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Do you consider yourself an optimist or a pessimist?

The “blue dot theory” could suggest that humans are hard-wired to be pessimists, after psychologists discovered that once our brains are primed to see something (such as a blue dot), we see it everywhere, even when it’s not really there.

Read on to learn more about how the blue dot theory could be affecting you and how you can stop it from negatively impacting your life.

The “blue dot” theory

In 2017, Harvard researchers asked participants to identify blue dots among thousands, ranging from very blue to very purple.

During the first 200 trials, the participants could accurately identify the roughly equal proportion of blue and purple dots. However, as the experiment progressed and fewer blue dots appeared, participants began to label more obviously purple dots as blue.

To confirm their findings, the researchers attempted another trial with the same concept where they replaced the blue and purple dots with photos of threatening and non-threatening expressions. Once again, as they reduced the number of threatening photos, participants still identified the same ratio of pictures as threatening.

They concluded that our brains are designed to look for threats and problems regardless of our environment or whether the issues exist.

In practice, this often affects social lives. If your brain is looking for problems, you are more likely to interpret other people’s expressions, comments, or silences as judgments against you.

The blue dot theory also means that when you solve the big problems in your life, instead of being pleased with your progress, the smaller annoyances become more significant to you to fill the space.

How to combat the blue dot effect

If your brain is hard-wired to be pessimistic, you might be thinking there’s nothing you can do to change it – but have a bit of optimism!

The more aware you are of how the blue dot theory impacts your day-to-day life, the easier it is for you to change your mindset and combat the negative effects it can have on your relationships.

1. Stop projecting assumptions

    The blue dot theory often leads us to leap to assumptions about other people based on our own thoughts, feelings, or intentions.

    For example, you might interpret your colleagues’ neutral behaviour as personal attacks on you based on insecurities. Next time you find yourself wondering if someone you know is displeased with you, stop and consider whether you have concrete evidence to prove this.

    Separating facts from assumptions can help you to quash the negative thoughts and remind you that most people are too focused on themselves to analyse your every move.

    2. Try to avoid snap judgments

    Our ability to make fast decisions is an evolutionary device that has kept humanity alive for centuries, but it can also lead to you making wrong judgments about your loved ones.

    For example, if your friend seems quiet, your first assumption might be that they are upset with you. However, this snap judgment is based on limited evidence and might not be true.

    Next time, you find yourself making a snap judgment about something important, pause and allow yourself to wonder what else could be the reasoning behind someone’s behaviour. For example, simply asking your friend what is wrong could help you to support them and deepen your friendship, rather than assuming the worst straight off the bat.

    3. Practise gratitude

    The blue dot effect can make your life seem a lot worse than reality by turning every inconvenience into a monumental problem and every social interaction into an anxiety-inducing spiral.

    Although we can’t prevent ourselves from finding problems and seeing the bad parts of life, it’s important to focus on the good things.

    Take five minutes out of your day to reflect on all the progress you have made in life and some good things that have happened to you recently. You can even record the things you are grateful for in a journal every morning for a positive start to your day, or every night to help you sleep peacefully.

    While it can seem difficult to find the positives at first, practising gratitude can help you weaponise the blue dot theory against your brain. If you prime yourself to focus on the good things in life, you are more likely to see them, helping you to have a more optimistic outlook on life.

    4. Be compassionate towards yourself

    We are often our own worst critics. When we’re quick to judge ourselves, blue dot theory means we are even faster at interpreting other people’s actions as judgments against us.

    Being kinder to yourself will mean you assume other people have good intentions and can help you put a positive spin on any problems you might face.

    To start practising self-compassion, try talking to yourself as you would someone you care about. Every time you catch yourself thinking negative thoughts, consider whether you would say those things to someone you love, and offer yourself the same kindness.

    Trade tariffs continued to affect investment markets in June 2025, though uncertainty did start to ease. However, rising tensions in the Middle East may have affected the performance of your investments. Read on to find out more.

    Remember, it’s often wise to take a long-term view of your investments when reviewing returns, rather than focusing on short-term market movements.

    In June, the Organisation for Economic Co-operation and Development (OECD) cut its global growth forecast to 2.9% in 2025 and 2026, down from 3.1% and 3% respectively, on the assumption that tariff rates in mid-May are sustained.

    The OECD said: “Substantial increases in barriers to trade, tighter financial conditions, weaker business and consumer confidence and heightened policy uncertainty will all have marked adverse effects on growth prospects if they persist.”

    Similarly, the World Bank lowered its growth forecasts for nearly 70% of all economies. It estimates that the 2020s are on course to be the weakest decade for the global economy since the 1960s.

    Trade tensions ease, but uncertainty in the Middle East leads to volatility

    On 2 June, a European market sell-off started in early trading as investors continued to react to the trade war. Stock indices, which track the largest companies listed on each stock exchange, were down, including Germany’s DAX (-0.25%), France’s CAC (-0.5%), and the UK’s FTSE 100 (-0.27%). Markets in the US also opened lower, including the S&P 500 dropping 0.3%.

    However, there was some good news in the UK. Following the announcement of a new defence review, stocks in the sector jumped, with Babcock, one of the largest Ministry of Defence contractors, leading the way with a rise of 3.8%.  

    Germany’s sluggish economy received a boost on 4 June when a tax relief package worth €46 billion between 2025 and 2029 was unveiled. It led to the DAX rising 0.9%.

    After weeks of tit-for-tat tariffs between the US and China, a trade deal was struck on 11 June. The US said a 55% tariff, inclusive of pre-existing levies, would be placed on China. The deal led to Chinese stocks rising. Indeed, the CSI 300 index, which tracks the largest stocks on the Shanghai and Shenzhen markets, was up around 0.8%.

    Despite poor economic data from the UK, the FTSE 100 closed at a record high on 12 June. Among the top risers were health and safety device maker Halma (2.8%) and Tesco (1.8%).

    In contrast, European markets dipped, with the DAX (-1.35%) and CAC (-1%) both falling.

    The Iran-Israel crisis led to stock markets falling when they opened on 13 June. In London, the FTSE 100 was down 0.56% and almost every blue-chip share was in the red. It was a similar picture in Europe and the US, with indices dipping.

    On 24 June, Donald Trump, president of the US, declared there was a ceasefire between Iran and Israel. It led to geopolitical fears easing and markets rallying around the world. However, some fears remain.

    UK

    UK economic data released in June was weak.

    Data from the Office for National Statistics (ONS) shows the UK economy shrank by 0.3% in April. This was partly linked to trade tariffs as exports of UK goods to the US fell by around £2 billion.

    In addition, the ONS revealed the rate of inflation remained above the 2% target at 3.4% in the 12 months to May. The news led to the Bank of England’s Monetary Policy Committee voting to hold interest rates.

    However, think tank the Institute for Public Policy Committee said the central bank was harming households by not cutting the base interest rate. It also added that GDP was lower than expected because interest rates have been kept too high for too long.

    A Purchasing Managers’ Index (PMI) involves surveying companies to create an economic indicator. A reading above 50 suggests a sector is growing.

    In June, PMI readings for May show the manufacturing and construction sectors were contracting, but they had improved when compared to a month earlier, leading to hopes that a corner has been turned. In addition, the composite PMI, which combines service and manufacturing surveys, moved back into growth.

    Europe

    Eurostat figures show the rate of inflation across the eurozone fell to 1.9% in May, down from 2.2% in April, taking it below the European Central Bank’s (ECB) 2% target for the first time since September 2024.

    In response, the ECB lowered its three key interest rates for the eighth time in the last 12 months.

    There was also positive news from PMI data. The eurozone continues to hover just above the 50 mark that indicates growth, and German business activity returned to growth in June. As the largest economy in the eurozone, German activity is important to the bloc, and factory orders were also higher than expected.

    Ireland is leading the EU in terms of growth. The country had expected its GDP to grow by 3.2% in the first quarter of 2025, but exceeded this with an impressive 9.7% boost. The jump was linked to strong exports in pharmaceuticals and other key sectors as companies tried to get ahead of tariffs.

    US

    In the 12 months to May 2025, the rate of inflation in the US increased slightly to 2.4% and remains above the Federal Reserve’s target of 2%.

    A PMI conducted by the Institute of Supply Management shows the US manufacturing sector is slipping due to tariff uncertainty. Indeed, 57% of the sector’s GDP contracted in May, up from 41% in April.

    The data from the service sector was also negative, with figures showing it contracted in May for the first time in June 2024, and new orders fell at the fastest rate since December 2022.

    However, separate data suggests that businesses are feeling more optimistic about the future.

    The National Federation of Independent Business’s Small Business Optimism Index increased three points in May. It was the first rise since Trump took office at the start of the year thanks to trade talks taking place between the US and China throughout June.

    The US economy also added 139,000 jobs in May. The number was slightly higher than forecast and could suggest that businesses feel confident enough to expand their workforce. 

    Asia

    Data from China showed it wasn’t immune to the effects of the trade war.

    China’s National Bureau of Statistics data shows inflation was -0.1% in May as prices dropped. Deflation affecting the country highlighted the importance of the US and China reaching a trade deal.

    In addition, manufacturing activity in May shrank at the fastest pace in two and a half years. Firms were hit by falls in new orders and weaker export demand. The PMI reading was 48.5, down from 50.4 in April.

    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.

    A career break could be fantastic for your life plans. It may allow you to take time away from work to raise children, pursue education, travel the world, or follow other dreams. Yet, it could also harm your security in retirement, so a long-term plan might be important.

    A May 2025 article published by Protection Reporter suggests career breaks could become more popular. In fact, around 29% of 18- to 24-year-olds plan to take extended leave at some point in their career. In contrast, just 9% of 45- to 54-year-olds plan to do the same.

    While career breaks might not be the norm for older generations, there could be benefits to taking one. However, there are downsides to consider, including the effect it might have on your retirement.

    A May 2025 report in PensionsAge noted that if everyone took an unpaid two-year career break, it would collectively lead to a £230.69 billion shortfall in pensions nationwide. 

    On an individual level, having less in your pension might limit your options when you’re ready to retire. It could mean you need to delay giving up work, or your income is lower than expected throughout retirement.

    However, that doesn’t automatically mean you have to put plans for a career break on hold if you’ve been thinking about it. There may be effective ways to keep your retirement on track, such as these seven practical steps.

    1. Set out what a career break means for you

      Understanding the full effect of taking a career break often starts with setting out a clear plan – how long do you intend to take off work?

      A six-month career break to explore South America would have a very different effect on your pension than taking five years out of work to look after young children. While your plans might change in the future, deciding exactly what your career break will look like is usually an essential first step to keeping your retirement on track.

      You might also want to consider if your career break would lead to work and financial changes in the future. For example, could you face challenges re-entering the workplace at your current level if you took an extended period off? Or do you hope your career break will lead to a new path entirely?

      2. Forecast how the value of your pension will change

      While retirement might seem like a long way off, forecasting the value of your pension and the income it might provide could be useful.

      Working with a financial adviser could help you understand how the decisions you make about your career now may affect your long-term financial security. You might find you’d still be in a position to retire comfortably even if you halt pension contributions, but you could also discover a shortfall.

      By projecting the effect of a career break now, you can make an informed decision about what to do and potentially bridge gaps. 

      3. Assess how you’ll use other assets

      When you’re taking a career break, consider how you’ll fund your expenses. In many cases, people will use assets, like savings and investments, to create an income. So, it may be important to consider how depleting these assets could affect your retirement and financial security.

      4. Continue to make pension contributions

      If your pension could face a shortfall due to a career break and you’re in a position to do so, you may want to continue making pension contributions.

      While you might not receive employer contributions, your contributions might still benefit from tax relief and be invested with the aim of delivering long-term growth.

      One thing to note is that if you’re no longer earning an income, the amount you can place into a pension while retaining tax relief could be significantly lower. In 2025/26, if you’re a non-taxpayer, up to £3,600 may be added to your pension without incurring a charge if you’re part of a relief at source pension scheme.

      5. Increase your pension contributions when you return to work

      Alternatively, when facing a potential pension shortfall, you might plan to make higher contributions when you return to work.

      A financial plan could help you understand how much you might need to increase contributions by and whether they would fit into your day-to-day budget.

      6. Check your State Pension forecast

      If taking a career break means you won’t be making National Insurance (NI) contributions, it’s worth checking if it could affect your State Pension entitlement.

      While the State Pension alone often isn’t enough to retire on, it provides a reliable income throughout your later years. Usually, you’ll need 35 years on your NI record to receive the full State Pension. You can use the State Pension forecast tool to check how many years you already have and calculate if a career break might mean you fall short.

      If you could face a shortfall, you can normally pay voluntary contributions for the past six years to fill in the gaps.

      In addition, you might be able to claim NI credits. For instance, you can do so if you’re taking a career break to care for a child and are registered for Child Benefit.

      7. Keep your financial plan up to date

      During your career break, your plans or financial circumstances might change. So, keeping your financial plan up to date to reflect your current situation could be essential. It might allow you to spot potential risks or opportunities.

      If you’d like to understand if you could take a career break and keep your retirement on track, please get in touch. 

      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.

      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.

      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. 

      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.

      Opting for a “boring” investment strategy could be the route to returns that allow you to make exciting lifestyle decisions in the future. If you’re looking for excitement in your investments, read on to find out why that approach could lead to disappointments.

      The media can make investing seem exciting

      When you’re reading financial headlines, they might say things like “stock market soars in best day ever” or “the best companies to invest in right now”. In other media, investing is often dramatic too. For example, in The Wolf of Wall Street, the main character, Jordan Belfort, is shown making a huge fortune through investing and fraud.

      Yet, despite the perceived excitement of investing, acting on emotions, even ones that feel positive, could harm your decisions. The excitement of finding a tip that declares a company will be the “next Apple” could lead to you skipping further research, like assessing the risk profile of the firm and whether it fits into your existing portfolio.

      Investors might even feel excited about the risks they’re taking – the anticipation of waiting to see if they were “right” can be addictive. So, some investors may take more risk than is appropriate because it adds to the excitement.

      As a result, viewing investing as something that should be exciting has the potential to affect the long-term performance and could mean you’re at greater risk of losing your money.

      So, what’s the solution? For many, it’s taking a boring approach to investing. 

      Why boring investments work

      First, what does a “boring” approach to investing mean?

      Focusing on your long-term goals and building an investment strategy around this and other factors, such as what an appropriate level of risk is and other assets you might hold. You’d try to remove emotions from your investment decisions and, instead, use logic.

      If you’ve heard the mantra “buy low, sell high”, this approach might seem like it wouldn’t work. Yet, historically, investing with a long-term outlook, rather than responding to short-term market movements, is a strategy that’s worked for many investors.

      March 2023 data from Schroders highlights the challenges of trying to time the market.

      If you’d invested £1,000 at the start of 1988 in an index of the largest 100 UK companies and left the investment alone, it would have been worth £15,104 in June 2022 – an annual return of 8.31% on average.

      However, if you tried to time the market and missed just the 10 best days, your average annual return would fall to 6.1% and you’d have £7,503 in June 2022, less than half of the amount had you remained invested.

      While trying to buy low and sell high might be exciting, even just a few mistakes could mean you miss out on long-term returns.

      Of course, it’s important to note that investment returns cannot be guaranteed, and past performance isn’t a reliable indicator of future performance. Yet, it can provide a useful insight into why taking a long-term view when making investment decisions could be beneficial.

      Boring investing could lead to exciting lifestyle opportunities

      A boring approach to investing doesn’t have to mean the outcomes are dull. In fact, taking a long-term approach could mean you have more opportunities to create the lifestyle you want. 

      A long-term investment strategy might allow you to tick items off your bucket list like:

      • Retiring earlier to travel the world
      • Sampling dishes at award-winning restaurants
      • Creating a disposable income to attend gigs or the theatre
      • Purchasing a holiday home to spend time with your family.

      Rather than looking for excitement when investing, finding it in your long-term plans and what investment returns may allow you to do could be far more rewarding. 

      Contact us to talk about your investments

      If you’d like to talk about your current investments, or you have a sum you’d like to invest, please get in touch. We’ll work with you to create a long-term investment strategy that’s aligned with your goals and financial circumstances.

      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.