Spring is normally a great time to get your affairs in order. This could also apply to the world of personal finance and your investing habits.
It could be seen as agreed time to review things, and make things work better for you in future. So you can improve your short term and ultimately long them financial plans and goals.
Ask yourself a simple question – when did you last review your ISA !
So what simple steps can I take to improve and spring clean my ISA.
Review your goals and objectives
Firstly, does you investments currently in place within the ISA, still align with your existing goals. Maybe when you set up your account or started out, you had money or funds held within a certain product but your situation has changed.
At first, it could have been for short term needs, such as holiday or newer car. It could now be for long term plans, such as clearing mortgage off earlier than expected, or retirement plans.
Your aims and financial goals, will differ in the earlier years whilst accumulating wealth or growth. To say the later years nearing retirement, when you may decide to de-risk your investments.
So ask yourself – why are you saving money or putting funds away in investments !
Normally the longer you can invest for, the greater risk you should be taking. Or your attitude to risk will be different as you don’t need the money in the short term.
If you circumstances or attitude to risk has changed. Take some simple steps to meet your current circumstances.
So take action and rebalance your portfolio.
You may be happy with your existing holding and assets held within your ISA. But you may decide to make some small changes or minor adjustments.
It could be that your holdings are top heavy within specific fund or sectors. So you could take some profits or reduce the size of holdings in a specific fund.
At present, I started out investing solely in individual stocks, that I knew about and what happy to commit funds too. But at present I will allocate new funds on a regular basis to simple low-cost ETF funds.
As I did have all my shareholdings, based with the UK, but now I have:
Around 75% in UK & Europe, 20% in the USA and 5% in emerging markets and Asia.
It may be that certain sectors are outperforming other sectors or asset classes. As we have seen in recent years the tech sector and the so-called magnificent 7 have produced very good results. But will that fad or band wagon continue in future years or will that bubble burst.
I will personally review my portfolio, at the end of each month and record my valuations. But I see my shares and funds as long term holds, but I will allocate any new funds into my ETF’s to avoid emphasis or basis solely to the UK FTSE 100.
What about switching your ISA provider
Are you happy with your current ISA or investment provider. Thanks to the improvement of technology, the world of investing has improved massively in recent years.
Are you using the same provider from many year ago. Or do that platform or APP meet your needs, is it easy to use and manage. Are their fees competitive and do they offer you products to meet your needs.
I personally use https://www.youinvest.co.uk, as I find their platform simple and easy to sue and navigate and they have great information, videos, newsletters to help you improve your investment knowledge.
Other platforms are available such as:
- www.ii.co.uk (interactive Investor)
- http://hl.co.uk (Hargreaves Lansdown)
- https://www.vanguardinvestor.co.uk (vanguard)
- http://www.trading212.com (trading 212)
Other companies are readably available but do your background checks and due diligence, and do some simple comparisons across different providers.
As we have seen in recent times, providers will changes fees, and conditions over time. So you too can react if they do change for the worse. The idea of moving funds or investments, should be simple to do.
Although buying and selling fees may apply, but it could be done in a few weeks and they will have online tools to help you in making it a hassle free transfer. They should do the legwork on your behalf to keep things relatively simple.
Are your investments easy to manage or becoming complicated
As you portfolio grows over time, though additional contributions or growth. Have your number of holdings become cumbersome and difficult to track and manage.
In my stocks & shares ISA, I currently have 10 UK shares, and 7 funds or ETF’s and it is currently worth over £ 100K. Of which no more than 10% is invested in a particular share or Fund.
I do produce a monthly stocks and shares ISA review video on my YouTube channel, being https://www.youtube.com/channel/UCLoChPEiggFg9n-iVRn8nPg, which highlights investments held, dividends received, asset or geographical location, plus news on assets held.
You should do your background and analysis into any new share of und that you may purchase. To eliminate making undue mistakes or future losses.
I fully support the idea of diversification, but sometimes you may have built up small amounts across many different sectors or countries. Which could become difficult to review, control and manage in future. It may be a step too far for most people, so try and keep your portfolio simple and easy to manage.
For the majority of people, a simple low cost ETF or transfer fund that covers the global stock market is a great addition to any portfolio.
I personally invest money into the Fidelity World Index fund (https://www.fidelity.co.uk/factsheet-data/factsheet/GB00BJS8SJ34-fidelity-index-world-fund-p-acc/key-statistics) which holds around 1300 holdings around the world. many other great low cost tracker funds will be offered by your investment provider or APP.
Or you could buy a multi-asset fund run by experts on your behalf. My current provider will also offer low-cost funds based on your attitude to risk. Such as cautious, balanced, moderately adventurous, and adventurous to assist you if you don’t want to pick your own investments.
They will also offer something such as recommended funds which over a specific sector, such as North America, Europe, Asia, Emerging Markets, China, to name a few.
So take advantage of the free tools to assist you to improve your knowledge.
Are you using the allowances available to you
You have an allowance of £ 20,000 each tax year, to invest within a cash or stocks & shares ISA each year. Most people will never use the full allowance, so no mater how small you invest each month or through ad-hoc lump sums, try and invest on a regular basis.
Use your allowances to your effect, and consider if you don’t use them you lose them.
If you are saving for a house deposit, you could invest up to £ 4,000 into a Lifetime ISA and the government will add 25% extra so £ 1,000 each year as free money. Check out my blog post via the following link to cover Lifetime ISA basics (https://moneyminted.co.uk/what-is-a-lifetime-isa)
It could be that you start off investing a small amount each month when starting out. As your confidence and investment knowledge grows you can increase your amounts moving forwards.
Also consider the power of compounding and the benefits in future. In the early your portfolio will be growing solely through contributions. But as the pot grows it will be like a snowball in future and will grow exponentially in the later years.
Also remember, any funds or cash held within the ISA, will remain income tax-free and dividend tax free within the pension wrapper.
There is no need to declare any profit or losses as proceeds are free from GCT, and any dividends received from dividend tax. So their is no need to give any money to HMRC or the tax-man, and no need to declare self-assessment for your ISA products. Which saves any undue charges, administration or reporting.
Hopefully by taking some simple steps, you can significantly improve your financial goals, aim and investments for future years. So you too can reach your long term goals.
As well as the above, your should also be taking steps to improve your financial knowledge, through the introduction of reading papers, journals, listing to podcasts, Youtube videos etc.
But remember, not everybody online or on social media is authorised and regulated. So do your due diligance and background checks. If you do need some extra guidance, use the tools on http://www.moneyhelper.org.uk, or seek regulated advice by using the http://www.fca.org.uk as everybody has to be regulated.
I personally think savings and investing should be simple and straightforward, but for most people the idea of savings and investing is complex and confusing. But it shouldn’t have to be like that. Also consider that no nobody should care more about your finances than you, not an investment, IFA or financial institution
Remember: If you found this blog post useful and informative, please check my other posts on investing, pensions, investment books that I recommend on http://www.moneyminted.co.uk.
So you can reach you investing goals and ambitions in future yers, the world of investing isn’t a get rich quick scheme, it should be safe and boring. But you will get their in the end if you think long term, invest on a regular basis and invest within tax-free wrappers.
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