A new financial year


It’s (almost) April.
Spring is in the air, and the days are getting longer.
And hopefully warmer!
It also sees the start of a new financial year and all that this entails.

Elsewhere in the world, as conflict goes on, the future can seem scary and unpredictable as ever.

Whether you’re a business owner or an individual investor, how do you make effective financial decisions over the next twelve months?

Here’s how…

new financial year planning

Think two steps ahead. And remember you can’t predict your opponent


Set yourself a budget 

This applies to either business owner or investor – set yourself a budget.
How much do you have, how much do you want to invest (this can be in the markets or something tangible, such as staff training or new equipment) as well as decide how much risk you are willing to take on this year. Remember that whilst holding all your assets as cash is relatively low risk, they are in danger of being eaten away by inflation. Allocating some to investing can increase their overall value – but remember they are at the mercy of the markets. So think long term if there is a downward spiral.
Do it right at the start of the new financial year when you have the money (and the memory!) to do so. You’ll thank us later.
Better to take action whilst it’s fresh in your memory, rather than mark it down on your ‘To Do’ list.
There are some events that happen each year that you can prepare for – for example, if you’re running a small business, the summer and winter months are when you’re most likely to have to chase up unpaid invoices, since most people are away during these periods.

Save time. Save money.

This includes important financial dates.
Such as the tax year end and the self-assessment deadline date (but only if it applies to you)
Because yes, you’re a busy individual but you really should know by now!
If you’re running a business, make sure to remind clients on when to pay invoices – there’s nothing more stressful or annoying than trying to chase late payments (I speak from personal experience!)
You can also save time and money by looking at where its going. Too busy trying to do everything? Delegate the less important tasks.
By freeing up time, you can get back to the important work of following up leads.

Know your limits

By this, we mean savings limits.
You can pay in up to £9k into a child’s JISA.
For those of you saving for your first home, the LISA limit is £4k (but the Government adds on 25% relief. So that £4k becomes £5k.)
And for the standard ISA, your allowance for the 2021/22 year is £20k.

However, remember that if you pay in the maximum £4k for your LISA, and want to put money elsewhere, your ISA limit goes down to £16k.

Where to invest?

The question to ask is ‘Should you pay yourself a dividend or use that money elsewhere?
A new company car is great, but also think about if you need to upgrade your IT systems or if you can upskill your staff.
Better facilities or better employees means you’re taking proactive steps to scale up your business – and business growth, whilst tricky, is a good thing!

‘The future is unwritten’

Try as we might (and as others have attempted in the past), we cannot predict the future.
When investors look at company information, a lot of emphasis seems to be placed on a company’s returns over the past five years. As if what happened five years ago will reoccur(!)

Diversify where possible

An oldie but a goodie.
Put everything into one vehicle and it will either do little or worse decrease. Spread your investments far and wide to not only reduce the effects of market volatility (such as the recent Ukraine conflict) but it also means you stand a better chance of getting returns as well as preserving your wealth.

Ignore the voices

And not just the ones in your head. You’ll need to block out the distractions around you when investing.
We’re constantly bombarded by messages and subject to the full range of emotional investing biases.

Everyone else acting on a market reaction and not you? Action bias.
People are shouting about the latest investing vehicle and you feel you should get involved? Herd mentality.
Sticking to what you know or feel comfortable with? Familiarity bias.
Worst case scenario is that you end up self-sabotaging all your hard-won efforts…

(We covered more about emotional biases in our rather excellent post here)