Putting together a balanced ISA portfolio makes complete sense, but knowing how to go about this isn’t always easy without the aid of expert advice.
Using Your ISA Allowance
The current ISA allowance for the 2017/18 tax year is £20,000, up from £15,240 the previous year. According to Standard Life, any part of the allowance that is not used by 5 April can’t be used in the next year – so you either use it or lose it forever.
So if you still haven’t used up your ISA allowance, how can you make investments that are financially sound rather than a financial disaster?
Spread Your Assets
One of the most useful pieces of advice you will receive when investing money is to spread your assets as widely as possible. Placing all your eggs in one basket may lead to financial ruin.
Take a look at all the different options open to you, including savings accounts, government bonds, corporate bonds, company shares or even property. Weigh up all the possibilities and decide which investments would be right for you. Don’t just go for those that offer the highest return, as these also tend to come with the highest risks.
Decide how much of a risk you want to take and whether you are happy to leave your money locked away for a long period of time or if a short-term investment suits you better.
Seeking expert guidance and getting clued up on the investments markets can really assist in helping to make the right decisions when building your ISA portfolio. An independent financial adviser, for example, is a good place to start, and with the aid of financial adviser software, such as that from https://www.intelliflo.com/, they will be able to ask relevant questions to build up a picture of your investment profile and the available options that would suit you most.
Achieving a balanced ISA portfolio is also about understanding how the markets work, such as how assets move according to a range of different factors. UK shares, for instance, work in harmony with those in the USA and Europe, so when one moves up or down, the others follow suit. On the other hand, UK government bonds are negatively correlated to shares, which means they tend to move in the opposite direction to the shares market.