The past couple of years have been highly volatile from a financial perspective. Since 2020 alone, UK savers and investors have had to deal with:

  • Erratic stock markets, with many people seeing their investment portfolios dip in value
  • Political uncertainty, including the announcement (and subsequent repealing) of significant changes to the UK tax regime
  • Surging inflation, showing a marked increase in the cost of goods and services year-on-year
  • Rising interest rates, causing an increase in mortgage repayments for many homeowners.

All the factors above, and more, have contributed to significant financial uncertainty, which has had a tangible effect on UK savers and their personal financial confidence. In particular, data shows that this has affected high net worth (HNW) individuals especially.

In fact, according to Professional Adviser, HNW individuals reported less financial confidence now than they did even a year ago.

So, if you are a HNW individual who has experienced a fall in your financial confidence, read on to discover a few tips that could help you rebuild yours.

Take stock of your entire financial situation

When your financial confidence drops, often the most sensible place to start is to take stock of your entire situation. 

Budgeting can be an incredibly valuable tool here. By assessing how well your income covers your current expenditure, you can see whether your money is suitably organised to afford your lifestyle.

You may also identify some areas in your expenses that you could cut back on, helping you to be more financially secure.

As part of this, it can be useful to review how much you are able to save and invest each month, and how much you are able to contribute to your pension. This can reassure you that you are adequately preparing for the future, regardless of what is happening more broadly.

Ensure that you have sufficiently protected yourself

As an extension of taking stock with careful budgeting, you may also want to review how financially protected and secure you are in the event of an emergency.

Some events are entirely unforeseeable. No one could have known that the Covid-19 pandemic would lead to lockdowns that ravaged economies around the world, or predicted that the government would announce the scrapping of additional-rate Income Tax, only to reverse this a few weeks later.

This is why it can be prudent to prepare for and protect against emergencies that might affect you.

For example, you may want to consider holding an emergency fund of cash to meet short-term, expensive obligations you might have. This can be particularly useful when markets are volatile, as it can ensure that you have money to live on without you having to sell investments that may have temporarily dipped in value.

Similarly, you might want to look at putting financial protection in place, or reviewing your existing cover to ensure it is still sufficient. 

There are various events that could befall you when financial protection could offer much-needed assistance. For example, you might:

  • Become unemployed, perhaps through illness, injury, or redundancy
  • Be diagnosed with a critical illness
  • Die unexpectedly, leaving your family in a precarious position.

Having protection to rely on in the face of events like these could be an invaluable lifeline for you or your family.

Even simply knowing that you have taken these steps can help you to increase your confidence. It can give you the peace of mind that you and your family will be financially secure, no matter what happens.

Remember that such events have historically been cyclical

While there are plenty of concrete choices you can make as an individual to improve your financial confidence, a shift in mindset can also be powerful. Most notably, it can be useful to remember that events which lead to financial uncertainty and volatility are often cyclical.

For example, consider this data reported by FTAdviser, showing the biggest single-day falls of the FTSE 100, which is an index of the largest 100 companies in the UK.

In March 2020, when lockdowns were introduced to slow the spread of Covid-19, the index fell by 9.3% in one day. You might have felt this in your portfolio, perhaps seeing investments you hold dip in value.

But, while this might feel extreme, it is by no means the only time in recent history when the index has fallen like this in just one day. Other notable moments when the FTSE 100 dipped significantly include:

  • The 2008 financial crash, in which the index lost 7.85% and 8.85% on the 6 and 10 October respectively
  • Falls of 10.84% and 12.22% on 19 and 20 October 1987 respectively amid the “Black Monday” crash.

Yet despite these falls, the FTSE 100 has still exhibited growth in the long term, as shown by the graph below:

Source: Google Finance

The point here is that, while these falls were often unexpected and concerning, they are not entirely isolated incidents. Markets are inherently volatile, and can fall like this in response to various different stimuli.

The key is to build these considerations into your financial plan from the outset, and understand that this can happen. This way, you can better prepare your wealth for times when markets fall.

You might also be able to improve your financial confidence when these events do occur. By understanding that this is how markets behave, you may be able to remain confident and keep a level head, no matter what is happening in the market.

Speak to a financial adviser

Perhaps the most powerful tool at your disposal to rebuild your financial confidence is to work with a financial adviser.

At DBL, we can help you organise your wealth so that you are able to live the type of lifestyle you want. 

Crucially, knowing that you have an expert assisting you in managing your money can help you to be financially confident, even when markets are uncertain.

If you would like support rebuilding and maintaining your financial confidence, please do get in touch with us today.

Email or call 01625 529 499 to speak to us today.

Please note

The value of your investment 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.

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

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.