Whether through the news or your own experiences, it’s clear that the UK’s current financial landscape is marked by some uncertainty, and you might be worried about the economy and your finances.
More than that, global factors continue to play a role. Geopolitical events and the performance of major international economies can influence the UK market, particularly in areas such as energy prices and supply chains.
These can all affect inflation, interest rates, and the cost of living.
Global dynamics can add layers of complexity to any financial landscape, so it’s only natural to wonder how these economic shifts might affect your finances.
Fortunately, with the support of a financial planner, navigating these challenges can be easier. Here’s how we support you and your wealth during turbulent times.
Your financial plan is designed to navigate uncertainty
Your personalised financial plan, which we develop together, takes a holistic view of your financial situation, goals, and risk tolerance. There are also several key elements of a robust financial plan that are specifically designed to sustain your wealth through economic fluctuations.
Diversity in a financial plan can help with volatile markets
A cornerstone of a sound financial plan is diversity. The more diversified your portfolio is, the better it can weather challenging economic times. Remember, your portfolio will likely be made up of different asset classes and could include stocks and shares, bonds, property, and other alternative investments.
For example, while equity markets might experience some volatility during periods of economic uncertainty, other asset classes, such as high-quality bonds, might offer more stability.
A long-term perspective keeps everything in focus
Your financial plan is designed to keep your long-term goals in focus, whether it’s retirement, helping your children through higher education, or preparing for other significant life milestones such as moving abroad or seeing the world
Short-term economic fluctuations are a normal part of the economic cycle, and while they can feel unsettling, reacting impulsively to market noise can be detrimental to achieving your long-term goals. That’s why we encourage maintaining a long-term perspective, as your plan is designed to ride out these short-term ups and downs.
Regular reviews and adjustments are key to remaining flexible
Remember that your financial plan is not a static entity. We schedule annual review meetings to discuss your progress, changes to your circumstances, and to assess the ongoing suitability of your plan. We keep the overall economic environment in mind while we do this.
This allows us to make proactive adjustments if necessary.
For example, if you go through a major life event, such as a divorce, we can discuss and readjust as needed. Moreover, if you have additions to the family we can ensure that your financial plan still aligns with your risk tolerance and long-term goals.
Contingency planning helps to shield your finances should the worst happen
Remember that your financial plan is likely to include elements of contingency planning. This simply means you have a backup plan in case unexpected issues arise.
This could include maintaining an emergency fund or having strategies in place to manage potential disruptions to your income.
These can act as a financial buffer during unexpected challenges.
How existing economic factors could affect your financial plan, and how we plan for them
Let’s consider some specific examples to demonstrate how the above points come into play in your financial plan.
- Inflation and purchasing power: While inflation can erode the real value of savings held in cash, your investment portfolio will likely include assets that have the potential to outpace inflation over the long term. We may also discuss strategies to adjust your income streams in retirement to account for different living costs.
- Interest rate changes and borrowing costs: If you have a mortgage or other loans, rising interest rates can increase your monthly repayments. During our reviews, we can discuss strategies to mitigate this risk, such as reviewing your debt management plan or exploring overpayments. A mortgage adviser would be well placed to further support these discussions.
- Market volatility: Uncertainty in the economy can lead to fluctuations in investment markets. Your diversified portfolio is designed to cushion the effects of this. Remember, we focus on the long-term growth potential of your investments and understand that short-term dips are a possibility.
If you’re uncertain about the current economic climate, talk to us
We understand that even with a robust financial plan in place, the current economic climate might still raise questions and concerns. We want to assure you that we are here to provide clarity and support.
If you want to discuss your plan in light of any economic shifts, schedule a review meeting with us.
In this meeting, we can:
- Discuss your specific concerns
- Review your existing financial plan
- Explore any potential adjustments.
We believe that proactive communication and regular reviews are essential, especially during times of economic uncertainty.
Email info@fourseasonsfp.com or call us on +44 (0) 13 7240 4417 to find out more about how we can work together. Alternatively, email or call your adviser directly.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
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.
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.
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.
