How to decide when nothing is certain

Because our clients are of the human variety, a lot of them want certainty in planning. They want to know that this decision will turn out right or that they will be able to achieve this or that goal.

We think we are a good firm, but certainty unfortunately is not something we can provide.

Life is uncertain, thirty years from now is definitely uncertain. Even tomorrow is uncertain.

So much can happen in the traditional 30 year retirement planning time frame of age 65- 95. Imagine how much more can happen if you are thirty five and trying to make financial decisions that can impact the rest of your life.

There are two types of uncertainty. Inside and outside.

Uncertainty “inside”
Do you want to get married and have children?
Do you want to buy a house?
Do you want to move to a bigger house?
Do you want to send your kids to a private school?
Do you want to move out of town?
Do you want to move abroad?
Do you want to change jobs?
Do you want to change your career?
Do you want to stop working and go travelling?

Answers to these questions can often change on a whim. You can’t rationalise this stuff. We are not robots.

If however, you may want to make these decisions in the future you need to be sure you are in a position to “execute” them. That’s where the planning comes in.

Uncertainty “Outside”
Will my job be obsolete?
Will there be a recession?
Where will interest rates be in five years?
Will I get sick?
How will an incoming Labour government tax us?

The answer is I don’t know. You don’t know, nobody knows.

Not knowing what will happen is scary but all we can do is just build resilience, manage risks prudently and plan for opportunities. Here are some ways we can plan financially –

  • Make sure you have insurance (life, income protection )
  • Don’t fear having lots of cash. In a crash, you will love your cash so much, you’ll want to marry it
  • Try and pay off your mortgage
  • Invest long term money (10 years plus)

And here are some non-financial ways to build resilience –

  • Call your friends. Go out to coffee, dinner
  • Spend lots of time with your children. Talk to them, listen to them.
  • Career – Get a mentor. Network a lot. Learn stuff. Build skills.
  • Physical health – Eat right, move your body. Sleep.

We make the best plans with what we know now and with our best guesses for what will happen. At the end of the day, risk is what’s left over after you think you’ve thought of everything. Uncertainty is scary but unavoidable. Accept that, move forward and live your life. After all life’s too short.

  • This guide is for information purposes and does not constitute financial advice, which should be based on your individual circumstances.
  • Generally, life and income protection plans have no cash in value at any time and will cease at the end of the term. If premiums are not maintained, then cover will lapse.
  • Your home may be repossessed if you do not keep up repayments on your mortgage
  • The value of investments may go down as well as up and you may get back less than you invest.

Guide: 7 allowances you might want to use before the end of the 2023/24 tax year

When should I engage with a financial adviser?

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