused on cutting the welfare budget. Indeed, the announcements made in the 2024 Autumn Budget remain intact.
Investment markets were affected by US trade wars and the war in Ukraine.
On 3 March, European leaders met in London for a summit to draw up a Ukraine peace plan. The meeting led to the pound and European stock market soaring as investors hoped for a resolution. Perhaps unsurprisingly, defence stocks saw the biggest gains, including the UK’s BAE Systems, which jumped by more than 14%.
However, the boost was short-lived. On 4 March, trade wars between the US and Canada, Mexico, and China triggered a drop of 1.27% on the FTSE 100 – an index of the 100 biggest companies on the London Stock Exchange.
There was an uptick in optimism towards the end of the month.
On 24 March, investors hoped that President Donald Trump would show flexibility ahead of the unveiling of new global tariffs in April. The FTSE 100 opened 0.5% up, with mining stocks leading the rally – winners included Anglo American (3.9%), Antofagasta (3.3%), Glencore (3%), and Rio Tinto (2.5%).
Data from the European Central Bank (ECB) shows inflation is moving closer to the 2% target. It was 2.4% in the 12 months to February 2025 across the eurozone.
The news prompted the ECB to cut the base interest rate by a quarter of a percentage point to 2.25%.
Data suggests the wider European economy is facing similar challenges to the UK.
Indeed, S&P Global PMI figures show a factory downturn. In addition, the headline PMI figure fell from 45.5 in January to 42.7 in February. Worryingly, the two largest economies in the EU, Germany and France, experienced the sharpest downturns.
The Euro Stoxx Volatility index, which tracks investor uncertainty, found stock market volatility hit a seven-month high in February and has more than doubled since mid-December 2024 due to investors feeling nervous about the global outlook.
So, it’s not surprising that there have been ups and downs for investors.
The 3 March summit in London benefited wider European stock markets. Again, defence stocks saw the biggest gains – Germany’s Rheinmetall, France’s Thales, and Italy’s Leonardo all saw an increase of at least 14%.
Expectations that US tariffs will hit the automaker industry led to stocks in the sector falling on 4 March. Among the shares affected were tiremakers Continental, which saw a 9% drop, as well as Daimler Truck (-6.6%), BMW (-5.5%), and Mercedes-Benz (-4.5%).
US inflation is nearing the Federal Reserve’s 2% target after a rate of 2.8% was recorded in the 12 months to February 2025.
However, there was negative news from the labour market. According to the Bureau of Labor Statistics, the unemployment rate edged up to 4.1% in February.
PMI readings for the manufacturing sector also reflected this trend. New orders fell in February and companies continued to lay off staff, which may suggest they don’t feel confident in the future. Yet, the sector has grown for two consecutive months.
On 3 March, in contrast to Europe, Wall Street dipped slightly. The technology-focused Nasdaq index was down 0.8% and the broader market indices Dow Jones and S&P 500 both fell 0.3%.
The following day, Trump declared 25% tariffs on imports from Canada and Mexico and 10% tariffs on imports from China. The news led to the dollar weakening, and indices tumbling further – the Nasdaq fell 2.6% and S&P 500 was down 1.7% – and the declines continued into the next week.
Technology stocks in particular have been hit hard by the market volatility. AJ Bell warned since the start of 2025, $1.57 trillion (£1.21 trillion) had been wiped off the value of the Magnificent Seven – seven influential and high-performing US technology stocks – as of 4 March.
Carmaker Tesla is among the biggest losers. As of mid-March, its share price had halved since it benefited from a post-election rally at the end of 2024, which has partly been driven by sales in the EU falling by almost 50%.
As a country with a trade surplus and a large US market, tariffs are expected to hamper growth in China.
China’s GDP target is 5% for 2025, the same target it hit in 2024. However, economists believe replicating this in 2025 will be difficult. China succeeded in reaching the 2024 target thanks to an export boom at the end of the year – exports increased by 10.7%, as some businesses tried to beat the expected tariffs.
In contrast, between January and February 2025, Chinese imports fell by 8.4% year-on-year after economists had expected growth of 1%. The data might suggest that Chinese manufacturers are cutting back on buying raw materials and parts due to trade 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 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.
