Five New Year’s resolutions for investors

1. Make use of tax efficient allowances

The tax net continues to close on investors following the Autumn Budget, and with important allowances frozen or cut, things had already been getting harder.

The income tax personal allowance, the slice of income on which no tax is paid, is set to remain at £12,570 until the 2030/31 tax year. Meanwhile, other important allowances such as the dividend allowance, the personal savings allowance and the starting rate for savings are also frozen.

Elsewhere, investors will see rates of tax on dividends increase from the 2026/27 tax year starting next April by 2 percentage points for the basic and higher tax rates. 

This could increase tax bills for those holding investments outside a tax efficient Individual Savings Account (ISA) or Self Invested Personal Pension (SIPP) and underlines the importance of using these wrappers as far as possible. There’s no tax on investment income or gains within these and you won’t have to worry about the reporting of investment returns from interest, dividends or profits.

Using tax efficient shelters for your assets is like applying sunscreen to your skin when it’s hot – essential and no trouble to apply.

2. Ensure your portfolio is diversified and rebalance if necessary

Diversifying, spreading your money between different investments and asset classes, can lead to a less bumpy ride for your portfolio. If some of your investments are performing poorly, others could be making up for it, and it’s usually too late to change things amid market-moving news.

Diversification also shouldn’t be taken for granted. Just as many of us might put on a few pounds over Christmas, portfolios may have been swelled by exposure to certain areas at the expense of others. Trimming back these and topping up the laggards may be sensible as it helps ensure a more consistent level of risk across your investments over time.

That’s because the winners will increase as a proportion of the portfolio and performance will become progressively more dependent on them. The laggards, assuming well-chosen and suitable for your needs, might perform better at a future point of the market cycle – perhaps when the recent outperforming areas don’t do so well.

Hopefully, you have some idea of what you want your portfolio look like in terms of its make up – how much in different asset classes and geographical areas and so on – what we call ‘asset allocation’. The process of rebalancing aims to get you back to that starting point after investments have performed differently.

3. Get your tax return finalised

It’s very important to get on with your tax return if you haven’t already – if you need to complete one. 

According to HMRC, 4,409 people completed their tax return on Christmas Day last year and 40,072 filed their tax return over the Christmas break. You’ve got until 31 January, but it’s worth getting ahead of the deadline so you can breathe easy and ensure you don’t risk getting a fine because of any last-minute hiccups.

4. Consider whether you are holding the right amount of cash

For an emergency fund and for any near-term planned spending there is no alternative to cash. For shorter term needs it’s just not worth taking the risk of market volatility.  Three to six months expenditure is a good target buffer for most people to help protect them from unexpected emergencies. And for any requirements less than five years away, it’s generally best to hold cash instead of investing in order to be certain you can meet them.

Yet some people may be in danger of keeping too much in cash especially now interest rates are falling back. Although it’s currently possible to generate an inflation-beating return, especially before tax, there is a danger of not fully harnessing the wealth-building potential of investing. Although capital is not secure, shares and other assets have a much better record of growing your money over longer periods.

With rates on cash likely to fall further a bit as 2026 unfolds, it could be an opportune time to check your balance between the two.

5. Get some professional help if needed

You don’t have to face quandaries surrounding your investments and wider finances on your own. Whether you have a specific question, would like your current portfolio assessed for imbalances or are looking for someone to help you create a detailed financial plan, we can help.

For more complex financial decisions you may wish to consider full, regulated financial advice. A financial adviser can help assess your existing finances, whether you are on track to meet your retirement goals and help structure your affairs as tax efficiently as possible. Alternatively, if you simply have some questions that need answering, to help you think clearly about your next steps, our Financial Coaching can provide the confidence you need.