Savers “shouldn’t make rash decision” before the budget
Chancellor Rachel Reeves will detail her Autumn Budget on Wednesday(Image: PA)
Chancellor Rachel Reeves will detail her Autumn Budget on Wednesday, November 26, triggering potential “panic” in some savers.
This is likely due to reports the Chancellor will announce the Cash ISA tax free allowance will be slashed.
Currently, people can save £20,000 annually without fear of being taxed on their savings, but this could be about to be cut down to as low as £10,000.
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Savers could “lock in losses” if they “make rash decision” before anything is confirmed. Instead, financial experts say “the smartest move is to stay calm”.
Philly Ponniah, Chartered Wealth Manager at London-based Philly Financial, advised: “Budget week always feels dramatic, but for most people the smartest move is to stay calm. Markets often jump around on headlines then settle once the details land.
“If your portfolio already matches your risk level, you usually gain more by holding your nerve than trying to second-guess policy shifts. If gilt yields spike or the Pound wobbles, remember these moves are often short-lived.
“Long-term investors don’t need to act fast because reacting in panic is how people lock in losses. “The only time to take action is if the Budget changes your personal tax position, not because prices flicker on the day.”
Antonia Medlicott, Founder at London-based Investing Insiders, agreed: “In these final two days before the Chancellor speaks, people shouldn’t panic or make any rash decisions.
“Instead, they should focus on the fundamentals: ensure their portfolio is adequately diversified, make sure they’ve made full use of their ISA allowance, understand what they hold in their pension and ensure they have an emergency cash account that’s receiving an above-inflation rate of interest.
“If you usually put more than £12,000 into a cash ISA each year, there’s a high likelihood you could need to find a new home for the excess, as Rachel Reeves is rumoured to want to lower the annual allowance from £20,000.
“So, if you’ve been nervous about switching over to an investment ISA, now is the time to do some research into providers. You may find that it’s not as risky, difficult, or as expensive as you had previously been fearing.”
Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said Budget week is a time to be measured: “Time in the market beats timing the market. Unless your personal circumstances, such as age, liquidity needs or tax situation, mean the Budget directly affects your financial plan, measured responses beat knee-jerk reactions in most cases.
“For most investors, do nothing. Markets have survived hundreds of Budgets. If you’re diversified and matched to your risk tolerance, sit tight. If yields soar or sterling falls, don’t panic-sell gilts if you’re long-term.
“A falling pound helps many investors as international equities and FTSE 100 multinationals benefit from sterling weakness. For sophisticated investors, watch for inheritance tax reforms such as taper relief and gifting rules, capital gains tax changes, property taxation and pension reforms.”
