Financial Planning

4 times you might want to review your financial plan

When you create your financial plan, you might envision everything following the path you’ve set out. However, life is often unexpected, and your plan should be updated to reflect changes to your circumstances.

So, as well as your regular meetings, you might want to book additional reviews with your financial planner to ensure your plan continues to reflect your situation. Here are four times you might want to call us to schedule a review.

1. Your goals have changed

Your goals are at the heart of your financial plan and guide the decisions you make.

Your goals aren’t set in stone, and it’s normal to change your mind at times. Perhaps you’ve decided you want to start a business, step back from work sooner than expected, or help a family member get on the property ladder?

Your financial planner could help you understand if these goals can be achieved with your current plan or if adjustments may be needed.

For example, if you want to retire five years earlier than you planned, do you need to increase your pension contributions now, or would you need to take a lower income to ensure your pension lasts your lifetime?

By updating your financial plan, you can answer these questions and move towards your new goal by understanding what you need to do to turn it into a reality.

2. You’ve been promoted or secured a new job

While you’re celebrating securing a new position at work, don’t forget to update your financial plan.

If your income has increased, it can be easy for lifestyle creep (where your spending increases at the same rate as your income) to happen. Splurging more on day-to-day expenses you enjoy isn’t necessarily a bad idea, but you might want to balance it with steps that could improve your long-term finances, such as regularly investing more or boosting pension contributions.

Your financial planner could help you:

• Update your budget to reflect your new income
• Assess if your new income could mean your tax position has changed
• Review your employee benefits to understand how to get the most out of them.

An updated review could help you use your money to support your goals and create a lifestyle you enjoy.

3. You’ve welcomed a child

A growing family often triggers a financial review because your commitments and priorities may change.

Your day-to-day budget may need to be updated to reflect you or your partner taking time off work or to include childcare costs.

You might also want to think further ahead. For example, do you want to create a fund that will pay for school fees or start building a nest egg for when they reach adulthood?

It can be difficult to think about, but you may also want to take steps to ensure your child would be financially secure if you passed away. There are several ways you can pass on assets to a child, including naming them as a beneficiary in your will or setting up a trust. If you’d like to review your estate plan to reflect your growing family, please get in touch.

4. You’ve received an inheritance

Receiving an inheritance can result in a lot of conflicting emotions. It could mean you have more financial freedom and are able to do some of the things that were previously out of reach, but you may still be grieving the loss of a loved one and wondering how they’d like you to use the assets they’ve left behind.

When you’re ready, a financial review could help you understand the inherited assets and how they fit into your existing plan. Whether you decide to use the inheritance to fund your retirement or spend it now, incorporating it into your plan could help you assess all the options and the implications of your decision.

You might also want to take a look at your own estate plan after receiving an inheritance. It could change who your beneficiaries are, how you want to pass on assets, and whether Inheritance Tax is something you could benefit from considering.

Get in touch if your circumstances have changed

There are lots of other reasons why your financial plan could benefit from a review. So, whether you’re moving home or you want to bring your retirement date forward, we’re here to help you update your financial plan when your circumstances change.

Please get in touch if you’d like to arrange a meeting with your financial planner.

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. 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 Financial Conduct Authority does not regulate estate planning, trusts or Inheritance Tax planning.

Explained: How Dividend Tax works and when you pay it

Managing your tax liability could help reduce your overall tax bill and get more out of your money. If you’re unsure how and when you might pay Dividend Tax, read on to find out.

A dividend is one way a company can distribute profits to shareholders. You might receive dividends if you hold shares in dividend-paying companies or if you’re a business owner.

Changes over the last few years mean more people are paying Dividend Tax.

For example, the amount you can receive in dividends before tax is due, known as the “Dividend Allowance”, gradually fell from £5,000 in the 2017/18 tax year to £500 in 2024/25.

According to a September 2024 FTAdviser article, the number of people paying Dividend Tax for the 2024/25 tax year is expected to double when compared to 2021/22. It’s estimated that almost 3.6 million people will need to pay Dividend Tax for the 2024/25 tax year, leading to the Treasury collecting almost £18 billion.

So, it may be important to understand how current legislation might affect you and some of the ways you could reduce your liability.

The Dividend Tax essentials you need to know

If you receive dividends, understanding when Dividend Tax may be due and the rate you’ll pay is important.

As mentioned above, you won’t pay Dividend Tax if the total amount you’ve received is below the Dividend Allowance. For the 2025/26 tax year, the Dividend Allowance is £500.

Dividends above this threshold will usually be taxable, and the rate will depend on which Income Tax band(s) the dividends fall within once your other income is considered. As a result, when calculating your Dividend Tax liability, you may need to include the income you receive from your salary, savings, and other sources.

For the 2025/26 tax year, Dividend Tax rates are:

• Basic rate: 8.75%
• Higher rate: 33.75%
• Additional rate: 39.35%

Depending on your circumstances, paying Dividend Tax on income could reduce your overall tax liability. For example, if you’re a business owner, choosing to reduce your salary and withdraw some money through dividends might result in you paying a lower rate of tax on a portion of your income.

Understanding tax rules and how they apply to you can be complex, and you might benefit from seeking tailored advice.

3 effective ways to reduce your Dividend Tax bill

1. Use your Dividend Allowance

One of the simplest ways to reduce your Dividend Tax bill is to use your Dividend Allowance.

The allowance resets at the start of each tax year. If you can, spreading dividends across several tax years could reduce how much tax you’re paying.

The Dividend Allowance is also individual. So, if you’re married or in a civil partnership, managing tax liability together could be useful. You may pass some dividend-paying assets to your partner to use both of your Dividend Allowances.

2. Place dividend-paying shares in a tax-efficient wrapper

A Stocks and Shares ISA is a tax-efficient way to invest – you won’t pay tax on dividends from shares held in an ISA, and returns aren’t liable for Capital Gains Tax (CGT) either.

As a result, moving investments to an ISA could be an efficient way to reduce your tax bill.

You should note that the ISA subscription limit caps how much you can place into adult ISAs each tax year. For the 2025/26 tax year, it is £20,000.

In addition, pensions are a tax-efficient way to invest for retirement. Again, dividends you receive from investments held in a pension will not be liable for Dividend Tax, and investment returns won’t be liable for CGT.

The Annual Allowance (the amount you can save into a pension each tax year before tax charges may be applied) is £60,000 in 2025/26. However, your Annual Allowance might be lower if you’re a high earner or have already taken an income from your pension.

Keep in mind that you usually can’t access the money held in your pension until you are 55 (rising to 57 in 2028).

3. Reduce the number of dividend-paying shares you hold

Depending on your investment goals, you might choose to reduce dividend-paying shares if you’re focused on growth rather than income.

However, it’s important to note that this may not be appropriate for everyone and could increase your tax liability in other areas, such as CGT. Your financial planner could help you assess if adjusting your investment portfolio could be right for you.

Get in touch to talk about reducing your tax liability

If you’d like to discuss your tax liability and the steps you might take to reduce it, please get in touch. We’ll work with you to create a tailored plan that suits your circumstances and 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.

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 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 Financial Conduct Authority does not regulate tax planning.

How to prepare your loved ones for the “great wealth transfer”

Passing on your wealth to loved ones could transform their lives and mean they have more opportunities in the future. However, to get the most out of the “great wealth transfer”, younger generations need to be prepared to manage their inheritance.

According to September 2024 data from Vanguard, it’s estimated $18.3 trillion (£13.45 trillion) in wealth will be transferred globally by 2030. It’s expected to be the largest intergenerational transfer of assets in history, leading to it being dubbed the great wealth transfer.

In the UK alone, it’s estimated that £7 trillion will pass between generations by 2050.

Receiving an inheritance provides your loved ones with a chance to improve their financial security and reach lifestyle goals, from home ownership to travelling. However, with previous US research suggesting that up to 70% of affluent families lose their wealth by the next generation, you might want to think beyond assets.

Ensuring your wealth is passed on in line with your wishes

When you’re creating an estate plan, taking steps to ensure your assets are passed on in line with your wishes is essential.

If you want to leave assets to loved ones after you pass away, writing a will is often a priority. A will lets you state what you’d like to happen to your assets when you die. Without a will, assets will usually be distributed according to intestacy rules, which could be very different from your wishes and mean some intended beneficiaries are disinherited.

There are other alternative options to consider as part of your estate plan, including:

• Gifting wealth during your lifetime. This has the benefit of allowing you to see the positive effect your wealth has, and a chance to offer guidance. In some circumstances, gifting could also make sense from an Inheritance Tax perspective.
• Use a trust to pass on assets. If you place assets in a trust, you can set out how and when they can be used, and name a trustee to manage the assets on behalf of your beneficiaries. It could allow you to retain greater control and preserve wealth. Trusts can be complex, and you may benefit from seeking legal advice if you want to set one up.

With an estate plan setting out how you want to pass on wealth to your family, you can start to think about how to ensure your beneficiaries are equipped to manage it.

Communication could be key to preparing your beneficiaries

While wealth can be something of a taboo subject, talking about money and other assets could be hugely beneficial for your loved ones.

Talk to your beneficiaries about your wishes

Many people in the UK don’t discuss what they want to happen to their assets after they pass away. According to an October 2024 report from The National Will Register, 53% of adults haven’t done so.

As a result, it’s likely many beneficiaries are unsure about what they’ll inherit and how assets will be passed on. This could lead to them feeling overwhelmed when they receive the inheritance and potentially make poor financial decisions. Speaking to your loved ones about your wishes could allow them to make long-term plans.

However, it’s important to note that inheritances cannot be guaranteed. Changes to your circumstances could mean the inheritance is less than expected, so they should consider this.

Share your financial experiences and goals

Sharing your money experiences, both the positives and the negatives, can be powerful. It can be a way to pass on the knowledge you’ve amassed and encourage good financial habits.

It’s also an excellent opportunity to talk about the legacy you want to leave. If you have a clear idea about how you’d like your loved ones to use the wealth you’re leaving them, talking about the reasons why could mean they’re more likely to uphold your values and make decisions that align with your wishes.

As well as talking about your goals, take the time to understand theirs too. Listening to the challenges they face and their aspirations could help identify ways you might be able to offer support.

Create an intergenerational financial plan

If you currently manage your finances completely separate from your beneficiaries, you might want to consider creating an intergenerational financial plan that involves them.

An intergenerational plan may establish ways to improve tax efficiency and support the long-term goals of each person. It’s also an excellent way to introduce your loved one to financial planning and working with a professional if they don’t already, which may mean they’re better prepared for the great wealth transfer.

An intergenerational financial plan doesn’t mean you have to involve your beneficiaries in all your financial decisions or share the details of every asset; you can tailor the approach with your financial planner to suit you.

Contact us to talk about your estate plan and prepare the next generation

If you’d like to review your existing estate plan or discuss how we could work with you to financially prepare the next generation, please contact us.

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 Financial Conduct Authority does not regulate wills, trusts, Inheritance Tax planning, or estate planning.

Half of adults reconsidering their retirement plans ahead of 2027 Inheritance Tax changes

An incoming change to the way pensions will be taxed when they’re inherited might mean you’re rethinking how you use your pension. Before you dive into updating your retirement plan, it’s important to understand what the changes could mean for you and how to balance passing on wealth with your retirement aspirations.

During the Autumn Budget in October 2024, chancellor Rachel Reeves announced that from April 2027 unspent pensions are likely to be included in Inheritance Tax (IHT) calculations. The government predicts the move will affect around 8% of estates each year.

In 2025/26, if the value of your entire estate is below £325,000, no IHT will be due. This is known as the “nil-rate band”. In addition, if you leave your main home to direct descendants, you may also benefit from the residence nil-rate band, which is £175,000 in 2025/26. Both thresholds are frozen until April 2030.

Your estate covers all your assets, such as property, savings, and material items. Currently, pensions fall outside of your estate, but you may want to consider how the value might change once pensions are included ahead of the new rule in 2027. Reviewing your retirement and estate plan could help you identify ways to improve long-term tax efficiency.

According to a February 2025 survey from interactive investor, 54% of UK adults are already planning to adjust their retirement or estate plan in response to IHT changes.

3 ways you might adjust your retirement plan to reflect Inheritance Tax changes

If the inclusion of your pension in your estate could increase the amount of IHT due, you might decide to update your retirement plan. Here are three options you could consider.

1. Spend more in retirement

The IHT changes could provide an excellent opportunity to update your retirement plan and consider what’s possible. Spending more of your pension during your life may bring the value of your estate under IHT thresholds or reduce a potential bill.

In the interactive investor survey, 19% of respondents said they plan to withdraw more money from their pension and gifting it (more on this later). What’s more, 6% are thinking about retiring earlier than previously planned.

So, if you want to deplete your pension during your lifetime, rather than leaving it as an inheritance, what would you do? You might start to think about a once-in-a-lifetime trip or how an income boost could allow you to do more of the things you enjoy, whether that’s visiting the theatre, supporting good causes, or keeping active.

Of course, spending more often needs to be balanced with long-term sustainability. A financial plan could help you understand if increasing pension withdrawals in retirement may lead to you running out of money later in life.

One thing to keep in mind is how increasing pension withdrawals could increase your Income Tax liability in retirement.

Your pension withdrawals will be added to other sources of income when calculating your Income Tax bill. As a result, taking a higher income from your pension could unexpectedly push you into a higher tax bracket.

2. Use your pension to gift wealth to your loved ones

If you’d previously planned to leave your pension to loved ones as an inheritance, gifting during your lifetime could provide a solution. You might withdraw a regular income or a lump sum to pass on to your beneficiaries.

A gift during your lifetime could be more beneficial to your loved ones than an inheritance later in life. It may allow them to purchase their first home, get married, pay education fees, or simply improve their day-to-day finances.

When gifting wealth, you may need to consider the “seven-year rule”. If you pass on assets and die within seven years of the gift being given, the asset could be included in your estate for IHT purposes. So, gifting during your early years of retirement could make sense if your goal is to reduce a potential IHT bill.

Again, keep in mind that withdrawing lump sums from your pension might increase your Income Tax liability and that gifting could affect your long-term financial security.

3. Reduce your pension contributions

8% of participants in the interactive investor survey suggested they planned to cut pension contributions due to the IHT changes.

For some people, this might be the right decision. For example, if you’ve already built up enough pension wealth to support yourself throughout retirement and you’d like to divert your money to other assets you could pass on tax-efficiently. However, it’s important to carefully assess your options to prevent knee-jerk decisions.

While your unspent retirement savings could become liable for IHT when you pass away, pensions are often tax-efficient in other ways. For instance:

• Your pension contributions will typically benefit from tax relief
• You can normally withdraw 25% of your pension (up to £268,275) tax-free
• Returns generated from investments held in your pension are not usually liable for Capital Gains Tax.

So, while your pension’s value may affect your estate’s IHT liability, maintaining, or even increasing, pension contributions could be tax-efficient when you look at them in the context of your wider financial plan.

Get in touch to talk about your pension and estate plan

If the incoming changes mean you’re unsure how to manage your pension or pass on wealth to loved ones, please get in touch. We can work with you to create or adjust a tailored financial plan that considers your circumstances and goals as well as regulation.

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. 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 Financial Conduct Authority does not regulate estate planning or Inheritance Tax planning.

Financial protection: How it could help you bridge an income gap

You don’t know what’s around the corner, but that doesn’t mean you can’t prepare for it.

A financial shock could derail your short- and long-term plans and might mean you face additional stress at an already difficult time. So, creating a financial safety net that you can rely on should the unexpected happen could offer you peace of mind.

Over the next few months, you can read about how financial protection might provide a cash injection if you’re unable to work due to an accident or illness. Read on to find out how appropriate financial protection may help you bridge the financial gap if your income stops.

7% of economically inactive people are dealing with long-term sickness

No one wants to think about becoming too ill to work. However, the chances of it happening could be more likely than you think.

Indeed an April 2024 report published by the House of Commons Library estimated that around 7% of the working-age population who are economically inactive are dealing with long-term sickness.

In many cases, those who cannot work will see their income slashed, which may mean they cannot meet essential financial commitments. This added stress could make recovery even more challenging. So, it’s important to understand how you’d cope financially if your income stopped and whether there’s a potential gap.

3 ways you might receive an income if you’re unable to work

Statutory Sick Pay

If you’re an employee who earns at least £123 a week, you’re normally entitled to Statutory Sick Pay (SSP). While this could provide some income if you’re unable to work, it’s often not enough on its own to cover regular household expenses.

Indeed, SSP is just £116.75 a week, so you’re likely to face a shortfall if you’re relying on this alone. In addition, SSP will only be paid for up to 28 weeks. So, those facing a long-term illness could find the money they receive through SSP stops.

According to Citizens Advice in November 2024, around a quarter of workers have to rely on SSP alone if they’re unable to work.

Occupational sick pay

In addition to SSP, around half of workers would benefit from receiving their full wages through occupational sick pay. It’s worth checking your employee handbook or contract to see if your workplace would continue to pay you an income if you’re unable to work.

If your employer provides sick pay, there are two key things to check:

1. Would you receive your full salary or a portion of it?
2. How long could you receive occupational sick pay for?

It’s common for the amount you receive through occupational sick pay to reduce the longer you’re off. For example, you may receive your full salary for the first six months, and then half your regular pay for a further six months.

So, even if your employer offers sick pay, you could still face an income gap.

Depleting your assets

If you need to create an income while you’re ill, another option is to use your assets. You might withdraw money from your savings or investments to cover day-to-day costs.

While useful, if the money wasn’t earmarked as an emergency fund, depleting your assets might affect other goals, from going on holiday to your retirement.

Financial protection may provide an income injection when you need it most

Depending on the type of financial protection you take out, it could provide either a regular income or a lump sum if you’re not able to work due to an illness or accident.

So, if you’d struggle to cope financially if your income unexpectedly stopped, financial protection might be a safety net you want to consider. Not worrying about how you’ll pay the bills could make your recovery smoother or mean you have more options if returning to work isn’t possible.

Contact us to talk about your financial safety net

We don’t have a crystal ball to predict what will happen in the future. However, we can work with you to create a financial plan that includes a safety net should the unexpected happen.

If you’d like to understand what steps you might take to create long-term financial security, please get in touch.

Next month, read our blog to discover the different types of financial protection that may be useful for you and your family.

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.

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

Investment market update: January 2025

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.

UK

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”.

Europe

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.

US

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.

Asia

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 1.97 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.

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.

How creating a care fund could provide you with essential protection later in life

Rising life expectancy is good news but it could present some challenges, including making provisions for potentially needing additional help later in life. An Age UK report has highlighted how many people have unmet care needs and the lack of financial support from local authorities. So, if you haven’t already, creating a care fund as part of your financial plan could offer you valuable protection later in life.

A care fund is simply a pot of money that’s set aside to cover expenses related to care. That might include paying someone to come into your home to help with day-to-day tasks or moving into a residential care home. You might hold this money in a savings account, earmark a portion of your pension for it, or have investments you could sell if necessary.

A care fund could offer you peace of mind and more options if you find you need care later in life.

2 million over-65s have unmet care and support needs

According to the Age UK report, the number of people in the UK aged 50 and over is increasing rapidly.

As of 2024, there are 22 million people aged 50 and over in England alone. This figure is expected to rise by almost 20% over the next two decades – the equivalent of 4.3 million people. This is likely to mean more people have care needs and place pressure on a system that is already stretched.

Indeed, Age UK estimates there are already around 2 million people aged over 65 who have unmet care needs.

The survey asked people aged over 65 about the challenges they face. The participants said they struggle to:

• Dress (10%)
• Get in and out of bed (6%)
• Bathe (6%)
• Walk across a room (5%)
• Go to the toilet (4%)
• Eat (1%).

A large number of those who reported needing help with these everyday tasks aren’t receiving the support they need. There are many reasons why this may be, but, for some, finances could play a role.

The report found that the number of people aged over 75 in England has grown by around a fifth between 2013 and 2024. Yet, despite this, fewer older people are receiving local authority long-term care.

Indeed, most people will need to pay for at least a proportion of care costs themselves.

In the 2024/25 tax year, in England and Northern Ireland, if you have savings and assets of more than £14,250, you will need to pay for some of your care fees. If the value of your assets exceeds £23,250, you will need to pay for all your care fees.

The thresholds for paying for care are different in Scotland and Wales.

So, in most cases, you’ll need to pay for some of the costs associated with care., which can be substantial. According to figures from carehome.co.uk, the average cost of a residential care home for a year is more than £60,000. If nursing is required, it could rise to more than £73,000 a year.

Even if you’re able to live independently, the cost of having someone visit to provide a helping hand with some everyday tasks can add up. The rate varies across the country, but the average is around £18 an hour. Just 10 hours a week at the average rate would add up to more than £9,000 a year.

Setting aside some money for care could mean you don’t have to worry about finances if you find you’d benefit from help. It might mean you don’t face a delay when you need to access services.

A care fund could help you create the lifestyle you want

A care fund isn’t just about paying for the cost of care either, it may also provide you with more freedom for creating the lifestyle you want.

With money set aside, you might have more options when selecting the care services, you need.

For example, you might want to choose a care home that’s close to your children so they’re able to visit or one that has facilities that will allow you to continue your hobbies. Alternatively, you may prefer to stay in your own home and pay for a live-in carer to provide daily support or be able to supplement a loved one’s income so they’re able to reduce their working hours to care for you.

It can be difficult to think about what you’d like to happen if you needed help or couldn’t live independently. Yet, weighing up the options now could mean you’re in a better position to make decisions should you need to.

Making your care fund part of your estate plan

Setting up a care fund could be an important way to protect you if you need help later in life. But, of course, you hope you won’t need it.

So, it’s worth thinking about what you’d like to happen to your care fund if it remains untouched. You might want to pass it on to family members through a will, make a charitable donation, or make gifts to loved ones during your later years. Making your care fund part of your estate plan could ensure that it’s distributed in line with your wishes.

Contact us to discuss how to manage potential care costs

We’re here to help you create a financial plan that gives you confidence in your financial future, including if you need care or support later in life. Please contact us to arrange a meeting.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate estate planning.

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