Are you on track? Simple steps to kick off 2025

Written by Alex Dolton

The start of a new year is always a good point to revisit your finances and establish a plan (or review an existing plan) to ensure you remain on track to meet your goals. As part of this plan, here are some key steps to consider taking to improve your plan and ultimately financial wellbeing:

Understand your outgoings

Get a grip on your expenditure. Start by looking at how much you are spending on a monthly basis to prevent becoming overwhelmed in the long-term. This is important because it will ensure you are budgeting appropriately and more importantly it will allow you to put any surplus cash flow to work.

Top up your emergency reserves

If you are fortunate enough to be in a position where you are a net saver, before redeploying any surplus we recommend ensuring your emergency reserves are replenished. This is an account with cash reserves that can be drawn upon immediately, preventing you from becoming a forced seller of your investments. There is no hard and fast rule on what amount should be set aside but the general rule of thumb is 3 – 6 months’ worth of living expenses. If you are nearing or already in retirement then you may feel comfortable holding back a bit more. We’d also recommend keeping back cash for known upcoming short-term liabilities.

Understand your debt

With interest rates at levels not experienced since 2008, debt has become more expensive to service. This isn’t necessarily a bad thing as there are still instances where it can still make sense to borrow. However, if you have any debt with high interest rates, you should consider paying this down with any surplus cashflow to stop it building. You could look to consolidate existing debt into a new product with a lower interest rate, if available.

Investment Allocation  

When the above steps have been addressed it’s important to review your goals and objectives and make sure your investments are aligned to these goals. Depending on the type of account you hold investments in (taxable brokerage, tax-deferred or tax-exempt accounts) it’s important to ensure they are invested strategically in the right mix of assets that are aligned to your goals. Whilst investment time horizon is one factor that helps to determine a suitable risk budget for each portfolio, emotional tolerance to risk, financial capacity for loss and your required rate of return need to be considered when determining a suitable risk budget.

Asset allocation (the split between equities and fixed income) will change throughout one’s life, so reviewing yours at the beginning of the year is important to make sure that it fits with your longer-term goals.

Estate and Insurance Planning

Regardless of where you are in life, it’s important to ensure your estate plan, insurance, and wills are up to date, with powers of attorney in place in case the worst happens. If there has been or you have any upcoming life events, it’s important to ensure you have the appropriate insurances arranged to provide protection.

These are just some of the most important steps we will be helping our clients with early in the new year.

The Legal Stuff

• This document is intended for the recipient only.
• The information contained herein is subject to copyright with all rights reserved.  The document may not be copied, forwarded or otherwise distributed, in whole or in part, to any other party without our written consent.
• The views expressed in this article do not necessarily reflect the views of MASECO as a whole or any part thereof.
• This document is provided for information purposes only and is not intended to be relied upon as a forecast, research or investment advice.
• This document does not constitute a recommendation, offer or solicitation to buy or sell any products or to adopt an investment strategy.

Risk Warnings:

• All investments involve risk and may lose value.  The value of your investment can go down depending upon market conditions and you may not get back the original amount invested.
• Your capital is always at risk.
• Fluctuation in currency exchange rates may cause the value of an investment and/or a portfolio to go up or down.

This article does not take into account the specific goals or requirements of individuals and is not intended to be, nor should be construed as, investment or tax advice. You should carefully consider the suitability of any strategies along with your financial situation prior to making any decisions on an appropriate strategy.

MASECO LLP (trading as MASECO Private Wealth and MASECO Institutional) is established as a limited liability partnership under the laws of England and Wales (Companies House No. OC337650) and has its registered office at The Kodak Building, 11 Keeley Street, London, WC2B 4BA.

MASECO LLP is authorised and regulated by the Financial Conduct Authority for the conduct of investment business in the UK and is registered with the US Securities and Exchange Commission as a Registered Investment Advisor.