Review your finances and get set for a prosperous 2024!
Whatever your other resolutions for 2024, it pays to make time for an annual review of your finances. ‘Even small tweaks can have a big impact down the line,’ says Paul Willans, Managing Director of AJB Wealth in Alresford, Hampshire. Here are eight key points to consider:
1. What do you really want?
Take time to consider your broader goals, such as a career change or when you’d like to retire. This forms the basis for a financial plan, and allows you to explore possibilities with your wealth manager. At AJB Wealth, we use detailed cashflow analysis to illustrate likely outcomes in different scenarios. This enables you to make more informed decisions about your investments and other aspects of your life.
2. Evaluate your investment portfolio
Are your investments being effectively managed and performing well compared to relevant benchmarks? Are appropriate changes made in response to market conditions and personal circumstances? Do management fees reflect the service you receive? AJB Wealth can provide an evaluation of your investment portfolio, taking account of your situation and your goals, as well as the broader economic landscape.
3. Do a money MOT
Do an annual or six-monthly check on any borrowing and other regular bills to ensure that the terms are still competitive. This is particularly true with energy and phone tariffs and when renewing insurance policies. Remember that if your circumstances have changed, you may be eligible for better deals. For example, you may be able to access a lower fixed rate deal on your mortgage.
4. Can you reduce your tax bill?
Careful tax planning is a must for married couples and civil partners, particularly when one partner has a far higher income and falls into a higher rate tax band. To take full advantage of tax-free allowances and lower rate tax bands, you may need to rearrange who owns which investments. This can reduce your overall tax bill.
5. Pension need attention?
Pensions are still a tax efficient way of saving for retirement, especially as the lifetime allowance is due to be removed in April 2024. One possible option is to opt for salary sacrifice, where you agree to reduce your salary and your employer then pays the difference into your pension. Thereby reducing the overall amount of Income Tax and National Insurance paid.
6. Capital gains tax (CGT)
The annual amount of CGT exempt from tax is being gradually reduced. This may be payable on any profit made selling an asset. Until 6 April, up to £6,000 of gain is exempt from tax. Next year the exempt amount falls to just £3,000. Therefore, you should consider whether it would be sensible to crystallise any available gains, so that the exemption can be used before the end of this tax year, and again in 2024/25.
7. Maximise your ISA contribution
Individual Savings Accounts (ISAs) shield your investments from tax, and are particularly useful given the changes to Capital Gains Tax exemptions mentioned above. You can contribute up to £20,000 in the 2023-24 tax year, either from cash or by transferring existing investments into ISAs.
8. How much should you spend?
Make sure you’re striking the right balance between spending and investment. ‘We use comprehensive cashflow analysis to create a robust strategy,’ says Willans. ‘We want you to enjoy life to the full in the present while safeguarding your financial future.’
At AJB Wealth, our experienced and highly qualified team is well placed to work with you, and your other professional advisers, to help you achieve financial efficiency and security. To arrange an initial consultation, please book a meeting, or call us on 01483 774 070.
Important: The content of this bulletin is for general consideration only, and does not constitute advice. No action must be taken, or refrained from being taken, without advice. This company accepts no responsibility for any loss occasioned as a result of any such action, or inaction. You are also reminded that investments can fall, as well as rise, and, in the event of early encashment, you may receive less back than your original investment.