Five New Year’s resolutions for investors

With the New Year fast approaching, it’s the traditional time for setting out personal goals for the year ahead and also getting into shape after the Christmas seasonal excesses.

Here Jason Hollands, managing director of business development and communications at Bestinvest, offers investors seven potential New Year's resolutions.


Cut the charges on the funds you already hold

"If you own investment funds such as OEICs and unit trusts, it is possible that you will be paying an annual commission to the financial adviser or broker who you originally took out the investment with."

"These are typically worth 0.5 per cent of the value of the investment each year and can therefore add up to thousands of pounds over the years."

"While from January 2013 new rules mean that advisers can no longer receive commissions for giving financial advice, existing funds will continue to pay commissions up until the point the adviser gives you further advice on the investments (which could be never)."


Give your existing portfolio a January "detox" and rebalance if necessary

"Recent research conducted by YouGov for Bestinvest found that one in five investors surveyed said their adviser had never reviewed their investment portfolio."

"Yet just as we all need the occasional health check or the car needs a periodic service, it is vital to keep an eye on your investments to make sure you still have the right mix of assets, the appropriate level of risk and that the individual funds you hold are delivering decent performance for fees that are not excessive."

"Even a portfolio that was well constructed at the outset will need to be rebalanced occasionally as carefully planned allocations to different markets will drift over time."

"January is a great time to review your portfolio and make any necessary changes to get it into shape ahead of potentially using any Individual Savings Account (ISA) or pension allowances."

"Too many investors rush into the business of selecting ISA funds at the end of the tax year without first understanding where their existing portfolio needs strengthening."

"This can lead to investors getting swayed by the barrage of ‘tips’ and marketing hype and the compounding of weaknesses in the portfolio, which may result in too much risk being inadvertently taken on board."


Get yourself into an ISA by the end of the tax year

"Although the very highest rate of income tax, the additional rate, is set to reduce from 50 to 45 per cent from next April, the UK is likely to remain in a high tax environment for some time."

"With a general anti-avoidance rule in the pipeline, it is important to make the most of legitimate tax-efficient schemes."

"The annual stocks and shares ISA allowance, currently £11,280, enables a couple to ring-fence £22,560 from the tax man and is worth utilising if you have the cash to do so."

"If you don’t have the cash to commit to an ISA this tax year, consider switching any non-ISA holdings in OEICs, unit trusts, investment trusts or shares into an ISA. However, take care not to crystallise any capital gains tax liabilities in doing so."


Use your annual capital gains tax allowance and your spouse's

"If you own investments outside of tax free-wrappers, then you can bank a profit on them this year of up to £10,600 per person without incurring any capital gains tax."

"Many investors forget to utilise this potentially valuable allowance. If you have more than £10,600 to crystallise, you can first switch some of your holdings to your spouse so that they can make use of their annual capital gains allowance as well."


Consolidate your disparate pension pots

"Many people acquire multiple pension pots as they change jobs and in doing so can end up losing a sense of control over their retirement assets."

"It may make sense to consolidate these within a single Self-Invested Personal Pension (SIPP) where your retirement fund will be easier to keep track of and can be managed as a single portfolio which is diversified over a wide range of funds and investments selected on a best-of-breed basis."

"In considering a pensions consolidation strategy, do first check with each existing pension provider you are with that there won’t be any excessive penalties or loss of valuable benefits."