Blog Archives - E S Walton

Investment market update: December 2025

After a year filled with uncertainty and rising trade tensions, markets were calmer in December 2025. Find out what may have affected the performance of your portfolio at the end of the year.

Market volatility eased in December 2025

Markets were downbeat at the start of the month. Most European markets were in the red on 1 December, including Germany’s DAX (-1.2%), France’s CAC 40 (-0.55%), and the UK’s FTSE 100 (-0.13%).

The Bank of England (BoE) carried out stress tests on 2 December, which all major banks involved passed. This led to bank stocks rising, including Lloyds (1%), Barclays (0.95%), and HSBC (0.7%).

American technology firm Oracle Corporation missed its revenue forecast and hiked expenditure plans by $15 billion (£11.3 billion). This led to the company’s shares dropping by 15.7% when trading started on 11 December – knocking almost £100 billion off the company’s market capitalisation.

The news dragged down other AI stocks as well, including Nvidia, which became the biggest faller on the Dow Jones Industrial Average index after it tumbled 2.7%.

Despite the concerns about AI, the Dow Jones Industrial Average hit a record high after rising 0.95% on 11 December following news that US interest rates had fallen.

On 17 December, the FTSE 100 was up 1.6% following a bigger-than-expected drop in inflation, leading gains in European markets.

With Christmas nearing, festive optimism swept through London. On 19 December, the FTSE 100 closed at an almost record high, with leading firms including Rolls-Royce (2.7%) and precious metal producers Endeavour Mining (3.1%) and Fresnillo (2.8%). However, housebuilders and retailers suffered falls.

UK

UK inflation slowed to 3.2% in the 12 months to November 2025, according to the Office for National Statistics. The news led the BoE’s Monetary Policy Committee to vote to cut the base interest rate from 4% to 3.75%, with further cuts anticipated in 2026.

The headline GDP figure was weak in the UK. The economy unexpectedly shrank by 0.1% in October, according to official data.

In addition, UK unemployment hit a four-year high of 5.1% in the three months to October. This could signal a weakening economy.

However, forecasts suggest the economy could pick up in 2026. The Organisation for Economic Co-operation and Development (OECD) expects the UK to be the third fastest-growing economy among G7 members in 2026, falling behind only the US and Canada.

This view is supported by a return to growth in the manufacturing sector.

According to S&P Global’s Purchasing Managers’ Index, manufacturing grew for the first time in a year. The reading came ahead of the Budget, when uncertainty was likely to have been playing on the minds of businesses, so the improvement is particularly encouraging.

Sadly, it’s a different picture for retail.

The Confederation of British Industry (CBI) reported that retail volumes fell at an accelerated pace in December despite the festive season, and firms don’t expect any relief in the opening months of 2026.

Europe

The European Central Bank (ECB) opted to hold its interest rates in December as it noted that it’s on track for inflation to settle around its 2% target.

The ECB also raised its growth forecast for the economic bloc, driven by rising domestic demand. The bank now expects GDP to rise by 1.4% in 2025 and 1.2% in 2026.

An industrial recovery is likely to play a crucial role in the higher GDP forecasts. According to Eurostat data, industrial output increased by 0.8% in October as businesses benefited from trade uncertainty fading and falling energy costs.

However, not every part of the region is as optimistic.

The German Ifo Institute’s business climate index fell in December, despite analysts predicting a rise. The gloomy outlook is linked to two years of economic contraction in manufacturing, confidence in the service sector falling, and unhappy retailers facing lower-than-expected sales in the lead-up to Christmas.

US

US inflation unexpectedly fell to 2.7% in the 12 months to November 2025. Experts had predicted inflation would be 3.1%.

While falling inflation is good news for struggling families, rising unemployment could suggest further difficulties ahead. The unemployment rate hit 4.6%, amid apprehension about the strength of the US economy.

However, job growth was higher than anticipated in November. A total of 64,000 jobs were added, against the predicted 40,000.

The economic news led to the Federal Reserve cutting the base interest rate by a quarter of a percentage point. The base rate is now at its lowest point since 2022.

President Donald Trump permitted technology giant Nvidia to ship H200 chips to China in exchange for a 25% surcharge for the US. The move could allow Nvidia to win back billions of dollars in lost revenue, which led to its shares rising by 2.3% on 9 December.

While good news for Nvidia, the move has been criticised for being an “economic and national security failure” by some Democratic senators.

Asia

The International Monetary Fund (IMF) raised its growth forecast for China. The organisation now expects the country’s economy to grow by 5% in 2025 and 4.5% in 2026, thanks to lower-than-expected tariffs on Chinese exports.

However, the IMF also urged China to fix “significant” imbalances in its economy, primarily by shifting from export-led growth to domestic consumption.

The positive news from the IMF was supported by official trade data.

China’s trade surplus hit $1 trillion (£0.74 trillion) for the first time in November 2025, as the economy appeared to shrug off concerns about the impact of trade with the US. Exports grew by 5.9% year-on-year in November following a 1.1% contraction in October.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

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.

The salary sacrifice pension cap essentials business owners need to know

You might already know that salary sacrifice can be a practical way for your employees to bolster their retirement funds, while reducing their tax liability.

However, in the 2025 Autumn Budget, the government announced changes to how salary sacrifice is treated for National Insurance (NI) purposes.

From April 2029, a new cap will be introduced, limiting the portion of pension contributions exempt from NI to £2,000 a year.

While 2029 might seem a long way off, this is the ideal time to think carefully about how you and your business might be affected so you can be prepared.

Continue reading to discover exactly how the salary sacrifice pension cap will work, and what it means for your business’s retirement planning.

Salary sacrifice is a way for your employees to exchange a portion of their income for benefits

Salary sacrifice involves an employer and employee agreeing to a reduction in gross pay in exchange for non-cash benefits.

These might include:

Employer-provided healthcare
Gym memberships
Financial advice
Company cars (especially electric vehicles).

Perhaps the most popular non-cash benefit is pension contributions. For many other non-cash benefits (known as “benefits in kind”), tax might still be due. However, pension contributions made via salary sacrifice are typically exempt from both Income Tax and NI.

Furthermore, when your employees sacrifice a portion of their salary, you might then decide to contribute the equivalent amount to their pension. Currently, this allows you to significantly boost their retirement fund.

Moreover, as an employer, you currently benefit from not paying Class 1 secondary National Insurance contributions (NICs) – 15% in 2025/26 – on the amount sacrificed by your employee. This results in a tax saving.

However, from April 2029, the government will limit the NI efficiency on these contributions. While your employees won’t pay Income Tax on your contributions, any amount sacrificed into a pension above £2,000 a year will attract NI.

For the portion exceeding the cap, employees will pay Class 1 NICs, while you will be liable for the 15% rate.

If you’re a business owner, you might want to review your pension strategy

As a business owner, these changes to the salary sacrifice regime can affect your company’s finances and your personal tax situation.

If you pay directly into your pension from your business, or do the same for your employees, nothing will change.

However, if you currently have salary sacrifice arrangements with your employees, or use salary sacrifice to fortify your own pension, the 2029 cap means that making pension contributions will become more expensive.

As an example, every £1,000 sacrificed over the £2,000 limit by you or your employees could see your business face a £150 NI charge.

Furthermore, if you currently share the employer NIC savings with employees to top up their pots, you may need to assess how the new NI charge might affect you.

Otherwise, if your business encourages higher pension savings, you might find your company costs rise significantly in 2029.

As such, it’s worth reviewing any existing salary sacrifice arrangements and employment contracts, and then modelling how contributions exceeding £2,000 might impact your business.

After building this model, you should confirm whether contributions are through salary sacrifice or as standard employer contributions. It might even be prudent to assess your remuneration approach for any key members of staff.

While April 2029 might seem like a long time in the future, taking steps to prepare your business now could help you soften any potential blows later down the line.

It’s useful to understand how the cap might affect your employees

While your own planning is important, it’s also a good idea to consider the impact the change could have on your employees, such as seeing their take-home pay drop as their NI bills rise.

For example, an employee earning £60,000 a year and contributing 6% of their salary into their pension through salary sacrifice would have annual contributions of £3,600. Since this would exceed the £2,000 cap by £1,600, they would pay NI on this amount.

Despite the cap, it may be worth informing your employees that salary sacrifice can still be a practical way to manage their tax liability.

Indeed, the higher-rate band for Income Tax starts at £50,271 as of 2025/26. If an employee earns £50,000 and receives a 5% pay rise to £52,500, they would normally be pushed into the 40% bracket.

They could, however, sacrifice that £2,500 into their pension to remain in the basic-rate band.

Even though they would now pay NI on the £500 of the contribution above the cap (assuming they make no other pension contributions), the Income Tax savings could still make this approach financially beneficial.

It’s is important to note that if salary sacrifice is a popular perk in your business, your company might seem less attractive to the talent you wish to hire from 2029 onwards.

A capped NI benefit might deter higher-level talent, turning them towards competitors who offer a higher base salary or more generous direct pension contributions.

To stay competitive, you may want to consider paying more into your employees’ pensions rather than offering a higher salary.

Get in touch

We could help you deal with some of the tax complexities of the new salary sacrifice rules well ahead of the deadline.

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.

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.

Workplace pensions are regulated by The Pensions Regulator.

The Financial Conduct Authority does not regulate tax planning.

2 reasons to combine your financial plan with your partner’s

Love is in the air with Valentine’s Day just around the corner. Amid planning romantic gestures, thinking about combining your financial plan with your partner’s could be valuable.

Talking about finances might seem too practical for a day that’s about celebrating love. Yet, it could support your relationship. Here are two reasons why you might want to create a single financial plan with your partner.

1. Work towards shared goals

If you’re planning to spend the future with someone, you want to ensure you’re both on the same page about your life goals. A financial plan can help you set out what these goals are and the steps you might take to achieve them.

Mismatched goals could mean you not only miss out on achieving them, but also place pressure on your relationship.

If your priority is saving for retirement while your partner focuses on spending now, it may lead to money arguments because you have conflicting goals. A financial plan can help you have important conversations about what you’re working towards.

According to a MoneyWeek article (26 August 2025), almost three-quarters of savers say they plan to rely on their partner’s pension to help fund retirement.

If these couples haven’t spoken about how they’ll create an income in retirement, they could face a shortfall and potentially financial insecurity later in life.

In contrast, if they’ve spoken about how they’ll combine their pension savings, they could approach the milestone with greater confidence.

2. Use both of your tax allowances

Many tax allowances are for individuals. As a result, by planning together, you could reduce your combined tax bill.

For example, interest earned on savings held outside of a tax-efficient wrapper, like an ISA, could be liable for Income Tax. If you’ve used your ISA allowance, which is £20,000 in 2025/26, you could place a portion of your savings into your partner’s ISA to minimise the amount of tax you pay.

Similarly, you could pay into your partner’s pension so the contributions benefit from tax relief, if you’ve already used your own pension annual allowance.

It’s important to keep in mind what would happen if the relationship broke down after you’d placed assets in your partner’s name. You might decide it’s not the right option for you, even if it could reduce your tax bill.

If you’re married or in a civil partnership, planning together could come with other tax benefits as well.

For example, if you or your partner earns below the Personal Allowance (£12,570 in 2025/26), you may be able to transfer some of the unused amount to reduce the amount of Income Tax you pay as a couple overall.

Additionally, when you’re creating an estate plan, you can pass on assets to your spouse or civil partner without being liable for Inheritance Tax (IHT). Unused IHT allowances can also be passed to your spouse or civil partner to increase the amount they can leave to loved ones before IHT might be due.

Creating a financial plan with your partner could help improve your tax position now and in the future. However, it’s important to note that taxation can be complex, so seeking professional advice can help you understand what steps may be appropriate for you.

Your financial plan can be tailored to suit you and your partner

Combining your financial plan with your partner’s doesn’t mean that you have to merge every aspect of your finances. You can create a balance that’s right for you.

Some couples prefer to share all assets, while others are more comfortable if some assets remain theirs. You might even decide to keep hold of all your individual assets and use a financial plan to ensure you’re both working towards the same future.

A financial plan can be tailored to you and adjusted as your goals and relationship change.

Get in touch to talk about combining your financial plans

Whether you want to combine finances completely or keep some assets separate, we can help you and your partner create a financial plan that suits your relationship. Please contact us to arrange a meeting.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

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 tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

7 ways financial planning could help you set realistic goals

As 2026 begins, it’s a good time to think about what you want to achieve in the coming months. A tailored financial plan can help you set realistic goals.

Creating goals on your own can be challenging, especially if they bring together several different parts of your financial plan or have a long-term time frame. If you’re overly ambitious, it can be disheartening if you don’t reach the target you’ve set. On the other hand, if you’re too cautious, you could miss out on opportunities.

Here are seven ways a financial plan could support your goals in 2026.

1. A financial plan can help you assess your starting point

A valuable aspect of a financial plan is understanding your current financial position. To assess what’s possible, you first need to know where you are.

A financial plan might involve reviewing your assets and budget so you’re in a better position to identify where changes could be made.

For example, if your goal is to retire in 10 years, you may benefit from increasing your pension contributions. By understanding where your money is going, you might find that you could reduce your day-to-day spending or divert some of your savings to your pension.

2. Your goals are at the centre of your financial plan

While managing your finances often conjures thoughts of figures and calculations, what’s really at the centre is your goals.

Working with a financial planner can create a space to explore what matters to you. Some goals might already be clearly defined, such as supporting children when they want to get on the property ladder or retiring by a set date.

However, other goals might become apparent through discussions with your financial planner, such as being in a position to overcome a financial shock or achieve peace of mind.

3. A financial plan can translate goals into numbers

Once your goals are set out, it’s time to consider what you’ll need to achieve them.

If you set a vague goal, such as “retire comfortably”, it can be difficult to assess if you’re on track.

A financial plan can help you get to grips with the numbers. So, your goal might become “to secure a retirement income of £40,000 a year”. You can then take it a step further to calculate what the size of your pension pot will need to be at retirement, and how you might need to alter current contributions.

4. A financial plan can help you balance multiple goals

Most people don’t have just one financial goal. It’s common to have several, often competing, priorities.

You might be paying off your mortgage, saving for retirement, putting money aside for your children, and hoping to go on holiday at the same time. A financial plan can bring together these different goals, so you’re able to strike the right balance between short- and long-term objectives.

5. Creating a cashflow model can help you visualise your changing wealth

One challenge of creating an effective financial plan is that you’ll usually need to consider how your finances will change over decades. It can be difficult to assess how the decisions you make today could have a positive or negative impact in the future.

A cashflow model is a tool that allows you to visualise how your wealth might change in different scenarios. For instance, you might use the model to see how adding different amounts to your investment portfolio each month will change your ability to reach your goals.

6. Working with a financial planner allows you to consider factors outside of your control

It’s not just the factors you can control that will affect the outcome of your financial plan. Sometimes, external influences, like the rate of inflation or stock market performance, might have an impact.

While you can’t know for sure what outside factors will occur, you can use a cashflow model to test different scenarios. For example, when investing, you might model several different average annual rates of return to assess what they’d mean for your goals.

This allows you to consider how your finances would cope in different scenarios, and you may be able to take steps to help ensure your goals stay on track.

7. A financial plan can create accountability

Every year, thousands of people make and break a new year’s resolution. According to a YouGov poll (17 December 2025), only 38% of people who made resolutions at the start of 2025 had kept all of them.

Working with a financial planner means you’ll have regular meetings and someone who can hold you accountable. With a clear strategy to follow, you’ll know when you’re straying from the path that could turn your goals into reality. As a result, you might be less likely to break the commitments you’ve made.

Talk to us about your goals for 2026

If your goals have changed or you’d like a review to understand whether you’re on track, please get in touch to arrange a meeting.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

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.

The Financial Conduct Authority does not regulate cashflow modelling.

5 useful tips that could help you identify financial blind spots

There are times when you may make mistakes without realising it. These mistakes could be due to blind spots, such as habits, assumptions, or risks that go unnoticed, and could affect your financial decisions.

Making mistakes is a part of life. However, because hidden mistakes often go unidentified, they may be repeated. Over time, the compounding effect of small mistakes could lead to a much larger negative impact.

Imagine you’ve started your first job and, to increase your day-to-day budget, you opt out of your workplace pension.

The first month of missed contributions might have little effect on the income you can expect in retirement. However, if you continue to skip pension contributions, you could find that your retirement is far less financially secure than you’d hoped, especially if you haven’t made other provisions.

Opting out of your pension due to a lack of information about the long-term effects could affect your lifestyle in the future.

Here are five ways you can spot financial blind spots and limit the effect they could have on your decisions.

1. Look beyond your budget to your behaviours

When you think about changing your money habits, examining where your money is going might come to mind first. While this is useful, looking beyond your budget to your behaviours could help you identify blind spots.

For example, are you more likely to splurge if you’ve been experiencing stress? Or is investment volatility likely to lead you to make knee-jerk decisions?

Understanding your financial behaviours could help you recognise when you might not be acting in your best interests due to a blind spot. It could give you the chance to step back and assess a situation before you make a decision.

2. Check the small details

Managing your finances often involves making big decisions. It can be easy to overlook the small details as a result.

When you review your pension, your focus might be on the annual returns. Yet, the fees you’re paying could also be important. Over time, paying higher fees on your pension could affect the value of your savings and the income you’ll receive once you retire.

Paying attention to the small details of your finances could make a big difference over time.

3. Assign your assets to goals

If the value of your assets is increasing, you might assume you’re on track. However, if you’ve not set out individual goals and understood how different assets will support them, it can be challenging to assess whether adjustments are needed.

A financial plan that balances short- and long-term goals can help you pinpoint blind spots. For example, you might have a savings account that you want to use to cover holiday expenses and provide financial help for your child when they go to university. If you haven’t calculated exactly how the savings will be broken down, it could mean you unexpectedly miss the mark.

4. Stress test your finances

Stress testing your finances can be one way to identify issues that blind spots might cause.

According to a PensionAge article (16 September 2024), almost three-quarters of Brits aren’t on track to retire with sufficient funds to maintain their current lifestyle. One of the reasons for this is that many do not consider factors that might affect their income needs, such as inflation or healthcare costs later in life.

Stress testing your finances can help you understand what might happen in different scenarios. In the above example, you might consider whether your income needs could be maintained if there were a period of high inflation, or how you’d cope if your income failed to keep pace with rising costs.

As well as retirement planning, stress testing could help you highlight other potential blind spots, such as determining if you have an appropriate financial safety net.

A financial planner could work with you to create a cashflow model, which might be valuable when you want to visualise the outcome of different scenarios.

5. Get an outside perspective

It can be difficult to identify blind spots yourself, even when you’re mindful of when they might occur. Working with a financial planner can offer you an outside perspective based on your objectives and circumstances.

Your financial planner can help you assess the small, important details and the bigger picture, so you’re in a better position to make decisions that are right for you. This approach could reveal what you may be overlooking.

Contact us

We can help you identify your financial blind spots so you can pursue your goals with confidence. Please get in touch to arrange a meeting.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

Workplace pensions are regulated by The Pensions Regulator.

The Financial Conduct Authority does not regulate cashflow modelling.

How to be a successful investor: Defining what “success” means

Every investor wants to be successful. Over the next few months, you can read about ways to improve your investment strategy.

Defining success against the performance of others can encourage a short-term mindset

What “success” means when investing is different for everyone, and defining what it means for you is crucial.

You might be tempted to measure success by achieving a certain average annual return, selecting the best-performing stock, or beating market averages. While these can be useful indicators of your portfolio’s performance, defining success by these measures may not be the best approach.

These definitions of success could even be harmful, as they may encourage short-term thinking.

For example, in a bid to choose the best-performing stock in an index, you might be tempted to make knee-jerk decisions based on the latest headline or piece of information you’ve read. Constantly adjusting your portfolio to reflect short-term movements could mean you miss out on larger trends that may benefit your portfolio.

Rather than measuring the success of your investments against what others have achieved, focusing on your reason for investing could be useful.

How investing success could support your wider goals

Investing can feel like a competition where you need to beat the returns of others. However, this mindset might not align with your needs. For instance, if you set out to beat the average annual returns of an index, you might decide to take on more investment risk than is appropriate for you.

Rather than seeing investing as something you need to try to “win”, viewing it as a tool to support your financial goals can be useful.

The aim of investing is to support your wider goals, so starting with your reason for investing could provide some clarity on what “success” means for you.

Imagine you’re investing in your pension to create financial security later in life. Success might be creating a pot that will provide a sustainable income of £40,000 a year from the age of 60.

To do this, you may calculate that you need to achieve an average annual return of 5%. If you focus on success as a competition, rather than the desired outcome, you might be tempted to chase higher returns even if doing so could place your retirement at risk.

These four factors could help you define what investment success looks like for you.

1. Your investment purpose

Setting out a well-defined goal can give your investments purpose. This goal can then inform the decisions you make and allow you to see if you’re on track for success.

Without a clear goal, you might choose investments that aren’t aligned with your needs, and place your chance of success at risk.

2. The investment time frame

As well as your reason for investing, you should also define when you want to achieve the goal. If you’re saving for retirement, when do you want to give up work? Or if you’re investing on behalf of your child, when do you plan to give them access to the assets?

The investment time frame is important for two key reasons.

First, it’s important for the success of your goal. Saving enough for retirement, but reaching that point five years later than you’d hoped, could be disappointing even though you’ve reached the target amount.

Second, the investment time frame will affect what investment strategy is right for you. As a general rule, the longer you’ll be invested, the more risk you can afford to take. However, other elements of your finances will also affect your risk profile.

3. Your risk tolerance

All investments have some risk involved. However, the amount of risk you take varies between different assets and opportunities. As a result, it is possible to invest in a way that reflects your risk profile and circumstances.

As well as the investment time frame mentioned above, factors like your current financial situation, the other assets you hold, and your attitude to risk may play a role in determining your risk profile. Your financial planner can help you understand your risk profile.

4. The required investment return

With a clearly defined goal and risk profile, you can estimate what returns your investments may deliver and whether they’ll support your goal.

You might find that you’re on track, which could offer peace of mind. Alternatively, if you discover a shortfall, you might adjust your target or take steps to close the gap, such as increasing the amount you invest each month.

Keep in mind that investments experience volatility. Annual returns will likely rise and fall each year, and it’s often sensible to focus on long-term trends when reviewing your success.

Contact us

If you have any questions about your investments or would like to talk to our team about how we can work together, please get in touch.

Next month, read the next successful investing blog to discover elements you might consider when building an investment portfolio for success.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

6 origins of financial bias that could affect you

Bias can affect the decisions you make, including financial ones. But how are biases formed? Research suggests numerous factors influence biases, including the following six.

1. Evolutionary psychology

Some forms of bias go back millennia and allowed early humans to prioritise safety. The ability to make quick decisions could have been the difference between survival and extinction.

This survival instinct may have helped early humans, but it’s often at odds with making rational decisions today. One example is the endowment effect – a cognitive bias where people place a higher value on an item they already own.

A research article from Vanderbilt Law School (15 September 2025) suggests that the endowment effect is not only present in humans but in non-human primates. The bias had a greater effect on primates when food, rather than toys, was involved, which would have greater implications for survival. The author suggested that evolutionary theory might predict such biases.

2. Your personal experiences

The experiences you have will shape how you approach information and the decisions you need to make.

Experiencing financial stress during your childhood could mean you’re more likely to be risk-averse because you subconsciously worry about financial security. Alternatively, if your first foray into investing is successful, this could lead to overconfidence and taking more risk than is appropriate.

It can be difficult to predict how experiences will lead to biases. Two people could experience similar events but respond very differently to them. However, examining your approach to managing your finances could reveal the ongoing influence of certain experiences.

3. Mental shortcuts

To save energy, your brain also makes mental shortcuts, known as heuristics.

These shortcuts help you make decisions quickly, and they can also distort your judgment. For example, when making a financial decision, you might be affected by anchoring. This is where you focus on an initial value or reference point.

In the context of investing, this may mean you anchor a particular share’s value to the price it had when you first saw it. Even when new information becomes available, this anchor affects how you view the potential opportunity.

4. Emotions

Your emotional state can strongly influence how you feel about your finances and options.

For example, if you read about an investment opportunity in the newspaper, excitement and the fear of missing out could lead you to invest before you’ve fully weighed your options. As strong emotions are often short-term, acting on emotional impulses could lead to regret in the future.

5. Social influences

It can feel safer to be part of a crowd. If it seems like everyone else is investing in a particular asset or sector, it can be tempting to follow along. You might feel like all those people can’t be wrong, and you’d be missing out if you don’t follow suit.

As your goals and circumstances can vary significantly from others, including family and friends, following the crowd could lead to decisions that aren’t right for you.

Market bubbles demonstrate the effect social influences can have.

In the late 1990s, eager to invest in the internet, investors drove technology stocks to record highs. Indeed, the US technology-focused index, the Nasdaq, went from under 1,000 points in 1995 to more than 5,000 in 2000, according to Investopedia (10 August 2025).

The market suffered a dramatic correction in the early 2000s as it became clear shares were overvalued – it took 15 years for the Nasdaq to surpass the high recorded during the dot-com bubble.

6. Information framing

How information is presented to you can affect how you view it.

Imagine you’re looking at three different fund options for your pension. One is in the centre with bold text in a coloured box to draw your attention. The other two are on plain white backgrounds. Even though the attention-grabbing fund might not be right for you, the way it’s framed could mean you choose it.

Being aware of framing and its effects could be incredibly useful next time you’re making financial decisions.

Contact us

Working with a financial planner could help you identify when bias might be affecting your financial decisions. Contact us to discuss your financial plan and what you want to achieve.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Investment market update: November 2025

One of the biggest factors affecting investment markets in November 2025 was concern about an AI bubble. Despite this, there were still market highs recorded during the month.

Remember to consider your risk profile when you invest and review your portfolio’s performance with a long-term outlook.

AI concerns led to volatility throughout November 2025

With UK chancellor Rachel Reeves set to deliver a fiscal Budget at the end of the month, speculation led to market volatility on 4 November. Indeed, the FTSE 100 fell during a speech Reeves delivered, but clawed back most of the losses, with shares in housebuilders rising.

On 5 November, worries that AI stocks were overvalued led to global volatility.

In Europe, the falls were modest, with London’s FTSE 100 down 0.1%, and Germany and Spain’s main indices both declining by 0.8%. The falls were more dramatic in Asian markets, including Japan’s Nikkei (-2.5%) and South Korea’s KOSPI (-2.85%).

The US technology-focused index, Nasdaq, was also down 2%. All of the “Magnificent Seven” – seven of the largest and high-growth companies in the world, made up of Nvidia, Amazon, Apple, Microsoft, Tesla, Meta, and Alphabet – suffered falls.

On 7 November, Wall Street continued to fall amid economic and valuation worries. The Dow Jones index, which consists of the 30 largest US companies, was down 0.45%, while the broader S&P index fell 0.6%.

The Financial Times calculated that $750 billion (£566 billion) was wiped off major AI stocks – including Nvidia, Meta, Palantir, and Oracle – in the first week of November.

Hopes that the US government shutdown was coming to an end led to both US and European markets rising, including London’s FTSE 100 hitting a new high on 10 November.

The rally continued in London, with the FTSE 100 hitting a record high on 12 November, nearing the 10,000-point mark for the first time. The biggest riser was energy company SSE. Its share prices jumped 11% after the firm announced a five-year investment plan.

Concerns about an AI bubble reared again on 14 November, with indices down globally, and the tech sell-off continued on 15 November.

Google’s boss warned that “no company is going to be immune” if an AI bubble burst happens. The FTSE 100 fell 1%, with mining companies Fresnillo (-6.4%) and Endeavour Mining (-4.7%) among the biggest losers. It was a similar picture across the wider European market, with the main indices in Germany, France, Italy, and Spain all experiencing volatility.

There was some investor relief on 20 November when AI firm Nvidia revealed its sales were up 62% year-on-year. The company beat expectations and reported revenue of $51.2 billion (£38.6 billion) from data centre sales in the third quarter of 2025. The firm expects revenue to reach $65 billion (£49 billion) in the final quarter of 2025.

The news led to Asian-Pacific markets soaring, including Japan’s Nikkei (2.6%), South Korea’s KOSPI (2%), and Taiwan’s TW50 (3.6%). Wall Street also rallied, and the Nasdaq was up 2.18%.

The UK’s Budget also affected markets, particularly the FTSE 100.

Ahead of the speech, it was reported that UK banks would be spared a tax raid, which led to shares in the sector jumping on 25 November. Among those benefiting were NatWest (2.2%), Barclays (2.9%), and Lloyds Bank (2.95%)

Betting companies didn’t fare so well. The chancellor revealed a new tax hike on gambling firms, which led to shares sliding on 27 November. Rank Group told its shareholders it expected a hit of around £40 million to its annual operating profit, leading to shares falling by 10%. Similarly, Evoke shares fell 5% after it estimated duty costs would increase by around £125 million a year.

UK

Inflation in the 12 months to October fell to 3.6%, suggesting it has peaked.

The Bank of England (BoE) opted to leave interest rates where they are, but the latest inflation data suggests a cut could happen before the end of 2025 or at the start of 2026. Indeed, Goldman Sachs predicts interest rates will fall to 3% by July 2026.

Economic growth was disappointing. Between July and September 2025, GDP increased by just 0.1%. Once GDP is adjusted for population growth, it remained unchanged when compared to the previous quarter. The figure is the slowest quarterly growth recorded since the short recession experienced in the second half of 2023.

The BoE’s data suggests that economic growth will pick up in the final quarter of 2025. The economy is expected to grow by 0.3% between October and December.

Official data also shows the impact of US trade tariffs on economic growth.

In September, the value of UK exports to the US fell by £500 million, or 11.4%, to the lowest level since January 2022. More broadly, UK goods exports fell by £1.7 billion, a 5.5% decrease. This led to the trade deficit widening to £59.6 billion in the third quarter of the year.

However, there was some good news, with UK factory output rising for the first time in a year. S&P Global’s Purchasing Managers’ Index (PMI) was 49.7 in October. While this is still below the 50 mark that indicates growth, it’s heading in the right direction.

Europe

The European Commission has increased its growth forecast for the eurozone economy.

The eurozone is now expected to grow by 1.3% in 2025, compared to the earlier spring forecast of 0.9%. The upward revision was linked to a surge in exports as companies tried to beat incoming tariffs. Looking ahead, the European Commission anticipates growth of 1.2% in 2026 and 1.4% in 2027.

As the largest EU economy, Germany’s economy plays an important role in the bloc. However, it’s a gloomy picture.

The German Economic Council revised its 2026 growth forecast down to 0.9%. In addition, an Ifo report found that German business morale is low, as companies lose faith in the economic recovery.

US

On the surface, US manufacturing data appears positive, with output and new orders rising, according to S&P PMI data. However, Chris Williamson at S&P Global Market Intelligence said the underlying picture is “not so healthy”. He explained there was an unprecedented rise in unsold stock due to weaker sales, especially in export markets.

Job data also appears positive initially. Official figures show more than 119,000 jobs were created in September, helping to recover from a summer lull. The figure is more than twice the number expected.

However, data from recruitment firm Challenger, Gray & Christmas, suggests the data could be very different in October. The firm suggests job cuts hit a 22-year high as employers embraced AI, which led to employers shedding more than 153,000 jobs in October – up 175% when compared with 2024.

Asia

Economic data from Japan revealed the economy contracted in the third quarter of 2025. The country’s GDP was down 0.4% between July and September when compared with the same period a year earlier. The fall was partly linked to exports falling 4.5% when compared with 2024 amid US trade tariffs.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Is the default pension fund right for you?

How your pension is invested will affect its value and the income it will provide you later in life. If you’ve put off reviewing your pension fund, find out why it could be a worthwhile task.

While most pension providers offer savers plenty of fund options to choose from, many leave their money in the default option. Indeed, according to PensionBee (19.02.2025), more than 90% of pension savers remain in the default fund.

When you start contributing to a pension, you will usually be paying into the default fund option. This is convenient, as you don’t need to do anything, you simply make your contributions and the money will be invested through this fund.

The default fund is designed to be suitable for most savers, but it doesn’t consider personal circumstances or long-term plans.

Practical reasons the default pension option might not be right for you

The default fund doesn’t align with your risk profile

One of the main reasons you might choose to switch your pension fund is if the risk profile of the default option doesn’t suit your financial goals or circumstances.

For example, if you’re young and have decades until retirement, a default pension fund might be more risk-averse than is appropriate for you. As a result, you could miss out on investment returns, which, thanks to the power of compounding, may mean the size of your pot is significantly smaller at retirement than it had the potential to be.

According to the PensionBee research, a worker earning £25,000 a year at the age of 21 who benefits from a 2% average annual salary increase, and contributes 8% of their salary, would have £194,185 in their pension at age 68 (after an annual management charge of 0.7%) if their pension returned 3% a year.

If this individual changed their pension fund and received a 7% annual return, their pension would reach £697,247 over the same period. The higher returns could make a dramatic difference to the retirement lifestyle you can afford.

Before you switch your pension to a fund with a higher potential return, remember to balance the risks and assess what’s appropriate for you. Investment returns cannot be guaranteed, and typically, the higher the potential returns, the greater the risk.

As your financial planner, we can work with you to assess which pension fund is right for your circumstances and goals.

You are paying higher fees in the default fund

The fees you pay to your pension provider will affect the value of your pension. Take some time to review the fees you’re paying now and whether alternative options could reduce these charges.

Often, you’ll pay an annual management charge, which is typically a percentage of the value of your pension. You might also pay management or service fees.

Over the decades you’ll be saving for retirement, even a small difference in the fees you’re regularly paying could have a sizeable effect on the value of your pension when you retire.

You want your pension investments to reflect your values

Alongside financial factors, some investors may choose to consider ESG (environmental, social, and governance) factors. This could align your personal values with your financial decisions. For example, you might want to ensure your pension isn’t invested in fossil fuel companies if you’re concerned about climate change.

Pension providers will usually offer one or more ESG funds for you to switch your pension to. However, you should note that the aim of the funds can vary, and the investment decisions might not perfectly align with your values.

In addition, it’s still important to consider your risk profile and other financial factors when deciding if an ESG fund suits your needs.

Switching your pension is usually simple

The good news is that pension providers usually offer a range of funds with different risk profiles and goals. If the default pension fund isn’t the right option for you, you can often switch online in minutes.

When comparing options, you may want to look at the risk profile, the aim of the fund, and what the fund is invested in.

If you’d like to talk to a financial planner about the different investment options offered by your pension provider, and which might be right for your goals, please get in touch.

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.

Explained: The new Cash ISA rules and what they mean for your savings

In the November 2025 Budget, the chancellor revealed new Cash ISA rules that will affect under-65s. The change could affect your savings and wider financial plan.

ISAs provide a tax-efficient way to save and invest, making them an essential part of many financial plans. In 2025/26, you can add up to £20,000 to ISAs and split the money across savings and investments however you wish. This will change from April 2027.

The Cash ISA limit will fall to £12,000 for most savers

The ISA annual allowance will remain at £20,000. However, for most savers, the amount you can place in a Cash ISA will fall to £12,000 in April 2027. So, if you want to use your full £20,000 allowance, you will need to place at least £8,000 in a Stocks and Shares ISA.

According to government figures (4 December 2024), there were around 12.4 million adult ISA subscriptions in 2022/23. Of these, 63.2% were Cash ISAs. As a result, some savers may wish to review their financial plan.

Over-65s will not be affected by the new Cash ISA rules, and will be able to add the full £20,000 allowance to a Cash ISA.

Despite speculation that the tax advantages of ISAs would be changed in the Budget, this didn’t materialise. The interest or other returns your money earns in an ISA will continue to be free from Income Tax or Capital Gains Tax.

Cash savings held outside of an ISA could be liable for Income Tax

Those who want to add more than £12,000 to their savings in a tax year might consider doing so outside of an ISA in light of the changes. This could lead to an unexpected tax bill.

The amount of interest on which tax might be due depends on the rate of Income Tax you pay. In 2025/26, the Personal Savings Allowance (PSA) is:

£1,000 if you’re a basic-rate taxpayer
£500 if you’re a higher-rate taxpayer
£0 if you’re an additional-rate taxpayer.

As a result, you may pay tax on the interest if your savings are not held in a tax-efficient wrapper, such as an ISA.

For example, if you’re a basic-rate taxpayer and receive £2,000 in interest on savings held outside a tax wrapper in 2025/26, you’d be liable to pay tax on the £1,000 that exceeds the PSA at 20%, resulting in a £200 bill.

During the Budget, it was also announced that the rate of tax you pay on savings income will rise by 2% from April 2027. So, if you exceed the PSA in 2027/28, the rate of tax you pay on the portion above the threshold will be 22%, 42% and 47% for basic-, higher-, and additional-rate taxpayers respectively.

Investing in a Stocks and Shares ISA could be right for some savers

There are times when holding money in cash makes sense – for instance, if the money will be used for a short-term goal or held in case of an emergency.

However, investing may be appropriate for long-term objectives, and the new ISA rules could be a useful reminder to check if a Stocks and Shares ISA is suitable for you.

You can invest in a range of assets through a Stocks and Shares ISA and choose a risk profile that suits you. Investment returns cannot be guaranteed, but they have the potential to outpace inflation to deliver growth in real terms.

Indeed, according to figures from Unbiased (4 February 2025), between 2015 and 2025, the average Cash ISA has delivered an average return of 1.21%. The average returns of a Stocks and Shares ISA were 9.64% over the same period.

If the new ISA rules mean you need to adjust your financial plan, you could benefit from moving some of your money into a Stocks and Shares ISA. You should be aware that investing carries risk, and it’s important to understand what level of risk is right for you.

Contact us

If you have any questions about the new ISA rules or would like to talk about other announcements made in the 2025 Budget, please get in touch. We’re here to help you understand what the changes mean for you and your long-term plan.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.