Give your portfolio an MoT as Isa deadline nears
WITH the end of the tax year creeping ever nearer and tax-friendly investment allowances to be used or lost, financial advisers are urging investors to ensure their portfolios are in good shape before putting more money into markets.
Jason Hollands, director at wealth manager Tilney Bestinvest, says investors should give their investments an ‘MoT’ at least once a year, checking to see if they are still happy with the performance of individual holdings and their exposure to specific assets and stock markets.
He says: ‘Different investments – whether bonds or shares – and markets don’t move in tandem. This inevitably means that a well constructed portfolio can drift over time. Without regular rebalancing and adjusting to take account of the outlook, an investment approach originally conceived as low risk can mutate into a high risk one.’
Hollands believes the next couple of months present as good a time as any to review investments because it is when many investors utilise any unused Isa allowance ahead of the end of the tax year. Any new investments bought, he says, should complement existing holdings and fit in with an investor’s overall objectives.
In the current tax year, adults can invest up to £15,000 in an Isa – £30,000 between a husband and wife – while £4,000 can be invested for a child via a Junior Isa. Contributions can go into shares, cash deposits or investment funds. Unused allowances cannot be rolled over into the next tax year, though a higher limit of £15,240, or £4,080 for children, kicks in from April 6.
Keen Isa investors Scott and Hayley Sanderson from Cranbrook, Kent, keep a close eye on investments they hold through an online fund platform. They change their investments when they want and are voracious readers of investment newsletters.
Scott, 43, is a partner in a small investment firm, while Hayley, 42, is a children’s yoga teacher. They have two daughters – Molly, 11, and Evie, eight.
Both Scott and Hayley have Isas and Scott says: ‘We tend to hold investment funds. We look for those run by long-established management teams.
‘We have got money invested with some quality investment fund companies such as Aberdeen, Axa and Schroders.’
Tilney Bestinvest has just published its latest ‘spot the dog’ guide. This is a report that helps investors to identify serial underperforming funds that probably should be avoided or jettisoned.
A free copy is available at bestinvest.co.uk/dogs.