Riding out market volatility The return of Donald Trump to the White House has meant his late-night social media posts have once again been rattling investment markets. Sudden movements in the value of shares and bonds – investment volatility – can be unsettling for even the most seasoned investor. Nobody wants to see their portfolio’s value take a rollercoaster ride. You could be tempted to retreat to cash and await calmer times. However, that presents another source of discomfort: you have to decide when to reinvest. A better approach may be to stay invested. As an old market adage says, what matters is time in the market, not timing the market. Like it or not, investment volatility is normal: markets do not move in straight lines and, at times, experience significant swings. If you’re a long-term investor, with a financial goal that is years into the future, you should focus on that distant point, not what happens – or is reported as possibly due to happen – in the short term. The long-term trend, not the short-term noise, is what you should follow. DIVERSIFY You can limit the impact of market volatility by having a well-diversified portfolio. It’s rare for every asset, country and sector to move in the same direction so, for example, if your US equity funds fall in value, your global fixed-interest funds may rise. However, diversification is not a one-off exercise. Market movements can mean that over time portfolio ‘drift’ can occur – the recent strong relative performance of US shares may mean your portfolio has become too heavily weighted in these assets. Ideally your portfolio should be reviewed and rebalanced each year to stop such a distortion creeping in. Beyond diversification, an adequate cash reserve prevents you being forced to sell when markets are down. After all an investment loss is only a loss when it’s realised. The key to avoiding real loss is to have enough instant access funds should you need them. One final tip: If you can – and in the 2025 media landscape, it is difficult – try not to become a 24/7 news junkie. It’s not good for either your emotional or investment health. ✣ The value of your investment and any income from it can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances. 2 As the new tax year arrives, the economic and political landscape has shifted since the new calendar year. While the Chancellor grapples with the challenges posed by disappointing growth and demands on the government’s resources, the return of Donald Trump in the US has heralded additional turbulence. In this edition we focus on making the most of the new tax year planning opportunities to shore up your finances. Understanding where your earnings will fall in 2025/26 in relation to your tax position is especially important. Part of assessing your financial wellbeing is also taking stock of your preparations for retirement. A surprisingly high number of people with fewer than 15 years to go until they reach their State Pension Age actually have no idea of the date they will receive it. Knowing how much money you will receive and when are critical for planning when, and how, you decide to retire. Whether you choose to buy an annuity should also be part of that planning. Overlooked by many following the advent of pension flexibility, better rates, and funding longer lives, have made them increasingly attractive. 03 The next rise in State pension age Nearly half of 54-64-year-olds don't know when they will receive their State pension. 04 Start your new tax year planning Early tax year planning can pay off. 05 Benchmarking a living wage The National Living Wage is a useful reference point for managing your retirement finances. 06 The case for early ISA investment Take time and do your research to make the most of tax-free saving in the new tax year. 07 Annuities lock in peace of mind Annuity rates are up, and are the only way to ensure a guaranteed income. 08 The lessons of March 2020 Five years on it's worth remembering the importance of preparing for the unexpected. In this issue... This newsletter is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this publication. The newsletter represents our understanding of law and HM Revenue & Customs practice. © Copyright 21 March 2025. All rights reserved. INVESTMENTS Credit: Javidestock/ Shutterstock.com Credit: nadia_if/Shutterstock.com Credit: gopixa /Shutterstock.com Credit: Dilok Klaisataporn /Shutterstock.com
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