Managing your wealth can be boiled down to three key elements: protection, growth and tax reduction – with each one equally relevant to people at all asset levels.
Top New Year’s resolutions for your wealth to start 2016 off strong!
The new year always brings around for each of us a sense of renewal and reflection – successes and failures, “would haves” and “should haves”, second chances and new beginnings. For many of us, this becomes an all too familiar annual practice – after we set our goals for the new year, we delay in taking that first step. However, the start of a new year is the best time to reassess our strategy on how we can get our money to start working harder straight away.
So in the spirit of fresh starts, here are the top 5 new year resolutions collected from the wealth experts at at findaWEALTHMANAGER.com that you can adopt immediately to ensure you have a prosperous 2016!
Set up regular savings now and you could reap the benefits all year. Investing a lump sum commits all your money to the market at the same time and the same price, whereas drip-feeding your money over a longer period can help to smooth out market highs and lows. This is because when prices are low your money buys more units or shares, and when they rise you get less – something called ‘pound cost averaging’. You can see a difference, for example, of 20% vs 12% returns according to Barclays.
Over-exposure to to certain markets, sectors or asset classes like property, becomes all too easy which leave portfolios vulnerable to significant losses. Diversification helps us even our returns and manage uncertainty in the markets over the long-term.
However, against our own intuition, there is a major risk that even the most diligent investor does not realise we are taking called over-diversification, which we did a piece on recently detailing the top 5 risks investors underestimate including over-diversification.
A review of insurance cover should be an annual routine at the turn of the year. As well as considering any new assets, this review should also take into account the changing value of existing assets. Jewellery is one product which has seen its value increase significantly over the last few years – often far in excess of the increase allowed by index-linking that insurers will have applied to the policy.
Here is an article we just released on Diamond Investing as an Alternative Investment.
ISAs are a tax-efficient, and are becoming a good alternative to traditional pensions as explained here. ISAs are a flexible investment option made even more attractive by the recent rise in the annual limit to £15,000 and the progressive lowering of the pension contribution limit. Ensure your ISA investments aren’t just languishing, however. Consolidating your ISA investments for active management by a wealth manager could be a good option.
It’s not uncommon for us to have several investment and savings accounts. However, did you know there are significant benefits to consolidating those investments? Consolidation can lead to a reduction in what you pay in management fees that tend to eat into our long-term returns, elimination of redundant investments susceptible to over-diversification risk as discussed in point 2 above, as well as a clearer picture of wealth.
There is so much more we can do, and we have only begun to scratch the surface; however, these 5 new year’s resolutions should be enough to make sure you start the new year strong!
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