Investments / Savings
With so many types of Savings and Investments on the market, with differing degrees of risk, it is wise to seek independent advice.
National Savings & Investments ( NSI ) Are investments offered by Her Majesty’s Treasury, which effectively raises money for the Treasury. In return NSI offers absolute security for the investment as they are backed by the government. Investment returns however are not spectacular, this being the compromise for security, but they are stable and in some cases tax free.
Individual Savings Accounts ( ISA ) These are tax efficient, and allow investors to hold UK and overseas shares, cash deposits, corporate and government bonds within the account.
From 6th April 2008, changes have been made to simplify the rules governing ISA investments.
Regular savings and/or lump sums are a popular way of building up a capital sum over the medium to long term.
Advantages of ISAs – Despite the abolition of the 10% credit reclaim, equity ISAs are still valuable
Investments for the following reasons:
The main changes are:
- The Government has confirmed that ISAs will remain indefinitely.
- All Personal Equity Plans or PEPs will be reclassified as Stocks & Shares ISAs
- The Maxi / Mini distinction has been removed; instead there will be two types of ISA.
- 1. Stocks & Shares ISA
- 2. Cash ISA (Tessa only ISAs are reclassified as Cash ISA)
- The annual subscription limits have increased to £7200, of which up to £3600 can be invested in a Cash ISA.
- You can continue to subscribe to one Stocks & Shares ISA and one Cash ISA, subject to the new overall maximum limits in any tax year. These can be with the same or different ISA managers.
- As from 6th April 2008, you will be able to transfer any investment currently held in a Cash ISA into a Stocks & Shares ISA.
- All growth on the investment is free from Capital Gains Tax,
- Investors do not have to account to the Inland revenue for any income received or on disposal,
- High exposure to a particular market sector.
- Higher rate taxpayers do not have to make up the further 22.5% income tax they would have to pay if the investment was held outside of the ISA.
The new rules provide you with an increased ISA allowance and greater flexibility to invest more into Stocks & Shares and to move money into them from any Cash ISA that you may hold.
You may already have an equity based ISA Investment. You can transfer your accumulated ISA investment to another ISA provider, and there are a number of reasons why you may want to consider this option:
- Poor investment performance with current provider,
- Excessive charges,
- High exposure to a particular market sector,
- Diversification,
- Portfolio consolidation,
- Change to your personal circumstances.
To find out more on ISAs please contact me for a no obligation meeting.
Collectives These are better known as Unit Trusts / OEICs and Investment Trusts which allow individual investors to pool their money into a fund which is then invested in a wide range of shares / fixed interest / property funds and is then professionally managed in the hope of achieving maximum returns consistant with the funds stated objective
A Unit Trust is a fund of stock market investments divided into equal portions called units, and the unit price is calculated normally on a daily basis. This price can rise and fall with movements in the price of the stocks and shares within the trust.
Open Ended Investment Companies (OEICs) are another pooled investment and are similar to Unit Trusts and managed in the same way. However, instead of buying units, the investor buys shares in the OEIC and the value of these shares is directly linked to the value of all the assets in the fund. Instead of having a bid/offer price structure like the Unit Trust, the shares are quoted on the stock market at a single price to which buying or selling costs are added.
An Investment Trust is a company listed on the stock exchange and whose main business is investing into other companies.
Investment Bonds are offered by Life Assurance companies in return for a one off lump sum payment. They allow access to a number of funds from the providers own internal funds, and many now give access to a greater range of funds by using external funds from a variety of providers. They give you a minimal amount of life cover, usually 101% of the policy value at death. A main benefit is that Investment Bonds allow tax deferral on withdrawals from the policy and can be used in effective tax planning.