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November 29, 2022

Cash Flow Planning – Switching the Lights On


in Financial Planning Insights

The rise of Cash Flow forecasting across the financial planning profession has been one of the biggest growth areas in recent years. It is estimated that over 90% of firms are now using the tool to some of extent or other.

But what exactly is it?

Put simply, it’s a tool that helps you understand how your:

Assets, Income, Liabilities, Expenditure – translate into your future financial security.

  • Do you have enough money to maintain your lifestyle? – If not, how much more do you need to be saving and investing?

It will also answer other key questions such as:

  • What’s the difference between investing and leaving your money in cash?

This is highlighted in the charts below which show £1m invested vs left in cash, for a client aged 50, taking a £2,500 p/mth withdrawal, until the age of 100. The investment return is variable (based on historic mixed balanced benchmark 20-60% equity from 1990-2021), averaging net 4.09% p/annum. Cash is set at 1%. Inflation across both portfolios 2%.



*These figures are not guaranteed and are purely used for illustrative purposes

Source: CashCalc (FE fundinfo Ltd.)

Other questions which can be answered:

  • What age can you afford to retire? – Or can you retire now?
  • Will you be able to leave an inheritance to your children?
  • How much money will you have for care fees.

Without a clear forecast, you are planning in the dark.

Risk warning: This information does not constitute investment advice and should not be used as the basis for any investment decision nor should it be treated as a personal recommendation. The figures quoted are for illustration purposes only.  With investing, your capital is at risk.