'Review, review. review, review'
DID you know that April 6th is the official first day of spring for financial advisers?
It’s the start of the new tax year! An uplifting time of renewal, rebirth, and new tax allowances, a time when, in the mists of early dawn, we advisers hold our electronic calculators towards the rising sun and chant: “Review, review. review, review.”
Now, if someone comes across this article in 1,000 years, in the dingiest depths of the Irish News archive, they may wonder why we chose the word ‘review’. It’s because the beginning of a new tax year is when your key tax allowances reset themselves for 2018/2019, and the perfect moment to review your financial planning for the ‘new year’.
Your Isa allowance, for example, resets itself to a full £20,000, which you can invest in one of the main types such as the Cash Isa, or the Stocks and Shares Isa, or spread it over both. Then there’s the Lifetime Isa, the Help to Buy Isa, the Innovative Finance Isa, and for the children of spring, the Junior Isa.
Everybody knows that as a tax-free account, the Isa is terribly popular. Latest figures show by the time the Isa turned 18 years old last year, over 12.7m adults had signed up, and there were already 740,000 of the much younger Junior Isas in existence.
If you have an Isa, you may wish to start taking advantage of the coming year’s £20,000 allowance from April 6, or even rush to use up some more of this year’s allowance before then. Review!
This is such an exciting time of year, financially speaking. If you see a happy guy in a grey suit skipping through the daffodil beds, and holding a fountain pen this week, odds are he’s a financial adviser. There are so many aspects to our finances we could look at around now, I couldn’t possibly cover them all today without pushing my esteemed colleagues on these pages back into the sports section.
We could, for instance, enjoy many happy minutes discussing life insurance and critical illness – alas, that’s for another day.
But I will single out one more area we might like to think about, as the financial new year approaches.
Did you know you are a stock market speculator? Not directly, of course, but if you have a workplace or personal pension, or a Stocks and Shares Isa, then the stock markets are where your money is invested and growing.
Did I say growing? Ah – this is the problem. Perhaps it’s not growing. It depends how they have it invested for you. If your money is lying in funds at the lower end of the performance scale, you are losing out on faster growth you might have had.
The American investment wizard Warren Buffett once summed it up. He pointed out you can really spot the best and worst fund managers when the markets hit a bad year: “After all, you only find out who’s swimming naked, when the tide goes out.”
It’s true! The investment group Bestinvest, who monitor this sort of thing, said in their latest report that 26 of the leading funds in the UK have been underperforming for three years now, compared to the benchmark they hoped to achieve - and each has been at least 5 per cent under in one of those years.
The Bestinvesties give those funds the rather inelegant title of ‘dog funds’, but when you consider that together they hold a massive £6.4 billion in savings and investments, well, I’d hate to be the lamp post where that pack of dogs is on the street.
Do not despair. It is spring, and you can take a financial ‘pooper scooper’ to your pension or Isa, and clean up the problem.
It is the easiest thing in the world to have us – your adviser – lift the lid, take a look at how you are invested, and see if you shouldn’t be switching your money into this year’s top-performing funds.
And being positive, there’s no shortage of good funds, if you just take a look. A number of well-known names have been this year’s top performers, with no dogs snuffling around in their portfolios.
Familiar names like Aviva Investors, AXA, Artemis, Legal & General and Royal London have all come up smelling of roses in this year’s list.
So why not make sure your savings come up with the roses this year too? Looking at your Isa situation, and letting us check on your pension funds, are two great ways to get yourself financially fit for spring.
:: Michael Kennedy is an independent financial adviser and pensions specialist, and can be contacted on 028 71886005 . Further information is available on the Facebook page 'Kennedy Independent Financial Advice Ltd'