If you are considering making an investment or want to review your existing arrangements we can help. It is important to many of our clients that they ensure their investments are working hard for them. We can help you build an investment strategy taking account of all your needs and preferences. An important part of investment planning is to ensure that your investments balance your needs for growth, income or a combination of both. It is our aim to ensure all our clients' understand what investments they hold and also the risks of investing over the long term. In our experience no two clients are the same, this is why our advisers take the time to understand your needs, wants and attitude to investment risk prior to making any recommendations to you.
Below we have provided information on the different types of investment available, it is important to take advice about which type of investment is right for you, and the following descriptions are provided for information only.
Deposit Account
There is an abundance of deposit accounts available from providers ranging from banks/building societies to supermarkets. Some accounts offer competitive rates with instant access whilst others impose “notice” periods before withdrawals can be made. All accounts provide a rate of interest payable on the capital invested.
National Savings
National Savings are a secure investment guaranteed by the British Government. This product is therefore an ideal, secure, tax efficient home for your money and can be considered part of your liquid assets.
Individual Savings Accounts (ISAs)
There are two basic types of ISA:
Cash;
Stocks and Shares (which includes unit trusts, OEICs, investment trusts etc.)
Owing to the fact that ISAs enjoy major tax advantages, the level of investment for the tax year 2011/2012 is restricted to £10,680. Both capital profits and income receipts are totally free from any liability to tax within the fund. Indeed, where interest accruing to an ISA on corporate or government bond holdings is received with a 20% tax credit, that credit remains reclaimable by the fund managers. Furthermore, as the underlying fund is a unit trust / open-ended investment company, you will also benefit from professional fund management.
Due to the tax-efficient nature of ISAs, there are rules governing contributions as follows:
The ISA investment allowance for the 2011/2012 tax year is £10,680. Up to 50% of that allowance can be saved in cash with one provider. The remainder can be invested in stocks and shares with either the same or a different provider.
ISA savers will be able to invest in two separate ISAs each tax year; a cash ISA and a stocks and shares ISA.
ISA savers are able to transfer money saved in their cash ISA to their stocks and shares ISA
Investors have no personal liability to income tax or capital gains tax on income or gains arising from investments held within an ISA. However, capital losses cannot be used to offset capital gains realised elsewhere. No details of ISA investments, income received or gains realised need be included on your annual tax return.
ISAs will be available indefinitely.
ISAs may not be written on a joint basis or in trust.
Unit Trusts / Open-Ended Investment Companies (OEICs) / Investment Companies with Variable Capital (ICVC)
A Unit Trust / OEIC / ICVC is a collective investment vehicle. The main benefits for investors are that:
Professional investment research and management is made affordable for even the smallest investor;
Risk is spread over dozens or even hundreds of different holdings within the fund, each investor effectively owning a small proportion of each;
Economies of scale cut dealing costs when holdings are bought and sold;
These funds can invest across a broad range of asset classes and investment markets
Investment Trusts
An Investment Trust is a company that is specifically set up to invest in the shares of other companies. Investment Trusts are made up of a fixed number of shares determined at the outset, which are then traded on the stock exchange. The value of the shares in an investment trust is therefore dependent on the demand for the shares in the trust, and unlike the units in either a Unit Trust or OIEC the value of the shares is not always directly linked to the value of the investments it holds.
Investment Bonds
An investment bond is technically a single premium life assurance contract although the life cover aspect is only nominal. Bonds are collective investments in which the investments of many individual investors are pooled. This pooling enables relatively small investors to benefit from the economies of scale made available to institutional fund managers.
A wide choice of managed, general and specialist funds are available offering investment opportunities in equity, property and fixed interest securities. Bonds enjoy the facility to switch between these internal insurance company funds at a reasonable cost if desired. Although classed as single premium investments, 'top up' facilities are offered, allowing further amounts to be invested either on a regular or ad hoc basis.
Guaranteed Products
There are various Guaranteed Products available which provide varying levels of capital protection and a range of investment environments. These tend to be available for a short period and then close, they may also have a limit on the amount of money which can be invested.
