A cashflow model is a valuable tool that lets you understand how the value of your estate and individual assets might change in the future. But, to get the most out of it, you need to look beyond the numbers.
A cashflow model provides a graphical representation of all your assets, such as investments, property and pension, as well as income, expenditures and debt. It forecasts how each of these will change over time.
To start, you’ll need to input information into a cashflow model, such as the value of your assets now, your household spending, or how much you’re contributing to your pension.
To calculate long-term changes, you may need to make certain assumptions too. You might factor in regular wage increases or the projected returns of your pension.
While the outcomes of a cashflow model cannot be guaranteed, it could provide you with a useful overview of your finances and how they might change throughout your lifetime.
With so much data, it’s easy to get bogged down in the numbers. Yet, moving past the figures could help you turn goals into reality and prepare for the unexpected.
A cashflow model provides a snapshot of your finances, and financial planning can help tie this to your goals.
When you think about why you’re saving through a pension, it’s probably the lifestyle you want to enjoy that comes to mind, rather than the figure you need to save.
So, you might think “I want to retire at 60 and maintain my current lifestyle” rather than “I want to save £500,000 in my pension”.
As a result, it’s important to think about what your lifestyle goals are when using a cashflow model if you want to get the most out of it. When you stop working, your outgoings often change, so in this scenario, you might calculate how much you’d need to maintain your current lifestyle.
You can then add this information to the cashflow model and see what would happen if you withdrew this income from your pension from the age of 60 – is there a chance your pension could fall short? Could you retire sooner and still be financially secure?
By combining your goals with a long-term view of your finances, you can work with your financial planner to create an effective financial plan that’s tailored to you.
As well as goals, your cashflow model can be used to help you address concerns you might have about your financial security and events outside of your control.
For example, if your family rely on your income, you might worry about how you’d cope financially if you were unable to work. Updating the information used to create the cashflow model could help you understand the short- and long-term impact.
You might find you have enough saved in an emergency fund to cover six months of expenses before you’d have to use other assets. So, to create an additional safety net, you may take out appropriate financial protection that would begin to pay a regular income after six months.
Taking an extended break from work may affect long-term goals as well. You might halt pension contributions, which could affect your income when you reach retirement, or use savings that had been earmarked for another use.
Much like how a cashflow model could help you understand your goals, it can also be useful when you want to identify risks or weaknesses in your current financial plan.
One of the benefits of cashflow modelling is that it may identify potential financial gaps that could affect your future. Being aware of these sooner often means you’re in a better position to take steps to bridge the gaps or adjust your plan.
Let’s say you discover there could be a potential shortfall in retirement because you aren’t contributing enough to your pension. If you identify this 20 years before you plan to retire, a small, regular increase to your contributions could be enough to keep you on track without making changes to your retirement plans. However, if you don’t realise until you reach the milestone, you may have fewer options.
Alternatively, if you find you’re in a better financial position than you expected, you might want to adjust your lifestyle now or update long-term plans.
After finding out you’re comfortably on track to have “enough” saved for retirement, you might decide to start building a nest egg for your child to provide a helping hand when they reach adulthood. If you’re confident in your financial future, you might also feel secure enough to increase your disposable income now and start doing more of the things you enjoy.
Please get in touch if you’d like to talk about creating a long-term financial plan that focuses on your aspirations and addresses concerns you might have about the 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.
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 Financial Conduct Authority does not regulate cashflow planning.
Concerns around potential trade wars following President Trump’s inauguration weighed on investment markets in January 2025, but there was positive news too. Read on to discover some of the factors that may have affected the performance of your investments.
Keep in mind that short-term market movements are part of investing and taking a long-term view is an important investment strategy for many people.
Headline figures were positive for the UK.
UK inflation fell to 2.5% in the 12 months to December 2024, data from the Office for National Statistics (ONS) shows. According to the Guardian, there’s a 74% chance the Bank of England (BoE) will cut interest rates in February as a result.
The ONS also reported the UK economy returned to growth in November 2024, as GDP increased by 0.1%. While it’s only a small rise, it follows three months of stagnation.
What’s more, the International Monetary Fund expects the UK to grow by 1.6% in 2025 and be the third-strongest G7 economy in terms of growth.
In encouraging news for the chancellor, at the World Economic Forum, PwC revealed that the UK is the second-most attractive country for investment, only falling behind the US. It marks the highest rank for the UK in the 28 years PwC has carried out the survey.
Sharp rises in borrowing led to the UK bond market making headlines.
On 8 January, UK government debt hit its highest level since the 2008 financial crisis, just a day after 30-year bond yields were at the highest level since 1998. Bonds rising could lead to mortgage lenders increasing rates and could affect the value of pensions, particularly those who are nearing retirement and are more likely to hold bonds.
Markets calmed down the following day but continued to experience ups and downs throughout January.
After the turmoil in the bond market, the FTSE 100 – an index of the 100 largest companies listed on the London Stock Exchange – was down 0.9% on 10 January. The biggest faller was financial group Schroders, which saw a dip of 4.3%.
Yet, just weeks later, the FTSE 100 hit a record high and exceeded 8,500 points for the first time on 17 January. The boost of around 1% was linked to speculation that there would be several interest rate cuts this year thanks to falling inflation.
However, many businesses still aren’t confident.
According to the British Chambers of Commerce (BCC), confidence among British businesses fell to the lowest level since former prime minister Liz Truss’s mini-Budget in September 2022. The pessimism was linked to chancellor Rachel Reeves’s £40 billion tax increases, which have placed a large burden on businesses. The BCC survey suggests 55% of firms plan to raise prices as a result.
Similarly, a survey from the BoE suggests more than half of UK firms plan to cut jobs or raise prices in response to employer National Insurance contributions increasing in April 2025.
The effects of the chancellor's Budget were also evident in S&P Global’s Purchasing Managers’ Index (PMI).
The index fell to an 11-month low in December and into contraction territory. Rob Dobson, director at S&P Global Market Intelligence, noted there were also sharp staffing cuts as some companies acted now to “restructure operations in advance of rises in employer National Insurance and minimum wage levels”.
Data paints a gloomy picture for the eurozone.
As expected, following an interest rate cut by the European Central Bank to boost the flagging economy, inflation across the eurozone increased. In the 12 months to December 2024, inflation was 2.4%.
Germany – the largest economy in the bloc – reported GDP falling 0.2% in 2024 when compared to the previous year, and it follows a decline of 0.3% in 2023.
According to an index from sentix, the challenges Germany is facing are negatively affecting investor morale across the eurozone. Indeed, investor confidence fell to a one-year low at the start of 2025. Germany is set to hold a snap general election in February, which could ease some of the uncertainty investors are feeling.
PMI figures from the Hamburg Commercial Bank fail to offer investors optimism.
While the eurozone service sector improved, it was still in decline at the end of 2024. In addition, the construction sector continues to contract and new orders fell markedly, suggesting that a recovery isn’t on the horizon.
Dominating the headlines in the US in January was the inauguration of Donald Trump, which took place on 20 January. Trump will serve a second term as US president and promised a “golden age” for America in his inaugural address.
In the first days of his presidency, Trump continued to make similar trade threats to those he made during his campaign. He suggested a 10% tariff on Chinese-made goods arriving in the US could be implemented as early as 1 February 2025. Trump also hinted that he was considering levies on imports from the EU, as well as a potential 25% tariff on the US’s two largest trading partners, Mexico and Canada.
According to the US Bureau of Labor Statistics, inflation increased to 2.9% in the 12 months to December 2024, up from 2.7% a month earlier. The inflation data could mean the Federal Reserve is less likely to cut interest rates in the coming months.
Indeed, on 13 January, Wall Street fell when it opened as traders expect interest rates to remain where they are.
Technology-focused index Nasdaq fell 1.3% and the S&P 500, which tracks the 500 largest companies listed on stock exchanges in the US, lost 0.8%. Pharmaceutical firm Moderna experienced the largest slump when share prices fell 24% after the company cut its outlook due to shrinking demand for its Covid-19 vaccine.
Markets faced more turmoil on 27 January. The emergence of a low-cost Chinese AI model, DeepSeek, led to concerns about the sustainability of the US artificial intelligence boom.
According to Bloomberg, shares in US chipmaker Nvidia fell by 17% and erased $589 billion (£473 billion) from the company’s market capitalisation – the biggest in US stock market history.
Other US technology giants saw share prices fall too. Microsoft, Meta Platforms and Alphabet, which is the parent company of Google, saw losses between 2.2% and 3.6%. AI server makers saw even sharper drops, with Dell Technologies and Super Micro Computer sliding by 7.2% and 8.9% respectively.
PMI data from S&P Global indicates business could pick up at the start of 2024. In fact, the service sector posted its biggest growth in output and new orders in December 2024 since May 2022. The jump was linked to firms anticipating more business-friendly policies under the Trump administration.
Threats of trade tariffs from the US in 2025 meant Chinese manufacturers rushed to fill orders at the end of 2024. Indeed, exports increased by 10.7% in December 2024 when compared to a year earlier, according to official customs data. With exports outpacing imports, China’s trade surplus was just under $1 trillion (£0.8 trillion) in 2024.
China’s National Bureau of Statistics also reported the economy hit its official target of growing by 5% in 2024.
Chinese manufacturer BYD could be on track to overtake US technology giant Tesla this year. BYD revealed it sold 1.76 million battery electric cars in 2024 falling only behind Elon Musk’s company, which sold 1.79 million. In fact, when including hybrid vehicles, BYD surpassed Tesla.
However, the new year didn’t start positively in the Chinese stock market. On 2 January, weak manufacturing data contributed to a sell-off of Chinese stock. The Chinese Stock Exchange fell by 2.7%, and the Chinese yuan also fell to a 14-month low against the US dollar.
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 can sound daunting. We get it! Pension consolidations, family protection, inheritance tax planning, savings and investments: where does it start and stop?!
Working with a Financial Adviser means giving someone access to one of the most sensitive parts of your life, which can be emotionally and mentally challenging for a lot of people. However, whatever stage of life you’re at, and wherever you are in the world, managing your money is important.
The right adviser can make the complex, simple. In doing so, Financial Advisers can empower financial resilience and help you to meaningfully map out your finances in a way that takes account of your short, medium and long term goals.
So what’s stopping you from appointing a Financial Adviser to help you to take control of your financial future?
Here are 10 myths about working with a Financial Adviser which may stop people from seeking professional financial advice:
Despite what you may think, you don’t have to have millions of pounds in your bank or savings account to start working with a Financial Adviser. No matter how much money you have now, building a financial plan can ensure that your money works as hard as possible for you, both now and in the future.
Investing money is however only one outcome of financial advice. A Financial Advisor can also deliver family protection products, inheritance tax planning and even help you to build or consolidate your pensions as part of a robust retirement plan.
Financial Advice therefore, is much more than just about investing money: it’s about inspiring and empowering you to take control of your finances, no matter how much money you have.
When it comes to spending behaviours, everyone is different – even your Financial Adviser will have experienced overspending at one point or another.
Financial Advisers are human beings, and while it is important that you take time to find the right adviser for you and your family, it is also worth understanding that they are impartial, experienced and non-judgmental.
And for total peace of mind, no matter what you spend your money on, Financial Advisers will keep your information strictly private and confidential.
The only stupid question is the one not asked.
A good Financial Adviser will be passionate about educating and coaching their clients by carefully explaining every step taken to build your financial plan, including the reasons behind their recommendations.
Financial Advisers want you to become financially resilient and will encourage you to ask as many questions as is required for you to achieve your financial goals.
That may well be the case! But, equally, what if we told you that the advice may even be for you spend more?
Your Financial Adviser will work with you to fully understand your current spending habits however they will do so in order to build appropriate and meaningful recommendations which serve to meet your long-term financial goals.
Not only will your Adviser look at your spending habits as they are now: they will also project your future income and spending, all with a view to keeping you on track to achieve your financial aims.
Your Financial Adviser will deliver recommendations for a diversified, balanced and bespoke financial plan based on all of the information you share throughout an early fact-finding exercise.
During this early stage of your relationship, your Adviser will determine several key elements of risk pertaining to your financial situation. More specifically, what level of risk you are comfortable with, what level of risk is required to achieve your financial planning goals and, importantly, what level of risk you can realistically afford to take. All these ingredients are taken into account when formulating a suitable financial plan which is aligned specifically to your goals and aspirations. This information is vital and will go a long way in building the foundations of your investment strategy.
They will also help you to understand how much money should be held in short-term savings, and for what reasons.
This is not a necessity: it is a choice.
It is of course important that you consider how you wish for your advice to be delivered. The effects of the Covid-19 pandemic have seen the use of video-call technology skyrocket and you may be comfortable receiving advice this way.
However, given the sensitive nature of financial planning, you may instead prefer to deal with an adviser who is based locally, enabling face-to-face meetings to take place with ease.
Financial Advisers work with you to formulate long-term plans which help you realise your specific goals. Products are merely the tools to get you there.
Professional advice can ultimately save you time and help you to achieve those financial goals. It is important however that you ensure that you understand the associated costs of receiving such advice – you need to know what you’re paying for, and why. Your Adviser should be open and upfront about their fees, giving you peace of mind that there are no hidden costs at any point along the way.
Some Advisers have fixed initial fees; some charge an hourly rate for their advice; some charge based on a percentage of the total assets they advise on; and others offer the option of all three. Also, when setting up protection plans such as Life Insurance or Income Protection, your adviser is often paid commission by the provider they set the life cover up with. The commission they receive should be outlined to you in pounds and pence, and you may also have the option of paying this directly to the adviser yourself, which in turn could reduce the premium you pay.
Your financial affairs and personal circumstances don’t have to be complex to merit working with a Financial Adviser. No matter how simple your life is, there may be many ways to better structure your financial affairs.
Changes to tax and legislation are ongoing and working with a Financial Adviser can help you to make any necessary short-term changes to your financial plan in order to protect your long-term goals.
Believe it or not, it may very well be the case that your financial plan involves no investment at all. This depends exclusively on your personal circumstances and financial objectives, which will be defined based on a very deep dive of your short, medium and long term goals.
As we’ve detailed above, there is so much more to creating a robust financial plan than simply investing your money.
A good Financial Adviser will help you to take control of your finances and your financial future, educating you and empowering you to take ownership of one of the most important parts of your life.
Understanding what drives you and what you want your life to look like in the short and longer term should be an exciting and ongoing journey, with you firmly in the driver’s seat.
Finding the right Financial Adviser is important however. Their personality can be the difference between your financial planning journey being exciting, empowering and more than just about numbers.
Importantly, your adviser can help to improve your emotional wellbeing by delivering financial resilience and confidence through access to expertise, comprehensive and bespoke financial planning and a sound understanding of financial products.
No matter what your financial situation is today, a Financial Adviser can help you to build a path towards financial security for you and your family.
Disclaimer
Your capital is at risk. 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. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
You want to make your money work for you and you’ve heard that there are much more attractive returns in the world of investments than can be achieved simply by allowing your money to sit in a bank savings account. Given the current interest rates offered by banks, you’re probably not wrong.
However, investment markets can be an absolute minefield.
Despite this, during the pandemic, more and more people have started to invest their money using easily accessible online trading platforms and investment tools. But how do DIY investors comb through the huge amount of conflicting advice when deciding how, and where, to invest their money? And is doing it yourself even the best thing for you to do?
Let’s take a look at what it is to DIY invest and at what benefits there are to working with a Financial Adviser.
It seems obvious, doesn’t it? And it is!
DIY investing is simply doing your own research and making up your own mind about how you are going to invest your money in the short, medium and longer terms.
Whether your research brings you to invest your money in individual companies (stocks) or in more complex financial instruments, your aim will be to put your money to work in the hope of achieving the highest possible return from your investments.
You might choose to invest in companies who give dividends from profits; or you may watch your investments in other assets grow as interest compounds year after year. And of course, DIY investing means you won’t be paying a fee to a Financial Adviser.
In short, DIY investing means taking 100% responsibility and control of your invested money.
A Financial Adviser is a professional who provides information and services to their clients based on their current financial situation.
Regulated (in the UK) by the Financial Conduct Authority (FCA), Financial Advisers are registered to provide advice, legally, to their clients.
Here are a few of the key service features of Financial Advisers:
Ultimately, you will enter into a long-term relationship with a Financial Adviser – and long-term advice can often lead to far better investment decisions.
With so much investment guidance available online and considering the relative ease at which DIY investing can take place, it can be easy to be blind to risks.
We’ve listed a few key risks to be aware of before deciding if DIY investing is truly right for you:
Wouldn’t it be great to have a professionally developed and detailed financial plan of your future?
Ultimately, working with a Financial Adviser means entering into a long term relationship, and long term, sound financial advice can translate to much better investment decisions.
Here are just some of the benefits of working with a Financial Adviser:
In deciding whether or not to partner with a Financial Adviser, ask yourself:
Whether you choose to DIY invest or build a long-term investment strategy with a Financial Adviser it is vital that you treat investments decisions seriously.
After all: if you fail to plan, you plan to fail.
Disclaimer
Your capital is at risk. 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. 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.
You’ve worked hard for what must feel like a lifetime and now you’re faced with trying to understand your options at retirement.
Well, we have good news and bad news for you:
This article will help you to do just that.
What you do with your pension(s) and investments when you retire is a huge decision. It is essential not to understate how important it is to ensure you are making the correct decisions which meet your current and future needs, goals and aspirations.
You may wish to retire now or delay your retirement to continue working. Alternatively, you may wish to retire now but are in a position to delay taking money from your pension pot, choosing instead to leave your money invested until you need it in the future. In this instance, you will be leaning on other income such as savings, other investments or rental income to fund your lifestyle for a defined period of time.
Options truly are hinged to your personal circumstances and a trusted Financial Adviser can help you to make more informed, best-fit decisions.
In the meantime, here are a few key options for you to understand and consider.
In short, an annuity gives you a regular, guaranteed income in retirement. And you can buy one with some or even all of your pension pot. Doing so means you could receive a secure income for life – no matter how long you live - or for an agreed number of years.
Normally you can opt to take up to 25% of your pension pot as tax-free cash (some pensions may allow an enhanced tax-free cash amount). The remainder of your pot can then be used to buy an annuity.
It is important to know early that the income you receive from your annuity is taxed as earnings.
Just as you have a myriad of options at retirement, there are also different types of annuities available to choose from. It’s always wise to shop around and ensure you obtain the best rates. A Financial Adviser can help you to do this and also to understand which of these bests meet your circumstances and needs:
Your health status, any sources of other retirement income and your attitude to risk will all be taken into consideration by a Financial Adviser when deciding which type of annuity (if any) is appropriate for you. It’s also important to note that purchasing an annuity is usually an irreversible decision, meaning once you have purchased an annuity, there is no longer the option to put that money back into a pension.
Often referred to as ‘Pension Drawdown’, Flexible Retirement Income is a means by which you can flexibly take money out of your pension to live on in retirement.
It is designed to give you more flexibility over how, and when, you receive your pension. For example:
With this option, you are in control of how much of your pension pot is drawn down, and when. However, how long your pot lasts depends on the performance of your investments and how much you choose to drawdown from your pot in retirement. The value of your pension pot (and any income from it) can go down, as well as up, which means your future income is not guaranteed. Working with a Financial Adviser can mean you are equipped with the best possible advice when deciding how to invest your remaining pot.
Some pension providers offer you the option of taking smaller amounts of money from your pension pot until it’s empty. Instead of your 25% tax-free amount being taken as one lump sum (for example, taking £25k from a £100k pension pot), 25% of each lump sum withdrawal is tax-free. The remainder is added to any other income and is taxable at your marginal rate. So it’s worth bearing in mind that if your income is not monitored or taken without any planning, this could incur a significant tax bill and even place you into a higher bracket.
One thing to consider here is that, as the remainder of your pot stays invested, the total value of your pension pot and the value of future withdrawals are not guaranteed, since investments can go down as well as up.
One advantage of this particular option is that it allows you to spread pension withdrawals over a number of years, reducing the overall amount of tax you pay and utilising your annual allowances as much as possible.
However, some providers will charge you each time you make a lump sum withdrawal and may even place limits on the number of withdrawals you can make each year.
Pension Triviality rules allow for 100% of your pension fund to be released as a cash lump sum payment from smaller value pots, often referred to as a ‘small pots’ payment. Pension Triviality rules will apply, one of which being that a small pots payment is usually limited to £10,000 and a maximum of three plans (£30,000) can be taken as a small pot payment over your lifetime.
Simply put, you can cash in your entire pot with 25% being tax free and the remaining 75% being treated as taxable income.
You may opt to empty your entire pension pot in one go for a number of reasons, for example to clear debts, to buy a property or because you have other income streams which will meet your future expenses in retirement.
One obvious potential drawback of this option is that, depending on the size of your pension pot, you may be met with a sizeable tax bill. It is rarely advisable to consider taking your entire pot in one lump sum.
Also, consider whether this sum can last you throughout retirement: do you have other sources of income, for example from savings or investments such as property rentals, which will supplement your income (and that of any dependents) over a long period of time?
Good news! There is nothing to stop you from mixing between these different options.
You have lots of flexibility and choice when it comes to how, and when, you take your money from your pension pot. This means you may be in a position to adapt to suit changing needs at different times throughout your retirement.
It can however be a daunting experience sifting through these options. After all, what you decide now can impact your retirement income over the rest of your life.
Your circumstances will dictate which options are right for you and your dependents. It may be that you opt for a Flexible Retirement Income early in retirement and then later take an annuity in order to secure a guaranteed income later in life. You may instead wish to split your pot to allow you to take a guaranteed income now, leaving the remainder of your pot invested.
And what if you have more than one pension pot? Simply put, you can choose different options for each of your pots.
Considerations:
As you can see, there are a number of options to consider when you are planning your retirement and it may be that a mix of two or more of these options will best suit your needs – either now, or in the future, with each having different outcomes and implications on your longer-term goals.
Working with a Financial Adviser who explicitly understands your current circumstances, your future financial roadmap and your dream retirement lifestyle can ultimately take away anxieties around the complex mix of options detailed here in this article.
Speaking to a Financial Adviser can ensure you are given experienced and valuable advice based solely on your personal situation, taking away complexities and giving you a sense of control over the money you worked so hard to save.
Whole of market Independent Financial Advisers can offer a full range of products and services, opposed a tied adviser who may only be able to offer a restrict range, which may not meet your needs.
