Six ways to spring clean your investment portfolio

It’s that time of year, where many of us will be busy sprucing up our homes or gardens, but it’s also a great time to give your investment portfolio a little TLC. Regularly reviewing your investments can help keep them on track and aligned with your financial goals. 🎯 

Spring is a great time to do this, as you may be making use of your pension and ISA allowances, and so already have some investment decisions to make. There’s no need to make changes simply for the sake of it, but you might find a few holdings in your portfolio which leave you scratching your head as to why they’re there. 🤔 

So grab a coffee, maybe put on some light background music and let’s dive right into these six steps to freshen up your finances for the new tax year.  

1. Has your personal situation changed? 🔃 

First things first, take a moment to reflect on any changes to your personal situation. Maybe you’ve tied the knot, welcomed a new family member, or moved house. These financial milestones can impact your money needs and risk tolerance when investing. 

Have a think if anything has changed personally, how this might affect your attitude to risk, and whether your portfolio is still a good match. 💕 

2. Has your portfolio become bent out of shape? 🍌 

Over time, market ups and downs can throw your portfolio out of balance. What we mean here is sometimes one investment or asset class can outperform the others, which can skew your original investment mix. 

For example, imagine you had invested 50% of your portfolio in the UK stock market and 50% in the US stock market five years ago. Today, if left untouched, that portfolio would be approximately 60% invested in the US and around 40% invested in the UK, because the former has performed so much better than the latter. 😲 

So, it’s worth having a look at your split every so often. After a review you might be happy as it is, but at least you would have made a considered decision, rather than simply letting the portfolio split be totally dictated by market movements.  

Most investment platforms offer handy tools to help you easily monitor and adjust your portfolio's balance. 🔧 

3. Have you got any poor performers? 👎 

Take a closer look at your portfolio and identify any long-term underperformers. Don’t be hasty here though, it's normal for investments to have ups and downs. But if a fund consistently lags behind its peers, it might be time to consider a change. 🔃 

Do your homework on your investments and maybe consider swapping out poor performers for more promising options. It’s a good idea to consider things like fund fees here too, as over time high fees can add up and eat into your gains. 

4. Is the investment still a good fit? 

As well as inspecting performance, it’s worth reminding yourself why you invested in each asset in the first place. Has there been a change in a fund’s management or strategy? Have your thoughts or ideas about an investment changed? Ensure your investments still align with your goals and beliefs. 💭 

5. Have any new ideas or opportunities cropped up? 

A portfolio review is a decent time to scout around for new investment ideas, which might replace funds or stocks you’re selling. Maybe there are some emerging trends that have caught your eye, or a fund that’s impressed you with performance.  

With Dodl, it’s super simple to explore new areas for investment, via the themed investments. So why not have a browse, you might find something that tickles your fancy… 🔍 

6. How can I reduce my tax bill? 

The final piece of the puzzle is to make sure your portfolio is invested as tax efficiently as possible. Now that we’re well into the new tax year, your allowances have reset, so there’s an opportunity to shelter a lot of investments from capital gains and income tax.  

With recent reductions in capital gains (£6,000 to £3,000) and dividend allowances (£1,000 to £500), tax-efficient investing has become even more crucial. So, make the most of your ISAs to help minimise your tax bill. 💸 

A little spring cleaning can go a long way in keeping your investment portfolio healthy and aligned with your financial goals. If you’re still not making the most of your allowances, why not open an account? 

 

Get started today

 

If you’ve got any questions, get in touch via the app. The team will be happy to help! 📲 

🔔 Always remember, the value of your investments can go down as well as up. Dodl doesn’t give advice, so if you’re unsure about investing, it’s always best to speak to a financial adviser. ISA and tax rules apply.