Like many people, I tend to start the New Year in ‘review and improve’ mode. As soon as the Christmas decorations are packed away, I start cleaning and decluttering every room in the house. The self-improvement starts in earnest with porridge for breakfast every day, packing healthy lunches for work and going to the gym as often as I can. Next on the list is the annual dusting off of my finances and reviewing my bills to see if I’m paying over the odds for anything.
By the end of January, I’m slightly less intense (much to the relief of everyone around me), having talked myself back into my usual modus operandi. After all, the house is clean enough, Raisin Wheats are not the food of the devil, and the odd take-away isn’t going to kill me. The 8am weekend workouts will have turned back into lie-ins (well, I deserve it), and the Sky vs Virgin decision can wait until next month.
One area of my finances I probably haven’t reviewed enough over the years is my savings and investments. Fortunately, I managed to get on the housing ladder in my mid-20s (back when such things were possible), I’ve always joined employers’ pension schemes as early as possible and maxed my contributions, and I’ve even patted myself on the back for habitually saving into an ISA. On the face of it, I’ve done all the right things.
Or have I? Since joining Wealthify, my eyes have been opened to a depressing reality. With UK interest rates at rock-bottom since 2009, my cash savings, like millions of others in the UK, have been earning next to nothing. Admittedly, I haven’t been as proactive as I could have been, transferring each year to chase the best rates, but in reality, there’s not been a great deal out there to chase. Consequently, all this time I’ve been working hard, my nest egg has been sitting idle, earning me a pittance in returns. To add insult to injury, indications are that inflation is on the rise, threatening to reduce my already-meagre returns to nothing – a prospect that, in the past, I have conveniently brushed aside for my own sanity.
So, this Spring, when I dust off my trainers in preparation for that half marathon (really?), I’m going to give my savings a bit of a workout too. I’ll keep a small rainy-day fund in a cash ISA to dip into when I need it, but I’m also going to think about the ‘bigger picture’ and put the rest to work in an investment ISA. Provided I hold my investments for the longer term, they should provide better returns than my cash savings, setting me in good stead for my future savings goals. You never know, the satisfaction of ticking something off my to-do list might even inspire me to go for that half marathon after all…watch this space!
Past performance is not an indicator of future growth. With investing, your capital is at risk and you might get back less than you put in.
The tax treatment depends on your individual circumstances and maybe subject to change in the future.