Pots and holdings

Everything you hold sits in one of four kinds of pot: bank savings, a taxable account, an ISA or a pension. The kind matters because it decides how the money is taxed on its way out.

Each pot grows at the rate its type assumes, unless you give that pot a rate of its own.

A pot can also be split into holdings, such as equities, bonds and cash. Each has its own growth, its own volatility and its own place in the queue when money is drawn. Once a pot has holdings, its growth is the blend of theirs.

Each holding also has a correlation to equities, which is how closely it moves with them in the stress test. In a crash it follows equities by that correlation, or by the floor set on the Stress test page if that is larger. How far it falls then depends on its volatility, so a steady holding falls less than equities and a more volatile one falls further. A pot not split into holdings takes the crash’s returns exactly.