Don’t put all eggs in one basket!

Don’t put all eggs in one basket!

As financial advisers, we talk all the time about the benefits of investing in different investments (asset classes) at the same time to spread risk.

The above chart shows the “ups and downs” of different asset classes over the years.

Also included is an “equally weighted” or diversified portfolio (the white one) which is an equal blend of the twelve asset classes.

The diversified portfolio is never in the top three but also never in the bottom four of returns.

We use quality risk profiling tools to design diversified portfolios to meet  the specific needs of our investors.  Our focus is to help our clients reduce the downside risk of a “non-diversified” portfolio.

Contact Us on 01384 671947 for a complimentary review of your investment portfolio.

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The value of your investment can go down as well as up and you may not get back the full amount you invested.

Is your investment paying too much dividends?

Is your investment paying too much dividends?

From 6th April 2018 the dividend allowance, introduced in 2016, will reduce to £2,000. The government estimate that 2.27 million individuals in 2018 will be impacted by this reduction.

You might be one of these people.

The reduction in dividend allowance will cost investors’ money. Currently an individual can earn £5,000 of dividend income and pay 0% tax. Once this is reduced to £2,000 from April this will cost savers some money as shown in these examples:

• £3,000 allowance reduction for
• a basic rate tax payer = £3,000 * 7.5% = £225
• a higher rate tax payer = £3,000 * 32.5% = £975
• an additional rate tax payer = £3,000 * 38.1% = £1,143

With some planning in this area unnecessary tax being paid could be avoided.

1. Use your ISA allowances. This remains at £20,000 for the tax year 2018/19. An ISA can shelter the dividend income from the tax highlighted above.

2. Adjust the investment type. You could review the way in which investment returns are achieved through interest and capital growth. This will of course depend on your personal attitude to risk but this could help reduce the dividend income received going forward

3. Use your spouse’s allowances. If you are married or in a civil partnership planning as a couple becomes very important to make the most of the tax allowances available. Each individual has the following for 2018/19:

• a personal allowance (£11,850)
• starting rate for savings (where earned income is below £16,850)
• a personal savings allowance (£1,000/£500/£0 dependent on earnings)
• a dividend allowance (£2,000)

If investments are all held in one of the couples name there is an opportunity to transfer some investments to the other individual to ensure these allowances are used to the couple’s advantage.

These are a few examples of the tactics that can be used to make your investment and income returns more tax efficient.

Contact us on 01384 671 947 for advice on your own individual circumstances.


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The information provided in this article is not intended to offer advice. The value of your investment can go down as well as up and you may not get back the full amount you invested. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.