Another tax year-end, another geopolitical curveball

As another tax year-end rapidly looms into view, many investors will be looking to find a tax-sheltered home for their money before the deadline – or indeed once the new tax year comes around and their allowances refresh. But, again, we seem to be in a period of volatility caused by some geopolitical reasons.

Four of the last seven tax year-ends have coincided with big incidents. First there was Covid, in 2020. Then in 2022, Russian tanks rolled over the Ukrainian border to begin a war which is still rumbling on to this day. Then in 2025, the President of the United States stood up and announced sweeping tariffs on all of the country’s trading partners in a self proclaimed ‘Liberation day’. Now the same President and his Israeli counterpart have decided to launch an attack on Iran, which has now escalated to a regional conflict – something we will continue to provide updates on.

Many of you, who are looking to make decisions about your tax wrapper contributions, could be forgiven for throwing your hands up in exasperation. What is a humble saver, looking to build for their future, to do?

To answer that question, let’s take a look at what the impact was for the previous three of these situations.

Sticking to the plan

Here, we look at what would have happened if someone had invested £20,000 each year into our level 5 portfolio (our most populated portfolio) on the 26th of March, regardless of the situation.

We can compare this with an investor who, in the years we highlighted – 2020, 2022 and 2025 – chose to move their money into cash instead*, concerned about the geopolitical environment, while remaining invested in the Level 5 portfolio in the other years (2021, 2023 and 2024), as before.

The money would still have grown, but most of that growth would have come from the three years in which it was actually invested. But instead of growing around £40,000, it would only have grown by £27,000. With more time in the market, these decisions are exacerbated, as you can see from the annual breakdowns below.

Breakdown of impact by contribution

• 2020 contribution £9,645.84 lower

• 2022 contribution £2,435.52 lower

• 2025 contribution £1,866.90 lower

Of course, there are many different choices investors may have made. Yet in periods of uncertainty, heavy news flow and real market volatility, it is not uncommon for investors to step away from the market.

At the time these previous examples generated some real panic. However, history shows that the investor who stuck to the plan and continued to invest at their appropriate risk level (assumed here to be the one deemed to be the right one for them) was better off.

Often these situations can actually provide a more cost effective entry point for a long-term plan, particularly compared to periods where markets are buoyant and everyone is very optimistic.

This comes with the usual caveats. Here we are assuming that the investor in question has a long-time horizon to allow for volatility in markets to occur. If you have a short-time horizon, i.e. you envisage needing the money in the short term, then you should consider lower risk options (again, regardless of the market situation). Also, the portfolio needs to be appropriate for the individual’s risk appetite. 

Another point is that diversification is key. This is not a simple cash vs investing point. If we run this with some very concentrated positions in specific investments, the outcome could look very different.

We don’t know how this war will pan out and our portfolio management team will continue to monitor the situation. But if you are a long-term investor, this essentially shouldn’t matter. These examples of recent tax year-end, pretty major, situations shows that sticking to your plan and continuing to invest in the right risk levels has shown to pay off.

This conclusion will come as no surprise to regular readers of our content, but it’s always good to give real examples in periods like this. 

If you are unsure about your risk level, want to make sure you are on the right track or want to discuss our views on the current situation and what we are looking at in the portfolios, please don’t hesitate to reach out.

Please remember that when investing, your capital is at risk. The value of your portfolio with Moneyfarm can go down as well as up and you may get back less than you invest. Past performance is not a reliable indicator of future performance. The views expressed here should not be taken as a recommendation, advice or forecast. If you are unsure investing is the right choice for you, please seek financial advice.