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. 

3 quick tips for keeping your emotions in check during volatility 

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.

1. Turn off the noise. If hearing about what’s happening in the markets puts you on edge, simply turning off the noise and not checking the performance of your investments outside of regular reviews can be hugely helpful.
2. Recognise that news headlines aren’t your portfolio. Headlines shouting about markets “plummeting” can be scary, but they often don’t represent what’s happening in your portfolio. Diversified investments may mean that when one area experiences a dip, gains in another balance it out. For instance, you might read that technology stocks have lost 10%, but they are likely to represent only a small portion of your entire portfolio.  
3. Review the long-term performance of your investments. Nobody wants to look at their investment portfolio and find the value is lower today than it was yesterday. However, you should invest with a long-term goal. So, rather than comparing the value to last week, look at the performance over years or even decades. 

Get in touch to talk about your investment portfolio 

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. 

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.

24% of people think all their savings are tax-free, according to a Lloyds Bank survey carried out in February 2025. However, they could be in for an unexpected shock, as the interest earned on savings might be liable for Income Tax.

The good news is, there are often ways to reduce a potential tax bill on your savings. Read on to find out when your savings might be taxed and how to avoid an unexpected bill. 

3 allowances that may affect whether you’re liable for tax on your savings  

How much you can earn in interest before tax might be due depends on your other income, such as your salary or pension. 

First, if you add the interest to your other income and the total is below the Personal Allowance, which is £12,570 in the 2025/26 tax year, no tax will be due. 

Second, most savers will benefit from the Personal Savings Allowance (PSA). You do not pay tax on interest that falls within this tax-free allowance. How much of the allowance you get depends on the rate of Income Tax you pay.

In 2025/26, before Income Tax is due on interest:

• Basic-rate taxpayers can earn up to £1,000 
• Higher-rate taxpayers can earn up to £500.

If you’re an additional-rate taxpayer, you do not benefit from a PSA.

Finally, if your income is less than £17,570 in 2025/26, you may also benefit from an additional £5,000 allowance on your savings. This is known as the “starting rate for savings”. 

2 million people are expected to pay tax on cash savings for the 2024/25 tax year

A combination of frozen tax thresholds and rising interest rates means more people will pay tax on their savings.

Indeed, according to AJ Bell figures released in February 2025, more than 2 million people will pay tax on cash savings for the 2024/25 tax year. The figure compares to just 650,000 in 2021/22.

It’s not just high earners who are affected. The number of basic-rate taxpayers who need to pay tax on savings has more than doubled in the same period. 

If you already complete a self-assessment tax return, you will be asked to declare the interest you’ve received.

Banks and building societies send information to HMRC. So, if you’re usually taxed under PAYE, you might not be aware that any tax is due until you receive a letter. Usually, if tax is due, HMRC adjusts your tax code, which would affect your take-home pay. 

How to manage your savings to reduce a tax bill 

If you want to mitigate a potential bill on your savings, it’s important to keep track of how much interest you’re earning. Should you near the threshold for when you might start paying tax, these five options may help you avoid a bill. 

1. Save money in an ISA

Interest earned on savings held in an ISA is tax-free. So, if you’re nearing the threshold for paying Income Tax on savings, moving some of your money to an ISA may be a logical step.

If you select a Cash ISA, your money will earn interest in the same way it would if you used a savings account.

You should note that the ISA allowance limits the amount you can place in an ISA in the 2025/26 tax year to £20,000. If your savings exceed this, you could slowly move your money into an ISA by making a new deposit each tax year, as your allowance will reset. 

2. Buy Premium Bonds

The money held in Premium Bonds won’t earn interest. However, you’re entered into a prize draw each month and, if you win, the money is tax-free.

The prizes range in value from £25 to £1 million – there is a 22,000 to 1 chance of winning each month for every £1 you have in Premium Bonds. 

As there’s no guarantee you’ll win through Premium Bonds, it may not be the right option if you want to generate a regular income or guaranteed returns.  

You can hold between £25 and £50,000 in Premium Bonds, and you can withdraw your money at any time.

3. Increase your pension contributions 

A pension provides a tax-efficient way to save for your retirement. So, if you’re holding a large sum in cash, you might want to consider boosting your pension contributions. 

Your pension is normally invested with the aim of delivering long-term growth. The returns generated from investments held in a pension are not liable for tax.

In addition, your pension contributions will typically benefit from tax relief. Assuming your pension contributions don’t exceed the Annual Allowance (£60,000 in 2025/26), you’ll receive tax relief at the highest rate of Income Tax you pay. If you’re a basic-rate taxpayer, that means when you deposit £80, the government will add £20. 

While the Annual Allowance is £60,000, the maximum tax relief you can claim is 100% of your annual earnings. If you’re a high earner or you have already taken a flexible income from your pension, your Annual Allowance may be lower. Please get in touch if you have any questions about your pension contributions. 

Historically, investment markets have delivered returns over a long-term time frame, but this cannot be guaranteed. It’s important to ensure your pension investments are appropriate for you and your goals.  

Keep in mind that money placed in your pension usually won’t be accessible until you turn 55 (rising to 57 in 2028). 

4. Invest your savings

Boosting pension contributions isn’t the only way to invest your savings. 

An efficient way to invest is to use your ISA annual allowance to place money into a Stocks and Shares ISA. Through a Stocks and Shares ISA, you may be able to invest in a range of assets that suit your risk profile and financial circumstances.

Again, remember that investment returns are not guaranteed, and the value of your investments may fall as well as rise. 

Returns on investments that aren’t held in a tax-efficient wrapper, like a pension or ISA, could become liable for tax. Making investments part of your wider financial plan could identify ways to reduce a potential bill. 

5. Place savings for a child in their own Junior ISA

If some of your savings are earmarked for a child, you might want to consider moving the money into their own Junior ISA (JISA).

There are benefits to holding the money intended for a child in your account, including having greater control over it. However, doing so could also increase your tax liability.

So, you may want to weigh up the pros and cons of opening a JISA in the child’s name. Keep in mind that you cannot usually access the money placed in a JISA until the child turns 18, at which point they can use it how they wish. 

Get in touch to create a tailored plan that considers your tax liability 

Reducing your tax liability in a way that aligns with your goals could help you get more out of your assets. Contact us to discuss how we could work with you to create a tailored financial plan that suits your needs. 

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.

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.

The Financial Conduct Authority does not regulate tax planning or NS&I products, including Premium Bonds. 

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 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.

The favourable tax treatment of ISAs may be subject to changes in legislation in the future.

An investment in a Stocks & Shares ISA will not provide the same security of capital associated with a Cash ISA.

If you want to help younger generations, passing on this pearl of wisdom could be key – start saving for your future as soon as possible. 

Many people think about their legacy when setting out their long-term goals. You may have considered gifting during your lifetime or how you’d like assets to be distributed after you pass away. One area you might have overlooked is the positive effect your financial insights could have.

Your knowledge could have a huge effect on the long-term finances of your loved ones. 

Indeed, a February 2025 survey from Aegon asked over-50s what they would tell their younger selves if they could time travel. Almost half of respondents said to “start saving as early as possible”.

In fact, the money tip ranked higher than “take care of your health”, “find a job you love”, and “spend more time with family”. 

A wealth transfer could give your loved ones a helping hand, but knowledge might be just as important. 

Long-term planning often plays an essential role in financial security 

When asked about the lifestyle choices they regret, the survey suggests many over-50s wish they’d considered long-term finances earlier. 

Respondents said they wish they knew more about how to invest and grow wealth (22%) and retirement planning (17%) at a younger age.

Research from Aviva published in March 2025 found a similar sentiment. Over-50s said they would tell their younger selves to:

• Clear debt (54%)
• Save an emergency fund (53%)
• Pay into a pension as soon as possible (52%). 

In addition, respondents said they’d encourage their younger selves to spend less on material items, like cars or designer labels. Instead, they’d prioritise experiences, including travelling the world, and creating a financial safety net. 

It’s not surprising that younger people are less likely to consider the long-term implications of their financial decisions. After all, it can seem like there’s plenty of time to think about retirement or other milestones. 

So, passing on what you’ve learnt about managing finances could be valuable. As well as sharing regrets, it’s a great opportunity to talk to your loved ones about the actions that have had a positive effect on your lifestyle, too. That might be putting a small amount of your income into savings each month, investing, or overpaying your mortgage. 

4 reasons to encourage your loved ones to start saving early 

1. It could help them form positive money habits 

Even if they don’t have financial goals right now, establishing positive money habits, such as setting out a budget, regularly contributing to a savings pot, or minimising debt, could lead to your loved ones laying a strong financial foundation. 

2. It’s impossible to know what’s around the corner 

Young people might be more likely to adopt a mindset of “it won’t happen to me”. It could mean they’re less compelled to put money aside for unexpected life events that could derail finances. 

Yet, financial shocks, like losing your job or being diagnosed with an illness, could affect you at any life stage. So, encouraging your loved ones to start saving as soon as they can could enable them to create a robust financial safety net.

3. They could benefit from the compounding effect 

Compounding is a powerful way to boost savings over time. Money placed in the bank will earn interest and, if it’s left untouched, the interest added will rise each time it’s calculated.

Imagine you place £1,000 in a savings account with a 5% annual interest rate. If you leave the interest earned in the account, your money would grow by:

• £50 to £1,050 in year one
• £52 to £1,102 in year two
• £56 to £1,158 in year three.

By year 10, the total amount in your savings account would be £1,628. 

The compounding effect may also apply to investing, including through an ISA or pension.

So, by starting as soon as possible, your family could benefit from years, or even decades, of the compounding effect. 

4. It could help them think about their life goals

Putting money to one side for the future could trigger your loved ones to consider what they want to achieve, from raising a family to starting a business.

Setting a direction might enable them to make better financial decisions that support their goals. 

Get in touch to make your loved ones part of your financial plan

If one of your goals is to support your loved ones, incorporating them into your financial plan may be useful. You might want to consider how gifts during your lifetime may help them reach their aspirations or create an estate plan that reflects this.

In addition, we could also work with your family members to build a tailored financial plan for them, which could help them balance short-term needs and long-term financial security.

Please get in touch to arrange a meeting with our team. 

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. 

A decade ago, the introduction of Pension Freedoms shook up retirement planning and gave retirees more options than ever. 

Before 2015, if you had a defined contribution (DC) pension, the common route was to use the money accumulated to purchase an annuity. The annuity would then provide you with a regular income, usually for the rest of your life. 

While an annuity can be valuable in some circumstances, it isn’t flexible.

To give retirees more choice, Pension Freedoms were introduced in 2015. If you choose, you can still purchase an annuity, but you might also opt to withdraw lump sums from your pension or take a flexible income that you’re in control of.

You may also mix the options. For instance, you may take an initial lump sum to kickstart retirement, purchase an annuity to create a base income, and withdraw a flexible income when you need to.

So, with a decade of Pension Freedoms data and experiences to draw from, what insights could be valuable when planning for your retirement?  

1. Pensioners could be missing out on returns by withdrawing a tax-free lump sum

One of the key changes in 2015 was the ability to withdraw 25% of your pension tax-free (up to £268,275 in 2025/26) when you turn 55, rising to 57 in 2028. 

The good news is that, despite fears of reckless spending, figures suggest most retirees aren’t immediately withdrawing this lump sum. According to Royal London data published in March 2025, just 8% of people took their tax-free lump sum within six months of turning 55. 

However, more than half of retirees choose to withdraw the lump sum at some point. The most common reason was to pay off a mortgage or reduce other debt, which could provide greater financial security over the long term.

Yet, around a quarter of people taking the tax-free cash simply deposited the money in the bank.

While having accessible cash might feel reassuring, leaving it in your pension, where it’s likely to be invested, could yield higher returns over a long-term time frame when compared to a savings account.

You don’t need to withdraw the 25% lump sum in one go to benefit from the tax-free cash. You can also spread it across multiple withdrawals. So, if you don’t have a clear plan to spend a lump sum, leaving it in your pension might make financial sense.

2. Over-50s are worried about running out of money in retirement 

As you\'re in control of how you access your pension savings, there is a risk that you could withdraw too much too soon, either by taking a large lump sum or withdrawing an unsustainable regular income. 

While figures suggest most retirees are taking a measured approach, 42% of over-50s told Royal London that they worry about running out of money in retirement. 

There are several ways to alleviate your fears and have confidence in your retirement finances. 

One option might be to purchase an annuity to create a base income. 

According to statistics from the Financial Conduct Authority (FCA), retirees are often choosing flexi-access drawdown over purchasing an annuity.

Indeed, in 2023/24, 68% of retirees accessing a pension worth between £100,000 and £249,999 did so by taking a flexible income. In contrast, just under 20% purchased an annuity. While an annuity isn’t right for everyone, it could offer peace of mind.

Another option is to work with a financial planner when you take a flexible income. We could help you assess your pension and other assets to understand what a sustainable income is for you.  

3. Retirees could face an unexpected tax bill

While you may have retired, you could still benefit from considering your tax liability, including Income Tax.

If your total income, including withdrawals from your pension and the income you receive from the State Pension, exceeds the Personal Allowance (£12,570 in 2025/26), you may be liable for Income Tax. Managing your withdrawals could help you avoid an unexpected tax bill or being pushed into a higher tax bracket. 

Yet, the Royal London research found just 4 in 10 people considered the tax implications of withdrawing a taxable lump sum from their pension. 

4. Most retirees aren’t seeking advice or guidance 

The FCA data indicates that just 30% of people accessing their pension for the first time took regulated financial advice. 

In addition, the Royal London survey suggests that 1 in 5 people didn’t speak to anyone about their pension or use any tools, such as income or tax calculators, before they made a withdrawal.

While retirement is an exciting milestone and you may feel confident handling your finances, it’s important to remember that the decisions you make now could affect your financial security for the rest of your life. 

Seeking professional advice or guidance could help you make choices that are right for you, identify potential risks, and put your mind at ease as you enjoy the next chapter of your life. 

Working with a financial planner may help you navigate Pension Freedoms  

Pension Freedoms mean you have far more flexibility than previous generations, but they may also come with additional responsibility, such as ensuring you don’t run out of money. A retirement plan could help you manage your finances as you prepare for the milestone and once you give up work. 

Please get in touch to speak to one of our team about your options for creating an income when you retire. 

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.

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.

Drawdown pension plans (unsecured income) are complex and are not suitable for everyone. Pension decisions can affect your income for the rest of your life (and that of any partner and other dependants). Where benefits are accessed on a flexible basis, these are not fixed or safeguarded for life. If security of income is important to you then you should consider purchasing an annuity or taking a scheme pension to provide a secured level of income.