Originally published at: Your mid-tax year portfolio review – InvestEngine Insights
As of October 5th, we’re now half way through the tax year. With six months to go before the new tax year gets underway, why not give your portfolio a spring clean without any of the pressure of a deadline.
When you invest for the long-term, time in the market beats timing the market, so we see little reason to leave any top ups or changes until the last minute (as tempting as it can be to put portfolio maintenance off!).
So, let’s dive into some key questions to ask yourself and determine whether your portfolio is still up to scratch.
Are you investing regularly enough?
Regular, little-and-often investing is one of the easiest ways to keep your portfolio ticking over. You don’t have to worry about dumping a large lump sum in at the ‘wrong’ time and you can set an amount that’s comfortable every week, fortnight or month.
Nearly a third of all InvestEngine clients are using Savings Plans to automate their investing. We won’t get into the magic of pound cost averaging in this post but you can read all about it here.
With a Savings Plan, you can incrementally get your portfolio into a much healthier position and use more of your yearly ISA allowance with ease, give it a try.
Are you sitting on too much cash?
With inflation as high as it is, cash savings are by no means the safe haven they’ve traditionally been considered as. Over time, in fact, sitting on cash is a surefire way to see the value of your savings dwindle (unless you have an incredible interest rate, of course).
Putting more into markets could give your cash the opportunity to grow. Alternatively, if you want a lower-risk way to access potentially higher returns, you could consider a Money Market ETF to strive for bank-beating returns. We offer a couple of different options on our platform so just search ‘money market’ in our ETF range to check them out.
Also, if you’re sitting on cash for the accessibility of it, this isn’t a problem either. With InvestEngine, your cash isn’t locked away and you can access it whenever you need to – just give us a little bit of time to make the transactions.
Is your portfolio still well balanced?
When people put their portfolios together, they often put a lot of thought into the initial composition and then leave it alone for the foreseeable future. Over time, however, portfolio weights can shift as some investments grow more than others.
This means that, after an extended period of time, the balance of your portfolio can look quite different to when you originally set it up.
So, you may need to rebalance your portfolio to ensure it’s still a good fit. Luckily, you can do this in just one click by heading to your portfolio, finding the options tab and clicking ‘Rebalance portfolio’.
Or, you can give our managed portfolios a try and we’ll take care of all things portfolio maintenance on your behalf.
Are you paying too much in fees?
It’s 2023; investing shouldn’t be expensive anymore. What a lot of people find when they analyse their investments is that they could be getting a much better deal elsewhere.
Well, InvestEngine DIY portfolios are completely commission-free. ETF costs apply (they’re normally very small) but we don’t charge anything on your returns so you can keep more of what you make.
Over the long-run, overpaying in fees can have a significant detrimental effect on your bottom line. If you think about it, you’re not just losing cash on the fee itself, you’re losing any potential returns that those fees could make if they stayed in your portfolio. We’ve talked about the power of compounding interest at length, but keeping more of your money in your portfolio is important.
Equally, we think it’s important that anyone can access a Managed investment portfolio if they want or need to. Our team of experienced portfolio managers will take care of your investments for as little as 0.25% a year (again, small ETF costs apply too). In real terms this means we charge £2.50 on every £1,000 you have in your portfolio, over a year.
So, before you lose any more unnecessary cash to extortionate platform fees, check any other investments you have to make sure you’re not overpaying. You can read more about our fee structure here.
Does your portfolio still reflect your goals?
This can be a tricky one but it’s important to review whether or not your portfolio still fits with your long-term plan. Situations change and you want to check that you’re on track to achieve your goals.
The general rule of thumb is that, the longer you have to invest, the more risk you can take on and absorb. This is because, if you have a 20-year timespan, one bad six month period shouldn’t matter too much over the long-run. On the other hand, if you may need access to your cash soon, a less risky portfolio is usually a better choice.
So, whether you’ve decided to save for a house and need the cash in a few years, or you’ve decided to start putting money aside for your children’s university fees – you might want to adjust your investments accordingly.
If you have a Managed portfolio, it can be worth periodically reviewing your risk level with us. Again, this isn’t something you need to do too regularly, but this mid-tax year spring clean could be a good opportunity. Why not reanswer our questionnaire and we’ll see whether your portfolio still fits.
Investments elsewhere not working? Transfer to us
Maintaining your InvestEngine portfolio is easy with our set of investing tools.
If your investments elsewhere aren’t up to scratch, however, it’s easy and free to transfer a portfolio to us. All you have to do is:
- Log into your InvestEngine account
- On ‘My dashboard’, open your ISA portfolio (or create one) and you’ll see an option to transfer an existing ISA
- Confirm your details and the details of the ISA you want to transfer
- Sit back and relax
Capital at risk. The value of your portfolio with InvestEngine can go down as well as up and you may get back less than you invest. ETF costs also apply.
This communication is provided for general information only and should not be construed as advice. If in doubt you may wish to consult a professional adviser for guidance.
Tax treatment depends on personal circumstances and is subject to change, and past performance is not a reliable indicator of future returns.