The crisis of living

Dominic Thomas
Dec 2024  •  3 min read

The crisis of living

Sometimes life throws something in your way that forces you to stop to think about its direction. We all tend to have landmark moments and of course the context, timing, and nature of them vary enormously. However, they all tend to pose a version of the same question … “so what now?”

One of the underrated skills of a good financial planner is to consider the things that we don’t want to think about. It would be normal for most to assume that this is the impact of a major economic crisis, financial meltdown, or some disaster to your portfolio. Whilst these things do happen, (regularly!) there is a degree of predictability about them, barring the final moment of global collapse, should that ever happen. These events (barring the apocalypse) are ‘baked in’ to your financial plan, making allowances for market corrections and reductions in capital values.

The real-life challenges are those we witness personally, perhaps experience vicariously or through the arts. These are the crises that we all probably wish away and hope that it doesn’t happen to us. Perhaps a marriage ending, a child dies, an addiction, a business bankruptcy, redundancy, a life-threatening illness, death, loss of loved ones or loss of personal mental capacity and independence.

These are no small matters, and I wouldn’t presume to pretend that financial planning removes the stress of such situations. However, raising such issues enables us to do some planning, but sometimes helps simply to acknowledge the reality that we cannot control very much in life at all. I will also not claim any special skills or talent in this area, it’s a minefield of values, beliefs and emotions. However, experience has taught me to face these challenges personally and with clients. I have improved my ability to ask the pertinent questions over the decades, but of course responses differ and there are no ‘right answers’.

Coming to terms with loss… 

I was asked to speak at a funeral of a friend who died much too young. One of the things I believe is that life is about coming to terms with loss. The majority of the gathered crowd simply stared back at me, looking incredulous. So perhaps I should’ve explained my position rather better. Life is precious, it’s a gift, it’s a miracle that any of us are here. It is also incredibly brief and once you have got over your own infant state of omnipotence (which for most of us happens in early childhood) you realise that everything you have and hold dear will eventually leave you. Whether that’s friends, brain cells, careers, skills, loved ones, money, energy, mind, health and so on… your va-va-voom eventually. Coming to terms with this isn’t always easy, in fact I’d say it’s a lifetime education. However, it will come to us all.

How do you measure a year? Seasons of Love – 525,600 minutes

One of my favourite musicals is Rent by the marvellous Jonathan Larson (who died the night before its premier – imagine that!). He begs the question “how do you measure a year?”. Of course we value your portfolio and consider its returns against markets; this is obviously sensible in the context in which we operate, but frankly, these are not measures of your life. I’m probably two thirds of the way through my lifetime, maybe it will be longer or shorter, but however much time I have left, I am grateful for each day (I’m practicing at getting better at this) and believe that it is my responsibility to get (and give) the most out of it. To experience connection and make meaning, which will almost certainly be forgotten within 100 years or less.

The assumption that tomorrow will be like today is deeply flawed. Carpe diem and all that. I’m not suggesting that we should live in a state of euphoric life maximisation (even if it is possible to do so); but certainly to consider the reality of loss as a built-in design of life. Pretending it isn’t so seems incredibly naive (at best). When such unwelcome challenges arrive at your door, plans have to change, sometimes dramatically.

I know that many of you have had these experiences and at times life is very hard. I cannot promise easy fixes, soft landings or neat solutions; I can simply promise that my team and I are empathetic and very much in your corner.

Your timeline is your own, we will help you to identify many of the key milestones that lie ahead and help plan for them. It is my belief that your financial plan should be rammed full of the things, people and experiences that you truly value.

Links: Rent the musical: https://broadwaymusicalhome.com/shows/rent.htm#gsc.tab=0

Seasons of Love song: https://youtu.be/PgBjMZ4IeKY?si=h0TgWf_BNxc-TfCU

Seasons of Love Lyrics: https://genius.com/Original-broadway-cast-of-rent-seasons-of-love-lyrics

The crisis of living2023-12-07T15:34:02+00:00

NOWHERE SPECIAL

TODAY’S BLOG

NOWHERE SPECIAL

The backdrop of a constant flow of awful news, was given some temporary relief through film. “Nowhere Special” is a marvellous little film from Director Uberto Pasolini and I think it’s quite an important one. There is some wonderful acting and storytelling. Uplifting, because against this tide of awfulness, there is the ability to see a different life, to walk in the shoes of someone else. Yet it is most definitely a tale of sadness.

In a nutshell, John (James Norton) is a single parent, raising his primary-school aged son Michael. John has a terminal illness and is attempting to find a family that will adopt his son.Certainly, it’s a horrible situation, one in which I am reminded that life gets turned upside down by changes to health. The only good thing about cancer is the opportunity it usually provides to prepare for death in a way that most of us do not.

Toby, (one of my closest friends) died from cancer in 2006. That’s already fifteen years ago! He was 37. His original diagnosis was in 1996, it was rare – multiple endocrine neoplasia (MEN). We were both grateful that I’d persuaded him at just 26 to take out some financial protection which mercifully paid out once he was diagnosed. It wasn’t anything like “enough” in my view, but at the age we were at the time, neither of us really expected the array of problems that come with poor health and the impact on family finances. We simply didn’t know better. There were many difficulties and awful experiences, as well as many wonderful ones. It doesn’t seem 15 years ago.

NOWHERE SPECIAL

HOW WILL WE BE REMEMBERED?

A topic of conversation was regularly how his two children would remember him. He created a memory box for each of them, wrote journals and placed important mementos into their boxes (something that John does in the film too). To my mind it was a valuable use of his time, despite his sapping energy levels. I was reminded of this experience watching the film. Michael, (the son) is younger than either of Toby’s two children at the time, though both they and mine lived through the experience of regularly wondering when the end may arrive. Unlike Michael, Toby was married and not alone in raising his children or facing cancer. It became clear to me that whilst he had the diagnosis, cancer was a daily reality for them all.

This is not an attempt to get you to take out insurance. To be blunt, I’m more concerned that you (and I) have good relationships with those we care about and, if I may, encourage you to leave some form of memory box of who you are. I know life is a journey, that we change and evolve over time, but as Chirstmas time is upon us, take a moment to ponder how those closest to you might remember you. Perhaps a memory box should be a work in progress – a reminder of who we are and who we are becoming. Christmas is of course a time for good cheer, but its also a milestone in all our lives (however we feel or whatever we believe about it). It acts as another measure of time and the direction in which we find ourselves.

I don’t think it too bold an assumption to presume that you have had difficulties in your life, that you have known loss and grief. As a financial planner, it is a regular part of my work and over the last 3 decades I have seen and felt the impact. We plan for these awful events but experiencing them is usually rather more emotional. That’s why I urge you to get your Will done, your Power of Attorney in place and a suitable amount of protection. I hope it’s something you don’t have to experience for a very long time, but death eventually comes to us all.

Life can change very suddenly, as your planner I help you prepare for the worst whilst hoping for the best. As for today, live it as fully as you are able, make good memories.

Anyway, here is the trailer. It’s worth your ticket price and some. 9/10. I think it’s rather special. Its certainly available via Curzon and I hope other platforms too.

Get in touch to talk over any issues that this raises for you. For clarity I have had permission to from Toby’s widow to relate this story. If you know anyone with MEN, there is a very good charity (AMEND) that has much more information.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Mill Cobham Park Road, COBHAM Surrey, KT11 3NE

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Mill Cobham Park Road, COBHAM Surrey, KT11 3NE

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

NOWHERE SPECIAL2025-01-23T10:52:06+00:00

KODACHROME

TODAY’S BLOG

KODACHROME

We’ve all probably watched more on television in the last 6 months than perhaps we have for many years. The other night I watched Kodachrome. I had reasonable hopes given the cast (Ed Harris, Jason Sudeikis, Elizabeth Olsen) and the plot, which was suggested as a father and son trip to get some final film developed at the last place to offer the service before closing. A sense of the now or never.

Famous photographer Ben Ryder (Harris) is at deaths door, much like his Kodak film slides. His relationship with his son Matt (Sudeikis) is also “mostly dead” rather like Kodak. At a crossroads or cul-de-sac (you decide) the two are reunited through contrived circumstance, on a journey together for different reasons. Ben to get 4 old rolls of film developed and Matt to get an interview, both with the air of desperate “last chance” about them.

SOLOMONS IFA - KODACHROME

NOT IN FOCUS

There are lots of possibilities for this, how change, endings and loss are handled for example. If you knew you had a few weeks to live, how would you conduct yourself in your final days. Perhaps a question many of us may have thought about more than usual recently. How do we handle ageing and the constant advancement of technology that can leave us behind, perhaps feeling (or being) redundant and consigned to history. How will we leave our mark, impression or do we even want to?

Sadly, the script and plot failed to cope with difficulty or nuance.  The film is seemingly at a loss for ideas. Perhaps I am wrong, but there is a point in the story where Matt returns to his Uncle’s adoptive home, where Matt lived from age 13 following the death of his mother and the chosen absence of his father. Matt is now an adult in the music business, something of an expert. Yet the room he returns to in his uncle’s home is as it was left – vinyl and posters intact. Whilst I imagine this may happen sometimes, it seems improbable that an adolescent’s room is left for well over a decade (well over) in its original state.

DEPTH

Unsurprisingly, the plot becomes ever more simplistic and lacks any depth of vision (ironic for a photographer). Words are said, tantrums had, departures, threats, ultimatums but we all know where this is headed – a “just in time” redemptive ending, where a man’s work is validated above his ability to be present or available to that which he suggests is important.

Life is rarely like this. We often do not get ample warning to adequately address painful experiences. No final road trip with a mission. The voice of the financial planner is to act as a reminder that life is brief. We all know it is, but most of us live as though it will last forever. Planning finances to last and to be sufficient, so that you can squeeze all the joy you want from your allotted time, whatever that means for you. It has a connection with money, but it is not about money. Its about the choices we make to live.

USE BY: SEE END

So, let me suggest something else. You have 4 rolls of film, (unlike digital images which are so instant and numerous that there is little focus on the importance of the subject and its composition). One roll for each quarter of your remaining time (I would not be so harsh as to divide it up into quarters and give you what should be left). At the end of each future quarter period, I take one from you. What have you filled it with? Even this is clearly a daft suggestion – we simply do not know how much time we have. What we do know is what is important to each of us. The job of the planner is to help you maximise the time you have available and help you calculate what is possible given the resources you have. Like Kodachrome, we all have a shelf-life, this life is to be used. Unlike the food in your fridge, we simply do not have the use by date. This is a reminder check your stock and plan. We all know how disappointing waste is, particularly when at one point it was within our control. Today is your day of control.

SOLOMONS IFA - THE LIFE YOU SHOOT

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Mill Cobham Park Road, COBHAM Surrey, KT11 3NE

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Mill Cobham Park Road, COBHAM Surrey, KT11 3NE

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

KODACHROME2025-02-04T16:14:52+00:00

A TRANSFORMED INVESTOR

TODAY’S BLOG

A TRANSFORMED INVESTOR

I came across this article which may be of some help to you. Dave Goetsch one of the executive producers of the hugely successful “Big Bang Theory”, who wrote a piece for Dimensional, one of our investment partners. This is his experience…

Seeing all the recent headlines about the sudden downturn in the stock market has transported me back to February of 2009, when I was close to despair. It’s striking how different I feel now.

In February 2009, the stock market was down around 50% from its high, and everyone seemed to feel like the sky was falling. I was familiar with this state of panic because my relationship to the financial markets was that I didn’t trust them.

They were always going up and down in ways no one could predict, and I couldn’t trust those folks who said that they could anticipate what was going to happen. So when the market went down, I went down with it—sinking into a depression, knowing there was nothing I could do. What a difference nine years make. I haven’t changed because the stock market rebounded. I changed because I learned that there was a different way to think about investing. I was right not to trust those people who thought they could predict what was going to happen in the markets, but I was wrong in thinking that there was nothing to do. I’ve learned that I can have a great investment experience if I just accept a few simple truths.

DAVE GOETSCH

I have to understand the uncertainty of the market. The stock market, as measured by the S&P 500 Index, has returned about 10% per year over the last 90 years, but there are very few individual years in which it has ever actually returned that amount. In fact, how many of those 90 years do you think the S&P 500 was up more than 20% or down more than 20% for that year? The answer is 40. Astounding, right? I wish somebody had explained that to me decades ago. Then I would have known to look at stock market returns in terms of decades—not years, months, days, or hours. I would understand that so many of those articles and cable news pieces are just noise, designed to keep an audience obsessed and unsettled.

I haven’t changed because the stock market rebounded. I changed because I learned that there was a different way to think about investing.

In order to be a long-term investor, you have to have a long time horizon. This can be hard to remember when you’re being assaulted by noise, but if you can stay strong, the results are stunning. By results, I don’t mean the investment returns, which hopefully are good. The return I’m talking about is how I feel every day. I worry less—not just about the future, but also about the present. Of course, I know that there are no guarantees when it comes to investing, but I feel like I’m going to be okay. I have a plan.

There’s no way I could’ve done this without a financial advisor. I needed someone who could not just talk me through what my asset allocation should be, but also help me work through how I felt about investing and what exactly I could do to change my perspective.

I was a mess nine years ago. Now, my outlook is totally different. The markets haven’t changed; they still go up and down. The difference is, I don’t anymore.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Mill Cobham Park Road, COBHAM Surrey, KT11 3NE

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Mill Cobham Park Road, COBHAM Surrey, KT11 3NE

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

A TRANSFORMED INVESTOR2023-12-01T12:13:21+00:00

DON’T LEAVE ME THIS WAY

DON’T LEAVE ME THIS WAY

The death of a loved one is one of life’s great traumas. The sudden and unexpected loss of someone that you care deeply for is something that creates waves of grief that alter over time but may never end. The essence of the human condition involves coming to terms with death in life. The stuff of poetry.

We know that one day our time will come. We prepare for the expected arriving unexpectedly. Those that have a family, a partner, a liability or a business would all be wise to prepare and plan. I often wonder why it is that so few of us are able to talk about this prospect clearly with those that are immediately impacted.

Solomons IFA blog review of Widows.

Talking isn’t enough

Talking about such events and scenarios is hugely valuable with the advantage of hindsight, but talking is rarely enough, taking action and implementing suitable arrangements to ensure that things go as planned is priceless. This is the what clients often mean when they describe having a sense of “peace of mind”.

The Widow’s Mite… 

When things are not discussed and little if any action is taken, life can be so much harder and of course raises mixed feelings about the one that has died, not having to struggle with the consequences. The new film by Steve McQueen “Widows” is based on this problem. A gang of criminals are killed and leave their families without any financial security. Worse than this they owe money to some ruthless men. The widows are forced to plot a course for their own survival. This may be an extreme situation, few people are really going to be left having to commit crime to survive, but many are left in positions that could have so easily been secure. Money offers choice, it offers security in the form of the number of options available. It is not security itself and of course doesn’t replace anyone.

As a movie, Widows is marketed as a film about women taking back control. There’s some degree of truth in this, it is certainly a reflection of aspects of life in the US today. Certainly, the scenes of trigger happy Police and the gun purchase fair all seem rather poignant. However, there was way too much room on the screen for relatively inconsequential male characters – notably Jack Mulligan played by Colin Farrell, it is also pretty violent, be warned.

Here is the trailer for the new film Widows.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

DON’T LEAVE ME THIS WAY2025-01-21T15:41:31+00:00

A STAR IS BORN

A Star Is Born

The latest reworking of A Star Is Born is currently showing in cinemas. The tale is familiar partly because it is simply a remake and partly because this is familiar Hollywood ground. It is difficult to not be cynical about the simple commercialism of this remake, directed by and starring Bradley Cooper and muse de jour Lady Gaga. These two are already global stars in their respective fields, so there was always a high chance of ker-ching at the box office.

There is nothing terribly wrong with the film. I had low expectations and so was relieved that it wasn’t as bad as I feared. Cooper is good as an actor, though heavy handed in direction and at 2 hours 15 it is about 45 minutes too long. If he is to repeat this role, he needs to learn the art of editing. Despite the screen time characterisation is thin – which is probably being kind. Certainly, this is yet another story about an alcoholic with money. The temporary relief of a woman to love and inspire him to better behaviour is insufficient.

Power Chord

Lady Gaga can certainly sing and this element of her performance is powerful. Watching her however, you were always conscious that this is Lady Gaga – which is not the purpose of film. Jackson Maine (Cooper) is towards the end of his country music career (really?) and drunkenly happens upon Ally (Gaga) who is performing at a drag club after her shift as a waitress. The only female to do so. He is enthralled and within 24 hours has written a song for her which they perform as a duet without any rehearsal. This from a man that is apparently nearly deaf and mainly drunk.

Instant World Fame

A video of this new encounter goes viral and Ally is immediately touring the world with Jack, from Arizona to Glastonbury. The depth and soulfulness of Ally’s songs is her appeal, yet a new English manager (Rafi Gavron) presumably a shade of Cowell, basically shapes her into a pop-tastic dancing pop-ster much like Gaga herself. The supposedly feisty Ally complies without any significant artistic difference. An almost out of body performance on Saturday Night Live which is really Gaga being Gaga. Yet this is nothing like the Ally we were all quite blown away by. Inconsistency aside, her success immediately casts Jack into the shadows where he swiftly finds substances to abuse.

The story could have moved in various directions but failed to explore the backstory of the main characters. There is no help other than the usual Betty Ford type clinic, yet nothing to get under the skin of why. We are told that alcoholism is a disease. It isn’t, it’s simply yet another way of coping with trauma.  The Hollywood problem is really one where nobody has the courage to say “no”.

Are We There Yet?

Admittedly, the story is meant to be partly about ambition, but the Vegas style marriage of a bad idea holds little to convince an audience that this is a deep connection, more one of convenience. We know and probably don’t care that much if Ally and Jack are just another 3-minute track on the playlist of life. The timeframe of the story shifts along at the pace of someone trying to fit in filming between pop tours, yet drags with the numbness of a long-haul coach ride.

We learn nothing new about fame, fortune, alcoholism or ambition, but there’s a soundtrack in it.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

A STAR IS BORN2023-12-01T12:17:47+00:00

Markets are High, the End is Nigh

Markets are High, the End is Nigh

I have no idea why radio and TV stations broadcast the level of the FTSE with every news bulletin. It’s as though they are screaming “the end is nigh”. Think about it for a moment, what purpose does it serve? The only people that can do anything about their investments are traders – who had the information already. To my mind the only reason I can think of is so that you and I panic. The markets are high, so we panic with the good news fearing that is must be coming to an end. Alternatively, they have fallen, so the anxiety and fear is by how much and how far.

So What?

A better question might be…. So what? How does this affect me at all? Well the truth is that your investments will almost certainly be impacted, but then that’s the point of investing. The issue is really does the rise or fall play any significant part on your financial well-being. This is where proper financial planning comes in. We know that investments fall in value. We allow for it. We also know and believe that the point of investing is so that they rise, otherwise we wouldn’t bother would we!

A picture paints a thousand words

So, I thought that I would share with you an interesting graph. This shows the returns of the FTSE All-Share over the last 30 years from 1986-2016 (31 years). The grey columns show the calendar year returns.  You will observe that 22 or the 31 are positive, 9 are negative. In other words, 70% of the time, calendar year returns have been positive. However, when the negative years occur, those years can see large falls, note the worst being -33% in 2008 (the credit crunch, supposedly the worst financial collapse in generations).

Let’s get Negative

Now observe the red dots. These represent the largest fall in each year. All falls must be negative to be a fall. So, every year has one. Note how these are pretty “bad” yet don’t really seem that bad when you consider the actual return over the year (grey column). Its noteworthy that the average fall in a year is -15.8% – the median (if you line up all the results, the one in the middle) is -12.6%. So, in short you should expect a fall every year of around this sort of amount. It should not be a surprise.

You probably remember the crash of October 1987… just after the hurricane that Michael Fish didn’t expect. Remember the headlines of millions wiped off the markets. True, it (the FTSE All Share) fell -37% however over the year it showed a return of +4%. Which do you remember? I’m guessing the crash… which you would certainly remember if you got in a panic and sold your holdings (when they were down)… selling in a panic or a crisis is the surest way to actually have one, but remembering your long-term financial goals and why on earth you are investing anyway is vital. That’s what we and any other decent financial planner will help with, when the crowd and the media and the market are telling you to panic, do something!… do not.

Diversify to Dampen

However, very few people have all their investments in the FTSE All Share or indeed entirely in shares (equities) most will have a portfolio that has some in low risk holdings as well, ideally the portfolio will be globally diversified across nations and asset classes. This will dampen the effects of both the rises and the falls of the markets.

The Only Timing that Matters

Trying to time the best moment to enter or exit the market is impossible to do with any repeatable success. However clearly you and your planner need to mindful (aware) of when you want to withdraw money. It’s all very well a favourable long-term average return, (or even a calendar year one) but what about when it’s a really bad year and you need the money out? Again, the truth is that any decent planner will help assess this advance. In practice it is unlikely that you would need all of your investments at the same time, but it can happen, particularly if you decide to use your entire pension fund to buy an annuity (income for life).  This is why we spend a lot of time getting to understand our clients, your goals, values and aspirations – importantly when you need the money,  so that that we can plan appropriately, perhaps reducing investment risk or holding more cash than you might need. Context is everything and a plan is vital. So get in touch to ensure that your investments are structured properly – for you, not for the media.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Markets are High, the End is Nigh2025-01-21T15:53:26+00:00

Your Capacity for Loss

Your Capacity for Loss

One of the more difficult aspects of financial planning is the subject of capacity for loss. In essence this attempt to assess how bad things need to be before your lifestyle is significantly worsened. Most think in terms of the decline of a portfolio due to stockmarket crash, which would also affect the level of income that could be withdrawn from it sustainably.

Your appetite for risk, (or risk tolerance) is normally tested using a psychometric tool, such as the one we use (FinaMetrica) is different – testing your ability to cope with the shift in value of your portfolio (or volatility). All tools are flawed and in reality, it isn’t a process for generating an answer, more of a helpful starting point in a discussion. Capacity for loss has more to do with your financial ability to cope with loss.

A financial planners job is to attempt to ensure that your money lasts a little longer than you do. Yes its more complicated than that in practice, but if you strip away the mechanics and maths, that’s invariably where it leads.

What you have to lose

However, putting a number on this is arguably an impossible task. There are lots of relevant variables. Your age, investment timeframe, years until you retire, health, family commitments, income and expenditure, net worth, cash reserves, debt and insurance and of course this is all a moving continuum. Many clients will at some point say that they will live within their means, to cut their cloth accordingly, which of course is a sensible approach to the restrictions of real life.  However, in practice this can hurt, and it’s easier to blame someone else for discomfort, that it seems, is what our political system is all about.

Why capacity for loss is an issue

I assume (which is therefore prone to error) that the regulator is concerned about capacity for loss, because it would appear that over the years there have been many investors that simply didn’t understand what they had invested in and it would seem did not understand how the impact of an investment going wrong might impact them. Neither did they understand the illustrations. I would suggest that this is in part due to a lack of financial education, a lack of adviser explanation and frankly a lack of interest.

We live in a world of risk

The truth is that investing carries risk, but then so does not investing, just a different one, which can be equally as painful. In real terms, by which I mean once you allow for inflation, many people’s income has reduced over the last few years. Inflation, currently very low can ravage away at the power of the money you hold. So, holding cash, which is currently generating less than inflation each year is essentially going backwards.

There is always somewhere to be King…

By historical standards we are all rich, by global standards we are all rich, but you may not feel it.  Indeed, to be richer, or certainly feel richer, simply encash your worldly wealth and move to somewhere that is obviously poor, there you can live like a king…. Isolated, needing high castle walls and compelled to spend huge sums on defending what you have. Rich, but perhaps not connected.

The roaring Lion

May I suggest an alternative? Perhaps pay a trip to the cinema to see Lion. This is the true story of how a small boy from a very poor village in India, gets lost and is eventually adopted by an incredible Australian couple. His life takes a very different path but eventually leads to a search for the family he lost.

Keep in mind the 767 million

We all know that most of the world is poor by our standards, and we are told that things are gradually improving, fewer people are in poverty, in 2013 10.7% of the world live on less than $1.90 a day. In the previous year, it was 12.4% (World Bank). That’s still 767million people, but 35% less than in 1990.

None of this is news to you. Yet I found myself confounded and discomforted once again by the plight of millions living in poverty and vulnerable children, who live on the streets and experience all sorts of abuse. I came away with a mixture of feelings, grateful that I don’t live in such circumstances, perplexed at why Governments don’t do more to serve their own people well and perhaps too a little ashamed of my own lifestyle choices, when so many have so few. So, I do wonder if it is ever truly possible to be even vaguely precise with terms like capacity for loss in a world of such extremes.

As for the film, it is very much worth watching and its good to see Dev Patel has been nominated for some awards along with the film. Here is the trailer.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Your Capacity for Loss2023-12-01T12:18:52+00:00

Money Monster

Money Monster

The latest George Clooney movie is on general release. It continues the theme of some elements of Hollywood questioning the current state of capitalism, yet recognises that the language used within financial circles is almost impenetrable and many feel so powerless that the impetus to understand is invariably lost.

Clooney plays Lee Gates, one of those dreadful money pundits on American TV stations that constantly cover the markets. If you have ever had the misfortune to tune into this sort of television you will know precisely what I mean. He is the worst sort of journalist – a TV presenter, who comments on markets and shares without context or thought of consequence. Regrettably this is not exclusive to the US, but within our own media too – both televised and written. The tempo may be different, but the problem is essentially the same. This is, for want of a better term, financial porn.

Financial Porn

Any glance at any financial publication over the last 10 years will reveal the same rather sad truth – the media appear to have little choice but to grab our attention with ever depressing or outrageous headlines. This reflects on us all and our overstuffed in-box lives, to which I am both a contributor and recipient.

The story itself revolves around Kyle, an irate investor who followed Lee Gates’ advice, but sank all his savings into this one “sure thing”. The stock collapses due to a “computer glitch” and he loses a lot of money. Kyle takes matters into his own hands, armed and in search of answers, takes the TV studio hostage. It’s a decent movie.

Lessons for investors

There are some obvious lessons for investors here. Firstly, all investment should have a context. There is no such thing as certainty, some things are much more likely than others, but not certain. I cannot guarantee that the sun will rise in the morning, but we all expect it will, but it’s not guaranteed. Do not invest all your money into one stock. Do not bet your future on a tip from a TV pundit or any other journalist – none of whom are accountable for the “advice” (that isn’t advice). Finally, in the event that the stock or investment collapses, few investments ever reduce to a value of nothing. It certainly is possible for a company to go bust, hence its share price worth “nada” but most investments are not single stocks. So you will not have “lost all your money” if the investment has a value, so does your investment. Ironically, in the film, the loss Kyle experiences would have been made far worse by the resulting story, not better.

I enjoyed the film, it poses some good and frequently asked questions. I would be happy to recommend it to you, about what not to do with your own money. Here is the trailer. It’s out now.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Money Monster2025-01-27T16:27:50+00:00

Creed: Fighting Talk

Creed: Fighting Talk?

There is a sense in which the new film “Creed” is simply another film about boxing and fighting talk. Given the latter films of the Rocky franchise, anyone could be forgiven for thinking it was likely to be both propaganda for American capitalism and selling a soundtrack for exercise. Yet I wonder if this is a fair reflection.

The movie opens into the harsh world of institutional care for young boys and unfolds with our main character coming to terms (or not) with the death of his mother and then learning that  his fatherless existence was due to infidelity and untimely death. His lucky break comes in the form of adoption by the woman originally jilted. The unnerving reality is that despite being afforded acceptance, financial security and a surname with punch,  there is a gnawing sense that he simply doesn’t “fit”. He turns to the most compelling and certain traits of his makeup – that of rage and a desperate search for purpose.

Now perhaps I’m reading too much into things, but despite appearances, the Rocky franchise has always exposed an uncomfortable relationship with wealth and how it changes lives and relationships, invariably not for the better.

Shadow Boxing

As we all know, America has all manner of racial problems, perhaps there is more than a passing nod to the two areas of life where black Americans are “allowed” to flourish – sport and music, where fame and riches catapult often humble backgrounds into the limelight of the elite. In the film, the protagonist, Adonis meets several sparring partners, but Bianca is the one that offers the prospect of a real connection and possibility of going the distance.

Growth through loss

Our story touches on the loss of loved ones and the continued search for significance, the battles that many face, irrespective of wealth, physical or mental ability. These are of course issues that face us all as we age (even Rocky) and like him we have greater exposure to the limitations that money can supply, but perhaps more costly is the sense of lost purpose, which can make us spectators of our own lives. Rocky rekindles his by reconnecting with the younger man within and without, a mentor, a trainer.

Like every prizefighter, we all come to a point of realization where money cannot buy peace of mind… something that the American dream and capitalism conveniently ignore. That is not to suggest that money cannot help – of course it can, but as we witness all too often, an identity crisis is not solved by cash.

In your corner

Some think a financial adviser is going to work magic, providing enormous payoff without significant effort. I see it rather differently, my role as a financial planner is more akin to the trainer, encouraging, helping to keep you on track, focused and with a strategy for the success you are seeking.

Our fight is more like shadow boxing, where our greatest opponent is ourselves. Our own minds and bodies can turn against us, something that becomes a more relevant nagging reality with each passing year….. So however many we have left ahead, we ought to make the most of this one; a theme that I seem to be returning to with regularity.

Ultimately, we are not remembered for our incomes or our assets, but how we spent our time, how we lived our lives. This is the fight that I am interested in, how we figure out what is indeed enough given an uncertain future and a history of mixed experience…. So I guess, this may come down to our own creed.

Here’s the trailer for Creed, which has a supporting actor OSCAR nomination for Sylvester Stallone. For some, this will be just another Stallone boxing movie, but may I suggest that perhaps it punches considerably above its weight.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Creed: Fighting Talk2025-01-28T14:35:48+00:00
Go to Top