New year, new finances? Seven investment tips for the new year

The new year can be the perfect time to evaluate what you’re doing with your money. 

You don’t have to make any resolutions or radical changes either – simply reflecting on what’s going well (or not so well) can help you make positive changes to your financial position, your confidence, and your future.

The government introduced a few changes to how tax and savings work in its latest Autumn budget. It’s a good idea to double check how they will affect you ahead of the new tax year.

Here are seven tips to get you started. 

1. Get your finances in order

It can be hard to save if you don't know how much you have – and how much you spend.

Making a budget and a financial planning checklist will help you see where your money is going and ensure your financial goals are realistic. Many advisers would recommend saving a "financial buffer" of a few months' salary – between 3-6 – before moving on to other investment and saving goals. 

Technology can make this easier. Your banking app might allow you to view your other financial products, and some will show outgoings by category. This can help you see how much you’re paying towards credit cards or mortgages. In some cases you can view investments alongside your current account and savings pots. This will give you a fuller picture of your budget in one place.

You can also do things the old-fashioned way. If you prefer, you can use your bank statements and credit card bills and create a spreadsheet to see what is coming in and going out. 

You may find that you are spending money you don’t need to on subscriptions, memberships or unnecessary shopping. A financial ‘detox’, where you cut out surplus spending, could help you find the cash to fund long-term investments.

2. Set financial goals

Most of us find it easier to put money away when it is for a specific purpose – perhaps to spend on a holiday or a car. Investing towards a less defined target, such as "retiring in 10 years" or "to pay for university fees", is often more difficult.

It’s worth taking a bit of time at the start of the year to map out why you’re investing, and how you’d like to reach your target. Those who set goals with their money are usually more successful when it comes to both saving and investing, according to research from the University of Stirling.

For some, financial goal setting comes easily, but many of our customers need help in setting and defining their financial goals. Once set, the next step is putting steps in place to make these realistic.

Remember, Nutmeg’s experts are on hand to offer financial guidance, and you can book a free call today to help you set up your investments to achieve your financial goals. We can also help you to understand if our paid for, restricted financial planning service can help create a plan that’s right for you.

3. Use tax free allowances

Tax efficiency is a term all savers and investors should know. When you invest money into a Stocks and Shares ISA or pension you won’t pay tax on growth or returns. In some cases, you’ll even get back the tax you’ve already paid. 

In the case of pension contributions, the government will add back 20% relief automatically if you are a basic-rate taxpayer. If you pay higher-rate tax you can claim an additional 20% (for a total of 40% relief). With work pensions this happens automatically, if it is a personal pension it can be done through your tax return. Additional-rate taxpayers can claim 45%.

There are other instances where tax should be considered. For example, if you are looking to sell something for a profit, such as a property, a family heirloom or a business asset, you may have to pay Capital Gains Tax (CGT) after your annual allowance is factored in.

When the 2025/26 tax year begins on 6 April, the Capital Gains tax-free allowance will stay at £3,000. However, the changes to CGT rates announced in the 2024 Autumn Budget went into effect straight away. The Budget increased the rate of CGT for basic rate taxpayers from 10% to 18% on gains on chargeable assets (for example, shares not held in an ISA). The current 18% CGT rate on residential property remains the same.

For higher or additional rate taxpayers, the Budget increased the rate of CGT on gains on chargeable assets from 20% to 24%. The 24% rate on residential property remains unchanged following the Budget.

If you’re unsure of the allowances you have available or how best to maximise these, a free call with a member of our wealth services team could help.

4. Consider consolidating your pension pots

With most of us having several jobs during our careers, the chances are that we will retire with pensions in several different places.

These can be hard to keep track of and might make it more difficult to work out how much money you might have in retirement. You might want to consider consolidating them by transferring to a single provider, so you can see them all in one place. In some cases, this may be cheaper in terms of what you are charged.

Before you transfer pensions it is vital to check they do not have any guarantees or benefits attached to them. Some pension types might guarantee a particular annuity rate or level of income and such guarantees can be valuable. You should also check whether any charges are payable by your provider if you transfer. If you’re unsure, we’re on hand to help.

5. Embrace compounding

Compounding means that when you earn interest or returns on your assets, returns can then begin to accrue gains for themselves. This can create a snowball effect and increase your wealth over time.

Compounding makes a strong case for starting to invest as early as possible for a long-term goal, which can have a significant impact further down the line.

Nutmeg’s compound calculator can help you to see the impact of compounding on your investments.

6. Don’t panic: investing is for the long term

Market volatility is a natural part of investing, but it can still be unsettling.  

When markets are volatile, it’s important for investors to keep the long-term view in mind. If you don’t need the money in the short term, and your goals and timeframe haven’t changed, then try to resist the temptation to sell investments on if the market is low – you will lock in losses that could be recovered later. Instead, focus on your long-term goals and how you will meet them.

Investing each month can help smooth out performance, as you end up investing throughout market ups and downs. This concept of ‘drip feeding’ into your investments is known as pound cost averaging.

7. Diversify your investments

On the subject of volatility, spreading your money across different investments can make for a less bumpy ride. Because different asset classes have different return profiles – for example, equities can be volatile, while bonds tend to be more consistent – having a blend of the two can reduce volatility. As a reminder, that’s the sharp changes in portfolio valuations. 

Asset allocation means ensuring your investments include a blend of asset classes, regions, styles and more. That way if one company struggles or there are problems in a certain geography, your portfolio can be cushioned by investments with more resilient performance.

At Nutmeg, our portfolios are built, monitored and managed by our expert investment team, globally diversified and risk-adjusted according to your needs. 

How to put these tips into practice

Perhaps you're feeling inspired and ready to start mapping out what you want from your investments – or maybe you're feeling unsure of where to start. Our life moments guide may be useful in determining how you may want to invest across the decades. Want to understand how much money you need, or how much you can afford to invest? Our handy toolbox of calculators can help you bring your visions to life and prepare you to invest in 2025 and beyond. 

You can also book a free call to speak to a member of Nutmeg’s team of experts if you have any questions about making the most of your money. We're on hand if you need us. 

Risk warning

As with all investing, your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest.

Tax rules vary by individual status and may change. For personalised advice tailored to your specific situation please consult with a qualified tax adviser or financial planner.

We provide 'restricted advice', which means we will only make investment recommendations on the products and services that we offer.

Please note that during any transfer, your investments will be out of the market. If you are unsure if investing is right for you, please seek financial advice.