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Seven strategies for the new financial year

April 2019

Categories: ISA

The new tax year started on 6 April.

It’s not quite the same as the calendar new year (there are no fireworks to mark a new financial year), but that shouldn’t stop you from making some important financial New Year resolutions.

Making improvements to managing your money can support your long-term investment plan for a safe and secure financial future.

Here are seven New Year financial resolutions to help kick-start a more successful year for your wealth.


Increase savings

Investing regularly is to be applauded, but don’t get too set in your ways and save the same amount each month for years on end.

Review the amount you save so you can boost monthly payments as your earnings increase.


Set clear goals

To really boost your savings habit, it will help you focus if you set yourself some goals.

What drives each of us to save can differ enormously. Yet most savers have a goal, which can be anything from your own future to supporting that of others – so from saving for a larger family home or having enough capital stockpiled to pay off an existing mortgage to helping younger family members financially.

Once you hit a milestone, consider rewarding yourself for a job well done.


Review your portfolio

Once you have constructed your portfolio, you will need to monitor it to make sure it is performing as you had hoped and that you are on track to achieve your goals. While a financial adviser will review your investments in, say, an annual meeting, those that have taken the DIY route will need to do a review themselves.  

Many existing investors will have accumulated a collection of fund holdings over the years that might no longer suit their needs or changing risk appetite. Plus, if your own circumstances change significantly, it’s important to review your portfolio.


Consider new themes

Achieving a balanced portfolio is unanimously regarded as the smart way to invest. However, if you have an interest in certain industries or sectors, you might want to have some focus in those areas.

Technology might be an area capturing your imagination, for example.

Daniel Pereira, Investment Research Analyst at Square Mile, highlights the Artemis Global Select (PKAAAB) fund. He said: “Current themes in the portfolio include 16 per cent in online services, 14 per cent in automation, 14 per cent in healthcare costs and 8 per cent in scientific equipment.”

As always, make sure you understand exactly what you’re investing in.


Start investing for good

Investing for good is a fast growing trend – and one worth exploring for any type of saver. A recent study showed that more than half (55 per cent) of investors say they would like their money to support companies that contribute to the environment and society. 

Fund groups offer funds that invest in companies that have a strong track record on environmental, social and governance issues - known as ESG investing. John Monaghan of Square Mile suggests looking at Stewart Investors Worldwide Sustainability and Kames Ethical Equity (SECEM).

Again, make sure you understand exactly what a fund invests in as not all ESG funds operate in the same way.


Be more tax-efficient

There are hundreds of tax breaks available to UK taxpayers – it’s your job to maximise them. Make sure you’re paying as much as you can afford into a pension – the tax breaks are unrivalled. Utilise your ISA £20,000 allowance and make sure any shares held are done so within the ISA wrapper. If you hold paper share certificates or even digital shares outside an ISA, consider a “bed and ISA’ process which allows you to hold them more tax efficiently.

When it comes to capital gains tax, married couples, or those in civil partnerships, should combine their two allowances (£12,000 in 2019/20) to reduce the tax bill on any substantial gains.


Don’t keep too much in cash

Brexit and other economic factors can send panic waves through private investors. But remember in reality, even cash is not without risk. In choosing the supposedly safer option of cash as a long-term investment, it is almost certain your money will fall in value over time as it is slowly but surely eroded by inflation.

The golden rule is that the stock market rewards patient investors.

Author: Holly Thomas Categories: ISA