Client trends April 2021 –
Investors look to top up portfolios and particularly ISAs, with the domestic market front of mind

Investors are looking to deploy a mountain of cash

According to The Bank of England, Britons are sitting on an incredible £100 billion of excess savings due to the privations of lockdown. And, while people will certainly seek to enjoy themselves once the country opens up, a really gratifyingly large proportion are set to put this money to work as almost three-quarters of people say they aren’t going to just spend their extra moneyi.

Those looking to deploy a very large cash injection from the sale of a business, bonus or inheritance always make up a significant proportion of our users, but we’re hearing from an increasing number of people who are already regular investors and now have extra resources to feed into their portfolio

This certainly reflects what we’re hearing from people coming to our site. Those looking to deploy a very large cash injection from the sale of a business, bonus or inheritance always make up a significant proportion of our users, but we’re hearing from an increasing number of people who are already regular investors and now have extra resources to feed into their portfolio.

Doing this in a way that maintains a well-balanced asset allocation is crucial. It should also be borne in mind that portfolio “makeovers” are very much in motion currently as the investment world looks towards a post-pandemic future and potential economic changes like reflation.

Buying British is the order of the day for many

Patriotic impulses may be playing a part, but it seems that for lots of our users “buying British” is the order of the day for rather more pragmatic reasons. Investors have clearly taken note of all the positive commentary around the UK equities market and the promising fundamentals thereof.

Here, the first factor is the way the UK markets underperformed their developed counterparts ever since the 2016 Brexit vote and therefore became significantly discounted to their true value due to fears of a “hard” exit. While trade frictions certainly remain, the reduction in political risk has seen a flood of global fund manager money to these shores. Added to this is the fact that UK stocks have the highest dividend yield of any market at 3.8%, alongside the highest earnings per share growth expectations in the world, at 49% for 2021ii.

Of course, it would be no good to overcorrect a UK underweight too much and unbalance your portfolio and there are risks to our “crouching tiger” recovery. We would argue, however, that there is a strong case for upping domestic exposure that you could usefully discuss with a wealth manager.

Investors are thinking ISAs – and beyond

This period is known as “ISA season” as people scramble to use up their allowances before the end of the tax year, but in 2021 they have been even more of a focus than ever before. One big reason is the freeze on the Lifetime Allowance for pension pots announced in the latest Budget. Many savers – and in fact a lot of younger ones – have realised they are likely to exceed the £1,073,100 threshold and are therefore exploring ISAs as an alternative way to save big for retirement.
We’re also hearing a lot from investors who have diligently used up all their ISA allowances for the year and who are seeking to minimise their tax liabilities in every other way possible
We’re also hearing a lot from investors who have diligently used up all their ISA allowances for the year and who are seeking to minimise their tax liabilities in every other way possible. As this Telegraph article featuring our Co-Founder, Lee Goggin, explains, there is a lot wealth managers can help investors achieve.
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Top Tip

Topping up your investment holdings is seldom a poor idea, but it is vital to do this in the right way lest you end up with an unbalanced portfolio and undue risk exposure. Make sure you are making the right moves for your risk-profile and time-horizon by using us to find professional wealth management advice fast and free.

Lee Goggin - Co-Founder

Lee Goggin

Co-Founder

Younger investors come into focus

While the wealth management sector of course serves clients in every age group, many people only think to get professional advice once they have amassed serious wealth and are thinking about retirement and succession. Thankfully, that is changing and we’re encountering far more high-earning young professionals and entrepreneurs eager to make their wealth work harder as early as possible in their careers.

This trend is to be welcomed on a number of fronts. As we always point out, the magic of compound returns is magnified for every year earlier you start investing. Being strategic and getting professional advice will also ensure that the investments you make really will deliver against your financial goals.

As we always point out, the magic of compound returns is magnified for every year earlier you start investing. Being strategic and getting professional advice will also ensure that the investments you make really will deliver against your financial goals

The Financial Conduct Authority has warned that younger investors are displaying a worrying tendency to invest in high-risk assets like cryptocurrencies and foreign exchange, often leveraging up with instruments like Contracts for Difference (CFDs) that could mean they lose far more than they originally invest. And while some younger investors are well versed in strategic investing, it is very worrying that the FCA found 78% of new investors are going entirely on instinct.

We will shortly publish a piece on wealth management for under 40s, which will outline just how powerful engaging a leading provider can be. However, if you already know you want a professional edge you can try our smart matching tool now.

Make sure your next moves are the right ones

We are in the midst of a great stock rotation as the winning sectors of the future start to emerge and all the while geopolitical and macro-economic risk is at worrying levels. There is certainly a lot of investment opportunity to capitalise on presently, but many dangers too.

Against this backdrop, you may find that taking timely investment management or financial planning advice is one of wisest moves you’ve ever made. Seize the initiative if you have a pressing question that you’d like to pose to an expert: we can arrange free, no-obligation discussions with a shortlist of leading wealth managers that will really put you in control.

i deVere Group
ii Reyl & Cie

Important information

The investment strategy and/or financial planning content of this piece is for informational purposes only, may represent only one view, and is not intended in any way as financial or investment advice. Any comment on specific securities should not be interpreted as investment research or advice, solicitation or recommendations to buy or sell a particular security.

We always advise consultation with a professional before making any investment and financial planning decisions.

Always remember that investing involves risk and the value of investments may fall as well as rise. Past performance should not be seen as a guarantee of future returns.

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