Now is a good time to review your investment position

The start of a new year is a great opportunity to review your personal financial position. Confirm and increase the success stories wherever possible, weed out the failures and start new plans.

Ensure you have the best professional advice. This should be independent and ideally paid on a fee basis, rather than expecting the advisor to earn through commission which could distort the recommendations and even mean some apt financial routes are omitted.

To find the most appropriate advisor for your needs and closest to home, contact the website www.unbiased.co.uk where some 15,000 IFAs are listed. Ask your short list about their areas of expertise and qualifications.

Ensure that investments are properly diversified, both geographically and by sector. Your advisor will help to assess the level of risk.

Make a comprehensive list of savings and outgoings and make a diary note when decisions have to be made.

Two examples where you can come unstuck are:

Providers who offer an initial bonus period but then either drop the rate drastically (as with savings) or increase (such as insurance);

Fixed-rate bonds which mature and, if no action is taken, the money may be rolled over into a low interest successor.

Many savings accounts entice with initial higher rates, such as for the first 12 months an extra one per cent on Mansfield Building Society's easy access at 2.75 per cent or 1.50 per cent with Northern Rock which pays 2.60 per cent.

Internet accounts are not immune. The top-paying savings accounts offered by both Nationwide with 2.78 per cent and Post Office with 2.9 per cent include as much as 1.25 per cent bonus for the first year.

Check all your savings rates. Whilst you may not have been looking, some eye-catching account names have been reduced to paying derisory interest: only 0.01 per cent with Newcastle's Nova Plus and just 0.05 per cent with Halifax's Liquid Gold (which used to be advertised by car shark Arthur Daley), Cheltenham & Gloucester's The London and Saffron's Cashbuild.

Instead consider ways to secure better rates:

Fixed, such as 4.5 per cent for five years with the AA or, for an Individual Savings Account (ISA), 4.25 per cent for four years with Halifax;

Monthly scheme: Four per cent with Saffron or Santander from 10 and 20 minimum respectively equity income fund with such yields as 7.24 per cent with Unicorn UK Income A, 7.23 per cent with Newton Higher Inc and 6.77 per cent with Insight UK Equity Income corporate bond fund with typical yields of 6.3 per cent with IFDS Brown Shipley Sterling Bond and 5.99 per cent with L&G Managed Monthly Inc.

To keep up to date, buy a subscription to monthly Moneyfacts (0845 1689 600).

Weed out consistent under-performers. For over a decade, financial advisors Bestinvest have revealed funds that regularly disappoint, currently valued at 13.29bn. Their five worst fund management groups are Jupiter (notably Jupiter Income), Scottish Widows, Schroders, Gartmore and Henderson.

The best performers are also singled out by Bestinvest, whose report is available from 020 7189 9999.

Consider consolidating your investments to reduce charges – notably when switching between funds – and make them more manageable. A fund supermarket could be the solution although the efficiency of some, notably Fidelity, is less than satisfactory.

According to the Investment Management Association, 11 per cent of savers purchase funds directly. Instead of paying a full initial fee this way – often five per cent – use a discount broker, who may eliminate the charge. Look particularly at Cavendish Online, Chartwell, Hargreaves Lansdown and Torquil Clark.

A helpful advisor – like private bankers Weatherbys – will produce a summary annual tax statement, which should save on your accountancy fees.

Maximise tax allowances, notably by saving through an ISA where 10,200 each can be sheltered free of UK income and capital gains tax although the 10 per cent tax credit on dividends from UK companies is not repayable.

Do not overlook tax-exempt savings plans offered by friendly societies, even though the maximum is 25 monthly or 270pa, although the figures do not equate. These should be regarded as 10-year plans with the best paying 13.46 per cent (Sheffield Mutual) and 11 per cent (Druids Sheffield).

If interest rates suddenly rise and too much money is held in inaccessible accounts, create a cash buffer of three to four months' expenditure to ensure good cash flow.

Watch the protection limits. Separate protection for savings expired on December 30 for:

Barnsley, Chelsea and Yorkshire Britannia, Co-operative Bank and smile, Cheshire, Derbyshire, Dunfermline and Nationwide, Coventry, Stroud and Swindon, Scarborough and Skipton.

The depositor cover is per bank, not per account, and is rising from 50,000 to 100,000 euros (about 85,000).

Ensure adequate protection. Far too many do not cover either critical illness (yet one in 17 cancer patients loses their home and one in six struggles with mortgage or rent payments) or loss of income.

Make adequate provision for retirement, probably through a pension, ISA arrangement or qualifying policy (which can be whole of life, endowment or term policies). Despite the average male annuity rate falling by 45.5 per cent over the past 15 years and female by 41.8 per cent, the incentives to invest in pensions remain strong.

Even non-taxpayers – like most babies – can pay an annual 3,600 pension premium and enjoy 20 per cent basic tax relief. Even though under current legislation the money will be locked in until the holder reaches 55, the compound effect is likely to be spectacular.

Check on how any personal pension is performing. Contributing 100 monthly over 20 years, unit-linked maturity values range from 30,934 (MGM Advantage) to 45,243 (Aviva) whilst with-profits vary from 34,888 (Prudential)to 55,478 (LV=, formerly Liverpool Victoria), according to research by Moneyfacts.

If under-performing, take advice on transferring provider.

With interest rates likely to rise later this year, cap or fix any home loan. Avoid both an offset and a tracker.

Ensure your home is properly covered for both rebuilding costs and contents, taking into account Christmas gifts and new purchases. It is far too easy to become under-insured with the risk that any subsequent claim is scaled back.

Finally, pay by credit card – not only to benefit from the cash flow – but to provide protection in the event of supplier failure. The cashback on key plastic (five per cent with American Express Platinum for the first three months and then 1.25 per cent) could be enticing for the new year sales!

Independent advice increased yield from savings

Eric Padgett, an 80-year-old widower from Birkenshaw, near Bradford, decided to seek independent investment advice as he relies almost entirely on his savings for retirement income.

The former master butcher chose Skipton Financial Services, a subsidiary of Skipton Building Society. Last year Dave Scott at the Bradford branch reviewed Eric's savings and recommended that he transfer cash ISAs and encash with-profit bonds into three "fund of funds", which have already grown by 13 per cent less five per cent deducted for income.

On Skipton's advice, Eric chose three funds regarded as "cautious managed": Jupiter Merlin Income Portfolio, Henderson Multi-Manager Income & Growth and Thames River Distribution.

Mr Padgett, who enjoys both modern sequence dancing and following cricket, described Skipton's advice as "always helpful."