August 2025 - Agile IFA

The US struck trade deals with several countries in July 2025, leading to markets rising and putting an end to some of the uncertainty that had plagued investors for months. Read on to find out what else may have affected your investments recently.

While it might seem like 2025 has been a poor year for investors, due to geopolitical tensions and trade wars, the figures paint a different picture.

In the first half of 2025, the FTSE 100, an index of the 100 largest companies listed on the London Stock Exchange, gained 7.2%. It’s the best performance in the first six months of the year since 2021. The data shows how markets often bounce back following short-term market movements, as the index fell sharply in April due to US tariff announcements.

Remember, while markets typically deliver returns over a long-term time frame, they cannot be guaranteed, and it’s important to invest in a way that reflects your risk profile and goals.

Trade deals lead to market rallies in July 2025

While uncertainty affected markets in July 2025, there were also several record highs.

On 3 July, it was announced that the US and Vietnam had struck a trade deal. In addition, US data showed 147,000 new jobs were created in June. The good news led to global stocks reaching a record high, according to MSCI.

US President Donald Trump previously set a deadline for trade deals. As this date approached on 7 July and countries without a deal faced high tariffs, shares on key US indices dipped slightly. The Dow Jones Industrial Average fell 0.16% and the S&P 500 was 0.3% lower.

With the trade deal deadline looming, Trump announced a pause on the levies for 14 trading partners to give countries time to negotiate with the US. It led to Asia-Pacific indices rising, including Japan’s Nikkei 225 (0.3%), South Korea’s KOSPI (1.9%), and China’s CSI 300 (0.8%).

The good news continued the following day. The FTSE 100 climbed 1.23% to close at a record high. Mining stocks led the way with Glencore, Rio Tinto, and Anglo American all up more than 3.5%.

On 14 July, European markets opened lower after Trump threatened to impose a 30% tariff on EU imports in August. The pan-European Stoxx 600 index was down 0.6%. Falls were also recorded on the main indices for Germany, France, Italy, and Spain.

There was further positive news for investors of stocks on the FTSE 100 index on 15 July. It hit 9,000 points for the first time after a rise of 0.2%. The UK was one of the few countries to have a trade deal with the US, and UK stocks benefited from trade tensions as a result.

The US and Japan reached a trade deal on 23 July. Under the deal, Japanese goods will incur a 15% tariff at the US border compared to the 25% Trump had previously threatened.

On the back of the news, Japan’s Nikkei index jumped 3.75%. Carmakers in particular saw rises, including Toyota (14.5%), Honda (10.8%), Subaru (16.8%), and Mazda (17.75%).

There was yet more trade deal news on 28 July when an agreement between the US and EU was announced. Indices across the EU were up as a result, including Germany’s DAX (0.8%), France’s CAC 40 (1%), and Spain’s IBEX (0.8%).

UK

With the Autumn Budget due in October, Reeves faces increasing pressure as key data released in July 2025 was negative.

Indeed, the Office for Budget Responsibility (OBR) said public finances are in a “relatively vulnerable position” with risks posed by tariffs, defence costs, and an ageing population. Based on current tax and spending policy, the organisation said public debt was on track to hit 270% of GDP by the 2070s. The projection would see public debt almost triple compared to the current level.

The concerns around public debt were further highlighted when UK borrowing increased to £20.7 billion in June 2025 due to interest payments rising. Worryingly, the figure was £3.5 billion more than the OBR’s forecast and could prompt the chancellor to raise taxes or cut spending.

In addition, data from the Office for National Statistics shows the UK economy shrank in May for the second month running. The 0.1% contraction was driven by a slump in industrial output.

The rate of inflation also unexpectedly increased to 3.6% in the 12 months to June 2025. It’s the third consecutive monthly increase and was the highest rate recorded since February 2024.

While the Bank of England’s Monetary Policy Committee didn’t meet to discuss interest rates in July, member Alan Taylor signalled a cut was likely in August. He said the “deteriorating” UK economy warranted a deeper interest rate cut than financial markets currently predict.

A Purchasing Managers’ Index (PMI) measures economic activity, and a reading above 50 indicates growth. In June, S&P Global’s PMI data for the UK found that the:

Manufacturing sector continued to contract with a reading of 47.7, but hit a five-month high
Construction sector was also contracting, but reached a six-month high with a reading of 48.8
Service sector posted its strongest growth in 10 months with a reading of 52.8, and improvements in order books indicate further growth in the months ahead.

So, while there are setbacks for many UK businesses, the figures suggest there’s movement in the right direction.

Europe

The eurozone hit the European Central Bank’s (ECB) 2% inflation target in the 12 months to June 2025.

Over the last 12 months, the ECB has cut its base interest rate by a quarter percentage point eight times, taking the policy rate from 4% to 2%. Despite speculation that there would be a further cut when inflation hit its target, the central bank opted to leave the rate as it was.

S&P Global’s PMI suggests the manufacturing sector across the eurozone continues to contract. However, the data indicates it may have turned a corner as the reading in June 2025 was the highest in 34 months and only just below the 50 mark at 49.5.

As the bloc’s largest economy, Germany’s exports are essential and ongoing challenges could dampen growth this year, though the new US-EU trade deal may ease some of the pressure.

A Destatis report found that German exports fell by 1.4% in May when compared to a month earlier. Exports to the US played a significant role as they were down 7.7% month-on-month and 13.8% lower than the same period in 2024.

Germany’s central bank, the Bundesbank, said the country’s exporters were losing competitiveness and called for urgent reforms to improve the business climate, including reducing barriers for skilled migrants and enhancing tax breaks for private investment.

US

Official data from the Bureau of Statistics shows that inflation increased in the 12 months to June 2025 to 2.7%. The figure is above the Federal Reserve’s 2% target.

Tariffs and uncertainty continued to leave a mark on the US’s trade deficit.

In May, the trade deficit widened by 18.7% when compared to a month earlier, according to official data. The deficit now stands at $71.5 billion (£53.5 billion) as exports dropped by 4%.

The consumer sentiment index from the University of Michigan suggests people are feeling more optimistic. The reading in July was 61.8, up from 60.7 in the previous month. It was the highest score since the trade wars began five months ago.

American chipmaker Nvidia became the first listed company to reach a valuation of $4 trillion (£3 trillion). The company announced it would build high-powered systems to train its AI software, which led to shares soaring. As of the start of July, the company’s shares have gained 22% in 2025.

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.

Cash can be comforting. It’s familiar, it’s accessible, and it’s tangible. But while cash savings can be part of a well-balanced financial plan, they’re not always the best-performing asset.

Data shows that many UK adults are reluctant to depart from cash. In an update reported by MoneyWeek, the Financial Conduct Authority (FCA) reported that 61% of adults with £10,000 or more in investible assets are holding at least three-quarters in cash. 1 in 5 adults have cash savings of £25,000 or more, and around 1 in 10 have savings exceeding £50,000.

The regulator warned that holding such a large proportion of assets in cash could mean UK adults are missing out on the longer-term returns potentially available from investing, even when savings interest rates are high.

Read on to find out alternative options to cash, how to begin moving into other investments, and the times cash might be a more appropriate choice.

Global economic uncertainty saw more investors turning to cash, but history tells us markets do rally

Part of the appeal of cash currently can be attributed to market volatility that spooked investors in the early months of 2025, with President Trump’s tariff announcements causing widespread uncertainty.

According to a May 2025 report from MoneyAge, this caused a rise in the number of DIY investors – those who manage their own portfolio – turning to cash. Between February and April, 56% increased their exposure to cash, a 10% increase compared to investors who switched to cash after the 2024 Autumn Budget.

It’s understandable for you to want your wealth kept safe, and for global turbulence to drive you to think about cashing in. But history tells us that volatility is to be expected. While we can’t rely on past performance as an indicator for the future, we can also see that markets bounced back quickly from events such as the 2008 financial crisis, the pandemic, and the beginning of the conflict in Ukraine.

The below graph from NatWest covering the period between 2003 and 2023 highlights this, showing the return on global equities (shares), bonds, and cash at critical points in history. Although cash remains relatively level, the eventual returns from bonds and equities would have been higher.

Rising inflation could have a negative effect on your purchasing power

Inflation is always another key consideration with cash savings. Unless your savings interest rate is consistently above the rate of inflation, the real value of your money could remain the same, or even go down.

Ultimately, this could dent your purchasing power in the long term.

Consider this example. You have £100, which can buy £100 of goods and services today. If you save your money in a bank account with 1% interest, you’ll have £101 next year. But if inflation is 5%, those same goods and services will cost £105 next year. With £101, the money in the bank would no longer be enough to buy it – it has lost value in real terms.

Historically, shares and bonds have always outperformed cash. According to Vanguard, data from 1901 to 2024 shows that average annual returns after inflation were:

5.34% for global shares
1.36% for bonds
0.89% for cash.

So, you can see the argument for investing at least some of your wealth, helping it keep pace with the rising cost of living.

Considering your goals and risk approach can help design a suitable investment portfolio for you

Shifting some of your cash savings into investments could help you see better returns. But before you do this, the first thing to consider is your goals. For example, are you hoping to receive an income from your investments, or are you investing for long-term growth?

This can help you determine the right place for your wealth. You also need to consider your approach to risk: do you want a low-risk option that will pay out less, or a higher-risk alternative with potentially higher returns?

Talking with a financial planner can help you establish your own financial strategy, based on your aspirations, risk tolerance, and preferences. They can work with you to build a diverse portfolio, meaning that if you see losses in one area, these could be mitigated in others.

Some of the most common types of investments you could consider include:

Stocks and shares. These are a stake in a company, and are traded on a stock exchange. The price of shares can go up or down.
Bonds. Investing in a bond means you’re effectively lending money to a company or government, which they pay back at a fixed rate of interest. They’re a more stable investment than shares, but can be negatively impacted by interest rate fluctuations.
Funds. Here, your money is invested along with other people’s to buy a range of assets, which can include shares and bonds, helping to diversify your investments. As they’re also spread across different markets and sectors, poor performance in one area can be offset by others.

There are other investment options, too, which a financial planner can talk through with you.

Cash is a good option for short-term goals and as an emergency fund

None of this is to say that cash is obsolete. Far from it, cash can be an important part of a well-balanced financial plan.

It’s a good idea to have a cash reserve in place as an “emergency fund”, which could be three to six months’ worth of your essential outgoings.

It can also make sense to save for short-term goals and purchases in cash savings. For example, if you’re saving for a holiday in a year’s time, you need to know that you’ve saved enough, without risk, and that it will be accessible when you need it.

Get in touch

Talk to us about how to strike the right asset balance, including cash, for your wealth portfolio.

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.

Understanding where your wealth is coming from and how you’re using it could help you make more informed decisions. However, as so many assets are intangible, having a clear picture of your wealth can be difficult. Finding ways to visualise all your assets is often useful, and something people have been doing for centuries.

When you hear the term “Exchequer”, you might think of the government’s economic and finance ministry or the position of chancellor of the Exchequer, which in 2025 is held by Rachel Reeves. However, the term is much older than the position.

The government explains that it is derived from a chequered cloth that was used by accountants in the 11th century to aid auditing by providing a way to visually record where money was being spent and received at a national level. These Exchequer meetings were said to be confrontational, with powerful Barons often interrogating the accountants about the state of their affairs.

Indeed, in the first Exchequer Budget recorded in 1284, the method highlighted that the Crown was spending far more than it was bringing in, which led to the introduction of taxation.

The Exchequer’s function as a financial department of state formally ended in 1833, but the value of visualising wealth remains, including when managing your personal finances.

Today, understanding your wealth can be even more difficult as so many transactions and assets are digital. According to a December 2024 report from the BBC, only a fifth of transactions in 2023 involved physical money.

Why visualising your wealth could support your long-term plans

Being able to see a visual representation of your wealth could help you better understand your assets, get to grips with your budget, and support your long-term goals. In addition, it can be reassuring to see all your assets, including those that are intangible.

The good news is you don’t need to unroll an Exchequer cloth and gather counters when you want to visualise your wealth. Today, cashflow modelling could help you assess your financial position now and in the future. Read on to find out how cashflow modelling works.

4 steps to creating a cashflow model that helps you achieve your long-term goals

1. Set out your goals and priorities

A cashflow model is used as part of your wider financial plan. You can begin creating one by talking with your financial planner about what you want to achieve in the short and long term, whether that’s travelling the world more in the next five years or being able to retire at age 60.

2. Gather your financial information

To calculate if you’re on track for the future, you need to understand your current financial position.

So, you’ll need to gather information that can be added to your cashflow model. This might include how much you’ve saved in your pension, the value of your home, or the amount in your emergency fund.

Your financial planner will then make realistic assumptions about factors that could affect your wealth, such as investment returns or the rate of inflation.

3. Project how your wealth might change

You can then see how your wealth will change over the long term. One of the reasons cashflow modelling is powerful is that it allows you to see multiple possibilities to explore your options and stress test your financial plan.

So, you might see if increasing your pension contributions by 1% now could mean you’re able to retire earlier. Or if you could gift assets to loved ones and still have enough to reach your other long-term goals.

You might also want to model scenarios that you’re worried about, so you’re able to take steps to protect yourself should they happen. For instance, you might want to see how taking an extended period off work due to ill health could affect your long-term security. Understanding the potential effect might highlight how you’d benefit from increasing your emergency fund or taking out appropriate financial protection.

4. Regular reviews are important for reflecting changes

Life doesn’t always turn out how you expect. Sometimes unexpected events or simply changing your mind might mean your goals and financial circumstances are different. So, to get the most out of your cashflow model, it’s important to update it regularly.

As well as personal changes, other factors outside of your control could also affect your wealth and the decisions you make. For example, a period of high inflation might mean you need to take a greater income in retirement, or market volatility could mean investment returns are lower than expected. Working with your financial planner to incorporate these events into your cashflow model could help you understand what they mean for you.

Get in touch to understand your wealth

If you’d like to understand your assets and how they might change in the future, please get in touch. We could work with you to create a cashflow model and use the information to build a long-term financial plan that focuses on your aspirations.

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.

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.

The Financial Conduct Authority does not regulate cashflow modelling.

The importance of remaining calm is often something that’s talked about when discussing investment market volatility. But there are other factors outside of your control that might lead to emotional decision-making, including uncertainty about the upcoming Autumn Budget.

Chancellor Rachel Reeves is expected to deliver an Autumn Budget at the end of October. Despite being weeks away, there’s already speculation about higher taxes and allowances being slashed.

With rumours featuring in the headlines, it can feel like you should be doing something to prepare for the potential changes. However, making knee-jerk decisions before changes are confirmed could harm your long-term financial plan.

For example, ahead of the 2024 Autumn Budget, there were attention-grabbing headlines suggesting the pension tax-free allowance would be scrapped. It led to some people taking a lump sum from their pension, even when it hadn’t been part of their financial plan. When the announcement didn’t materialise, some were unable to cancel the withdrawal or place the money back in their pension.

As pensions provide a tax-efficient way to invest, those who acted on speculation may pay more tax overall or find their pension now falls short when planning for retirement.

So, read on to discover some tips for remaining calm in the run up to the Autumn Budget.

1. Tune out the noise

It’s easier said than done, but try tuning out the noise in the lead-up to the Budget.

Reducing how much you’re exposed to speculation could reduce stress and mean you’re less likely to make decisions that could harm your long-term financial plan based on rumours.

That doesn’t mean you have to turn off the news completely. Simply being mindful of where the updates are coming from or only reading the headlines once a day could minimise the pressure you might feel.

2. Check where your news is coming from

Sometimes updates can make it seem as though a rumour is confirmed, particularly if you’re getting your news from social media.

So, before you respond to news or even worry, take some time to fact-check the source and understand if the reported change is speculation.

3. Consider what changes could mean for your financial plan

Headlines about changes may sound like they’ll affect everyone, or use average figures to highlight the potential implications. However, as financial circumstances and goals vary significantly, taking some time to understand what it means for you could be important; you might find an announcement won’t affect your long-term financial plan at all.

For instance, there are suggestions that the amount you could place into a Cash ISA may be reduced. That might seem like something you should worry about, but if you use your ISA to invest, it may have little effect.

Similarly, headlines might read that changes to Inheritance Tax (IHT) mean the average bill will increase by 10%. Yet, your estate might not be liable for IHT, or your existing estate plan could mitigate the effects.

Your financial planner is here to help you understand what speculation and confirmed changes could mean for you.

4. Remember, changes often don’t come into effect immediately

Often, an Autumn Budget announcement isn’t implemented immediately.

For example, in the 2022 Autumn Budget, it was announced that the Capital Gains Tax annual exempt amount would be reduced from £12,300 to £3,000. It fell to £6,000 in April 2023, and then to £3,000 in April 2024.

As a result, you usually have time to understand what the changes mean for you and carefully consider how you’ll respond before they come into force.

This isn’t always the case, and sometimes changes, including tax hikes, may be implemented right away. When this happens, it can feel like you need to act immediately. However, taking a step back to weigh up your options and speak to your financial planner, rather than making a snap decision, is often still valuable.

5. Contact your financial planner

If you’re tempted to make changes to your financial plan because of speculation, your financial planner could help you assess if it’s the right decision for you.

Remember, we’ll be here to help you navigate Autumn Budget announcements that might affect your financial plan. If changes happen, we can work with you to review and update your long-term plan to ensure it continues to reflect current legislation and your circumstances. Please get in touch if you’d like to talk to one of our team.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning.

This guest blog was written by Chris Budd, who wrote the original Financial Wellbeing Book as well as The Four Cornerstones of Financial Wellbeing. He founded the Institute for Financial Wellbeing and has written more than 100 episodes of the Financial Wellbeing Podcast.

There is an old joke that sheds light on the role that money plays in our lives.

How many psychiatrists does it take to change a lightbulb? Only one, but the lightbulb has got to really want to change.

Wellbeing is a term that describes a long form of happiness. Doing something to make you happy is fairly easy. Finding and maintaining wellbeing, however, takes work. We have to want wellbeing.

Money distractions

This might sound, at first glance, rather strange. Why wouldn’t we want wellbeing? Surely, the natural state for any human being is to want to be happy.

While this is undoubtedly true, there are many aspects of modern life which, when combined with our natural behaviours, can distract us from this simple ambition.

Take our inclination towards comparison. This behaviour can be extremely positive in some circumstances. For example, copying others is an essential component of our ability to learn.

When it comes to money, however, we have a tendency to focus more on what others have than what we have ourselves. To quote Theodore Roosevelt: “Comparison is the thief of joy”.

This behaviour often results in our being unhappy. Looking at someone’s perfect lifestyle on social media, for example. We are also very good at ignoring the fact that we all know that the lifestyle being presented isn’t the whole picture!

Then there is advertising that presents beautiful people doing amazing things, which we can only do if we were to buy that particular product. Property programmes and magazine articles, suggesting that somebody else’s house is nicer than ours.

Then there is our difficulty in picturing our future selves. Research¹ tells us that we see our future self as a stranger. This is why we are far more likely to spend our money on ourselves now, rather than deferring that enjoyment to a later date.

How to really change

I’m sure we have all, at some point, been on a diet and lost weight, only to put it back on again six months later. Indeed, research suggests that 95% of people on a diet regain the weight they lost within two years.

Changing our habits is very hard to instil. Being determined to change our patterns of spending, or to look at Facebook less often, rarely results in long-term changes in behaviours.

A more effective tactic might be to follow these two simple steps:

Better understand your future self
Create a plan to get there.

By bringing the future closer in this way, we are more likely to stick to this plan and create new, more meaningful financial behaviours.

Meet your future self

Understanding what your future might look like is something you can work on with your financial planner. Crucially, it should be a future in which you are happier, not just wealthier.

Try to envisage yourself in, say, 10 years. Where will you be? When you get out of bed and open the curtains, what will you see? What does the day ahead hold for you? Will it be different on a working day from a weekend?

You might ask some bigger questions. What will give meaning and purpose to your life? How will you be spending time with loved ones? Note that your possessions are unlikely to play much of a part in this assessment of your future self, as they do little to add to long-term wellbeing.

It is worth spending some time on this exercise. Once the future is a little clearer, your financial planner can then create that financial plan to help you get there.

Of course, we know that the only thing that is true of any plan is that it will be wrong in some way. The regular meeting with your planner should now focus on whether you wish to make any changes to your desired future and to monitor progress toward achieving it.

Once this plan has given you real clarity over your life, you will likely find that your financial behaviours start to change, because you will really want them to change. You will also find that those distractions become easier to ignore.

¹Your Future Self: How to Make Tomorrow Better Today by Hal Hershfield

Your relationship with money is related to far more than how much cash you have. In fact, psychological influences could be having more effect on your decisions and how you feel about wealth than you think.

Speaking to the Guardian in July 2025, financial psychotherapist Vicky Reynal stated she believes thoughts and feelings about money have “everything to do with our earliest experiences, deepest yearnings, and misgivings”.

Her unusual role sees Reynal work with clients to assess why they’re making certain financial decisions. She notes that while many clients understand what they need to do to improve their financial position at a rational level, they can’t bring themselves to do it.

For example, some people know they need to cut back to balance their budget, but still obsessively purchase non-essential items like shoes. Or, on the other end of the spectrum, one client has ample means to purchase nice things but will only buy the basics.

Taking a step back to understand why you make certain decisions could help improve your relationship with money and your chances of reaching long-term goals. Read on to discover some of the psychological influences that might affect you.

Recognising these psychological influences could improve your relationship with wealth

Previous experiences

Past experiences have a profound effect on how you view current situations, and lessons from your childhood can be particularly influential.

If your family had a mindset that money is meant to be spent, you might find it difficult to save or invest for the future, even though you know it would benefit you in the long run. Alternatively, if you were encouraged to save all your money as a child, you may be reluctant to spend money on luxuries even if they’re affordable for you.

A financial plan is centred on your goals and identifies the steps you need to take to turn them into a reality. So, by working with a professional, you could overcome the influence that past experiences might have.

Money beliefs

“Money beliefs” refers to deeply held and unconscious ideas you have about money. Again, these often start to form in childhood, and it can be difficult to spot when they’re influencing your decisions.

For example, Reynal notes that if you grew up in a culture that thought of wealth as “immoral”, it can lead to a dilemma around what it means for you to become wealthy. For some, this money belief could mean they sabotage their financial security or build up wealth they worry about using for fear of judgment.

Working with a financial planner could provide an opportunity to re-examine your money beliefs and why you’re making certain decisions.

Comparing what you have to others

As the common saying goes, comparison is the thief of joy.

Sometimes, looking at what other people have can negatively affect your relationship with money. Such behaviour could then affect both your small and large financial decisions.

You might feel envious when a family member shows off their latest gadget. But if you let emotions get the better of you, it could lead to you splurging on the item even though you didn’t want it before. Or you may be looking forward to your retirement at 65, but feel less enthusiastic once you discover a friend plans to give up work earlier.

While it can be difficult at times, try to focus on your financial plan and stop making comparisons. Everyone’s path is different, and usually, you only see a snapshot of someone else’s life.

Get in touch to talk about improving your relationship with money

Setting clear goals and having a financial plan that reflects your circumstances could have a positive effect on your relationship with money. Please get in touch to discuss how you might turn your goals into a reality and feel more confident about your financial future.