Its a balmy 22C under my sunshade, palm trees are gently swaying in the breeze, and a few short yards away the sea looks enticing. Greetings, in short, from the golden sands of Fuerteventura.
Why am I interrupting this well-earned spring break in order to write these words? Because, sipping a glass of wine and letting my brain freewheel, Ive just been getting stuck into one of the most important jobs that Ill undertake this year.
Namely, doing a bit of financial and investment planning for the year ahead. And, just as importantly, for the tax year ahead that is just beginning.
Thinking time is precious
You might think Im barking. Why am I giving up valuable vacation time in order to think boring thoughts about money and investments?
For several reasons, in short.
First and call me sad I dont find it boring. Second, it needs doing: financial and investment plans dont create themselves. And third, because I find holidays and short breaks away to be ideal times to let the mind wander, and think about all this stuff that needs thinking about.
Plus, of course, its an ideal time to catch up on some of the reading that informs that thinking (and, in this digital age, some of the online videos and blogs Ive bookmarked or downloaded over the last few months).
Put another way, free from the day-to-day pressures of the daily grind, its possible to not only put some quality time aside, but also use that time to reach better and hopefully more profitable decisions.
Decisions about what, exactly?
In part, as youd expect at the start of a new tax year, some of the thinking is about how best to take advantage of the various tax shelters and wrappers that the government offers as an incentive to save.
For me, these chiefly revolve around pensions savings and ISA allowances as Ive never found Venture Capital Trusts to my taste, although thats a purely personal preference. Likewise, while AIM shares can be a handy way of sidestepping inheritance tax, that isnt high on my priorities at the moment.
Take pension provision, for instance. Every year, the pundits in the media point to boosting pension contributions as a way of minimising higher-rate tax liability.
As advice, its absolutely spot-on. But completely useless if you get to the end of March next year, and dont have ready cash in hand to take advantage of the governments largesse.
In which case, instead of putting money aside to help secure a comfortable old age, youll be steeling yourself for another dollop of your hard-earned dosh going to the taxman.
My own approach and theres nothing particularly scientific about this, its just what I happen to do is to squirrel away a fixed sum each month, and build up (or budget for) a lump sum that can be thrown at the pension towards the end of the tax year, when its possible to take better stab at end-of-year tax liability.
Something else that Ive been thinking through is how I plan to take advantage of the coming years ISA allowance.
There are various things to think about here. Which ISA wrapper, for instance, and from which provider? What investments to place inside that wrapper? And how to phase the contributions that I wish to make to the ISA?
The latter, I think, is particularly important because I find that if I dont put so much aside each month, it can be difficult to find lump-sum investments towards the end of the tax year.
In short, as with pension planning, I tend to favour a mixture of regular savings and lump-sum payments, with lump-sum payments timed to take advantage of turbulent market conditions.
The bigger picture
Its not all about the coming tax year, of course. A short break away is a good time to reflect on questions that are quite unconnected with tax.
Broad-brush questions regarding asset allocation, for instance. Take my S&P 500 and Nikkei 225 index trackers, which have performed well. Should I continue to hold or switch to other markets? In my opinion, Europe is certainly more reasonably rated at the moment, thanks to euro-deflation and the antics of the new Greek government.
And what of those shares on my must investigate list? With nothing to do before the evening meal, nows a good time to check a few out.
Plan, dont panic
Sad? Well, possibly. But holidays are a time for self-indulgence, and frankly Im enjoying what Im doing. You might not enjoy it, or might not enjoy it as much.
But the real point is this: its better to have a plan, and a strategy, than to not have a plan or strategy. Last-minute rushed investment decisions are never as good as those that have benefited from careful thought and research.
Dont leave it too late. Put some time aside, and plan accordingly.
We’re in it for the long term here at the Motley Fool, andwe focus on investing in great businesses for years rather than months. It’s over that kind of time horizon that we can make sensible judgments on how a business is likely to perform, and whether the price is right.
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