10 steps to investment success this ISA season and beyond

7th March 2016


Adrian Lowcock, head of investing at AXA Self Investor outlines his 10-step plan which he believes will provide investors with a framework upon which they can decide where to invest this year’s money…

Know your goals

What do you want to achieve with your investments?  It is essential to know your short and long term goals and keep reviewing them and revisiting them each time you review your portfolio.

Understanding risk

Risk in investing is more complicated than most think.  This is because risk and our attitude to it changes over time.  If we are making money we are more likely to become confident and place greater trust in our own decisions.  Whilst when we are losing money we losing money we get fearful and panic which leads to making rash decisions such as selling instead of buying.  Learn to recognise your changing attitude to risk and rein it in, don’t let emotion drive investment decisions.


This is one way to manage some risk in your portfolio. By holding investments across a wide range of asset classes you reduce the risk of one area having too much effect on your portfolio.

Review your portfolio – Asset Allocation

Over time different assets perform differently; some will rise faster than others, while others will be falling. The overall effect is that the asset allocation of your portfolio will no longer look like it used to.   Over time these variations can significantly change the risk of your portfolio.

Review your portfolio – fund performance

This is the second second stage of a portfolio review. Look at whether the funds you have in the asset class are doing a good job or not. Every manager has periods of underperformance so it is important to understand why. Check the managers and fund objectives – do they match the actions of the manager?  A sign a manager has gone off the boil is when they change their approach it shows a lack of confidence in their processes.   Check each fund’s investment style and approach to risk. Ask does this fit with the other investments in your portfolio.

Consolidate Holdings

It is easier to monitor your portfolio if it is all in one place. Consider moving to one platform.  Re-registration between platforms is available so you don’t even need to sell. However some platforms will try to prevent you from leaving by imposing exit fees so check before you transfer.

Know your allowances

In the 2014/15 Tax year each adult can put up to £15,000 into an ISA which can either be placed into cash or stocks and shares. On April 6th it rises to £15,240(check figure).  For a monthly saver that means you can invest up to £1,250 per month and from April it will rise to £1,270, so make sure you increase your monthly contributions to reflect the new limit.

Get value for money

Shopping around for the right platform will save you money.  Some platforms charge a flat fee of 0.5% or more and have a host of additional charges.  Look out for incentives and offers.

Don’t hold too many funds

Diversification works up to a point, beyond which there is little, if any, additional gain, just a lot more work.  It becomes more difficult to identify what is driving performance of the portfolio. A typical portfolio should have between 10 and 20 funds, beyond this the holdings will not contribute significantly to performance.

Don’t follow the herd

Too many investments are made based on current trends and expectations, not what may happen in the future.  These trends tend to be overvalued and often short term in nature.  Instead invest in funds you understand which suit your goals.

Buy low sell high

It is human nature to avoid investing in stock markets when they have fallen or risk seems the greatest. Buy low sell high is an obvious mantra but few investors actually do it. When markets are low their confidence is also low so they wait. Don’t follow the herd, buy low.

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