Category Archives: Financial Planning

The Great Emergency Fund

Many people – through no fault of their own – have found themselves in a position where they have had a reduced level of income over recent months. From self-employed people who have been unable to work, through to retirees who have reduced income to avoid drawing down from depleted funds, and a great many different scenarios in between, you don’t need to look very far to find someone whose financial security has suddenly and unexpectedly come under threat.

No-one could have predicted this pandemic a year ago; if we could, many people may have done lots of things very differently. But this just goes to demonstrate the point that we never know what’s around the corner and being prepared financially can provide great peace of mind in the event of the unexpected.

As the past few months have amplified, relatively few people in the population at large have a ‘rainy day fund’ to fall back upon should they need it. Statistics1 indicate that a third Brits have less than £600 in savings with 1 in 10 having no savings at all. A further worrying statistic is that 40.93% of Brits don’t have enough savings to live for a month without income.

One of the key fundamental elements when we begin putting a financial plan in place with a client is an ‘emergency fund’. Although the exact amount varies from person to person depending on circumstances and preferences, the general consensus is that this should be somewhere in the region of 6 months to a year’s worth of income.

One comment we have heard from clients time and time again during the course of this difficult period has been ‘at least I have savings to fall back on’ – or words to this effect.

Here are five tips to building up your own emergency fund…

Look for day to day savings

With so many parts of our lives having been restricted during lockdown, it’s possible that the period highlighted some of the areas where savings in day to day spending could be made. For example, not being able to eat out, buy coffees or have regular hair or beauty treatments.

Although many people will find themselves with less income as a result of the Coronavirus crisis, conversely, there are some individuals and families who may find that they have been able to accumulate savings due to not being able spend in the normal way. In fact, some surveys have found that 70% of people have actually managed to save during lockdown. Whether it’s saving on the cost of commuting, days out or buying coffees and snacks, these mount up on a week by week and month by month basis. Rather than simply reverting to old ways as more of these options become available, it could be a good time to rethink what you spend and try and divert more everyday costs into savings.

Be disciplined

There’s no doubt about it, saving up takes discipline. We would all like to be able to afford to buy anything we want to as well as having money set aside for a rainy day or as part of our plans for the future, but for most of us, this simply isn’t possible. Regardless of your income and how much you can afford to save or invest, any sort of financial planning involves making a plan and sticking to it. There will almost always be some sacrifices and choices to make, but try to remember the end goal and what you’re saving towards.

Get to grips with your finances

Being able to save effectively requires a good understanding of your financial situation, and how much money you have available to set aside for your future. Most people get paid every month, so listing your monthly income and expenditure is a good place to start. It is also worth bearing in mind that you will have some larger annual costs – such as some insurance premiums or annual subscriptions. Taking all of this into account, you should be able to work out a rough amount that you have that is surplus to your spending requirements on a monthly basis. From here, it is up to you to decide how much you are comfortable or willing to set aside each month or year. As above, it may be worth looking at what items are ‘essential’ in your spending and what are ‘optional’, and how you may be able to utilise more of your optional expenditure into savings, whilst remembering that the things you spend money on today come at the additional cost of what you will have available to spend in the future.

Use technology

Making a conscious decision to set up an ISA and make payments into it isn’t something that everybody has the resources to do. But the good news is that technology has evolved rapidly over recent years and there are numerous online tools and apps aimed at helping people build up savings in small increments. For example, there are apps that round up everyday spending to the nearest pound, setting the money into a pot for investing or saving. Although you’re unlikely to be able to sail away into the sunset using this approach, it’s a great place to start for those with little ‘disposable’ income.

Pay yourself first

Move money into savings accounts on payday so it’s not tempting to spend your ‘future fund.’ When trying to build up savings, it can be easier to build the process of saving into your monthly expenditure plan, even automating the process by way of a direct debit or standing order. Taking the manual process out of the equation means that saving can take place without you having to think about it.

Equally, making monthly contributions can, for some, make saving and indeed investing more manageable. When investing on a monthly basis you also benefit from ‘pound cost averaging,’ which helps to mitigate risks relating to market timing.

Although these tips are written with the idea of building up an emergency fund in mind, in fact, they apply to anyone at any stage of the financial planning journey. An emergency can hit anyone at any stage as the Covid-19 pandemic has demonstrated.

For more information on any of the above points or to discuss starting your own journey into savings and investments, please get in touch with one of our financial advisers.



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Lessons from Covid-19 – Being Prepared for the Unexpected

Five months ago, if someone had told you that there would be an outbreak of a virus that would effectively bring the world to a standstill, would you have believed it? Even now, at times it’s hard to think that any of this has happened; it’s almost as if you’ll wake up one day and it will have been one, long, bad dream.

Covid-19 is likely to be the biggest global health pandemic many of us will ever experience in our lives. A crisis such as this hasn’t been seen since 1918 and according to many experts, viruses such as this are a once in a century occurrence. Perhaps the most shocking thing is the speed at which the outbreak and subsequent restrictions progressed; catching the vast majority of us completely off guard.

Unfortunately, other health scares and concerns on an individual level are not so unlikely. We have all read the statistics around cancer; 1 in 2 UK people will be diagnosed with cancer in their lifetime according to Cancer Research UK. Similarly, we will all know someone who has been affected by a serious accident – on the roads, at work or even in the home.

Yet even in light of this knowledge, we, on the whole, fail to protect ourselves and our loved ones financially via the numerous insurance policies available.

Income Protection Assurance is just one such insurance. It provides an income if an individual is ill long term. Usually speaking, it pays a maximum of 60% of income, tax free.

Critical illness Cover is another type of policy that provides a lump sum payment upon diagnosis of serious illnesses.

Life assurance provides a fixed one off payment upon the death of a named policy holder to help provide financial security to remaining loved ones.

The fact of the matter is that life is unpredictable. None of us want to think about the bad things that may happen to us or our family members, and it seems that our aversion to morbid thinking takes precedence over taking the sensible and usually straightforward precaution of putting policies in place. Yet for a relatively small sum per month, it can be possible to have the peace of mind that should you – or any member of your close family – encounter one of life’s nasty ‘surprises’, financial support will be payable.

Covid-19 has brought many things into focus across a variety of aspects of our lives. It’s made us appreciate the things we have and are able to do; the freedoms we ordinarily enjoy and the people we love.

If events over the past few months have prompted you to think about the ways in which you can protect yourself and your family in the future, please contact us to discuss the range of insurance policies available. As Chartered Financial planners, Gresham Wealth Management’s advisers are qualified to advise on life and wealth protection products.


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Investing Through the Current Crisis and Beyond

Financial markets have seen increased volatility since the outset of the Covid-19 pandemic, and with a continual flow of new information there is no clear indication as to whether markets are priced too high or too low.

With this in mind, we would like to share seven principles that we believe give a concise strategic framework for investing money in the current climate and beyond.

Get advice

When markets are moving up, worries of investors tend to be low as they are comforted by the increase in value of their wealth. However, investor behaviour can change as markets fall. The primary offender in this regard is loss aversion which often leads to bad decision making. Taking, and continuing to take, financial advice will help you understand the current investment landscape and prevent decisions that could adversely affect your ability to build wealth over the longer term.

Make an investment plan and stick to it

Whether you are saving for retirement, funding your retirement via income withdrawals, saving for a special event, utilising various tax efficient investment vehicles, investing for income or growth, or investing in your capacity as a Trustee, Attorney or Deputy, never lose sight of why you have invested in the first place; to achieve long term returns in excess of cash plus inflation.

Invest as soon as possible

Timing the market is a notoriously difficult skill to master and one that is fraught with risk. By investing at the earliest possible opportunity, you will allow your investment sufficient time to ride out the peaks and troughs of the market.

Don’t just invest in cash

With interest rates currently at all-time lows and the consensus seeming to provide little prospect for increases over the short term, cash is certainly not king. Therefore, it is imperative that investors look to use other asset classes that can provide the potential for greater long term gains and ultimately protect the value of their wealth after inflation.

Diversify your investments

Or quite simply, do not have all your eggs in one basket. Diversifying across different asset classes and geographic regions will not only help to mitigate risk but will assist in generating positive, long term returns.

Invest for the long term

This, we believe, is the key to successful investing. Not only does it give you time to ride out the peaks and troughs of market movements but it also gives you the opportunity to invest in assets that have the potential for significant long term growth. Short term investing is more akin to speculation, leaving a greater exposure to the vagaries of the market.

Stay invested

History has shown that markets go up and down, and when they fall, they recover. Staying invested will ensure you capture the long term upside of stock markets.

To highlight this, Schroders looked at the performance of the FTSE 250 Index over the last 30 years. It confirmed that remaining in the market rather than trying to time the market produced the best results.

Period invested Annualised Return
Whole 30 years 11.60%
Best 10 days missed 9.60%
Best 20 days missed 8.20%
Best 30 days missed 7.00%



When investing, it is imperative that these principles are upheld at all times. We ensure that the financial position of all our clients is sufficiently strong to withstand periods of market stress. Ultimately, the best strategy is to invest as soon as possible, and stay invested for the longest possible period of time; and these are our overarching principles when it comes to managing the investment of your money.


NB. The value of investments can fall as well as rise. You might not get back what you invest.

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Interest Rates and Monetary Policy – Where are we Now?

Living in a world of low interest rates is nothing new. In fact, with interest rates having remained so low over the last few years, and now at historic all-time lows – it’s hard to remember a time of high interest rates.

Over the course of the last eleven years we’ve seen many countries pursue this strategy to help boost economic growth and resilience and we now live in a world where interest rates across most countries are the lowest we have ever seen (in fact in some countries rates are negative!)

In this blog, we take a look at low interest rates within the frame of wider monetary policy.

Monetary policy, or the demand side of economic policy, is action that a country’s central bank or government can take to influence how much money is in the economy and how much it costs to borrow. It is used to promote macroeconomic targets that support sustainable economic growth and it generally involves influencing the money supply through interest rates or open market operations (quantitative easing or QE).

Here in the UK the Bank of England are responsible for monetary policy and their mandate is primarily to maintain the rate of inflation at 2% per annum, thus promoting economic stability. However, the Bank of England do have the powers to use monetary policy to help support wider economic goals, such as employment and economic growth. Indeed, in 2008 the Bank of England pursued one of the most aggressive forms of expansionary monetary stimulus in history by reducing interest rates to 0.50% per annum from 5% per annum. Only recently, we saw them step in to take emergency steps to reduce rates further to 0.10% per annum during the early stages of the Covid-19 epidemic in the UK.

Low or negative interest rates support economic growth in times of stress because they reduce the costs of borrowing for business and for households. This means that they are able to spend and invest, which in turn helps aid economic recovery.

However, there is a limit to how low interest rates can go before the measure becomes less effective or ineffective. For this reason, central banks across the world have pursued aggressive Quantitative Easing programmes alongside the reduction of interest rates. At its simplest, Quantitative Easing involves central banks digitally creating money which is then used to buy government bonds. Large purchases of government bonds help to keep bond yields low, which in turn helps to keep borrowing costs low.

Following the QE packages announced in March and June 2020, the Bank of England’s bond purchases will rise by £300bn to £745bn.

Government Bonds

It is interesting to see how these bond purchases (QE) have acted to support the government’s ability to fund their rescue package.  As many will be aware, the Chancellor of the Exchequer, Rishi Sunak, announced a support package for businesses valued at £350bn. The size of the stimulus speaks for itself. The government doesn’t have this sort of capital in a bank account ready to deploy. Capital therefore must be raised by issuing government bonds; debt-based investments that involve investors, institutions or other governments loaning money to a government in return for an agreed rate of interest (coupon) usually over a defined period of time (term to maturity).

Governments issuing bonds to help fund public spending is nothing new, it happens annually in line with their expenditure plans, and the government is usually able to sell these bonds with relative ease.

However, the rescue package needed to mitigate the impact of Covid-19 has been so large, the size of the stimulus means the government has had to issue a huge amount of debt very quickly at a time when the UK currency is weakening and investors are more risk averse.

The Bank of England’s QE package helped the UK government solve this problem by buying a large proportion of the bonds themselves. By avoiding the potential issue of not having a sufficient amount of buyers prepared to invest in bonds, the risk of higher cost of government borrowing has subsequently been circumvented. Keeping borrowing costs low is important for the long-term economy, leaving the country better placed to support the economy and public services in the future for generations to come.

Other Asset Classes

Quantitative easing and low interest rates also provide indirect support for other assets classes. as the demand for government debt increases, deposit rates fall as do yields. The result being that investors may have to look to riskier areas of the stock market and the economy in their search for income and or return.

In environments where too much money is invested and not enough spent, the flow of money into the real economy can reduce, creating ‘asset bubbles’ rather than support for employment and wages. Rising unemployment and falling wages can result in deflation.

However, low interest rates usually encourage borrowing which adds new money to the money supply. This can cause inflation because there is more money in the system which chases a fixed amount of goods and services, so prices rise. To avoid this central banks must act quickly enough to increase rates and sell bonds back into the secondary market once signs of a recovery support a reversal of monetary expansion.


It is true that at times of monetary expansion and low interest rates borrowers will see their cost of debt fall. The effects of low interest rates can take some time to feed into the economy but in time households have lower mortgage repayments and therefore higher levels of disposable income and business pay less to finance their operations which can help to improve their return on investment (all things being equal).

However, it’s not all good news for borrowers. Those seeking finance may find it more difficult. This is because when interest rates fall, the banks generally have less capital to lend out as their deposit base falls and lower interest rates reduce the profitability of a loan which doesn’t encourage taking risks and creates a reluctance to lend.

Nobody, as yet, knows the long-term extent of economic damage Covid-19 will have. Due to the unprecedented nature of the virus, it’s difficult to apply models from previous economic downturns and therefore, it’s equally hard to predict how quickly the economy will recover.  The use of monetary policy is clearly complex, with many different variables in play, and it will be interesting to see how policy-makers respond as and when the green shoots of recovery occur.

Notwithstanding this, it’s difficult to see any scenario in which the Bank of England or any Central Bank across the globe start to increase interest rates materially in the short to mid-term. Unfortunately for savers, this means that deposit rates are likely to remain unprecedentedly low for the foreseeable future.


NB. The value of investments can fall as well as rise. You might not get back what you invest.

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10 Financial Considerations in Light of Covid-19

The impact of Covid-19 is concerning to us all, and the effect on our lives has been significant. Most of us will have had changes enforced upon us and our normal way of life. As part of this adjustment, we’re aware that many clients have been taking the opportunity to use the time and space they have been presented with to focus on what is important to them, and likewise, their plans for the future.

With that in mind, now is an ideal time to review your finances. A de-cluttered financial life can create peace of mind; if you have a good financial plan in place and your money in order, you are likely to feel more in control of your wealth as well as your life. With this in mind we have put together ten areas you may be able to act upon now in readiness for the future.

  1. Review your cash balances.


With base rates at 0.1% returns in cash will continue to disappoint. However, it is important to remember that the reason to hold cash is not for its return but for security in the short term. Indeed, your cash allocation works in tandem with your investment portfolio. The latter provides long term investment growth and income and protection from inflation, however, in the short term returns can be variable. Cash helps take pressure off portfolios in this environment by helping to support immediate expenditure requirements and provides an emergency fund.


  1. Review what you are spending your money on.


Income is hard earnt but easily spent. It’s easy to fritter money away on things that have very little value. Keeping close to how much you are spending and what you are spending on allows you to identify where you can make savings. Committing to a regular review of your expenditure at least annually is important. Once you have identified savings that can be made ask you adviser to quantify the benefit of investing surplus cash to help you visualise and understand the importance of that choice.


  1. Review withdrawal rates.


When markets fall its often advisable to reduce the income taken from the portfolio as far as you can. This statement is not intended to alarm but to inform. It is best illustrated using the example of two twins, both with £100,000 invested. Twin A draws income of £4,000 per annum and Twin B draws nothing. If investment portfolios fall by 15% immediately and then Twin A draws income, the value of his portfolio would have fallen to £81,000. Twin A now needs a return of 23.46% to maintain capital values. Conversely, Twin B has £85,000 invested and needs a return of 17.65% to recover from paper losses. Reducing income in times like this will do two things; it will help asset values recover more quickly and shore up the long term sustainability of your income strategy. Large cash balances could be used to help replace lost income in the short term.


  1. Consider how tax efficiencies can enhance net investment returns.


Married couples and civil partners (from 2019) should consider the ownership structure of their investments to ensure that where one partner pays no or lower rates of tax, investments are held in their name to make sure their personal income tax allowance and basic rate band are fully utilised. This limits the total amount of income tax paid across the household ,also allowing couples to benefit from two capital gains tax exemptions and dividend allowances.


  1. Utilise ISA allowances.


This point leads on from the last. The ISA allowance remains at £20,000 per annum, per person. This means a couple can shelter £40,000 of capital from all taxes each year.


  1. Consider realising gains on portfolios.


Selling into weakness should not be advocated. However, if you have been holding on to an investment because of longstanding capital gains rather than for sound investment reasons, now might be a time to consider restructuring your portfolio in favour of areas that might offer better investment returns in the future. Furthermore, investments currently held directly could be moved into an ISA environment to create more tax efficiency.


  1. Review old paperwork and legacy contracts.


It’s so easy to lose track of where your pension and investments are and how they are invested, particularly if you have changed employment and / or your contract providers have merged with multiple organisations over the years. Taking the time to find out what you have and where can prove to be a fruitful exercise, as the difference between the worst performing fund and the best performing fund can be quite significant over the longer term.


  1. Plan for retirement, don’t plan at retirement.


The Institute of Fiscal Studies (IFS) issued a working paper W19/02 about how individuals severely underestimate their life expectancy. The IFS has stated that the population of over 90s will increase by 138% in the next 30 years. It is now more important than ever to start planning as soon as possible. This can be done by checking your rate of funding and projecting asset values forward to identify any short fall in provision at retirement and commit to funding that shortfall. The sooner you act, the cheaper your retirement income will be as less needs to be invested over a longer term to achieve the same outcome. Acting sooner rather than later also allows you to take advantage of income tax relief (employed individuals) and corporation tax relief (for employers) each year which helps reduce the net cost of saving.


  1. Review objectives and need for a wealth plan.


In the midst of uncertainty, it is important to remember your longer term objectives and strategy. Having an overall plan for your wealth is important. Often people want to achieve multiple things and objectives can be competing. For example, clients planning for retirement are often concerned about ensuring they have sufficient income to live on during their lifetime but equally concerned about giving capital to children to help them become independent and secure home ownership. Cash flow planning uses your asset, liability, income and expenditure position to help quantify your overall position so that you can see how sustainable your income needs are and helps to highlight how much you can afford to gift. Scenarios can be built to take account of contingencies and possible market downturns.


  1. Wealth protection.


For many people, the focus of financial planning is to build up wealth and create a comfortable future. However, the ‘protection gap,’ which refers to the amount of cover needed to maintain current living standards, is real and under reported. Protection policies including life assurance and critical illness cover are there to help ensure that in the worst case scenario, there is a backstop to help support immediate financial needs so that long term savings do not need to be raided.


In times of uncertainty, those that are able to make and stick to a plan will often fare better in the longer term. Our team are working with all clients to ensure that they are well placed to achieve their financial objectives, notwithstanding the current climate.

To discuss any of the above points in further detail, please contact your adviser.


NB. The value of investments can fall as well as rise. You might not get back what you invest.

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