When so much is happening around us, it’s great to see some people taking control of their financial future. And building their financial resilience.
Between April and June this year, households saved a record 29.1% of their disposable income. They used the money to clear £11.8 billion from their credit cards and other loans.
To help, we asked a group of our financial advisers what investors could consider doing now to take control of their finances. While each had their own view, two common themes came out.
This article isn’t personal advice. All investments rise as well as fall in value so you could get back less than you invest. If you’re unsure, please ask for advice.
Revisit your financial plan
Without even thinking about it, most of us will naturally organise our daily lives. Unfortunately, that’s not always the case with our financial future. This means we don’t plan how we’ll reach our financial goals. Or, in some cases, there aren’t any goals at all.
Creating a financial plan can feel daunting at first. Lots of us don’t like to think about the future and getting older. But it’s important to have one. It will give you something to aim for. And you’ll know if you’re on track.
Start with your goal, and add in any targets and life events along the way. Then ask yourself a few questions:
- When will you need the money, and how long will it need to last?
- How much risk are you comfortable with?
- What are you aiming for – growth, income or a mixture of the two?
There are no guarantees when looking to the future. Investments and any income they pay will go up and down in value, so you could get back less than you invest. It’s sensible to build in a plan B to protect yourself if things don’t go as expected.
Read our guide to financial planning
Review your savings and investments
Reviewing and, if necessary, making changes to your portfolio is an important part of investing. To avoid nasty surprises, we suggest reviewing your portfolio at least once a year.
But recent events could mean it's worth reviewing again, with your up-to-date financial plan in mind.
Stock market movements can affect the balance of your portfolio. For investors relying on their investments for income, coronavirus brought another unwanted challenge. Lots of companies have cut their dividend payments in the last 6 months and at the moment it’s not quite clear when they’ll be coming back.
A good place to start is by checking you have a good mix of investments in your portfolio. Spreading your money across different assets and markets, diversification, helps manage your risk. It also makes sure you don’t have all your eggs in one basket.
So no matter how the stock market is doing, you should at least have something that’s doing well when others aren’t performing so well.
The next step is to make sure your investments are right for your objectives. Are they giving you the growth or income you need?
For example, as you get closer to retirement, you might decide to scale back some higher-risk investments and focus on less risky ones to help generate a sustainable income.
And finally, don’t forget your cash savings.
It’s important you don’t ignore your savings, or forget the importance of having money available quickly in case of an emergency. You don’t want to have to make sudden changes to your investments to pay for an unexpected bill.
Getting financial advice from HL
Have the changes going on around you caused concern? Maybe there have been changes in your own life which mean you need a different financial plan. If you’re not sure which way to turn, our financial advice service can help.
If you’d like to talk to us about financial advice, our advisory helpdesk is your first port of call.
This free, no obligation call is to help you understand:
- The extra support we offer
- Why our expert financial advisers could be the answer
- How financial advice works, including the benefits and charges
Our helpdesk won’t give personal advice on this call. If you decide financial advice is right for you, an adviser will be in touch within two working days.