THE last year has been a traumatic one in which much has changed, but it’s also provided us with some useful financial lessons. Kerry Chaloner, financial planning consultant, at Armstrong Watson LLP, reports

Relying on a state safety net is dangerous

The pandemic saw the number of Universal Credit claimants more than double to 5.8 million in the year to November 2020. The lowly level of benefits – even after a £1,000 temporary uplift – was a shock for many of those new claimants, including people who fell between the gaps in the job support schemes. Martin Lewis, founder of, recommends setting up an emergency fund to the value of “at least six months’ worth of bills”.

Update your will

The first lockdown highlighted the importance of having an up-to-date will (or, in some cases, any will) just as it became difficult to arrange one. Without a will, statutory rules dictate how your assets are distributed, meaning they may not go to those you want it to benefit.

Kerry Chaloner

Kerry Chaloner

Keep adequate cash reserves but be aware

With near zero interest rates, cash on deposit earns next to nothing, although cash itself is not risk-free. The capital value may be secure but the impact of inflation reduces the purchasing power of each pound. Investing in savings accounts and Cash ISA’s may lead to long-term financial disappointment as savings rates tend to be lower than inflation, meaning prices rise faster than the value of your savings.

Stay Calm – Time in, not Timing

The UK’s FTSE 100 hit its low for 2020 on March 23, the day the first lockdown was announced. It was a dark time, but any investor who got nervous at that point, when the FTSE 100 was below 5,000, would have chosen the worst time to pull out. By the end of 2020, the index was 29.4 per cent above its March low.

Timing the stock market is extremely difficult, the best policy is usually to stay fully invested over the long-term according to your objectives and time horizon. Our Guide To Investing – at – outlines that missing just the ten best days over the last five years would have cut your annual return substantially.

For support and advice to help you build sound financial plans for the future, contact Kerry on 07917-035691 or email