Savings and investments

Financial planning is an all encompassing phrase that means nothing unless you consider the individual components that are required to determine a sound financial planning strategy.

As part of a comprehensive financial planning service, we will consider details of your existing finances and arrangements and then compliment them with a practical action plan, which should enable you to generate tax efficient wealth in the future.

Such aspects are likely to include:

• Efficient tax planning to make use of tax allowances and investment tax breaks available, e.g. ISAs
• The use of your annual capital gains tax allowances where capital can be generated tax free for your collective investments
• The use of graded funds from lower risk high yielding funds to full equity managed funds as a means of tax sheltering capital growth until your taxable income reduces in retirement

The uses of trusts and life assurance to assist in your estate and succession planning as a means of continuing the wealth you have created for future generations

Naturally, these aspects are not exhaustive and very much depend upon your personal circumstances and requirements.

As specialist independent advisers we are well versed in assimilating and providing solutions for your needs - often with a hectic life, the time and effort required to do this is not available without outside assistance.

The following gives a brief taste as to the areas we can look at for you :

Deposit Accounts

Deposits are designed to protect your money while offering a fixed or variable interest rate. Most people have cash investments in the form of deposit accounts that pay a regular interest and enable you to access your money at short notice. They are one of the safest forms of investment; however the buying power of your money could be eroded by the effects of inflation.

Benefits

• Low risk
• Competitive interest rates
• High level of security
• Capital Guarantee
• Transparent

Taxation

• Interest subject to income tax at marginal rate

ISAs

Individual Savings Accounts (ISAs) were first introduced in April 1999 by the Labour Government to replace Personal Equity Plans (PEPs) and Tax-Exempt Special Savings Accounts (TESSAs).

What is an ISA?

ISAs are ‘tax-free wrappers’ you can save cash or invest stocks and shares in. This means that you do not pay tax on the income you receive from your ISA, or pay tax on the interest your savings earn - no matter how much your investment grows or how much you withdraw in any financial year.

Each year, you have a tax-free allowance of £10,200 and this may be all be invested in a Stocks and Shares ISA or up to £5,100 can be invested in a Cash ISA.

Benefits of ISAs

• You don’t have to pay any income tax on your investment growth.
• You don’t have to pay any capital gains tax from the money arising from your investments.
• You don’t have to tell the taxman if you hold an ISA on your tax return.
• ISA`s are transferable to new providers.
• You can take an ISA out at any time though a notice period or restrictions may be put in place depending on your ISA fund manager’s rules.

Stocks and Shares ISAs

These are generally used for long term savings in stocks and shares. Whether you wish to invest all your money in stocks and shares or wish to make a cash investment, you must invest all your money with the same ISA fund manager - so it is important that you find the ISA most suitable for you. You must be a UK resident aged 18 or over to take out a Stocks and Shares ISA.

Cash ISAs

These are generally used for short term saving. You can guarantee quick access to your money and make withdrawals at any time, though you need to check policy restrictions and notice periods, as these tend to vary between ISA providers. You must be a UK resident aged 16 or over to take out a Cash ISA, limits currently being £5,100 per annum.

Structured Products can also be utilised within Cash ISA’s to provide alternatives to bank account returns.

Investment Bonds

Investment bonds are provided by life insurance companies. They are flexible and can be used to produce capital growth or to generate an income and the minimum investment is typically £5,000 or £10,000.

When you buy a bond you will be allocated a certain number of units in the fund(s) of your choice. The value of your capital will normally rise and fall in line with the value of these units. They also include an element of life insurance, typically an extra 1 per cent.

Benefits

• Low investment limits
• Tax efficient withdrawals
• Efficient for trust planning
• Wide fund choice
• Death benefits
• Competitive charges - typically 1 - 1.5% annual management charge
• Top slicing

Taxation

• Gains subject to income tax
• Taxed at source
• No further liability for basic rate taxpayer (providing gain doesn’t take investor into Higher Rate Tax)

All investment returns are determined by performance, marketing conditions and overall economic factors which may not be repeated in the future. Therefore, past performance is not necessarily a guide to future returns.

Structured products

The term Structured Product is the name given to an investment product that provides a return that is pre-determined by the performance of one or more underlying markets such as the FTSE 100.

Structured products typically come in two forms: growth products (which may provide an element of capital protection) and income products (that provide a fixed high income but with a risk to the capital return).

Benefits

• Benefit from stock market growth without direct exposure
• Access to various markets
• Safety net
• Income
• Growth

Taxation

• Dependent on provider and product
• Income tax or CGT

All investment returns are determined by performance, marketing conditions and overall economic factors which may not be repeated in the future. Therefore, past performance is not necessarily a guide to future returns.

Mutual Funds

Mutual Fund’s can be accessed via savings vehicles such as ISA’s, Unit Trusts & OEIC’s. They provide investors with a simple route to investing in stocks and shares. Each investor’s money will be pooled with that of other investors and used to purchase shares in their chosen fund.

Mutual Funds can range from single assets such as UK Equities to fund which invest in a range of assets classes such as Managed Funds or Fund of Funds. Investing in a Fund of Funds arrangement will achieve greater diversification.

An investment manager will actively manage your investment with a view to selecting the best securities. A Fund of Fund manager will select the best performing funds to invest in based upon the managers performance. This additional level of selection can provide greater stability and take on some of the risk relating to the decisions of a single manager.

A feature which can be used in conjunction with Mutual Funds is a Platform. A Platform is an administrator that holds all collective investments such as ISA’s, UT, and OEIC’s in one place. The underlying funds remain invested in the original fund. This eases the administration on the investor as they will have all holdings on one statement and also allows them more fund choice and cheaper fund switches.

Benefits

• Regular savings
• Low investment limits
• Wide fund choice
• Low charges – economies of scale
• Competitive charges – typically 1 to 2% annual management charge

Taxation

• Income subject to income tax
• Gains subject to capital gains tax

All investment returns are determined by performance, marketing conditions and overall economic factors which may not be repeated in the future. Therefore, past performance is not necessarily a guide to future returns.