Month: May 2025

This guest blog was written by Chris Budd who wrote the original Financial Wellbeing Book, and also the Four Cornerstones of Financial Wellbeing. He has written more than 115 episodes of the Financial Wellbeing Podcast and founded the Institute for Financial Wellbeing.

Whether money makes someone happy is a question that provokes many different opinions. Some will say yes; just look at people who have nothing and compare their happiness with people who have lots.

Others will say no; some of the poorest areas of the world show the greatest happiness, and some of the richest people are unhappy.

Research tells us that, as with most things in life, the answer is a bit of both. Understanding this interaction between increasing wealth and wellbeing is an important part of financial planning.

Maslow’s hierarchy of needs

There is a psychological theory about motivations called “Maslow’s hierarchy of needs”.

This theory states that our basic needs must be met (food, shelter) before we can think about our psychological needs (love and belonging). Those psychological needs must then be met before we can find self-esteem and be creative (Maslow describes this final stage as “self-actualisation”).

This has been a very popular model but it is, of course, flawed (as Maslow himself admitted). Life does not present itself in a series of stages, each of which is only accessible when the previous stage has been completed. For example, it is possible to be creative without feeling 100% secure.

Instead of seeing these needs as a hierarchy that we pass through, we could view the development of wellbeing as similar to building a house. We don’t build one side at a time; rather, we work on all aspects simultaneously.

Money and Maslow

So, how does money link with the hierarchy of needs? Maslow himself did not see money as a need, but a tool to be used to satisfy some of the lower needs on the hierarchy.

Although money can help feed us and make us feel secure, it doesn’t have much to do with love and a sense of belonging.

As we travel up the hierarchy, we find that money can actually work against self-esteem. If we judge ourselves by how wealthy we are, then this requires a judgment based on how wealthy other people are. As Theodore Roosevelt is reported to have said: “Comparison is the thief of joy”.

Finally, money has little to do with self-actualisation and creativity. Having more money can create more options around how we spend our time, it is true, but this is often a case of priorities.

Money and happiness

So, do we need more money to be happier? The evidence is clear: not really.

In his book The Antidote, Oliver Berkman describes the second-largest slum in Africa – Kibera in Nairobi. One would imagine it to be a place of great misery – but research shows it to actually be a place of great happiness.

We could point to a homeless person on the street in comparison with that same person with a roof, a job and some income. Of course, they will be happier.

And yet, give that same person lots of money, and they may become less happy again (there are examples of lottery winners who became miserable after their windfall).

We could also point to relative happiness. A person living in a two-bedroom semi-detached house with wonderful neighbours and a strong sense of community might be extremely happy. Until they hear that an old school friend is living in a four-bedroom detached house in an expensive area of town!

My happy challenge

The question you might wish to ask yourself is this: what are the sources of joy in your life? And how does money affect those sources – positively, negatively, or not at all? How might these change in the future?

The next step is to consider the answers to these questions in the context of your financial plan. What objectives does your financial plan aim to fulfil? Will achieving these objectives increase your wellbeing? In what ways? Are there any other objectives that you would like to include?

Perhaps you could discuss these questions with your financial adviser. The answers could help you to create a financial plan that will make you happier, not just wealthier.

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.

Once again, US president Donald Trump’s trade tariffs have affected investment markets throughout April 2025 and could have far-reaching implications over the coming months.

Indeed, UN Trade and Development now predicts that global growth will slow to 2.3% in 2025, compared to 2.8% last year.

While experiencing volatility can be daunting as an investor, remember to take a long-term view. Historically, markets have recovered from periods of downturn. However, it’s important to note that investment returns cannot be guaranteed.

Trade tariffs and their effect on the market in April 2025

Since Trump took office in January, uncertainty around trade policies has affected global markets, and these announcements continued to have an effect in April. 

On 2 April, markets prepared for key tariff announcements from the US, dubbed “Liberation Day” by the White House.

The speculation led to a European stock sell-off gathering pace, with pharmaceutical shares being particularly affected. The Stoxx 600 healthcare index, which is composed of European businesses in the healthcare sector, fell by around 2.5%.

On “Liberation Day”, Trump announced sweeping two-tier tariffs. A baseline 10% tariff was applied universally to imports from all countries (except Mexico and Canada) and then additional country-specific “reciprocal” tariffs were also applied.

As a result, on 3 April, markets around the world plummeted when they opened – from Tokyo’s Nikkei (-3.4%) to London’s FTSE 100 (-1.4%). In fact, Wall Street recorded its worst day since 2020 as the S&P 500, which tracks 500 leading companies in the US, closed 4.9% lower.

On 4 April, Beijing retaliated and announced 34% tariffs on the US.

As the market continued to fall, it didn’t stop there, with both the US and China increasing their tariffs several times. By 11 April, China’s tariff had reached 125% and the US’s was 145%.

Amid this tit-for-tat trade war, Trump announced a 90-day pause on reciprocal tariffs for most countries, which led to markets rallying.

Despite the uncertainty experienced throughout April, the market began to settle towards the end of the month. On 24 April, the FTSE 100 closed 0.65% higher than it opened and was back to the level it was on 3 April before the tariff volatility. It was a similarly positive day for the main indices in Germany and France.

UK

Headline data was mixed for the UK in April.

Figures from the Office for National Statistics show the economy unexpectedly grew by 0.5% in February. While this will certainly be welcome news for chancellor Rachel Reeves, experts predict a downturn in March due to the tariffs. 

Inflation also fell in line with expectations to 2.6% in the 12 months to March 2025, compared to 2.8% a month earlier. The Bank of England hinted it could cut the base interest rate at the next Monetary Policy Committee meeting in May.

However, readings from S&P Global’s Purchasing Managers Index (PMI), which provides an insight into the health of businesses, aren’t optimistic. 

The PMI indicated manufacturing production fell at a faster pace in March as new orders declined at the sharpest rate in 19 months.

In addition, the private sector went into decline for the first time since October 2023 due to exports falling at the fastest pace in almost five years.

Europe

Eurostat data shows inflation was down across the eurozone to 2.2% in the 12 months to March. There was a significant variance between countries, from France (0.9%) to Romania (5.1%).

The figures paved the way for the European Central Bank to make its seventh cut to interest rates in the last 12 months. The main interest rate fell from 2.5% to 2.25%.

PMI data was more positive for the eurozone than the UK.

Factory output increased for the third consecutive month and crossed the threshold that indicates growth for the first time in two years. This boost is linked to orders rising as businesses tried to beat incoming tariffs.

Perhaps unsurprisingly given market volatility, a survey from the ZEW Economic Research Institute found German investor morale plunged to the lowest level since the start of the war in Ukraine. The president of the institute pointed to the “erratic change in US trade policy” as a reason.  

US

There could be difficult months ahead for the US. The International Monetary Fund increased the probability of a US recession occurring in 2025 from 25% to 37%.

Tariffs affected more than the markets too. Uncertainty around trade policy led to factory production stalling, according to S&P Global’s PMI. However, at 50.2, the reading remained just above the 50 mark that indicates growth.

Similarly, the PMI showed US business activity fell to a 16-month low.

Some of the largest businesses in the US have suffered a setback due to the tariffs.

On 3 April, Apple shares were down by 9%, wiping $300 billion (£225 billion) from the company’s value. The business relies on imports from Asia and is likely to face higher costs as a result.

Tesla’s quarterly sales also indicated challenges as they slumped 13% in the first three months of the year. The fall was linked to strong competition from rivals and owner Elon Musk’s involvement with Trump’s presidential campaign.

Asia

Exports from China climbed by 12.4% year-on-year in March – a five-month high. The jump was caused by factories rushing to get shipments out before tariffs took effect.

There was a blow to China when Fitch downgraded its credit rating from A+ to A. The organisation said the decision was made before tariffs were considered and is due to China’s rising debt and deteriorating public finances.

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.

According to the Belonging Study 2025, around 3 in 10 adults in the UK say they feel lonely often or some of the time, and a further 27% experience it occasionally. It’s something many people will experience at some point in their life and it can be difficult to overcome.

Loneliness Awareness Week, between 9 and 15 June 2025, aims to reduce the stigma of this natural human emotion and encourage people to connect.

Loneliness is defined as a perceived mismatch between the quality and quantity of social connections that a person has, and what they would like to have. So, a person who feels lonely isn’t necessarily alone. There might be people in your life who feel lonely who you would not expect to.

Loneliness can harm your health

While you might think of loneliness as an emotional state, it may have a more complicated effect on your health.

According to the NHS, it’s linked to conditions like anxiety, depression, and poor mental health. It’s also associated with physical conditions, like dementia. What’s more, a 2016 British Heart Foundation study found that social isolation was linked to a 29% increased risk of coronary heart disease and a 32% increased risk of having a stroke.

Whether you feel lonely or know someone who might, starting a conversation could change your outlook and have a positive impact on your life.

4 useful rules that could help you tackle difficult conversations about loneliness

1. View loneliness as a normal emotion

While it can feel strange at first, try to normalise loneliness. It’s something many people feel and if you share your experiences, it’s likely the person you’re speaking to can relate in some way.

Approaching loneliness like it’s a taboo subject can make it feel far scarier, and lead to feeling more isolated than ever. So, approach talking about loneliness with your family and friends the same way you would other day-to-day topics where possible.

2. Avoid negative words and phrases

The language you use can be powerful and affect how a conversation feels. So, avoiding negative words and phrases could make those difficult conversations far more productive and valuable.

For example, rather than saying someone is “suffering” from loneliness, you might say they are “experiencing” it instead. Suffering implies that something is wrong, so it’s a subtle change that helps people feel like they’re in control.

Similarly, when you want to talk about your feelings, you might automatically say, “I am lonely”. While you can describe your experiences in a way that feels most comfortable to you, this phrase can make it seem like loneliness is a permanent state of being, and that it’s part of who you are.

In contrast, “I feel lonely” suggests your feelings are something you can change and improve.

3. Use questions that invite reflection but aren’t judgemental

When you’re having a challenging conversation, it may be difficult not to come across as judgemental even when your intention is the opposite.

For example, if someone tells you they feel lonely, you might ask, “Have you tried joining a social club?” without giving it much thought. Your intention may be to provide a solution, but the person coming to you for help may feel like you’re accusing them of not doing enough. 

Instead, try asking questions that invite reflection. You might ask, “Have you been feeling supported lately?”, which provides an opportunity for them to tell you what they need.

4. Leave conversations open

It can take some time to get used to talking about feeling lonely or wider mental health challenges. So, make sure the conversation remains open if you feel like you could benefit from talking to the person again.

Letting the person know how valuable you found their company or that you’d like to catch up again could mean loneliness is an easier topic to broach next time, or even prompt the other person to initiate it.

If you’re talking to someone who is lonely or you think could be struggling with their mental health, leaving conversations open-ended or with an invitation may be useful.

It could be as simple as saying “you can always talk to me” to let them know you’re there for them should they need you.

If you want to help younger generations, passing on this pearl of wisdom could be key – start saving for your future as soon as possible.

Many people think about their legacy when setting out their long-term goals. You may have considered gifting during your lifetime or how you’d like assets to be distributed after you pass away. One area you might have overlooked is the positive effect your financial insights could have.

Your knowledge could have a huge effect on the long-term finances of your loved ones.

Indeed, a February 2025 survey from Aegon asked over-50s what they would tell their younger selves if they could time travel. Almost half of respondents said to “start saving as early as possible”.

In fact, the money tip ranked higher than “take care of your health”, “find a job you love”, and “spend more time with family”.

A wealth transfer could give your loved ones a helping hand, but knowledge might be just as important.

Long-term planning often plays an essential role in financial security

When asked about the lifestyle choices they regret, the survey suggests many over-50s wish they’d considered long-term finances earlier.

Respondents said they wish they knew more about how to invest and grow wealth (22%) and retirement planning (17%) at a younger age.

Research from Aviva published in March 2025 found a similar sentiment. Over-50s said they would tell their younger selves to:

• Clear debt (54%)
• Save an emergency fund (53%)
• Pay into a pension as soon as possible (52%).

In addition, respondents said they’d encourage their younger selves to spend less on material items, like cars or designer labels. Instead, they’d prioritise experiences, including travelling the world, and creating a financial safety net.

It’s not surprising that younger people are less likely to consider the long-term implications of their financial decisions. After all, it can seem like there’s plenty of time to think about retirement or other milestones.

So, passing on what you’ve learnt about managing finances could be valuable. As well as sharing regrets, it’s a great opportunity to talk to your loved ones about the actions that have had a positive effect on your lifestyle, too. That might be putting a small amount of your income into savings each month, investing, or overpaying your mortgage.

4 reasons to encourage your loved ones to start saving early

1. It could help them form positive money habits

Even if they don’t have financial goals right now, establishing positive money habits, such as setting out a budget, regularly contributing to a savings pot, or minimising debt, could lead to your loved ones laying a strong financial foundation.

2. It’s impossible to know what’s around the corner

Young people might be more likely to adopt a mindset of “it won’t happen to me”. It could mean they’re less compelled to put money aside for unexpected life events that could derail finances.

Yet, financial shocks, like losing your job or being diagnosed with an illness, could affect you at any life stage. So, encouraging your loved ones to start saving as soon as they can could enable them to create a robust financial safety net.

3. They could benefit from the compounding effect

Compounding is a powerful way to boost savings over time. Money placed in the bank will earn interest and, if it’s left untouched, the interest added will rise each time it’s calculated.

Imagine you place £1,000 in a savings account with a 5% annual interest rate. If you leave the interest earned in the account, your money would grow by:

• £50 to £1,050 in year one
• £52 to £1,102 in year two
• £56 to £1,158 in year three.

By year 10, the total amount in your savings account would be £1,628.

The compounding effect may also apply to investing, including through an ISA or pension.

So, by starting as soon as possible, your family could benefit from years, or even decades, of the compounding effect.

4. It could help them think about their life goals

Putting money to one side for the future could trigger your loved ones to consider what they want to achieve, from raising a family to starting a business.

Setting a direction might enable them to make better financial decisions that support their goals.

Get in touch to make your loved ones part of your financial plan

If one of your goals is to support your loved ones, incorporating them into your financial plan may be useful. You might want to consider how gifts during your lifetime may help them reach their aspirations or create an estate plan that reflects this.

In addition, we could also work with your family members to build a tailored financial plan for them, which could help them balance short-term needs and long-term financial security.

Please get in touch to arrange a meeting with our team.

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.

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 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.

If an unexpected lump sum lands in your bank account, you might be tempted to splash out and treat yourself. However, using a windfall effectively could create long-term prosperity.

There are plenty of reasons why you might suddenly receive a cash injection. Perhaps you’ve received a bonus from work or inherited assets. Whatever the reason, before you start making plans, read on to find out how you might use it to improve your long-term financial security.

Favouring savings could mean UK adults miss out on long-term growth

A February 2025 study from Aegon asked UK adults how they’d use an unexpected £5,000 bonus. Encouragingly, 70% would prefer to save for the future or pay off existing debt than spend it on themselves.

However, many would miss out on long-term growth opportunities as they favoured holding the money in cash – 27% would deposit it in a savings account and 16% would use a Cash ISA. In contrast, just 9% would invest in stocks and shares and 5% would invest through their pension.

While cash can seem like the “safe” option, the interest rate is likely to be lower than potential investment returns. So, while intentions might be good, they could be missing out on an opportunity for long-term growth.

Investing isn’t always the right option if you’ve received a windfall but it’s important to weigh up the pros and cons. Here are six useful steps that could help you identify how to use an unexpected cash injection in a way that reflects your goals.

1. Set out your financial goals

You can’t make a decision that reflects your goals if you haven’t defined what they are.

So, before you start thinking about how to use the money, answer these questions: What are your main financial goals, and when do you want to achieve them?

Your answer can provide direction for the decisions you make next. For example, if you said you wanted “to create a nest egg to give my child in five years”, the most effective way to use the money would be different than if your answer was “to retire in 20 years”.

2. Assess your current finances

A windfall might seem separate from your day-to-day finances. Yet, taking the time to understand your current financial position and how the additional money could be used to support your existing financial plan is likely to be valuable.

For instance, the Aegon research found 12% of people would opt to pay off debt.

Paying off debt may make financial sense and have a positive effect on your overall wellbeing – many people feel relief and a sense of achievement when their mortgage is paid off.

In addition, lowering your regular outgoings might provide you with greater freedom. Perhaps you could reduce your working hours or change your role as a result.

3. Review your financial safety net

While part of your wider financial plan, it’s worth paying particular attention to your financial safety net when reviewing your current position.

You may hope to never need your emergency fund, but, should something unexpected happen, a financial safety net is invaluable.

A common rule of thumb is to have six months of expenses in an easily accessible account that you could use in an emergency, from a roof repair to needing to take time off work due to an illness. Going through your financial commitments could help you set an emergency fund target that’s right for you.

You may also want to consider financial protection. Several types of protection would pay out either a lump sum or regular income when the conditions are met. For example, income protection would normally provide you with a portion of your salary if you need to take time off work because you’re ill or injured.

4. Consider if investing is right for your goals

When you’ve received a windfall, one important decision is whether to save or invest the money.

Usually, a savings account makes sense if you’re goal is within the next five years or you might need access to the money at short notice, such as your emergency fund.

On the other hand, if you want to build long-term prosperity, investing might be the right option for you.

It’s not possible to guarantee investment returns. However, markets have, historically, delivered returns over a long-term time frame. So, if you aim to turn a windfall into wealth that could support long-term goals, investing may help you get more out of your money.

5. Add money to your pension

If you decide investing is right for you, don’t overlook your pension.

A pension provides a tax-efficient way to invest for your retirement. Tax relief provides an instant boost to your contributions, and the potential to benefit from decades of compound returns might turn an initial lump sum into a way to create a comfortable retirement.

However, you can’t usually access the money in your pension until you turn 55 (rising to 57 in 2028). So, it’s important to understand your goals and time frame before you boost your retirement pot.

6. Seek professional advice

Working with a regulated financial planner gives you a chance to really consider what you want to get out of the windfall, and how you might achieve that. As well as creating an initial blueprint, ongoing financial advice could help ensure you remain on track and that your plan is updated to reflect changes in your goals or circumstances.

Please get in touch to arrange a meeting with one of our team.

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.

The Financial Conduct Authority does not regulate NS&I products.

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. 

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.