2024 was, generally speaking, a positive year for investors. All major markets saw growth across the year, driven in no small part by the major tech companies pushing the boundaries of AI, among other things.
As 2025 gets underway, we’re encouraging investors to use January as a time for organisation, reflection and maintenance of their portfolios. With most of us considering what changes we’d like to make in the new year, financial New Year’s resolutions should be on your list.
The single biggest change you can make to your finances is to start investing your cash. You could be missing out on growth by letting your cash sit in low-interest bank accounts. Start investing today (capital at risk).
Put your cash to work
Inflation was yet again one of the top stories of the year from an economic perspective, after dominating headlines in the year or two prior. Inflation has come down since its peak in the fallout from Covid-19, but it’s still lingering above the Bank of England’s 2% target. UK inflation reached 2.6% in the 12 months up to November, its highest level for eight months.
Investors need to find ways to grow their cash so it doesn’t have its value eroded away. Naturally, we recommend investing as a tool to grow your wealth and fight the effects of high inflation. Whether it’s money market ETFs – which can still offer investors a targeted 4.7% return on their cash – or a broader ETF portfolio, there are opportunities out there to maximise your cash.
Keep looking to the long term
2024 was a very positive year for markets, but long-term investing is about thinking in 5-10 year periods, rather than focusing too much on any single year. For this reason, it’s important to remember that volatility can strike markets for all manner of reasons, but to investors it shouldn’t be a reason to panic.
As we ended the year, with interest rates coming down in both the US and the UK as inflation eases, we began to look ahead to what 2025 has in store. One lesson to take is that planning for the short-term is difficult and that maintaining a long-term view of investing is an important part of your financial planning.
We’ve written before about the importance of thinking long-term and remaining invested during any turbulence that might occur. Particularly with ETFs and well-diversified investment portfolios, selling when you’re in a dip is a surefire way to crystallise any losses and miss out on any recovery.
Market turbulence is normal – if we see any in 2025 (it’s always possible that we will), remember to stick to your guns.
Consider your options
With major providers occasionally making changes to their fee structures, it’s important for investors to consider their options as we head into 2025. You could be paying fees that you might otherwise avoid elsewhere, so take some time to look at your portfolio’s fee structure and explore options with other providers.
We recently removed our SIPP fee, giving investors back their 0.15% per year. It was a low fee, but over the long-term even the smallest figure can have an impact on your portfolio’s value. Take a look at how InvestEngine’s fees compare. It’s also important to check you’re not paying any unnecessary trading fees (we don’t charge these) and that you won’t be stung with any considerable withdrawal fees (again, none here) once you access your portfolio after it’s grown.
Invest regularly
Probably the most important resolution you can make is to start investing regularly. Markets may rise and fall but consistently topping up your portfolio is an easy way to keep it growing over time.
Pound cost averaging is a tried and tested investment strategy and our Savings Plans make it easier than it’s ever been to take advantage of it. You simply set the amount you want to invest and how often and we’ll handle the rest.
Savings Plans make use of our AutoInvest feature, which takes any cash you’ve accumulated in your portfolio and invests it automatically in your chosen portfolio. This means you don’t have to worry about unused cash building up in your account and missing out on any potential returns. If there’s one change you make in 2025 to your financial habits, regular investing should be it.
Review your investments
Part of investing is periodically ensuring that your portfolio is up to scratch. It’s fine to practice set-and-forget investing, but this doesn’t mean never checking in and making adjustments.
Circumstances change – inflationary pressures, global socioeconomics, your personal financial situation or long-term goals – these are all factors to consider and weave into your investments. A portfolio that made sense in 2018 could look very different to one that fits 2025.
In 2025, consider a Managed portfolio if you want some help ensuring your investments remain fit for purpose. Our experts build and manage portfolios that are suited to each investor’s financial goals. They monitor markets daily so you don’t have to, making changes where necessary to steer the ship.
Or, alternatively, pick up a ready-made LifePlan portfolio, which is built and maintained by our team but gives you the choice of the level of risk you’re comfortable taking on. Whatever you choose, no InvestEngine portfolio will cost you more than 0.25% in management fees – a small price to pay if you value peace of mind when investing.
Healthy financial habits can have a serious material impact on your life. In 2025, let’s set some positive financial New Year’s resolutions (and actually stick to them)!
Important information
Capital at risk. The value of your portfolio with InvestEngine can go down as well as up and you may get back less than you invest. ETF costs also apply.
This communication is provided for general information only and should not be construed as advice. If in doubt you may wish to consult a professional adviser for guidance.
Tax treatment depends on personal circumstances and is subject to change, and past performance is not a reliable indicator of future returns.