November 29, 2022
Cash Flow Planning – Switching the Lights On
![](https://www.brightoncapital.co.uk/wp-content/uploads/2022/11/Lightbulb2.jpg)
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%.
INVESTED
![](https://www.brightoncapital.co.uk/wp-content/uploads/2022/11/Invested-1024x320.jpg)
CASH
![](https://www.brightoncapital.co.uk/wp-content/uploads/2022/11/Cash-1024x313.jpg)
*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.