European hidden gems that are perfect for a spring break

With so many headlines about tourists taking over popular holiday spots and governments introducing restrictions, such as tourist taxes and bans on new hotels or souvenir shops, you might find it harder than ever to decide where to travel next.

Luckily, Europe is filled with amazing places you can visit to get the authentic experience of that country without fighting your way through crowds of tourists.

Read on to discover our top 10 hidden European gems for the perfect spring break.

1.  Naxos, Greece

If you’ve always wanted to visit Santorini but don’t want your holiday interrupted by tourists queueing for the perfect picture, you might want to head to Naxos instead.

This beautiful island boasts ancient ruins and traditional white-washed buildings that draw people to Santorini without the huge crowds. Discover the island’s fascinating history by visiting the Temple of Apollo, or relax on the long stretches of sandy beaches.

2.  Berat, Albania

Berat is often referred to as the “City of a Thousand Windows” because of the incredible stack of Ottoman houses on the side of Berat Hill.

Visit the Bogovë Nature Park and Lake Komani to experience the gorgeous natural landscape and secluded waterfall, or climb to the top of Berat Hill to explore the incredible 13th-century castle.

3.  Valencia, Spain

This stunning port city sits on the same coastline as Barcelona, so you can enjoy the gorgeous beaches and incredible architecture without battling your way through a crowd.

Explore the rich history of Valencia through an interactive museum, explore one of the many walking trails through the beautiful landscape, or soak up the sun on the beach.

What’s more, research concluded that Valencia is the most affordable city in Europe for a pint of beer!

4.  Kotor, Montenegro

If you were considering visiting Croatia, you might want to pop next door to Montenegro instead.

With the same picturesque Mediterranean coastline and sunny weather, Montenegro has the same rugged mountains and enchanting medieval villages while being less crowded than more popular destinations like Dubrovnik.

Visit the Venetian fortifications in Kotor for a taste of history or take a dip in the stunning Bay of Kotor if you’d prefer to relax.

5. Graz, Austria

If you’re looking for a sustainable city break, Graz is the place to go. Although it’s Austria’s second biggest city, it’s often overlooked.

Surrounded by the Styrian countryside, the city takes fresh produce, vegetarian dishes, and creative recipes to a new level that will deliver the best of Austrian cuisine.

6.  Wroclaw, Poland

With the Czech Republic introducing increasing restrictions on tourists in Prague after they started taking over entire zones of the city, you can avoid the hordes and get a similar experience by visiting Wroclaw instead.

Explore the dazzling Gothic architecture and the picturesque Oder River in the daytime, and visit Speakeasy-type bars and fine-dining restaurants to make the most of the city’s electrifying nightlife.

7. Porto Santo, Portugal

Madeira is currently enjoying its moment in the spotlight, but a smaller island only a three-hour ferry ride away remains one of the best European beach escapes.

Porto Santo is more beach than island, with a nine-kilometre stretch of sand backed by rolling hills and lush greenery. Relax in the sun, or venture out into the wilderness along the island’s many hiking routes.

8.  Ghent, Belgium

If you’re looking for the same fascinating architecture and local culture as Amsterdam without having to pay extra for tourist tax, why not head to Ghent in Belgium instead?

Filled with quirky bars and an amazing pedestrianised city centre for you to explore, Ghent boasts a medieval castle and Michelin-starred restaurants, so there’s something for everyone to enjoy.

9.  The Frosinone Valley, Italy

Halfway between Rome and Naples, the Frosinone Valley is often no more than a stop for travellers. However, it hides the incredible Abbey of Montecassino and the Valle di Comino, where some of Europe’s deadliest battles have taken place.

But if you’d prefer to search for postcard-perfect views, Frosinone is also the place for you. Sip award-winning cabernet in the vineyards or head to San Donato Val di Comino for incredible mountain views.

10. León, Spain

There are so many popular cities in Spain. However, León is another that escapes most people’s notice.

Home to one of Gaudi’s designs, the architecture is the city’s main attraction. Casa Botines, one of his only works outside Catalonia, makes it the perfect place to visit if you want to experience history without the hustle and bustle of Barcelona or Madrid.

Business owners: 5 reasons you could benefit from saving into a pension

Building a business can be exciting and rewarding, and it might play a key role in ensuring you’re financially secure now and in the future. Yet, focusing all your attention on your business could mean you miss alternative ways to provide security later in life, including overlooking a pension.

Indeed, according to a January 2024 report in This Is Money, around half of business owners aren’t regularly contributing to a pension.

Many business owners may plan to use their business to create an income once they’re ready to step away from work. You may plan to sell your business to a third party and live off the proceeds, or remain a shareholder of the firm and take a dividend income.

While your business could provide for you in retirement, it isn’t always a reliable option, and it might not be the right one for you. Read on to find out why and discover how a pension could support your long-term financial security.

Your business might not deliver the retirement security you expect

Even if your business is thriving, there are some challenges you could encounter if you plan to use it to fund retirement.

The funds might not be readily accessible

While you might have enough money tied up in your business to fund retirement, it’s not always simple to access the money, especially if you plan to sell your company.

Finding the right buyer for your business can be a time-consuming and lengthy process. Delays may mean you need to push back your retirement date if you don’t have other assets you could use to create an income. This could be particularly challenging if changing circumstances, such as your health, mean you want to retire sooner than expected.

Selling your business for the “right” price isn’t guaranteed

Whether you plan to sell the business to a family member or need to find a buyer, you’ll often need to negotiate a price, and selling the firm for “enough” to support your retirement goals may not be guaranteed. 

In some cases, a business owner might struggle to find a suitable buyer too. As a result, relying solely on your business could mean your retirement plans are uncertain.

So, even if you plan to use your business to support your later years, taking other steps to create a retirement income could help you feel more confident about your future.

The tax-efficient benefits of using a pension to save for your retirement

It’s important to remember that you can’t normally access the money saved in your pension until you reach retirement age, which is 55 (rising to 57 in 2028). So, if you’re saving for short-term goals, alternative options could be better suited to your needs.

However, if you’re thinking about your long-term financial security and how to create a retirement income, a pension could be an option worth considering for these five reasons.

1.  Your pension contributions could benefit from tax relief

To encourage you to save for your retirement, your pension contributions will benefit from tax relief, providing a boost to your savings.

The amount of tax relief you receive usually depends on the rate of Income Tax you pay. So, if you pay Income Tax at the basic rate and want to increase your pension by £1,000, you’d only need to add £800 as your contribution would benefit from £200 of tax relief.

To boost your pension by £1,000, the amount you need to add as a higher- or additional-rate taxpayer is £600 and £550 respectively.

Your pension scheme will often claim tax relief at the basic rate on your behalf. However, you may need to complete a self-assessment tax return to claim your full entitlement if you’re a higher- or additional-rate taxpayer.

2. Your pension contributions are often invested

Normally, the money you place in a pension is invested. This provides an opportunity for the value of your pension to rise over the long term.

As your pension contributions may remain invested for decades, the compounding effect could mean your initial contribution has significantly increased by the time you retire.

Of course, investment returns cannot be guaranteed and it’s important to weigh up what level of financial risk is appropriate for you. However, historically, financial markets have delivered returns over a long-term time frame.

3. Investments held in a pension are not liable for Capital Gains Tax

Returns from investments that you don’t hold in a tax-efficient wrapper may be liable for Capital Gains Tax (CGT).

Fortunately, investing in a pension means your returns won’t be liable for CGT. So, if you’re investing for the long term, a pension could offer a way to mitigate a potential tax bill.

4. Contributing to your pension could reduce your business’s tax bill

Employer pension contributions are often an “allowable expense”. This means your business could deduct contributions to your pension for Corporation Tax purposes, which might reduce your business’s overall tax bill.

Tax treatment varies and is subject to change. If you’d like help understanding how you could balance retirement planning with your firm’s finances, please get in touch.

5. Separate your business and personal finances

For some business owners, separating your personal finances and those of your firm could be useful.

Using a pension to save for retirement might offer you some security – even if the circumstances of the business or personal goals change, you may have a safety net to fall back on should you need to. For example, if ill health means you want to retire earlier than expected, having a pension, rather than relying solely on your business, could provide you with more freedom to choose what’s right for you.

We could help you create a long-term financial plan

As financial planners, we could help you build a long-term financial plan that considers your goals and circumstances, including using your business to support your aspirations. 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.

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. 

5 ways financial planning could help you emotionally prepare for retirement

While financial challenges often come up when those nearing retirement are asked about their concerns, emotional obstacles could be just as important. A financial plan might include looking at areas like your pensions and investments, but it could help you emotionally prepare for retirement as well.

Here are five ways a financial plan could improve your wellbeing and confidence when you retire.

1. Financial confidence could ease concerns when you retire

One of the key concerns that weighs on those nearing retirement is a financial one. According to This is Money in January 2025, more than half of over-55s fear they’ll run out of money later in life. Just a quarter of people believe they have enough to see them through retirement.

Worrying about running out of money could mean you’re not able to fully relax and enjoy your retirement. A financial plan could help you understand how you might create a sustainable income that will last a lifetime.

So, taking control of your finances before you give up work could improve your overall wellbeing and mean you feel far more prepared emotionally for taking the next step.

2. It provides a chance to consider what you’re looking forward to

A financial plan doesn’t just focus on your assets, but what you want to get out of life. A retirement plan is the perfect opportunity to consider what you’re looking forward to in retirement and address any apprehensions you might have.

You might start by setting out what your ideal week in retirement would look like – are you keen to see your family and friends more now you’re not working, or would you like to join a class to develop a hobby?

While you’re doing this, you might discover concerns as well. For example, some retirees may worry about feeling lonely if they enjoy the social aspect of work. As a result, they might ensure their retirement income provides enough disposable income to regularly go out with loved ones or try an activity that allows them to meet new people.

3. Financial security could mean you’re able to enjoy big-ticket expenses

It’s not just the day-to-day retirement lifestyle you might be looking forward to, there might be one-off experiences or purchases that you’d like to spend some of your money on.

If you love to explore new places, you might dream about taking an extended holiday to exotic locations now you’re no longer tied to work. Or, if you’re a keen gardener, you might want to explore purchasing an extra plot of land to turn into an outdoor oasis.

Whatever your big-ticket plans, incorporating them into your financial plan could help you understand what’s possible and get you excited for the future.

4.  A financial plan could address retirement trepidations

Worrying about your future could dampen retirement celebrations. So, addressing these concerns and understanding how you might create a safety net could take a weight off your shoulders.

As you near retirement, you might worry about how your partner would cope financially if you passed away first, or how you’d fund care services if you needed support.

While a financial plan can’t prevent some things from happening, it could allow you to identify areas of concern and take steps to reduce the effect they could have. So, in the above cases, you might purchase a joint annuity with your pension so you know your partner would continue to receive a reliable income if you passed away and set aside some money to act as a care fund.

5. Working with a financial planner could allow you to take a hands-off approach

Managing your finances in retirement can be very different to handling your household budget when you are working. You might not receive a regular, reliable income, and, for retirees, the change can be difficult to manage or they simply want to take a hands-off approach.

Working with a financial planner means you can rely on someone else to handle your finances on your behalf and inform you if changes are needed.

It could lead to a happier retirement that allows you to focus on living the retirement lifestyle you’ve been looking forward to.

Contact us to talk about how to achieve your desired retirement lifestyle

If you’re nearing retirement, get in touch to talk about what you’re looking forward to and concerns you might have. We could work with you to create a financial plan that gives you confidence and means you’re able to focus on what’s really important – enjoying the next chapter of your life.

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. 

Is your estate worth more than £2 million? Your Inheritance Tax liability could be higher than you expect

Often dubbed the “most hated tax” in the media, Inheritance Tax (IHT) is a tax on your estate when you pass away, which could reduce how much you leave behind for family and friends. If your estate is worth more than £2 million, the potential IHT bill might be higher than you expect. Read on to find out why.

Frozen thresholds mean the number of estates liable for IHT is on the rise. Indeed, according to a November 2024 BBC report, around 4% of estates were liable for IHT in 2024 and it’s expected to rise to 7% by 2032.

HMRC statistics show £6.3 billion was collected through IHT receipts between April 2024 and December 2024 – £0.6 billion higher than the same period in 2023.

As the standard IHT rate is 40%, it could significantly reduce the value of your estate if it’s liable. So, it’s important to understand if your estate exceeds IHT thresholds.

The residence nil-rate band is reduced if your estate is worth more than £2 million

Usually, when passing on assets to loved ones, you can make use of two key thresholds.

1. The nil-rate band, which is £325,000 in 2024/25 and frozen until April 2030. If the entire value of your estate falls below this threshold, no IHT will be due.

2. The residence nil-rate band could increase how much you’re able to pass on before IHT is due if you leave your main home to your children or grandchildren. In 2024/25, the residence nil-rate band is £175,000 and is also frozen until April 2030.

You can leave assets to your spouse or civil partner without them being liable for IHT, and you may also pass on unused IHT allowances. So, if you’re planning as a couple, you could leave up to £1 million to loved ones before your estate may be liable for IHT.

However, a little-known rule could mean the amount you’re able to pass on before IHT is due is lower.

If the value of your estate is more than £2 million, a taper reduces the residence nil-rate band. For every £2 that the value of your estate exceeds this threshold, the residence nil-rate band will reduce by £1. So, if your estate is worth more than £2.35 million, it will not benefit from the residence nil-rate band.

As a result, your loved ones could face a higher bill than you expect.

5 proactive steps you could take to reduce a potential Inheritance Tax bill

The good news is there are often steps you can take to reduce a potential IHT bill if you’re proactive. So, making IHT part of your wider estate plan could mean you’re able to pass on more to loved ones.

Here are five steps you may want to take if you’re concerned about IHT.

1. Write a will

Writing a will is a way to ensure your assets are passed on in a way that aligns with your wishes. It may also be used to pass on your assets tax-efficiently.

For example, you might state that certain assets are to go to your spouse or civil partner, so they aren’t considered for IHT purposes.

While you can write your will yourself, seeking legal support may be useful. A solicitor could minimise the risk of mistakes occurring and ensure your will clearly sets out your wishes.

As your circumstances and wishes can change, it’s often a good idea to review your will following major life events or every five years.

2. Gift assets during your lifetime

One way to cut an IHT bill is to reduce the value of your estate by passing on wealth during your lifetime.

This option could have other benefits too. You’ll be able to see the effect your gifts have and you might be able to offer financial support when your loved ones would benefit from it most. For instance, a gift to your child when they’re struggling to get on the property ladder could be more useful to them than an inheritance later in life.  

However, it’s important to note that not all gifts will be considered immediately outside of your estate for IHT purposes. Usually, gifts will be considered for up to seven years. These are known as “potentially exempt transfers”.

Some gifts will be immediately outside of your estate when calculating IHT, including:

• Up to £3,000 each tax year known as the “annual exemption”

• Small gifts of up to £250 to each individual, so long as they have not benefitted from your annual exemption

• Wedding gifts of up to £1,000, rising to £5,000 for your child or £2,500 for a grandchild

• Regular gifts from your surplus income that are part of your normal expenditure and do not affect your usual standard of living.

It’s often a good idea to keep a record of gifts, particularly if you plan to gift from your surplus income as HMRC may check to see if the gifts are part of a pattern.

A financial plan could assess the effect of passing on assets during your lifetime and help you understand how gifting might affect your financial security later in life.

3. Place assets in a trust

You may take assets outside of your estate by placing them in a trust and potentially reduce the IHT bill your estate pays as a result.

You can specify who you’d like to benefit from the assets held in a trust, known as the “beneficiary”, and who will manage the trust on their behalf, known as the “trustee”.

Trusts can be complex and once you’ve transferred assets you may not be able to reverse the decision. As a result, taking professional advice could help you assess what’s right for you.

As a financial planner, we could help you understand the effects of placing assets in a trust and how you might do so in a way that aligns with your wishes. A solicitor could also offer support in writing a trust deed, which would establish the trust and set out any rules or conditions you may have.

4. Leave 10% of your estate to charity

If you leave at least 10% of your entire estate to charity in your will, the IHT rate your estate pays may fall from 40% to 36%.

In some cases, leaving a portion of your estate to charity could mean passing on more wealth to your loved ones while supporting a good cause.

5. Take out life insurance

Life insurance won’t reduce an IHT bill, but it could provide your loved ones with a way to pay it.

If you took out whole of life insurance, it would pay out a lump sum on your death to your beneficiary, which they may then use to pay an IHT bill. It’s an approach that could mean you’re able to pass on your estate intact and reduce stress for your loved ones.

You may need to calculate the potential IHT bill to ensure the payout would cover the entire amount. You’ll also need to pay regular premiums to maintain the cover.

It’s also important that the life insurance is placed in trust, otherwise, the payout could be included in your estate when calculating IHT and lead to a larger bill.

Get in touch to talk about your estate’s potential Inheritance Tax liability

There are often other steps you might take to reduce your estate’s IHT liability too. If you’d like to discuss your estate and how you might pass on wealth to your loved ones efficiently, please get in touch to arrange a meeting.

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.

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, tax planning, trusts, or will writing.

State Pension: Everything you need to know in 2025/26

For many pensioners, the State Pension provides a foundation to build their retirement income. Whether you’re already claiming the State Pension or it’s still some years away, here’s what you need to know in 2025/26.

In the 2025/26 tax year, you can claim the State Pension from the age of 66. However, the age will gradually start to increase from 6 May 2026 to 67, and it’s expected to rise further in the future.

You won’t automatically receive the State Pension when you reach this age – you need to claim it. You should receive a letter a few months before you reach the State Pension Age and then you can apply online.

In some cases, you might decide to defer claiming the State Pension. For example, if you’re still in work and the State Pension income could push you into a higher tax bracket, you may delay claiming it. If you choose to do this, you’ll receive a higher income from the State Pension.

The full new State Pension will provide a weekly income of £230.25 in 2025/26

How much you could receive from the State Pension is based on your National Insurance contributions (NICs) during your working life.

To be eligible for the full new State Pension, you will usually need to have 35 qualifying years on your National Insurance (NI) record. Qualifying years may include periods where you’re working and paying NICs or you may be entitled to NI credits if you’re unemployed, ill, a parent, or a carer.

If you have between 10 and 35 qualifying years on your NI record, you’ll normally receive a portion of the new full State Pension. So, it’s important to be aware of your NI record before you reach State Pension Age so you can accurately forecast how much you’ll receive.

One of the reasons the State Pension is valuable is that it increases each tax year. As the cost of goods and services typically rises, this could help to preserve your spending power in retirement.

Under the triple lock, the State Pension increases by the highest of the following three measures:

• Inflation

• Wage growth

• 2.5%

For the 2025/26 tax year, the triple lock means pensioners who receive the full new State Pension will benefit from a 4.1% boost to their income taking it to £230.25 a week, or around £11,970 a year.

Understanding when you could claim the State Pension and how much you might receive is often important for creating a financial plan that suits your goals. You can use the government’s State Pension forecast tool, but keep in mind both the State Pension Age and how the income is calculated could change in the future.

Filling in National Insurance gaps could boost your State Pension income

As your NI record affects your State Pension income, you might benefit from filling in gaps if you don’t have the 35 qualifying years you need to receive the full amount.

So, if you’ve taken a career break in the past, you may benefit from checking your NI record now. The cost of buying a full NI year is usually £824 but may vary depending on the year you’re topping up and your circumstances. If you paid NI for a portion of the year you’re topping up, the cost will typically be lower.

Before you fill in any gaps, consider your long-term plans. In some cases, it won’t make financial sense to fill in the gaps. For example, if retirement is still several years away, you might eventually have enough qualifying NI years without making voluntary payments.

You only have until 5 April 2025 to voluntarily buy missing NI years between 2006 and 2016. After this date, you’ll only be able to fill in gaps from the last six tax years.

The State Pension could form a foundation for your retirement income

While the full State Pension might not provide enough income to retire comfortably on, even after the 2025/26 increase, it may be a useful foundation to build on.

Having a reliable income could offer peace of mind and mean you’re confident that you can pay for essential outgoings.

Many retirees will use other assets, from workplace pensions to savings and investments to supplement the income the State Pension delivers. Bringing together these different income streams in a retirement plan could help you understand how to create a sustainable income that meets your needs.

Contact us to talk about your retirement income

If you have questions about how to create an income in retirement to supplement your State Pension, please get in touch. We could help you manage your pension, whether you’re ready to start making withdrawals or plan to continue working for several years.

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. 

How to stop following the investment crowd and stick to your strategy

We’re only weeks into 2025, and it’s already been one filled with market volatility and uncertainty. At times like this, being part of a crowd might feel comforting, but following the investment decisions of others could lead to choices that aren’t right for you.

Political and economic uncertainty means investors may already have experienced the value of their investments falling this year. In fact, towards the end of January, you might have been affected by the value of US technology stocks falling sharply.

The sudden emergence of Chinese AI app DeepSeek, which rivals US AI technology at a fraction of the cost, led to some investors questioning whether the US’s dominance in the sector would continue.

According to the BBC, following the release, Nvidia, which makes chips for AI, saw share prices fall 17% on 27 January – the biggest single-day loss in US market history. The next day, the share price began to recover but remained significantly below where it had been the previous week.

It wasn’t only Nvidia that was affected either, many other US technology businesses experienced a fall in share prices. Indeed, the Nasdaq – a technology-focused US index – was down 3.5% when markets opened on 27 January.

With other investors seemingly selling off their US technology stocks, you might have been tempted to follow the crowd and do the same.

Market volatility can trigger herd instinct among investors

Herd instinct is a type of financial bias where people join groups to follow the actions of other people. When investing, it might mean you make similar investments to others or that you sell your investments when share prices fall. In fact, herd instinct at a large scale could lead to market crashes or create asset bubbles.

It’s easy to see why this happens. Being part of a crowd can offer a sense of comfort, especially during periods of uncertainty. In contrast, standing out from the crowd could mean you feel vulnerable or that you’re making a mistake by going against the grain.

So, following the crowd may feel like the sensible option. After all, if everyone else is doing it, it must be the right decision.

Yet, it’s not as straightforward as that. In fact, herd mentality could harm your long-term plans and wealth.

When following the lead of others, you might assume they’ve already carried out research, so you skip analysing the decision. The other investors could also be acting based on herd instinct or making a decision that’s right for them, but that doesn’t automatically mean it’s the right option for you.

3 useful strategies that could help you focus on your own path

While it can be difficult to not compare your investment decisions with those of others, remember, with different goals and circumstances a great investment for one investor isn’t right for another. 

So, here are three useful strategies that could help you focus on following your own investment path.

1. Develop a clear investment plan

One of the key steps to reducing the effect of herd mentality on your decisions is to have a developed investment plan. By outlining your objectives, you’re in a better position to understand the types of opportunities that are right for you.

If you have confidence in your investment strategy, you’re also less likely to be tempted to make changes. For example, if you know your investments are on track to provide “enough” to reach your long-term goals, taking additional risk for a chance to secure higher returns might not be as appealing.

As a financial planner, we can help you create an investment plan that provides you with a clear direction.

2. Diversify your investments in a way that reflects your plan

One of the challenges of investing is keeping emotions in check. You’re more likely to follow the crowd when the market or your investments face a sharp fall or rise. It might mean you feel uncertain about the investments you’ve chosen, so you start to look at what others are doing.

By diversifying we won’t shield you from all market movements, but it could mean your McLaren portfolio is less exposed to volatility. By investing in different asset classes, sectors, and geographical areas, when one part of your portfolio experiences a dip, it could be balanced by gains in another. As a result, it may mean the value of your investments is less likely to experience large fluctuations and limit knee-jerk decisions.

3. Be aware of your investment risk profile

All investments involve some risk. However, the level of risk can vary significantly.

So, understanding risk could mean you’re able to confidently pass by opportunities that you know involve more risk than is appropriate for you even if it seems like everyone else is investing in it.

Contact us if you would like to talk about your investment strategy

If you’d like to talk about how to invest in a way that aligns with your goals and circumstances, please get in touch. We can work with you to create a tailored investment strategy that may give you confidence in the steps you’re taking.

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.

Investment market update: January 2025

Concerns around potential trade wars following President Trump’s inauguration weighed on investment markets in January 2025, but there was positive news too. Read on to discover some of the factors that may have affected the performance of your investments.

Keep in mind that short-term market movements are part of investing and taking a long-term view is an important investment strategy for many people.

UK

Headline figures were positive for the UK.

UK inflation fell to 2.5% in the 12 months to December 2024, data from the Office for National Statistics (ONS) shows. According to the Guardian, there’s a 74% chance the Bank of England (BoE) will cut interest rates in February as a result. More recent data and a further uncertainty surrounding the impact of significant increases in taxation and business costs, make the outlook for a cut now at 50%.

The ONS also reported the UK economy returned to growth in November 2024, as GDP increased by 0.1%. While it’s only a small rise, it follows three months of stagnation.

What’s more, the International Monetary Fund expects the UK to grow by 1.6% in 2025 and be the third-strongest G7 economy in terms of growth.

In encouraging news for the chancellor, at the World Economic Forum, PwC revealed that the UK is the second-most attractive country for investment, only falling behind the US. It marks the highest rank for the UK in the 28 years PwC has carried out the survey.

Sharp rises in borrowing led to the UK bond market making headlines.

On 8 January, UK government debt hit its highest level since the 2008 financial crisis, just a day after 30-year bond yields were at the highest level since 1998. Bonds rising could lead to mortgage lenders increasing rates and could affect the value of pensions, particularly those who are nearing retirement and are more likely to hold bonds.

Markets calmed down the following day but continued to experience ups and downs throughout January.

After the turmoil in the bond market, the FTSE 100 – an index of the 100 largest companies listed on the London Stock Exchange – was down 0.9% on 10 January. The biggest faller was financial group Schroders, which saw a dip of 4.3%.

Yet, just weeks later, the FTSE 100 hit a record high and exceeded 8,500 points for the first time on 17 January. The boost of around 1% was linked to speculation that there would be several interest rate cuts this year thanks to falling inflation.

However, many businesses still aren’t confident.

According to the British Chambers of Commerce (BCC), confidence among British businesses fell to the lowest level since former prime minister Liz Truss’s mini-Budget in September 2022. The pessimism was linked to chancellor Rachel Reeves’s £40 billion tax increases, which have placed a large burden on businesses. The BCC survey suggests 55% of firms plan to raise prices as a result.

Similarly, a survey from the BoE suggests more than half of UK firms plan to cut jobs or raise prices in response to employer National Insurance contributions increasing in April 2025.

The effects of the chancellor's Budget were also evident in S&P Global’s Purchasing Managers’ Index (PMI).

The index fell to an 11-month low in December and into contraction territory. Rob Dobson, director at S&P Global Market Intelligence, noted there were also sharp staffing cuts as some companies acted now to “restructure operations in advance of rises in employer National Insurance and minimum wage levels”.

Europe

Data paints a gloomy picture for the eurozone.

As expected, following an interest rate cut by the European Central Bank to boost the flagging economy, inflation across the eurozone increased. In the 12 months to December 2024, inflation was 2.4%.

Germany – the largest economy in the bloc – reported GDP falling 0.2% in 2024 when compared to the previous year, and it follows a decline of 0.3% in 2023.

According to an index from sentix (a sentiment index), the challenges Germany is facing are negatively affecting investor morale across the eurozone. Indeed, investor confidence fell to a one-year low at the start of 2025. Germany is set to hold a snap general election in February, which could ease some of the uncertainty investors are feeling.

PMI figures from the Hamburg Commercial Bank fail to offer investors optimism.

While the eurozone service sector improved, it was still in decline at the end of 2024. In addition, the construction sector continues to contract and new orders fell markedly, suggesting that a recovery isn’t on the horizon.

US

Dominating the headlines in the US in January was the inauguration of Donald Trump, which took place on 20 January. Trump will serve a second term as US president and promised a “golden age” for America in his inaugural address.

In the first days of his presidency, Trump continued to make similar trade threats to those he made during his campaign. He suggested a 10% tariff on Chinese-made goods arriving in the US could be implemented as early as 1 February 2025. Trump also hinted that he was considering levies on imports from the EU, as well as a potential 25% tariff on the US’s two largest trading partners, Mexico and Canada.

According to the US Bureau of Labor Statistics, inflation increased to 2.9% in the 12 months to December 2024, up from 2.7% a month earlier. The inflation data could mean the Federal Reserve is less likely to cut interest rates in the coming months.

Indeed, on 13 January, Wall Street fell when it opened as traders expect interest rates to remain where they are.

Technology-focused index Nasdaq fell 1.3% and the S&P 500, which tracks the 500 largest companies listed on stock exchanges in the US, lost 0.8%. Pharmaceutical firm Moderna experienced the largest slump when share prices fell 24% after the company cut its outlook due to shrinking demand for its Covid-19 vaccine. 

Markets faced more turmoil on 27 January. The emergence of a low-cost Chinese AI model, DeepSeek, led to concerns about the sustainability of the US artificial intelligence boom.

According to Bloomberg, shares in US chipmaker Nvidia fell by 17% and erased $589 billion (£473 billion) from the company’s market capitalisation – the biggest in US stock market history.  

Other US technology giants saw share prices fall too. Microsoft, Meta Platforms and Alphabet, which is the parent company of Google, saw losses between 2.2% and 3.6%. AI server makers saw even sharper drops, with Dell Technologies and Super Micro Computer sliding by 7.2% and 8.9% respectively.

PMI data from S&P Global indicates business could pick up at the start of 2024. In fact, the service sector posted its biggest growth in output and new orders in December 2024 since May 2022. The jump was linked to firms anticipating more business-friendly policies under the Trump administration.

Asia

Threats of trade tariffs from the US in 2025 meant Chinese manufacturers rushed to fill orders at the end of 2024. Indeed, exports increased by 10.7% in December 2024 when compared to a year earlier, according to official customs data. With exports outpacing imports, China’s trade surplus was just under $1 trillion (£0.8 trillion) in 2024.

China’s National Bureau of Statistics also reported the economy hit its official target of growing by 5% in 2024.

Chinese manufacturer BYD could be on track to overtake US technology giant Tesla this year. BYD revealed it sold 1.76 million battery electric cars in 2024 falling only behind Elon Musk’s company, which sold 1.79 million. In fact, when including hybrid vehicles, BYD surpassed Tesla.

However, the new year didn’t start positively in the Chinese stock market. On 2 January, weak manufacturing data contributed to a sell-off of Chinese stock. The Chinese Stock Exchange fell by 2.7%, and the Chinese yuan also fell to a 14-month low against the US dollar.

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.

Research: Financial stability could be the key to retirement happiness

While the saying might be “money can’t buy happiness”, research suggests that financial stability certainly plays a role in your overall wellbeing. In retirement, when you’re no longer earning a salary, finding a way to create financial stability could be a vital part of building a lifestyle that allows you to enjoy the next stage of your life.

Legal & General and the Happiness Research Institute carried out a study to uncover what makes people happiest in retirement.

The happiest respondents enjoyed good health and satisfying close relationships. They also valued their independence and filled their time with meaningful activities. Together, these factors may help you create a retirement that supports your wellbeing.

Underpinning these components was a consistent key factor – a predictable income.

Interestingly, retirees often didn’t need a large income, but feeling financially secure was important. Indeed, the research found that a stable income of £1,700 a month for an individual supported happiness. The boost of a higher income started to level off once it reached around £2,000 a month.

Over the last few years many households, including retirees, have had to adjust their spending as high inflation has led to higher outgoings. So, it’s perhaps unsurprising that financial stability is valued.

In addition, changes to how you can access your pension in 2015 have offered greater flexibility to retirees. While many welcomed Pension Freedoms, they also added a layer of complexity and may mean some retirees no longer receive a reliable income from their pension savings.

3 types of retirement income that are reliable

The research found that many retirees were concerned about their financial security, and 27% said their finances are often or sometimes unpredictable or difficult to keep track of.

So, understanding what income is reliable and whether it could meet your essential outgoings might offer peace of mind. Here are three types of dependable income you might receive once you retire.

1.  State Pension

The State Pension often provides a foundation to build your retirement income on. It’s valuable for two key reasons:

• It provides a regular income you can rely on.

• Under the triple lock, it increases each tax year, which helps to preserve your spending power.

The full new State Pension would provide an income of £221.20 a week, or around £11,500 a year, in 2024/25. However, the amount you receive will depend on your National Insurance (NI) record and when you reach State Pension Age.

Usually, under the new State Pension rules, you’ll need at least 35 qualifying years to receive the full amount. You can use the government’s State Pension forecast to understand how much you could receive and whether you’d benefit from filling in NI gaps.

One potential issue to note is that you may plan to retire before State Pension Age. The State Pension Age is currently 66 for both men and women and it’s set to rise to 67 between 2026 and 2028. The government could announce further increases in the future too.

So, you might need to take a higher income from other assets before you reach State Pension Age to bridge the gap.

2. Defined benefit pension

If you have a defined benefit (DB) pension, also known as a “final salary pension”, it’ll pay you a regular income from when you reach the retirement date until you pass away.

How the amount of income it provides is calculated varies between pension schemes. However, it’s usually linked to the number of years you paid into the scheme and your salary.

In many cases, the income provided will rise in line with inflation and the scheme would provide an income for your partner if you pass away first.

3.  Annuity

If you have a defined contribution (DC) pension, you’ll often be able to access your savings when you reach the normal minimum pension age, which is 55 (rising to 57 in 2028).

One of the options you have with a DC pension is to purchase an annuity. An annuity would provide you with an income for the rest of your life or a defined period, and might help to create financial stability in retirement.

You may choose an annuity that will rise in line with inflation or would provide an income for your partner if you passed away first.

A flexible income could also provide you with financial security in retirement

With a DC pension, there are other ways to create a retirement income too. While these options might not provide a reliable income, they could still offer a sense of financial security and might better suit your needs.

For instance, you may choose flexi-access drawdown. With this option, your pension would typically remain invested and you withdraw an income, which you can adjust. This might be useful if your income needs could change throughout retirement.

Understanding the potential long-term effect of your withdrawals, and calculating what a sustainable withdrawal rate looks like for you, could help you feel confident in your finances even if you choose a flexible income.

Contact us to talk about how you could create financial stability in retirement

Most retirees will receive an income from several different sources. For example, you might benefit from a reliable income from the State Pension and a DB pension, which you supplement with a flexible income from a DC pension.

Juggling these different income streams can be confusing and might mean you’re worried about your finances, even when you’re in a good position. A financial plan could help you understand which options are right for you and give you confidence in the future, so you’re able to enjoy a happy retirement.

Please contact us if you’d like 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.