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6 Investment tips to start the New Year [Part Two]

So far 2017 has not produced too much excitement. Controversy continues to surround the American President-elect and polls for Marine Le Pen are showing that she may make it through the first round of the French elections in May.

Before we look at the last of the 12 investment tips for 2017 it is worth reminding ourselves how 2016 started. In February last year the UK stock markets fell dramatically following concerns about China and the price of Oil. The chart below shows the movement of the UK's leading index over the last twelve months. By staying invested and accepting short term downturns at the start of last year you could have returned 27.1% by investing in the in UK leading index during 2016. The chart highlights that by the weathering the storm a better result can be obtained in the longer term and supports our tips for diversifying quality investments with the medium to long term in mind.

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Data provided by FE. Care has been taken to ensure that the information is correct but it neither warrants, represents nor guarantees the contents of the information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein.
 
1. Active management – If you are going to invest, make sure that someone is managing your investment. Select the investments that help you reach your goal, don't just buy the market because you don't know what to buy. If you need income buy dividend paying investments, if you want growth buy companies that are reinvesting their profits to expand. If you are going to buy the market, make sure you don't pay the same as an active managed fund or buy a synthetic passive fund without being aware of the counterparty risks.
2. Consolidating – Don't have your investments with 15 different providers [unless you're breaching the FSCS deposit limit]. Consolidating your ISAs and other investments onto one platform will help build a balanced portfolio over a number of accounts. Some companies will buy the same 20 investments in each account, why not save costs by buying each investment once? Each account may be out of balance, but, once brought together, work in harmony. Consolidating will improve performance monitoring and will benefit from consolidated tax reporting.
3. Diversity – The start of this article makes it clear that although the news and prevailing opinions were bad for the equity markets this year, yet they have turned out to be the best place to be. Never swing from one asset class to another, make small adjustments if and when necessary. If you had been out of equities ahead of the Brexit vote, you will have lost out on a lot of the upside swing afterwards. Keep your portfolio well diversified at all times.
4. Buy, hold and review – Buy to keep for the long term, don't go in and out of the markets. Only buy an investment you are aiming to keep for 5 years. This does not mean we should keep it for the whole term regardless of what happens or that you should not sell all or some if you make a profit. Buy quality investments with the long term in mind.
5. Tax efficiency – There is no point making loads of money and then losing it to the tax man. Some investments fit better with ISAs, others are better in an open architecture off-shore bond or general investment accounts. Tax can reduce your returns on investment by as much as 45% if you use the wrong product. Why pay tax if you don't have too?
6. Regular reviews – Lastly, make sure that you stay on track to meet your goal or that your investments have not become riskier than you had planned. Regular reviews and occasional rebalances will ensure that you will reach the lifestyle that you desire.
  Contact us with questions you may have about this or your savings to see how we can assist.
 
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