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In our previous article in this series we defined what true financial planning meant. Many people simply invest their money to get the best returns possible. But within a financial plan it is essential that your investments are designed to support your lifestyle. The first thing to consider is an emergency fund. The textbooks will suggest holding capital to the equivalent of between three and six months’ income which can be drawn as at short notice. However, a more reasonable amount should be what feels comfortable to the individual, giving some consideration to the cost of an emergency that is not insured. For those in work, we would suggest a

A recent study* has identified several distinct pension personality types, each with its own strengths and challenges. Which one resonates with you? Procrastination Pete and Paula are the most common type, often overwhelmed by the complexities of pensions. This group is likely to make poor decisions, such as hastily withdrawing a 25% tax-free lump sum without a clear plan – potentially costing them thousands in future income. Buy-to-Let Brian and Barbara prefer the perceived security of property, though they often underestimate the costs and risks involved. Meanwhile, Spend-It Simon and Sally focus on enjoying life now, potentially jeopardising their long-term financial security by dipping into their pensions early. Winding-Down William