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. 

Combining a cashflow model with your goals could help form an effective financial plan 

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.

A cashflow model could identify potential weaknesses in your current financial plan 

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. 

A cashflow model could help you make informed financial decisions now 

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. 

Contact us to talk about your long-term finances

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.

Please note: 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.

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.

Market volatility can trigger herd instinct among investors 

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. 

3 useful strategies that could help you focus on your own path

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. 

Contact us to talk about your tailored investment strategy

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. 

Please note: 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.

While inflation is stabilising in many major economies, markets continue to experience some volatility, which may have affected your investment portfolio. 

According to the latest International Monetary Fund’s Global Financial Stability Report, markets could be underestimating the risks of conflicts and upcoming elections.

Indeed, the rising price of gold suggests some investors are seeking a safe haven amid news of interest rate cuts, the upcoming US election, and escalating tensions in the Middle East. On 18 October, the price of gold hit $2,700 (£2,083) an ounce for the first time.

Read on to discover what else may have affected your investments in October 2024.

UK

The headline news in the UK in October 2024 was chancellor Rachel Reeves’ delivery of the Autumn Budget – the first from the Labour Party in 14 years. 

She announced a raft of reforms, including £40 billion in tax rises to address the “black hole” in the public finances. Among the announcements were changes to Capital Gains Tax, Inheritance Tax, Stamp Duty, and employer National Insurance contributions. 

Following the Budget on 31 October, the FTSE 100 – an index of the 100 largest companies on the London Stock Exchange – slumped to its lowest level in almost three months as investors reacted to the updates.

The latest GDP figures released by the Office for National Statistics (ONS) offered some welcome news. After the economy flatlined in June and July, it returned to growth in August and was up 0.2%.

Inflation figures were also positive. The ONS data shows that inflation was 1.7% in the 12 months to September 2024 – the first time it’s been below the Bank of England’s (BoE) 2% target in three and a half years.

The news led to the FTSE 100 rising by 0.65% on 16 October. 

Inflation falling paves the way for the BoE to make further interest rate cuts, which would be welcomed by borrowers. Indeed, the BoE hinted that it could be more aggressive with rate cuts in the coming months. 

Lower interest rates could boost the property market, and homebuilders benefited from the BoE’s outlook as a result. On 3 October, Persimmon was the top riser on the FTSE 100 after a 3.1% increase. Vistry and Barratt also gained. 

Yet, it wasn’t all good news for the housebuilding sector. Just days later, Vistry issued a profit warning and said this year’s pre-tax profits would be around £80 million lower than expected. The announcement led to shares in the company plunging by almost a third. 

Data suggests the manufacturing sector is struggling. According to S&P Global’s Purchasing Managers’ Index (PMI), confidence in the sector suffered its biggest drop since March 2020 in September. The fall was linked to the Autumn Budget with businesses reportedly taking a “wait and see” approach before making decisions. 

Overall, business outlook could be gloomy. Trade credit insurance firm Allianz Trade predicts UK business insolvencies will rise by 5% this year when compared to 2023 to more than 29,000. That figure would be a 12-year high and around 30% above pre-pandemic levels.

However, some businesses are bucking the trend. At a time when many other retailers are struggling, fast-fashion giant Shein’s UK arm reported sales surpassed £1.5 billion for the first time in 2023, up from £1.12 billion in the previous year. 

Europe

The eurozone’s key data is similar to the UK.

In the 12 months to September 2024, inflation in the eurozone fell below the 2% target to 1.7%. The news led to the European Central Bank (ECB) cutting interest rates for the third time this year – all key rates were trimmed by 25 basis points.

However, the ECB warned that inflation was expected to rise in the coming months.

PMI data indicates the eurozone economy is stuck in a rut. In October the PMI reading was 49.7 after a slight rise from 49.6 in September – only a figure above 50 indicates the economy is growing.

The manufacturing sector in particular is struggling, with a PMI reading of 45.0, indicating contraction. The bloc’s two largest members are dragging the figure down. Germany recorded its worst decline in factory conditions in 12 months, and France’s manufacturing sector is also contracting. 

The UK wasn’t the only country to review taxation in October. According to Bloomberg, Italy’s finance minister said it plans to raise taxes on companies that have benefited the most from the economic turbulence of recent years to bring down the country’s deficit. 

In response, Italy’s MIB share index, which tracks the 40 leading companies listed on the Borsa Italiana, fell 1.35% on 3 October. 

US

Official figures show inflation in the US continues to near its 2% target when it fell to 2.4% in September 2024.

After recent concerns that the US economy could fall into a recession, job data indicates the economy isn’t weakening and businesses are feeling confident. According to the Bureau of Labor Statistics, the number of jobs increased by 254,000 in September.

The data led to the dollar rising and Wall Street rallying on 4 October. On the back of the news, the Dow Jones Industrial Average was up 0.55%, while the S&P 500 gained 0.75%, and the Nasdaq jumped 1.2%. 

Asia

China and the EU continued their trade tit-for-tat, which had a knock-on effect on French spirit makers.

At the start of the month, the EU voted to increase tariffs on Chinese-made electric vehicles from 10% to up to 45% for the next five years. Beijing labelled the tariffs as “protectionist” and, just days later, announced temporary anti-dumping measures on imports of brandy from the EU. France’s trade ministry said the measures were “incomprehensible” and violated free trade.

Among the French companies affected were spirit makers Remy Cointreau and Pernod Ricard, which saw shares fall by 8% and 4% respectively on 8 October. 

A Chinese press briefing also affected markets when investors were disappointed that officials didn’t announce any major stimulus measures. On 9 October, the Shenzhen Composite Index tumbled by 8.2% – its biggest fall since 1997 – while the Shanghai Stock Exchange lost 6.6% and the benchmark CSI 300 fell by 7.1%. 

Please note: This blog is for general information only and does not constitute advice. 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.

If you’ve ever struggled to find motivation, you’ll know how draining it can feel to push through and finish your work.

Getting out of a rut can be difficult, but is far from impossible. Finding a way to boost your creativity and approach your work with fresh eyes can help you leap back into your projects with renewed energy.

Indeed, recent research from Stanford University has found that changing your location could help you escape a creative rut.

Read on to discover why it’s important to find your motivation again and simple tips on how you can boost your creativity.

What is a “creative rut”?

We’ve all fallen victim to a creative rut at some point or another. Suddenly, a project that you used to be excited about stops being so fun, you lose inspiration, and working on something you used to love feels like a chore.

This can look like:

• Long-term procrastination
• A feeling of monotony
• Struggling for inspiration or motivation
• A lack of new ideas.

Creative ruts can often go hand in hand with burnout, which occurs when you spend a prolonged amount of time working too hard without taking breaks.

Why is it important to break out of a creative rut?

Creativity offers lots of benefits to your mental health and productivity across all areas of your life.

For example, creativity can:

• Increase workplace success
• Help you maintain loving relationships
• Improve healthy psychological functioning.

It’s also important to remember that everything you create, no matter how big or small, has the potential to improve people’s lives, whether that’s by bringing a smile to their faces or inspiring others to create their own art.

Changing your location could help you escape a creative rut

During their research, the Stanford scientists aimed to discover whether a change of location and a walk could improve their participants’ creativity.

Across their studies, they found that the participants who walked – no matter the distance or location – had an average increase in creative output of around 60%.

Furthermore, walking exhibited a residual effect on creativity. Not only did the participants’ creative output increase during a walk but their subsequent seated creativity after a walk was much higher than the group who remained seated the whole time.

To see how the location change affected the participants’ creativity, they also had them sit and walk in various locations. 

They found that all the participants – including the ones who didn’t walk at all – had a slight increase in productivity when moved from one location to another between tests.

5 practical ways to leave a creative rut behind

With this research in mind, there are a few tricks you can try if you need to escape a creative rut.

1. Go on walks

Adding a walk to your daily routine can help you boost your creativity and hopefully spark some much-needed inspiration.

One interesting thing the study concluded is that walking indoors on a treadmill was as effective as when the participants walked outdoors on a bustling university campus.

So, whether you take a stroll through your local park, walk to work, or invest in a treadmill, getting your body moving can help you regain your motivation.

2. Switch up your location

If you’re used to working in one location, you might be able to spark inspiration by moving your project somewhere else.

For example, if you usually work at your desk, then try taking your laptop to the kitchen table or meeting room, or even further afield, such as your local café.

3. Try something new

Trying something new can help you find a new perspective if you’re stuck on a specific aspect of your project.

For example, if you’re suffering from writer’s block, then why not try taking your current project in a completely unexpected direction?

Moving onto another aspect of your creative project and returning to the part you struggled with when you have more motivation and experience can help you power through the tough parts of your creative journey.

4. Look for inspiration

If inspiration isn’t coming naturally to you, sometimes you must hunt it down.

Speak to the people who motivate you, whether this be supportive friends and family members or a mentor who can help you with your creative project.

Enjoying other people’s art can also spark inspiration. Wander around a gallery, read a fantastic book, or watch a new movie to refresh your love for your project and generate some ideas.

5. Take a break

Working and thinking about a creative project non-stop can lead to burnout.

Instead of trying to force the motivation to come back to you by trying these other tips, sometimes you just need a break. 

Spend a few days or even a few weeks if you can indulging in your other hobbies or completing other work projects. When inspiration inevitably hits you again, you can jump back into your project with renewed energy and enthusiasm.