Uncertainty seems to be the only constant in the current economic climate.
Rising costs. Fluctuating markets. Changing interest rates.
It’s enough to make anyone in Leicester feel anxious about their finances.
You’ve worked hard to build your wealth, whether that’s savings in the bank, investments, property or pension funds. Protecting what you’ve accumulated matters just as much as growing it, particularly when the economic outlook feels so unpredictable.
The good news is that there are practical steps you can take right now to safeguard your financial position. Preserving your wealth isn’t about making dramatic changes or taking drastic action. It’s about being thoughtful, reviewing your situation regularly and making adjustments where needed.
This blog explores some key financial planning strategies that you can implement to protect your wealth during uncertain times.
Build your financial safety net
An emergency fund is your first line of defence when things go wrong. During uncertain economic times, this becomes even more important.
Unexpected expenses still happen. Having cash readily available means you won’t be forced into selling your investments at the wrong time or relying on expensive credit when something unexpected crops up.
The general rule is to keep three to six months of essential expenses in an easily accessible account. That’s enough to cover your mortgage or rent, bills, food, transport and other necessities if your income suddenly stopped. Work out your monthly essentials and multiply by the number of months you’d feel comfortable with. If that feels like a large sum, start smaller and build gradually.
Keep this money somewhere you can access it quickly, like an instant-access savings account. With average savings rates higher than they were five years ago, you can actually earn a reasonable return while maintaining security. Shop around for the best rates, but prioritise access over chasing the last fraction of a per cent.
Some Leicester residents worry about keeping money in savings when they could be investing it for better returns. However, your emergency fund serves a different purpose. It isn’t money you’re trying to grow aggressively. It’s financial insurance, preventing you from making poor decisions under pressure.
Without this buffer, a broken boiler or unexpected car repair could force you to sell your investments during a market downturn, crystallising the losses you might otherwise have ridden out. That’s the opposite of preserving your wealth.
Review your investment strategy
Market volatility makes regularly reviewing your investment portfolio essential. What seemed like an appropriate investment strategy six months ago might not suit your circumstances or the current economic environment.
Life changes, the markets shift, and your risk tolerance can evolve. So, start by checking whether your investments still match your goals and timeline.
Money you’ll need within five years probably shouldn’t be heavily invested in equities, regardless of market conditions. Longer-term funds, like retirement savings, can typically weather short-term volatility.
Consider whether you’re properly diversified. Spreading your investments across different asset classes (shares, bonds, property), business sectors and geographies (UK, US and emerging markets) will help protect against any single poorly performing area.
When the markets move significantly, your portfolio balance can shift. Perhaps shares have fallen, meaning bonds now make up a larger proportion than intended. Rebalancing your portfolio brings things back in line with your target allocation, which often means buying assets that have fallen in value, a disciplined approach that can benefit long-term returns.
However, reviewing your investments during volatile periods can be emotionally challenging. Seeing your portfolio value drop is uncomfortable. The temptation to sell everything and move to cash can be intense. That’s why professional advice is invaluable. An experienced financial adviser can provide perspective, help you understand whether changes are needed and prevent emotion-driven decisions that can damage your wealth preservation activities.
Make the most of your tax allowances
Every pound of tax you pay is a pound less in the wealth you’re trying to preserve.
Individual savings accounts (ISAs) are one of the most powerful wealth preservation tools available to Leicester residents. Any growth or income within an ISA is free from Income Tax and Capital Gains Tax. Over decades, this protection can make a substantial difference to your wealth.
You can currently invest up to £20,000 per tax year across cash ISAs and stocks & shares ISAs. That’s your allowance for this tax year. Use it or lose it. You can’t carry any unused allowances forward.
Pension contributions offer even more attractive tax benefits.
Basic-rate taxpayers receive 20% tax relief on contributions, higher-rate taxpayers get 40%, and additional-rate taxpayers receive 45%. This tax relief isn’t just a nice bonus. It’s a guaranteed return that protects and enhances your wealth immediately.
Review whether you’re maximising these allowances. If you have savings sitting in a standard bank account, could some move into an ISA? If you’re only contributing the minimum to your workplace pension, could you afford to increase it slightly?
Your financial adviser will be able to point you in the right direction.
Manage debt strategically
Not all debt is created equal, so your approach to managing it should reflect that.
High-interest debt – credit cards, personal loans, overdrafts – actively destroys wealth. If you’re paying 20% or 30% interest on a credit card balance (the UK average credit card APR is currently 21.54%), clearing that debt delivers a guaranteed return that’s virtually impossible to match through investing.
Mortgage debt sits in a different category. With rates currently higher than in recent years, many Leicester homeowners are paying 4%-6% interest. Whether to overpay your mortgage or invest spare cash depends on your circumstances.
Overpaying reduces the total interest you’ll pay and provides guaranteed savings equivalent to your mortgage rate. However, mortgage debt is relatively cheap compared to other borrowing, so the long-term investment returns might exceed your mortgage rate.
The right balance often involves building your emergency fund first, then considering whether to split any spare money between overpayments and investments, or focusing on one approach. So, keep enough flexibility in your finances to handle unexpected situations without stress.
And if you’re juggling several debts, consolidating them might help. Combining all your debts into one lower-rate loan can reduce your interest costs and simplify your finances. Speak with your financial adviser to explore whether this approach suits your situation.
Protect your income and assets
Insurance might feel like an unnecessary expense, particularly when money is tight. However, adequate protection is fundamental to preserving your wealth.
Without proper insurance, a single event could wipe out years of careful saving and planning.
Life insurance ensures your family can maintain their lifestyle if you die. If you have dependents or significant debts like a mortgage, life cover prevents financial catastrophe during an already difficult time.
Critical illness cover pays a lump sum if you’re diagnosed with a serious illness like cancer, heart attack or stroke. With treatment and recovery potentially preventing you from working, this protection preserves your wealth by covering your ongoing expenses.
Income protection insurance replaces a portion of your salary if illness or injury prevent you from working. For most Leicester residents, their ability to earn income is their most valuable asset. Protecting it makes financial sense.
The key is finding the right balance. You need enough cover to protect against genuine risks, but you don’t want to overpay for insurance you don’t need.
Regular reviews with your financial adviser will ensure your cover remains appropriate as you get older and your circumstances change.
Protect against inflation
Inflation is the silent destroyer of wealth that many people overlook. Even modest annual inflation of 2% would see your money lose half its purchasing power over 35 years. What costs £100 today will cost £200 in 35 years at that rate. If your wealth isn’t growing at least in line with inflation, you’re getting poorer in real terms.
This makes keeping all your wealth in cash savings risky over longer periods. Yes, your account balance stays safe, but that £50,000 in the bank will buy you significantly less in 10 or 20 years.
Certain assets have historically provided better protection against inflation. Equities (shares) tend to grow faster than inflation over long periods because companies can increase their prices. Property values and rental income typically rise with inflation. Index-linked bonds specifically adjust their returns based on inflation.
The challenge is balancing protecting your wealth against inflation with appropriate risk. Equities can be volatile in the short term, even if they tend to beat inflation over decades, while tying your cash up in property means it isn’t easily accessible if you need it quickly.
So, your investment strategy should consider your timeline. If you need the money soon, it may be better to prioritise security over protecting it against inflation. However, if you’re trying to build longer-term wealth, you should focus more on maintaining your money’s purchasing power through growth-oriented investments.
Regular contribution increases can help combat inflation, too. If you’re saving £200 monthly for retirement, increasing that amount by 2%-3% annually will help ensure your contributions keep pace with rising costs and maintain their real-world value.
Pensions and well-structured investment portfolios offer built-in inflation protection through their growth potential, making them valuable tools for preserving the real value of your wealth over time.
How can BDWM help?
Preserving your wealth during uncertain times requires a thoughtful, personalised approach.
There’s no one-size-fits-all solution. What works for your neighbour or colleague might not suit your circumstances, goals or comfort with risk.
Professional financial advice will help you navigate these decisions with confidence. That’s where BDWM comes in.
We’ve helped Leicester residents protect and grow their wealth through various economic conditions. We understand the local context and the concerns facing people in our community.
Our approach starts with understanding you. We’ll take time to learn about your circumstances, aspirations and concerns before making any recommendations. We’ll review your current financial position, including savings, investments, pensions, debts and protection, to identify where your wealth might be vulnerable.
Then, we’ll work with you to create a tailored strategy addressing your needs. It might involve investment advice, retirement planning, tax-efficient structuring or protection planning, whatever combination makes sense for preserving and growing your wealth.
We offer a no-obligation initial chat to discuss your situation and explain how we can help you protect your financial future. So, contact us today to arrange your consultation.