Top 10 Things to Do During Your Mid-Year Investment Review

Introduction

By mid-year, your investment portfolio may have experienced fluctuations, your financial goals may have shifted, or market conditions may have changed. It’s the perfect time to step back, assess your investments, and make any necessary adjustments to stay on track. A mid-year review isn’t just about reviewing performance; it’s about reassessing your goals, rebalancing your risk, and fine-tuning your strategy.

Whether you’ve been proactive in managing your portfolio or you’re just starting to think about your mid-year financial health, this checklist compiled by Luke James, Chartered Financial Planner will guide you through the essential steps. Ensuring that your investments remain aligned with your financial goals requires regular attention, and now is the perfect time to make any necessary tweaks.

1. Revisit Your Budget

A mid-year review is the ideal time to check that your spending and saving habits are in line with your goals. Life changes, expenses shift, and priorities evolve your budget should reflect that.

Key Action: Take a close look at your income, spending, and savings. Are you staying on track with your savings goals? Are there any areas where you can cut back or increase contributions to reach your financial objectives? Or should you be spending even more and splashing out?

2. Analyse Your Cashflow

Managing your cashflow is the foundation of a sound financial strategy. If you’re not reviewing your cashflow regularly, you may be in a position where you can spend more than you expect and you are missing out on opportunities to enjoy life! Or potentially it might mean having to cut back later on.

Key Action: Track your monthly income and expenses to ensure you're generating enough cash to fund your goals. If your cashflow is better than expected, look for areas to adjust, such as going on that holiday you have wanted to and treating yourself.

3. Assess Your Debt

Reviewing your debt at the mid-year mark ensures you’re not overlooking liabilities that could be hindering your wealth-building efforts. Whether it's credit card debt, student loans, or a mortgage, managing your debt is key to maintaining financial health.

Key Action: Prioritise high-interest debts or consider consolidating loans to save on interest. Make a plan to pay down your liabilities aggressively if necessary to stay on track with your financial goals.

4. Review Your Portfolio

At the heart of any mid-year review is your investment portfolio. Is it still aligned with your financial objectives? Markets fluctuate, and portfolios can drift, so it’s crucial to ensure that your investments continue to reflect your current goals.

Key Action: Has there been a significant change which could impact your attitude to risk? If so, get in touch with your adviser to discuss.

"A mid-year investment review isn’t just about checking performance it’s about ensuring that your strategy is still aligned with your long-term goals and risk tolerance. Regular adjustments help you stay on track and avoid costly mistakes."

Keely Woods – Chartered Financial Planner

5. Reconsider Your Life Goals

Life is constantly evolving, and so are your financial goals. Whether you're planning for retirement, buying a new home, or starting a business, it’s essential to revisit your goals at least once a year to ensure your investments align with your changing circumstances. Read our blog on this here.

Key Action: If your goals have shifted, your portfolio may need adjustments. For example, if you’re planning for a home purchase in the next five years, you may want to reduce your exposure to volatile stocks in favour of safer, more stable investments.

6. Check In on Your Retirement Plan

A mid-year review is a great time to assess your progress toward retirement. If your financial goals include retiring early or saving a certain amount by retirement, now is the time to gauge whether your strategy is on track.

Key Action: Review your pension contributions and the performance of any retirement accounts. If you're behind on your savings target, consider increasing contributions or reassessing your asset allocation to stay on track.

7. Revisit Your Insurance Needs

Your insurance needs may have changed since you first established coverage. Life events, such as marriage, children, or buying property, often trigger the need to review your coverage to ensure you're adequately protected.

Key Action: Check your life, health, and property insurance policies to ensure they reflect your current circumstances. Consider increasing coverage if you've taken on new financial responsibilities or reassess whether you're paying for unnecessary policies.

8. Refresh Your Estate Plan

As you accumulate wealth, it’s vital to have an up-to-date estate plan that reflects your wishes. Mid-year is an excellent time to revisit your will, trusts, and beneficiaries to ensure everything is aligned with your current goals and family dynamics.

Key Action: Review your will and trust documents to ensure your estate will be distributed as you intend. Update any beneficiaries if needed and ensure your estate planning strategies are tax-efficient.

9. Identify New Tax-Saving Strategies

The tax landscape can change throughout the year, and identifying tax-saving strategies mid-year can help optimise your portfolio’s performance. Whether it’s making use of ISAs, pensions, or tax-efficient funds, now’s the time to review your tax position.

Key Action: Consider making use of tax allowances or shifting investments to more tax-efficient vehicles, such as ISAs or pensions. If you’ve made significant gains, you might also look into tax-loss harvesting to offset potential capital gains taxes.

10. Should I ‘Put My Eggs in Different Baskets’?

Diversification is crucial for risk management, and mid-year is an excellent time to assess whether your portfolio is sufficiently diversified across different asset classes.

Key Action: Review your portfolio’s allocation to ensure you’re not overexposed to a single asset class, market, or sector. Diversification reduces the impact of any single investment’s poor performance on your overall portfolio.

"Investing isn’t a ‘set and forget’ endeavour. Regular reviews allow you to adapt to changing market conditions, tax laws, and personal goals, ensuring that your investments continue to work in your favour over time."

Ellie Pemberton – Independent Financial Planner

Are Your Investments Right for You Right Now?

As markets and personal circumstances change, your investment strategy should adapt. Mid-year is a good time to evaluate whether your investments still align with your current financial situation and objectives.

Key Action: Ensure your portfolio matches your current financial goals, whether it’s long-term growth or more immediate income generation. Consider selling investments that no longer fit your strategy or reallocating funds to match your evolving priorities.

Are You Paying More Fees Than You Need To?

Investment fees can erode your returns over time. If you're not reviewing your investment fees, you might be paying more than necessary. On average Lucent clients end up paying between 1.2%-1.3% per year in total. This is around 0.5% per year lower than average for the UK.

Key Action: Check the fees on your current investments and compare them to lower cost alternatives. Evaluate the value provided by high-fee funds and consider switching to lower-cost options if you can achieve similar returns.

Common Pitfalls and How to Avoid Them

When reviewing your investments, it’s easy to fall into common traps. Here’s a look at some potential pitfalls to watch out for during your mid-year review:

• Procrastination - Postponing your review can lead to missed opportunities for tax savings, rebalancing, or portfolio adjustments. Set a date to regularly assess your investments, ideally every six months but at least once a year.
• Overlooking Small Expenses - Small, recurring fees might seem insignificant, but they can add up over time. Keep track of every fee and expense associated with your investments to avoid unnecessary costs.
• Ignoring Tax Changes - Tax laws can change, and ignoring these changes may lead to missed opportunities for tax-saving strategies. Stay informed about tax updates that could impact your investments.

Summary

Your mid-year investment review is an important opportunity to take stock of your financial situation, reassess your goals, and make adjustments to your portfolio. By following this checklist, you can ensure that your investments stay aligned with your objectives and avoid common pitfalls that can derail your progress. Regular reviews allow you to manage risk, optimise tax strategies, and ensure your long-term financial success.

If you’re unsure whether your portfolio is still aligned with your goals or if you’d like assistance with your mid-year review, our team is here to help. Feel free to get in touch for personalised guidance tailored to your unique financial situation.

Disclaimer: This article does not constitute financial advice. We recommend that you speak to a qualified financial planner for advice tailored to your individual circumstances and goals. Financial markets may go up or down, and you are not guaranteed a return on your investment. Past performance is not necessarily a guide to future performance.