In my 30+ years as an independent financial adviser, I have come to understand that the start of the tax year is usually a good time to get into the market early.
If you wait till the end of the tax year, that means you have lost out on nearly 11 months’ worth of potential growth on the funds.
However, recent events in both the UK and the rest of the world may suggest that not only is getting into the market early good practice, but it may also be a great opportunity to take advantage of some unique opportunities.
This short article will help to explain why, as we approach a new tax year (April 6th), investors might want to consider getting into the market early and perhaps rethink where they are currently investing.
The UK market still has room for recovery
The first thing investors may want to look at in order to find these unique opportunities is the current value of the UK market.
Part of the reason is that even though it is improving, the UK market still hasn’t returned to last January’s height. In fact, it’s the only major world market that hasn’t fully recovered. The American, German and Japanese markets are all higher than they were last January, so the only major market that still has some potential to get back to where it was in January 2020 is the UK.
Also, due to a sell-off in the tech stock, America has started to come off the top of the market. This suggests that shares in the US market may start to drop a little in value if this trend continues.
Because of this, we have started to rebalance our clients’ portfolios. For example, we have started to take some of the profits that we made our clients in the overseas markets (which performed much better than the UK market last year) and bring them back to the UK for investment.
The world economy bounces back
Overall, we do expect the economy to start to bounce back around the world in the coming months. America has just signed off on a massive $1.4–1.9 trillion (depending on who you ask) stimulation package, which will boost not only the American economy but hopefully the world’s economy too.
And this may mean good news for the future growth of the UK economy and market.
Another reason why the UK market is currently looking like it might be good value is that Brits have managed to save up a great deal of money during the pandemic that’s waiting to be spent once the world goes back to the new normal.
Recently a client told me that you can’t book anywhere to stay in Cornwall. Apparently, it’s already booked out for the summer!
All of this money spent on hospitality, travel, holidays, restaurants, meals and shopping may well be a big boost to the economy, which may lead to an increase in profitability for most businesses. If profitability increases, the dividends increase, and that may push the share price up.
So it seems that we are in a situation where it’s potentially looking good for the new tax year ahead.
At Applewood Independent Ltd, we are certainly feeling very positive, particularly in the UK market for new investments.
If you are considering ISAs, pension contributions or any other investments, the UK market might potentially be worth looking into.
However, in order to take advantage of these new positives, I would recommend you find yourself a good independent financial adviser. A person who is experienced and knowledgeable, like the team at Applewood Independent Ltd, who will help to guide you in these matters so you can make the right decisions about your financial future.
More and more people are understanding that the gold standard of financial advice comes from an independent financial adviser, and the people who take this advice are potentially a lot better off in their financial affairs than the people who don’t.
I hope this was useful. Feel free to email me directly for any further information at firstname.lastname@example.org.
The views expressed in this article are those of the author and do not constitute financial advice. Applewood Independent Ltd is authorised and regulated by the Financial Conduct Authority. For financial advice designed for you and your specific circumstances, please contact the author using the contact details provided in this article or, alternatively, contact the Applewood Independent Ltd office on 01270 626555.
The value of an investment can go down as well as up. Past performance is not a guide to future performance.