New Year Resolutions for Your Finances

Posted on December 20, 2017

After the festive season people are beginning to think about New Year resolutions, the usual boring issues relating to expanding waistlines, joining the gym, or even dry January.

All of these are no solution to the underlying insecurity and problem that you really have no intention addressing. They are a form of punctuation in our lives, whereas a question mark indicates you are looking for an answer, so talking about the same old resolutions is repetitive and uninteresting, when the big question needing an answer is what to do about your finances in 2018?

The answer is simple and of all the potential promises you make to yourself in 2018, my number one proposal is to actually “be boring”, this is particularly pertinent when talking about your investments.

If my client meetings are anything to go by the public fall into one of two categories: 1. Have substantial investments and will have enjoyed a large amount of investment growth of late. 2. Considering setting up some form of investment vehicle either for long-term capital growth or assist with retirement.

Let’s just consider the investment climate as we enter the New Year. Brexit is in full swing, whether this is a positive swing or negative swing is yet to be decided. However, the deal struck for the first phase of Brexit is already having an effect on investment portfolios.

For clients who've already got substantial investments you might think its good news but like most things the answer, unsurprisingly, is not so straightforward.

Over the last 18 months investors have experienced a large return. This is not the result of companies expanding, providing more goods and services or being more profitable. No it’s actually a result of sterling depreciation.

As everyone else gets poorer (relative to world standards) investments are rising because much of the UK stock market is denominated in foreign currency. Should a good Brexit deal be struck, a strengthening pound may adversely affect your portfolio.

Conversely if you're thinking of setting up a new investment, contributing into your pension or ISA for example. This will be in your favour as you can buy more assets as the pound strengthens.

So what can you do in these two very different situations? The answer is simple, be boring.

Changing your investments because of a bit of market volatility is not a good idea and should never affect your overall strategy.

For those worried about market movements the last thing that you should do is second guess the market. Leave your money exactly where it is, making sure you reinvest your interest and dividends.

As for saving into pensions and ISAs, do not stop your contributions so long as they are affordable, pound cost averaging will ensure you won’t get caught out by market movement and provide you with strong long term investment prospects.

Boring is a virtue, no more so than in turbulent times and as the gym membership remains unused you can be smug in the knowledge that your resolution of being boring is actually rather satisfying, there is enough excitement in the markets for all of us.

For further help and advice, please contact Simon Taylor on 0161 785 3500 or email simon.taylor@pearsonlegal.co.uk.

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.