If I had a pound for every conversation about uncertainty, I’d have a few quid, as they say. That’s normal. But, more recently, some people have mused whether the acute levels of modern uncertainty mean it’s worth not planning at all. This got me wondering. Can anyone ever successfully play their finances by ear? You can probably guess what I think about that!

Obscure data can tell you quite a lot.

And my new discovery, the “World Uncertainty Index”, has a rather surprising result.

You guessed it. We have war at the edge of Europe, a horrific situation in Gaza, some bizarre cabinet selections from Donald Trump (a defense secretary who thinks the military is too woke anyone?), refugee trafficking, a cost of living crisis without end … and the World Uncertainty Index doesn’t seem that bothered.

The index currently compares with the low levels last seen in late 2014. Not a vintage year by any means but the world was hardly on the brink either.

I don’t know about you, but this feels a little off given the state of the world, doesn’t it?

If you were on the sharp end of the Budget; if you glance at the news from America, Ukraine, Gaza; if a 37% rise in the cost of your weekly shop seems unreasonable; such data and your daily experience will feel badly misaligned.

Constant craving

I very much sympathise when clients and prospects ask me why they should plan, when it’s genuinely impossible to know what will happen.

And yet, planning is certainty.

No matter how bad things feel, adding more certainty – by planning – will help you feel comfortable with life and your position in it.

We’re wired to crave certainty. Our ancestors needed reliable places to shelter and to catch or grow food. Uncertainty meant the risk of dreadful suffering and worse.

These days, we like to know we can meet contractual, emotional and financial commitments. You may need to consult a lawyer on contractual commitments … and perhaps my wife on social ones. But I can say financial commitments are sometimes the most stressful of all.

Paying down debt, meeting liabilities, achieving the lifestyle you’d like in retirement, providing for children … these are all big decisions.

Yet all of them solvable through proper planning.

Control what you can

For example, a cash buffer is an essential. Your foundation, or groundsheet for any campers out there. Have about three months’ worth of income in a high interest savings account (or something similarly accessible) if you’re still working. Store up two years’ money if you’re retired.

I mention this partly because it’s a way of adding more certainty to life, and partly because it’s a good example of controlling what you can control.

Finance has four particular uncertainties: the performance of investment markets, regulations governing what you can and can’t do, the tax system and your personal life are always going to behave unpredictably at times.

There’s genuinely nothing you can do about, say, a market crash or a critical illness.

Market crashes can be pretty trying. But they always rally afterwards. The Covid crash of 2000 was pretty traumatic for any investor – as this chart of the FTSE100 over the last five years shows.

But pull the lens back – in this case to 15 years, below – and it starts to fade into the background of a market grinding ever upwards over time. A 20- or 25-year chart makes that Covid drop seem even smaller.

Planning in an uncertain world

Your plan might be to top up when markets have fallen some way and take profits when they’ve done well. As long as you’re working towards your long-term target, it will help you shut out short-term worries.

The other thing is to speak to your adviser when things get jittery. We all need assurance when life gets complicated or difficult. That’s what me and my colleagues are for.

Because, let’s face it, your plan will probably need a tweak at several stages in your life. For example, we’re talking to clients affected by tax changes announced in the recent Budget. You may be similarly affected.

But having such support is also part of your plan.

If you’re worried about the world and would like to build more certainty into your life, do please get in touch.