Aside from your relative preference for baked apples, custard, steak and kidney, or meat and potato, there is a lot to learn from the humble pie, including a thing or two about managing your finances.
Pie baking, like financial planning, is a delicate art that requires care and attention, but you can make it a lot simpler by following some key principles, after which you’ll see that it really is as easy as… well, pie.
So, as the smell of National Pie Week wafts around the corner, what better time to take a look at 10 delightful reasons your financial plan is like baking the perfect pie?
1. You need the right ingredients in just the right amounts
When baking a savoury pie, start with the basic ingredients, such as your pie crust, onions, garlic, herbs, and spices. Then comes the fun stuff, your filling. Meat, fish, vegetables, cheese, beans, you name it, and the more creative, the better.
Just as a pie filled with nothing but chicken, cheese, or carrots, would pale in comparison to one with a sumptuous combination of vegetables, gravy, and meat, so too should you carefully craft your investment portfolio to hold a diverse array of assets.
A well-rounded and diverse portfolio helps to spread risk across various assets and can provide the potential for long-term success.
2. Handle your pie as little as possible
Any seasoned pie maker will warn you of the perils of over-handling your pie, and how it can lead to an uneven texture, soggy crust, or leaky filling.
And, as pie crusts are like investments, you should only touch them when you need to.
Investments are typically designed to provide long-term returns, so it can be beneficial to leave them untouched for several reasons. You may, for example, incur a transaction charge each time you trade, which could build up to a significant sum if done too frequently.
Moreover, regularly selling your investments could trigger a taxable event, such as taking you over the threshold of the Capital Gains Tax Annual Exempt Amount. And focusing on long-term investments, rather than making quick and hopeful trades, can help to ensure financial stability and more consistent returns.
3. Adjust for dietary requirements
When baking a pie, you may be required to make certain adjustments for allergies or dietary restrictions, either for yourself or your guests.
Similarly, it may be necessary to adapt your financial plan to accommodate various life changes.
This could include adjusting your plan to account for shifts in income, such as starting a new job or transitioning into retirement, as well as changes in expenses resulting from significant life events like having a baby or your child leaving home. These adjustments ensure that your financial priorities and goals remain aligned with your evolving circumstances.
4. Bake the pie for as long as it needs
The age-old test for checking if a pie is ready is to insert a knife into the centre, and if it comes out clean, it’s cooked. If it’s smeared with filling, put the pie back in the oven.
Patience is a virtue when it comes to pie baking, and the investment element of your financial plan is no different.
Nutmeg reports that if you invested in the stock market for 24 hours on a random day between 1971 and 2022, you would have had a 52.4% chance of making gains. Yet, if you invested for a full quarter, you would have had a 65.6% chance of making a profit.
Investing for a year would have raised your chances to 72.8%, while 10 years would have increased the odds to 94.2%.
So, give your investments time, and there is good potential for them to grow.
5. Consistency is key
There is a precise sweet spot between wet and soggy and dry and crisp in which the consistency of a perfectly baked pie resides.
The benefits of consistency stretch to further domains in life than pie crusts and financial planning, but let’s leave it at these two for now.
Remaining consistent with both your investments and financial plan may reward you in the long run. Consistency entails building discipline, focusing on long-term results, and having a plan that you stick to – adapting it as circumstances change as you read above.
Staying consistent and avoiding impulsive spending or speculating means you can keep on track toward your goals.
6. Understand the risks associated with pie baking
From burning your hands on the pie dish, to scorching your tongue on the piping hot filling, there are several risks to be wary of when baking a pie.
Whether creating a financial plan or baking the perfect pie, every venture in life comes with a degree of risk, so try to understand the risks involved and protect yourself against them as best you can.
Your investments can be susceptible to the risks associated with the market as well as wider macroeconomic factors. You can protect yourself against such risks by diversifying your portfolio, focusing on long-term investments, and shying away from short-term trades based on market hype.
A financial planner can help you to better understand the risks associated with investing and how to build a portfolio aligned with your risk tolerance.
7. Start cooking early
Give yourself an extra 20 minutes or half an hour and start cooking your pie early to give it time to cool.
As with all plans, be they pie- or finance-based, the earlier you start, the better.
Making a financial plan early could help you achieve goals that are important to you. It means you may be better equipped and prepared to approach significant milestones with confidence and prosperity.
A report by the International Longevity Centre found that people who take financial advice are, on average, £47,000 better off in retirement than those who don’t. So, even if you think you’re too young to benefit from working with a financial planner, developing a plan early could help you in later life.
8. Know when you are going to eat
Knowing when you’re going to eat your pie is important as you want it to be just the right temperature when you’re ready to tuck in.
Much like knowing precisely when to take a pie out of the oven, setting a time frame for achieving your financial goals ensures that you’re well-prepared to enjoy the fruits of your labour at just the right moment.
For instance, by establishing a retirement date, you can develop a comprehensive plan that could help you retire on your terms and enjoy the retirement lifestyle you’ve always envisioned.
9. Share and enjoy your pie with others
Though you may plan to cook for yourself and eat your pie solo, the best pies are the ones enjoyed and shared with others.
And, as we are continually discovering on our journey, what’s true for pies is true for life, and financial planning.
Sharing and discussing your financial plan with family members or a financial planner can offer support and clarity on what your goals are. And remember, your financial plan is there to help you achieve the life you want, so try to enjoy its offerings with your loved ones when you can!
10. Chef knows best
If after absorbing all the wisdom in this article you are still at a loss on how to fix a crumbled or soggy pie, or you don’t even know where to begin, the best thing you can do is to ask a professional chef (or at least a veteran pie baker) for advice.
And, when it comes to financial planning, that’s where we come in. If you want professional advice and assistance in developing a financial plan (not baking pies), get in touch.
Email info@BlueSKYifas.co.uk or call us on 01189 876655.
Please note
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
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.