19th March 2014 by Peter Chadborn
Once a year we renew our car insurance and our car’s MOT and we generally know when our house insurance falls due. There are enough finance-related anniversaries in the year that even the financially apathetic should have a reason to think about general money planning matters. For many people this is the end of the tax year and that’s because there are many use-it or lose-it tax breaks at that time. As Financial Advisers it is our busiest time of the year because the end of the tax year is either a logical time for clients to make sure they have utilised their ISA allowances or made pension contributions but it’s also busy because it is a deadline and it easy to put off action until a deadline.
In the same way an Accountant will tell you that January is their busiest time of year due to the Self-Assessment deadline.
Ideally you don’t leave your financial planning until the last minute. I suggest picking a date in the calendar to review your financial affairs. Whether you do so by getting advice or DIY it is prudent to make a diary entry for a financial overhaul, or a sense-check of your plans. If not, the years can drift past and it just becomes a round-to-it job. For some people this date picks itself. It may be their company’s business year end or it could be bonus season. I like to pick the end of the calendar year because it’s a natural time of reflection and forward thinking. Whatever makes sense for you I’d recommend sticking it in your diary so it becomes routine and you avoid deadline panics.
But what can you do if you’re up against a deadline? Take stocks and shares ISAs for example.
Making investments is not, or should not be a lucky dip. You need to make an investment decision which incorporates your risk profile, your investment horizons, the strategy and structure of the investment and its charges and performance. These decisions should not be taken lightly but what should you do if it’s the 11th hour and there are more decisions to be made than there is time to make them? There are genuine risks in rushing an investment decision just to avoid missing a deadline so what I’d suggest if you find yourself in this position is to play it safe; make the ISA investment but do so in a very low risk, low volatility fund. You can then switch funds at a later date to whatever fund/s are deemed appropriate. If you invest via an investment platform or wrap then in most cases a fund switch is free so you’ll have met the deadline, invested at low risk for damage limitation, and bought yourself time.
As an example I’d suggest M&G Short Dated Corporate Bond fund.