Focus on a New Year Review

If you have made, or are about to make, your New Year's resolutions, one of the first, and a vital one, should be to make a full review of your financial situation.

2008 has been an incredibly difficult year as far as finances are concerned. Governments worldwide have struggled to ease the financial position in previously untested ways. While the credit crunch has raised some specific issues (see page 5), taking a general overview of your planning could highlight important questions.

Investments

If you have deposit investments, are they properly protected? The Financial Services Compensation Scheme now protects up to £50,000 of an investment in a specific bank (see page 6). Do you have more than that at risk in an institution? Should you spread these investments?
What about the stockmarket? It has been extremely volatile during 2008. How have your equity-based investments been doing? It may be time to look at these to see if your portfolio is balanced properly.

Mortgages

If you have a mortgage you may well be coming to the end of a fixed interest rate period. With the mortgage market in a state of uncertainty following recent interest rate cuts, it is important to take professional advice. Experienced mortgage advisers often know where the best deals are to be had and could save you considerable amounts of money. Your home may be repossessed if you do not keep up repayments on your mortgage.

Protection

The financial situation over the last few months has adversely affected the wealth of many families and you may wish to look at the different ways of protecting your family for the future. Do you have enough life cover to protect your spouse or partner as well as your children or grandchildren? Again, professional advice is important to ensure that such life cover is set up in the correct way.

Pensions

One major area to suffer from the decline in stockmarket values is pension funds. Most of these have some equity exposure. If you are already retired and drawing on your funds or you are rapidly approaching retirement, you really owe it to yourself to conduct a full review of how your pension fund is performing. You do not want to suffer -a drastic reduction in pension just when you find that you need to take an income.

You may wish to consider ways to try and stabilise your fund value as retirement approaches. Pensions are complex, combining government rules on limits regarding tax-efficient investments and the tax reliefs available with actual investment decisions. Professional advice is essential to establish if any strategic decisions need to be taken.

An overall financial review at this time could serve to put you into a much better financial position in 2009.