Strategic financial planning in times of change

In our recent seminar, we dove into the complexities of the current financial landscape, addressing crucial questions many investors are contemplating. Here’s the distilled essence of our discussion, designed to navigate the intricacies of investment and tax considerations in today’s economy.

With interest rates historically high, what’s the cash versus investment proposition?

If we think of interest rates over the last ten years, they look quite elevated. However, they are aligning with historical norms. Cash has become a popular asset for its perceived security and the newfound ability to yield a modest interest over the last few years.

Cash is a very sensible asset to hold. Indeed, if we’re starting to think about short-term planning needs, especially for anything you might want to spend your money on over the next year, two, or three years. Plus, people are being rewarded with some interest, which is nice.

However, when we compare cash with investments, history consistently shows that investments, particularly those bearing risk, generally outpace cash over time, especially for long-term financial goals.

It really depends upon what we’re planning for.

How does age and proximity to retirement affect this decision?

Age and the timeline to retirement critically influence the cash versus investment decision. As retirement approaches, the appeal of converting investments to cash grows, yet it’s essential not to overlook the erosive impact of inflation on cash assets. For those pondering retirement shortly, balancing cash for immediate needs against investments for future security becomes paramount.

What strategies can help the long-term financial positions of 30 to 40 year olds?

The best approach is to consider the level of risk that they’re willing and prepared to accept. Individuals need to consider what is most suitable for them. For individuals navigating their prime earning years, the focus should shift towards risk tolerance and tax-efficient investment strategies. Balancing risk with potential returns, considering tax implications, and managing investment costs can significantly influence long-term financial growth.

How can a family-based financial approach benefit planning?

Planning as a family unit is also very sensible. I often deal with married couples; if they thought about their finances as a collective unit, they could often deliver a much better outcome. A holistic, family-based approach to financial planning can maximise tax allowances and optimise asset distribution, proving especially beneficial for managing larger asset pools or navigating complex tax situations.

Why do Carpenter Box Financial Advisers use the Cubit Model as an investment tool when considering portfolio management?

The purpose of getting involved with the Cubit proposition was to build a quality investment proposition run by a recognised investment manager who could offer input to the portfolio structures.

The introduction of the Cubit model has allowed Carpenter Box Financial Advisers to offer a hybrid between passive and active investment management, creating some cost efficiencies without compromising on quality and the potential for investment growth.

This emphasises the importance of innovative solutions in today’s investment landscape. It remains one of the solutions used when considering client investment portfolios and helps ensure we have diverse product solutions to meet clients’ needs.