New year, new money goals

The Money Observer team share their investment and financial resolutions for 2020.

“Not doing this will definitely leave me a £100 fine lighter”

My new year’s financial resolutions tend not to change much from one year to the next – they’re an annual checklist of stuff to plough through in the first three months of every year. They sneak up on me in the dark January evenings and niggle at my conscience until I give in, stop doing displacement activities and watching box sets, and knuckle down. The big niggler, of course, is my tax return, but I also need to take a look at my SIPP portfolio holdings and trying to tidy them up, and also pay in any spare cash I can find down the back of the sofa, etc, before the end of the tax year.

To be fair, completing my tax return has become a much less onerous task in recent years now it’s all online, and particularly as I am no longer self employed and therefore have fewer sections to fill in – but it remains one of my least favourite tasks of the whole year. Does it even count as a resolution? It doesn’t make me a better/fitter/healthier person, or even a wealthier one; but not doing it will definitely leave me a £100 fine lighter. 

Faith Glasgow, editor, Money Observer

“My resolution is achievable if I put down the book/phone/toast, and pick up a computer”

Which new year’s resolution requires more motivation than “doing more exercise” and “eating more broccoli”? Moving out of a default pension fund, that’s what. Although I’ve learned that, given the decades of work ahead of me, the default fund in my current workplace scheme is unlikely to be the right level of risk, I procrastinate on switching to something spicier.

However, my resolution to switch to a more adventurous fund is achievable if I just put down the book/phone/slice of toast, pick up a computer and knuckle down to some research. My employer’s website lists which funds are available to me, and at what cost. My colleague Kyle Caldwell has useful reflections on workplace pension funds in his 10 golden rules of investing article.

“The reality is that the default option for most people is likely to be some form of balanced multi-asset fund, which will have been automatically selected by a pension firm as being the ‘safe choice’.”

However, he adds: “A balanced fund will typically have 40% to 60% in global shares, but those with a 30- to 40-year time horizon can afford to be more adventurous.”

Another reason for me to escape the default fund is that the state pension age is being raised to 66 in April 2020, but is scheduled to rise to 68 between 2037 and 2039. Given the UK’s ageing population, I fear for its sustainability. So it’s a logical step to move the pot to a less cautious fund to give it a good chance to grow to a healthy sum by the time I’m ready for retirement - and the state pension is potentially nowhere to be seen.

One upside to my 2020 money goal is that it will have its own resolution once I’ve switched funds. Unlike, say, exercising more, which I fear sounds like an ongoing commitment.

Nina Kelly, web editor, Money Observer

“There is generally less popular investment literature on the topic”

My new year’s resolution is to get to better grips with the theoretical case for growth investing. While growth stocks dominated for the past decade and the theory has been shown to work in practice, there is generally less popular investment literature on the topic. Instead, books explaining the merits and mechanics of value investing have long dominated the finance and investment book genre, all the way back to Benjamin Graham in the 1930s.

I’ve started to read Only the Best Will Do: the compelling case for investing in quality growth businesses by Peter Seilern, Thomas Phelps’ 100 to 1 in the Stock Market: a distinguished security analyst tells how to make more of your investment opportunities, and Philip A. Fisher’s Common Stocks and Uncommon Profits.

Tom Bailey, staff writer, Money Observer

“It is a resolution that may take until the latter end of 2020 for me to conclude”

New Year’s resolutions resemble more of a marathon than a sprint, which is why I am going to give myself the full year to complete the important, yet tediously slow process, of consolidating pension pots from previous employers. 

I have kept the paperwork, so that should save me some time, but after seeing my better half go through the process this year, and the ridiculous amount of letters that went back and forth, it is a resolution that may take until the latter end of 2020 for me to conclude.

While there are certain reasons why it can pay to keep pension pots apart under current pension rules, the reality is that by the time I retire the pension rules will likely be completely different to what they are today. I would sooner group my pensions together, see where I am, and then plan accordingly.

Kyle Caldwell, deputy editor, Money Observer

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