Tips for maximising your investment returns

Trying to accurately forecast market highs and lows is never easy. Investment returns invariably go in cycles, so keeping a steady hand on the investment tiller through different cycles can help you avoid potential perils from trying to time exits and re-entries.

While there’s no big secret, it can pay to keep calm when things aren’t going so well. History shows that the passing of time tends to smooth out short-term volatility and allow investors to benefit from the recoveries that often follow downturns.

It’s worth considering a strategy that supports patience and gives the market time to recover, rather than stressing and reacting impulsively to temporary fluctuations. This can be enhanced by focusing on funds or investments designed for growth over years, not days.

The golden rule of investing is to ensure that your portfolio aligns with your goals and risk appetite. You should take some time to be clear on your financial and personal goals – and your timeline to reach them – as well as your tolerance for risk.

The simple fact is that what works for someone else might not work for you, and so personalisation is key. For example, someone with 30 years of working life still to come may want to invest more in higher-growth assets such as equities, while an investor approaching their retirement might favour more stable, income-generating assets such as government bonds. Sticking to an investment plan tailored to your circumstances can help you stay the course towards your goals and resist the urge to make hasty, reactive decisions during times of market stress.

Putting all your eggs into one basket can be a risky move. However, spreading the risk across different industries, geographies and asset classes (for example, stocks, bonds, cash and property) is one way to reduce the overall risk of your portfolio.

Diversification can help balance the inevitable ups and downs of markets and keep your overall investments resilient. If one part of your portfolio is struggling, you have other kinds of assets that may still be performing well, helping to offset a potential loss. It’s not about avoiding risk entirely, but about being smart with where risks are taken, and enabling you to insulate your portfolio from shocks in any area.

A well-diversified portfolio, tailored to an investor’s risk tolerance (ability and willingness to take risk) and time horizon, can cushion against market swings in any one sector, protect your savings during downturns and support steady long-term growth.

The fable says that the tortoise always beats the hare, and investing is no different. 

Contributing fixed amounts into the investment pot at consistent intervals, regardless of market conditions, can actually help navigate volatile markets more effectively than chasing short-term trends.

Setting up regular, automated contributions of a set amount keeps your strategy consistent and removes the temptation for emotional decision-making. Not only does it encourage more disciplined investing habits, but it also means that you will automatically buy more units when prices are low and fewer when prices are high. A stable approach such as this may help to offset the risk of investing a one-off lump sum at a market peak.

The UK government offers several incentives to encourage investment, including tax-efficient options like Individual Savings Accounts (ISAs). By investing through an ISA and making full use of the annual allowance of £20,000, you can benefit from tax advantages such as exemption from income tax on interest earned, capital gains tax on investment growth, and dividend tax on qualifying shares. These benefits can help maximise your returns while keeping your tax liability low.

Similarly, pensions are often considered the most tax-efficient savings vehicle in the UK. While the exact details may vary depending on your circumstances, pensions benefit from tax relief on contributions and tax-free growth until withdrawal, which effectively boosts the amount invested.

Keep in mind that tax treatment varies by individual and may change over time. Also note that pension outcomes vary and aren't guaranteed—your plan’s value can fluctuate over time.

Finally, life circumstances evolve just as financial markets do, which is why it’s important to keep reviewing your goals and needs to ensure your investment strategy remains aligned. At Schroders Personal Wealth, our Ongoing Advice Service includes an annual review of your financial plan. This gives you the opportunity to review your goals and aspirations and for any big life events. 

Fees and charges apply at Schroders Personal Wealth.

This article is for information purposes only. It is not intended as investment advice.

Tax treatment depends on individual circumstances of each client and may be subject to change in the future. 

The retirement benefits you receive from your pension plan depend on a number of factors including the value of your plan when you decide to take your benefits which isn’t guaranteed and can go down as well as up. The benefits of your plan could fall below the amount(s) paid in.