As the new tax year begins, investors seeking strategies can “set themselves up for success” in the year ahead with a few key tips, an expert has said.
Prioritising smart investment decisions is paramount with market uncertainties and changing economic landscapes.
From diversifying investments to making use of ISA allowances, experts at wealth management firm Killik & Co have shared their top tips below.
Consider equities
Global stock markets had a great run in 2023, thanks to an improvement in the macroeconomic picture on both sides of the pond, Rachel Winter, a partner at Killik & Co. said.
Inflation more than halved in the UK and the US, and the Bank of England and the Federal Reserve finally hit the pause button on interest rate hikes, fuelling speculation that rate cuts would be on the cards this year.
Ms Winter said: “Although many stock indices are at record highs, some areas still look attractively valued. For example, shares in small and medium-sized companies continue to trade well below their 2021 peaks.
“Investing in equities is still a good bet for those seeking long-term capital growth. As the adage goes, it’s time in the market and not timing the market that counts.
“For those thinking about investing, there is no time like the present. Drip-feeding money into the market over a few weeks or months could be an appealing approach for those wary of taking the plunge.”
Don’t sleep on below-par bonds
With interest rates poised to start falling, Ms Winter speculated the high rates offered on new fixed-income products last year will likely not be available this year.
She noted: “There are still attractive investment opportunities available in the bond market for investors seeking more predictable returns.
“Many bonds continue to trade below their par values. As bonds are not subject to Capital Gains Tax, snapping these up could be a tax-efficient option for anyone investing outside of an ISA or SIPP.”
Diversify into high-growth sectors
Ms Winter said: “As thematic investors, we’re always on the lookout for long-term growth trends. In our view, investors targeting growth should have exposure to Artificial Intelligence (AI) and energy management.”
According to Ms Winter, AI was arguably the biggest topic for investors last year, and technology stocks have had a “fantastic run” because they are viewed as the facilitators of this phenomenon.
However, Ms Winter noted: “There are many businesses that will now benefit hugely from using AI. Businesses that own a lot of data, for example, will now be able to analyse this data far more effectively by implementing AI.
“Energy management is another key theme. The Western world is still firmly set on achieving net zero in the coming decades, and companies that can help to reduce energy usage are well placed to benefit financially from this shift.”
