Ensuring you keep your costs low is another way you can make the most of your money.
“A pound not spent in fees is a pound that can be reinvested for future growth. And here’s one more that resonates with me as I move towards retirement. Every pound that I don’t spend on, for example, an unused subscription is a pound that can stay in my pension pot, keeping it bubbling away for my later years. As the ads say, every little helps.”
Learn more about putting time on your side in our principles for good investing.
2. Prioritising my rainy-day fund – Emma-Lou Montgomery
Facing a potential boiler breakdown, Emma-Lou is thinking about contributing more to her rainy-day fund.
“It all started when I was suddenly staring into the abyss and looking at £3,000-plus for a new boiler. Sure, we all love to joke about the proverbial washing machine breakdown or make a smart quip about having to stump up for a new boiler or some major car repair, but it isn’t until you come face-to-face with the reality of having to hand over a “spare” few thousand pounds on something so mundane and so pressing that it comes into sharp focus,” said Emma-Lou.
“I have some rainy-day savings, but they’re not meant to be touched. They’re the holy grail of financial wellness – there as a comfort and a cushion should I ever – perish the thought – need them. And the prospect of dipping into them made me realise just how shallow my rainy-day fund was.”
“Thanks to some nifty work on the part of my emergency heating engineer (a perk included with my home insurance) financial crisis was averted – this time at least. But coming so close to having to dip into my hallowed rainy-day fund made me realise I need to seriously beef-up what I’ve got saved.”
It’s important to have an easily accessible rainy-day fund. Find out more about investing in cash and cash-like funds to make your money work harder.
3. Boosting contributions to my pensions – Ed Monk
Ed offers two resolutions for the new tax year. First, he’ll divert a higher share of his regular savings into pensions.
“I’ll still save into an ISA and maintain some cash for a rainy day, but I’m getting to an age when the point at which I’ll be able to access my pension – in about 14 years – doesn’t seem as impossibly far off as it once did,” said Ed.
Fidelity recently published figures laying out the substantial uplift pensions can provide your savings via tax breaks – they really are the best place for your long-term savings in most circumstances.
But Ed warns that tax rules can change, so he aims to take maximum advantage of the system while he can.
Learn more about investing in a Self-Invested Personal Pension (SIPP) and the benefits of investing regularly.
4. Spring clean my portfolio – Ed Monk
Ed’s second resolution for the new tax year includes doing a thorough spring clean of his portfolio.
“I plan to shift out of large multi-asset funds into a stable of low-cost funds and ETFs. In the process I’ll introduce some more undervalued assets. At the margins there’ll be a little less US tech and a little more exposure to smaller companies,” said Ed.
If you’re curious about low-cost funds, consider checking out some index fund ideas from our Select 50 – funds selected by experts.
5. Talk money with my children – Becks Nunn
“My oldest daughter turns 16 this year. Up until now, any chats we’ve had about her Junior ISA have been pretty hypothetical… the reality of her getting her hands on her savings at 18 felt so very far away. Yet in two short years, that’s exactly what will happen,” said Becks.
“As her parent, I feel it’s my responsibility to give her the tools she needs to make smarter decisions about her financial future. My new tax year resolution is to talk her through our principles for good investing pages, to plant the seed (earlier rather than later) that she has the potential to do something really meaningful with the money we’ve steadily saved for her over the years.”
Becks said that there are some great charts that will really speak to her daughter as it visualises the power investing can have – particularly around the benefits of starting early and how saving even small amounts can make a big difference.
6. Ignore fear of missing out (FOMO) urges – Richard Evans
“One thing I will do differently in future is consider selling anything that has increased in value very quickly. In my past life as a share tipster, I did on occasion recommend a share that went on to double in a year. Hardly ever did I then say “sell”. Invariably I wish I had,” said Richard.
“Why? There are a couple of reasons why a share (or investment trust or fund) might double in value” said Richard.
“Perhaps it was hugely undervalued in the first place. But even if it was, a doubling in price is very likely to have done away with the earlier undervaluation. Perhaps now the asset is now merely fairly valued – in which case banking your quick windfall makes perfect sense.
Or perhaps the asset was reasonably valued when you bought it and is now very overvalued; here the case for selling is clear cut.
Another possibility is that the company’s fortunes have for some reason drastically changed for the better in very short order. While this does happen, it is rare and you should be able to identify when it has. An example would be Nvidia, whose chips are in effect essential for anyone who wants to put AI to good use.
If I’m lucky enough to have to deal with this kind of situation in real life, I’ll base my decision on what happened to the earnings multiple while the share price was doubling. If earnings have also doubled, and the price-to-earnings ratio is therefore unchanged, I may well be inclined to hold on to the stock. If on the other hand the rise in the share price is largely down to an increase in the earnings multiple, I will force myself to sell and ignore any FOMO urges I may feel to hold on for more.”
Taking the emotion out of investing is a challenge for even the most experienced of investors. Here are 3 thinking errors that cost you money.
7. Simplify my portfolio – Nafeesa Zaman
I recently wrote an article about how many funds to hold in a portfolio. The conclusion is that there’s no right or wrong answer. It’s actually dependent on a number of factors, including the number of funds you’re comfortable monitoring in your portfolio, your investment objectives and risk appetite.
Currently, my stocks and shares ISA is split across four funds and five different stocks. My new tax year resolution is to whittle these choices down to two funds and two stocks – this is a number I’m more comfortable monitoring.
I’m also taking this approach with my pension, which really is a long, unwieldly list of funds. I’d like to sort through these funds and simplify my pension.
Of course, I’m still keen to prioritise diversification in my portfolio, but in the long-term managing a smaller selection of funds is more comfortable.
Find out if your portfolio is diversified enough here. If you’re a Fidelity client, you can take advantage of the ‘account holdings report’. This shows where in the world you’re invested, which assets you’re investing in and how your money’s performing. If you’re not saving with Fidelity, you can open an account and make the most of your tax allowances.