Pay attention people! It’s about five weeks until the end of the tax year and if you don’t use up your annual tax perks by then, you’ll lose them forever.
One of the biggest allowances is the Individual Savings Account (Isa) which is worth £15,240 this year. Admittedly you have to be truly minted to be able to whack that kind of spare cash into savings within the next few weeks. Nonetheless, you don’t need the full sum to open the account: you can put in whatever you want up to the limit.
The trouble comes with deciding on where to put that Isa money. The return on cash (and its near cousin, bonds) is woeful at the moment. Shares look like they could do the job but stock markets are riding high. It seems foolish to wade in now near the top and risk losing your shirt when the inevitable crunch comes.
What’s the answer? If you’re really nervous, you can open the Isa and keep the money in cash until you’re comfortable enough to make the shift into shares. If you’re a beginner investor, you should probably stick to UK funds (many shares not just one firm). We’ve got some great ideas for you here.
Or maybe you already have a portfolio of funds and are looking for additions? In which case, don’t be like Mr Minted who is always asking me for the latest investment theme or star fund manager. Just because they’ve done well in the past, it doesn’t mean a repeat performance is guaranteed. Unfortunately, it’s easier to sell investments which have made huge returns recently. You could well be encouraged into a certain fund by a marketing blitz, probably when the tide is turning against you.
Timing your investment to get the greatest gains is impossible and anyway you should be investing for the long term. So overcome this problem of ‘where in the world’ by looking for gaps in your existing investments. Do you have a large sum of money in UK and hardly anything in Europe? The US is one of the biggest economies in the world – do you have any investments there?
Pushing money into missing areas (just small amounts in high-risk areas such as Asia please!) will help you build a balanced portfolio. And we’ve short-cut the process for you by asking fund experts at Bestinvest and Hargreaves Lansdown to select the best funds in different geographical areas. Check out their recommendations for advanced investors here. No money? No worries – you can sign up a regular monthly saving plan. These start from as little as £25 a month with Hargreaves Lansdown and £50 a month at Fidelity. There really is no excuse to get saving and get your sticky mitts on those juicy tax perks.