Maggie Fleming is an independent financial adviser at Isis Financial Planners - the UK's leading, truly independent financial advisers serving the UK's gay and lesbian community.
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I must say that I’m not one that particularly looks forward to the New Year with much enthusiasm. This is mainly because it heralds the start of a very busy time for financial planners. The first big date is 31 January by which time all tax returns and monies must be paid to the Inland Revenue. Alongside this comes the last opportunity to make pension contributions for the 2003/04 tax year and like tax returns, some always leave it to the last minute, creating panic for both them and us.
The next big date is the end of the tax year on 5 April and what the financial press refer to as the ‘ISA season’ – the investment managers’ own version of Christmas. In recent years many have avoided investing in stocks and shares ISAs having seen poor returns from the markets.
One thing I notice is what short memories we all have. I know one gay couple who have several investment properties and are in the process of buying another one. Mortgaged to the hilt but when I remind them that the property market crashed 15 years or so ago, leaving millions of people with ‘negative equity’, and suggest that it might be a good idea not to have everything they own invested in property, they think I’m insane. Since they started investing in bricks and mortar, property has done well and signs of a slow down haven’t put them off.
Take another friend of mine. Four years ago, he was one of the most enthusiastic exponents of the ‘tech boom’ – tech had changed the world and the boom would go on and on. When the tech bubble burst, he was a much poorer man. But not, alas, wiser – he rang me just the other day to say he was putting everything he could afford into a Far Eastern fund because you couldn’t go wrong! Where did I hear that before?
So, when it comes to investment, what is the best approach? I’m afraid it doesn’t sound very exciting (unlike tech and Far Eastern stocks), but the best approach is to diversify. By that, I mean that you should not put all your eggs in one basket – be it property or stocks and shares or whatever. Depending on your own attitude to risk you should split your investments between the four major asset classes – cash, equities (stocks and shares), bonds and property.
Equities markets worldwide have perked up and the recovery seems to be under way. This may be the time to invest in equities. You can invest up to £3,000 in a mini equities ISA (together with £3,000 in a mini cash ISA) or, alternatively, you can invest up to £7,000 in a maxi ISA. But if you want an ISA for the current tax year, you will need to sort it out soon. You should contact an independent financial adviser, who can recommend a mix of funds that suits you. And please, don’t wait until the very last minute.
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