This checklist is designed for UK investors. However, most Principles will apply to everyone.

The Principles

  1. Aim to save and invest at least +20% of your net income.
  2. Save enough to be able to live on say 5% of your capital base in retirement, depending on age and expenditure needs.
  3. ‘Savings’ are cash backed and guaranteed.
  4. ‘Investments’ have the potential to make ‘real’ returns (ie above inflation), as well as lose value (property or stock prices can be volatile in the short term).
  5.  ‘Time in the market’ is more important than ‘timing the market’, so take a +5-10 year view when investing.
  6. Compound interest is ‘the most powerful force in the universe’ (Einstein). 7% pa doubles your money roughly every 10 years. The longer you invest, the better.
  7. Financial markets are cyclical, so be prepared for periodic falls in asset prices, just like your house value.
  8. Inflation will erode the real value of cash, so you will need to ‘invest’.
  9. ‘Invest’ means putting cash into assets such as bonds, shares in companies (public and private), property, commodities.
  10. Develop a diversified portfolio of assets that will perform for you in all market conditions more often than not.
  11. Bonds are loans to companies and governments. Equities are shares in a company and their future profits.
  12. Some advisers recommend % in equities = 100% minus your age i.e. 60% in equities if 40 years old.
  13. Diversification of investments reduces risk and can also improve returns but don’t over-diversify and dilute potential returns.
  14. Diversification will also help you ‘stay invested’ rather than panic and sell when markets become bearish.
  15. From 1996-2015 the US stock market returned an average 8.2% pa but just 4.5% pa if you removed just the best 10 days, so stay invested.
  16. ‘Be fearful when others are greedy and greedy when others are fearful’ (Warren Buffett) ie buy low, sell high.
  17. Consider low cost ‘passive’ Exchange Traded Funds (‘ETFs’) for some investments eg iShares and Vanguard ETFs.
  18. Be aware of investment costs and try to keep them below 1% pa.
  19. Performance cannot be guaranteed but aim for +3% pa above inflation over the longer term.
  20. Be tax efficient when investing, so cash works harder and compounds faster.
  21. If something sounds too good to be true, it probably is!
  22. Keep it simple.
  23. Keep learning, keep earning.

The Practical

  1. Keep at least 1 year’s (ideally 3 years) expenditure in readily available cash – your ‘rainy day fund’.
  2. Place cash with at least 2 secure banks. Cash is only protected by FSCS up to £85k per bank per person in UK.
  3. Aim to achieve close to ‘Base rate’ on your cash.
  4. Save with National Savings (NS&I) which is government backed and may offer competitive rates on cash.
  5. Invest up to £20,000 per annum in ISAs (tax free).
  6. Invest up to £9,000 per annum in JISAs for kids (tax free).
  7. Invest into pensions each year, especially if employer matches (tax relief on contributions and tax free fund).
  8. Invest up to £50,000 surplus cash into NS&I Premium Bonds (prizes are tax free).
  9. Wealthier investors can consider riskier Enterprise Investment Schemes (30% tax relief on up to £1m invested).
  10. Make use of your annual CGT and dividend allowances.
  11. Consider regular, say monthly, investing and benefit from ‘pound/dollar cost averaging’.
  12. File Wills and have supporting Letter of Wishes plus consider POA.
  13. Consider Offshore Investment Bonds (‘OIBs) only after ISAs and pensions maximised.
  14. Think about ‘gifting’ assets to family or charity and reduce IHT once you have reached financial security.
  15. Consider Exchange Traded Funds (ETFs) or ‘index trackers’ for low cost investment options eg iShares and Vanguard.
  16. Wealthier investors can consider trusts for controlled gifting and IHT planning – get professional advice.
  17. Get advice if you need it. Ask for references.
  18. Keep informed on financial market news with the Financial Times.
  19. Check financial product offers in Sunday Times and fund ideas in Investors Chronicle.
  20. Read relevant books – see Books section on this website.
  21. Develop a wealth plan, review it annually, and take control of your financial future.
  22. Example portfolio: iShares IGWD World Equities ETF or HSBC FTSE All World Index ETF (60%), iShares SGLN Gold ETF (10%), Ruffer Diversified Return Fund (30%). Plus your cash accounts.
THIS IS NOT PROFESSIONAL FINANCIAL ADVICE. JUST A HELPING HAND FOR WEST X FRIENDS.
Useful resources can be found at:
Useful platforms for wealth management: