Has the pandemic changed your life plans? Here’s how working with a financial planner can help

In recent months, the pandemic has changed many things about our daily lives. For example, for IT professionals such as yourself, it may have brought about a shift towards remote working, instead of being in the office every day.

However, one of the biggest impacts of the virus is the major disruption to many people’s long-term goals.

According to a recent study by Aviva, more than half of Brits have had to rethink their retirement plans because of the pandemic. If you’re one of them, seeking professional advice can help to give you greater reassurance about reaching your life goals.

Working with a planner can help you to know your risk tolerance

One of the biggest psychological effects of the pandemic has been that it’s made many people more risk-averse. It’s not hard to see why, as the virus has caused a significant amount of economic disruption.

According to government figures, the UK’s GDP fell by 9.7% in 2020 due to the Covid outbreak and subsequent national lockdowns. As businesses across the country were unable to operate normally, many assets fell in value, and this worried investors.

While the UK’s economy bounced back with healthy growth in 2021, the sudden shock had a psychological impact on many people. After going through such a highly uncertain and stressful period, it’s understandable that many people have become more cautious.

This is especially true for younger people, who have less experience of market downturns. According to a study published in FTAdviser, more than half of 18-to-24-year-olds are more risk-averse when investing than they were before the pandemic.

While a sense of caution can sometimes help you, being too risk-averse can mean that you may not be able to invest in the most effective way. And this can mean that your wealth isn’t able to grow enough for you to reach your financial goals in the time you have.

This is where working with a financial planner can help you. Seeking professional advice can help you make informed decisions with your wealth, meaning that you are able to grow it effectively without exposing yourself to more risk than is necessary.

A financial planner can help you to build a resilient and diversified portfolio

While seeking professional advice can help you to understand your risk tolerance, another way that a planner can help you is by ensuring that your portfolio is sufficiently diversified. This means that when a financial shock happens, your wealth won’t be as badly affected.

Diversification is essentially about not putting all your eggs in one basket. If your investments are concentrated in a particular economic sector or geographical region, they could fall in value rapidly if an unexpected problem arises.

This can be a particular problem if you receive company shares as part of your workplace benefits scheme. If you hold an uneven balance of shares in the company you work for, you run the risk of being overweighted in the IT sector. This could make you potentially more vulnerable to the effects of a sudden market downturn.

A well-balanced portfolio typically contains a variety of investments from a range of asset classes, as well as economic sectors and geographical areas. For example, it may contain stocks and shares, corporate and government bonds, as well as real estate holdings.

Diversifying your investments can help to give you greater confidence when investing, as you can rest assured that even if market volatility does occur, only a portion of your wealth will be affected.

Using cashflow modelling can help you to see your progress towards your goals

While understanding your risk tolerance and building a diverse portfolio are both useful ways to gain more financial peace of mind, one of the best ways that a financial planner can help you is with cashflow modelling.

Essentially, this helps you to get an accurate picture of what your financial situation will look like over time. This can help you to see if you’re on track to reach your goals and enables you to do something about it if not.

For example, you may want to enjoy an early retirement. If this is the case, your planner can assess the value of the assets that you hold and look at how much they will need to grow by to provide you with a comfortable and sustainable lifestyle when you want to give up work.

If the modelling shows that you may not have enough, you can reassess your investing strategy or consider increasing your pension contributions. This can give you much greater confidence to know that no matter what disruptions you might experience, you’re on track to reach your goals.

Get in touch

If you want to gain more peace of mind that you’ll be able to achieve your financial goals, we can help. Email enquiries@bowmorefp.com or call us on 01275 462 469 to find out more.

Please note:

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.

Bowmore Financial Planning Ltd is authorised and regulated by the FCA.

The Financial Conduct Authority does not regulate cash flow planning.

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