Prioritise peace in your life: extend the Marie Kondo tidying craze from your home to your finances.
Have you ever looked at a room in your home – or even at your office desk – and wondered how you accumulated so much stuff? You might well remember when you acquired each item, but the questions of why you did so and whether you still need it can be more awkward to answer.
‘Seemed like a good idea at the time’ and ‘No, not really’ could be the embarrassing truth for many of us.
What applies to the curiously coloured article of clothing or the novelty mobile phone holder can also be relevant to excess baggage in your personal finances. Working out what investments, savings and insurance cover you have, why each one is there and whether you still need it can be a daunting, but ultimately rewarding task. For example:
- Do you have any old ISAs – perhaps they were even once PEPs – bought for their league table topping funds and then forgotten when past performance proved to be no guide to the future?
- Do you have cash invested in bank or building society accounts opened more than a couple of years ago?
- Are your investment funds held on a single platform or spread across several platforms, or are any of your funds held directly with the asset managers?
- Do you have any pension plans where contributions have long since ceased and perhaps the provider has closed to new business?
With just a little tidying, we can help create some coherence to your finances. The process can have a range of benefits, even if it is simply to bring your investment funds under a single umbrella. Charging structures now often favour bringing together holdings in one place rather than spreading them over several providers or platforms.
A consolidated approach can also make it easier to see the bigger picture and carry out any necessary adjustments. For cash deposits, Financial Conduct Authority research from 2018 showed that accounts that were more than two and half years old typically paid less than half the interest rate offered by newly opened accounts.
The value of your investment 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 fi t in with your overall attitude to risk and financial circumstances.
The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.