5 “mad” financial planning numbers that will make you think twice about your wealth

Some numbers are just so mind-boggling that they’re almost impossible to grasp. Take the time, for instance – a million seconds is around 11.5 days.

While you might think that a billion seconds is just a bit longer, in reality, Encyclopaedia Britannica reveals that it is an astonishing 31 years and eight months.

While these figures might make you sound clever at a dinner party, they don’t hold much significance in your day-to-day life.

However, some numbers are just as mad and incredibly important, especially when it comes to financial planning.

With that in mind, continue reading to discover five figures that might surprise you, but are also important when managing your wealth.

1. The rule of 72

While it is challenging to predict how your wealth will grow, the “rule of 72” formula could help you make an estimation.

By dividing 72 by your annual returns, you could estimate how long your savings would take to double.

For instance, if you held your money in a fixed-rate savings account that offered a guaranteed 3% return each year, it would take 24 years for your savings to double, since 72 divided by 3 is 24.

It’s vital to note that this is only an estimate, and consistent guaranteed returns are rare. Still, this number does show that being too cautious with your money and investments could ultimately stop you from reaching your long-term financial goals.

While keeping your wealth as cash might feel safe, it might take too long for it to increase in value as much as you need it to.

2. The number of unprotected Brits

Financial protection can act as an essential shield in the face of the unexpected, helping you and your loved ones manage costs during difficult times.

For example, if you suddenly fall ill and are unable to work, income protection or critical illness cover could offer you and your loved ones a payment so you can keep up with bills and other essential costs.

Similarly, if you suddenly pass away, life cover could ensure that your family can maintain their standard of living without you.

Despite the importance of protection, you might be surprised at just how many people don’t have it. Indeed, Actuarial Post reveals that only 14% of Brits have income protection, while only 37% have life cover.

Income protection is designed to pay you a regular source of income if you’re unable to work due to an accident or illness.

This could help you cover any essential costs at a time when you should be focusing solely on your recovery rather than worrying about bills.

Additionally, critical illness cover may be able to provide you with a tax-free lump sum if you’re diagnosed with a serious condition listed on the policy.

You could use this payment to cover your mortgage or other significant debts, pay for private treatment, or even renovate your home to be more accessible if you’re affected by a short- or long-term disability.

Money aside, simply having the protection in place could give you some much-needed peace of mind that you’ll have the means to handle significant costs should you receive a sudden diagnosis.

3. The cost of pausing pension contributions

Whether you’re looking to free up more disposable income, wish to allocate more funds to other investment opportunities, or want to deal with high mortgage rates, you might have considered pausing pension contributions at some point in the past.

However, the financial implications of doing so might be far higher than you initially expected.

Figures from Royal London show that if you’re a higher-rate taxpayer on a salary of £70,000, you could increase take-home pay by £3,360 a year by stopping 8% matched pension contributions for one year.

However, your pension savings would be £31,508 worse off in 20 years’ time after this one-year pause due to the effects of compounding.

This demonstrates how even a short break from saving for the future can leave you with a significant shortfall in retirement.

4. The hidden cost of supporting your adult children

As a parent, it is commendable that you want to help your children financially, whether that’s by contributing to their deposit for a home, covering higher education costs, or another form of support.

Though, it’s vital to consider the potential long-term effects of doing so on your own finances.

In fact, This is Money reports that the “Bank of Family” is anticipated to pay out a staggering £30 billion over the next three years to help children onto the property ladder. In 2023 alone, first-time buyers received a total of £9.4 billion in financial support from their family members.

While gifting money to your child might be a generous decision, doing so without considering its effects on your overall financial plan could be risky.

For instance, a significant lump sum towards a house deposit might give your child a head start, but it could also leave you with a shortfall in retirement. Additionally, you may want to decide whether your financial support is a gift or a loan. If you expect repayments, you could prevent any misunderstandings by setting up a formal agreement.

If supporting the next generation is important to you, working with a professional could help you make it a reality – without compromising your own stability.

5. The cost of reacting emotionally to market downturn

When your hard-earned wealth is on the line, and markets are experiencing a period of downturn, it’s understandable to feel concerned.

In this instance, you may react emotionally to the volatility and sell your investments to cut your losses.

However, doing so could mean you may miss out on a subsequent period of recovery, harming the long-term performance of your portfolio.

Take, for example, the chart below, which shows the 20 best (represented by orange bars) and worst (represented by blue bars) trading days since 1 January 1980.

Source: Vanguard

Notes: The chart shows daily returns of the MSCI World Price Index from 1 January 1980 to 31 December 1987 and the MSCI AC World Price Index thereafter. The green bars highlight the 20 best trading days since 1 January 1980 and the gold bars highlight the 20 worst trading days since 1 January 1980. Past performance is not a reliable indicator of future results.

As you can see, the market’s best and worst days often occur close together. So, if you react emotionally and sell your investments after a period of downturn, you wouldn’t still be in the market when markets eventually recover.

Past performance does not necessarily indicate future performance. But even so, while attempting to time the market might seem like a wise decision in the moment, this surprising data shows why it isn’t always prudent when you’re working towards your long-term goals.

Get in touch

We could help you wrap your head around some of the “mad” numbers so you can effectively manage your wealth.

Email info@douglaswhiteltd.com or call 0151 345 6828 today for more information.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The purpose of this article is to provide technical and generic guidance and should not be interpreted as a personal recommendation or advice.

All information is correct at the time of writing and is subject to change in the future.

The subsequent interpretation of or application of the comments and/or statistical information is to inform but NOT to recommend or support any specific investment course of action.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

All statements concerning the tax treatment of products and their benefits are based upon our understanding of current tax law and HMRC practices, both of which are subject to change in the future. Levels and bases of reliefs from taxation are also subject to change and are dependent on your individual circumstances.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Note that protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Protection cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

Sources

Encyclopaedia Britannica article dated 1.09.24.

Actuarial Post article, using information from a Shepherds Friendly survey.

Royal London article dated 18.09.23, using information from Ten Years of Automatic Enrolment in Workplace Pensions Statistics and Analysis GOV.UK.

This is Money article dated 16.08.24, using information from Savills.

Vanguard article dated 03.02.25 using Vanguard calculations in GBP, based on data from Refinitiv as at 17 January 2025.