We will offer to do a full fact find to ascertain your needs and objectives.
This will include a "Risk" assessment. When completed we will make a recommendation which is personal to your circumstances in terms of tax efficiency, age and family situation. In general terms people either invest for growth or for to get an income.
The value of the investment can go down as well as up and you may not get back as much as you put in.
It is important when investing that you understand the risk factors and that you only invest in areas that are consistent with your attitude to risk.
The following needs to be taken into consideration:
Pound Cost Averaging is the term used to explain the technique of buying a fixed amount of an investment through regular savings. An Investor who puts money into an investment on a regular basis, may benefit from the smoothing out effects of short term fluctuations in the share price that can be normally experienced.
The table below illustrates how pound cost averaging works using an example of a regular investment of £100 per month:
|Month||Amount Invested (£)||Share Price (p)||Number of units purchased|
We can see that the share price can go up and down from month to month. This will affect the number of shares purchased. When the share price is high, the number of shares purchased will be fewer. However when the share price falls, the number of shares purchased will increase.
In the example the average share price is 59.16p over the 12 months, but the average cost per share is 55.95p. So the amount paid per unit is 3.21p less than the average price over the same period which has resulted in the investor paying less per share by investing regularly.
This "drip" feeding into the market can therefore be beneficial and over the longer period it smooths out the short term fluctuations.
These investments have been in existence since 1999, being the successors of PEPs and Tessa's. They are available to all UK residents over the age of 18. (Over 16's can take out a Cash ISA).
The benefits are that the Investment is largely free of Income and Capital Gains Tax and for this reason they are generally the first recommendation from the Financial Industry. There are two types of ISA - Cash and Stocks and Shares. The legislation concerning these investments change from time to time.
The maximum investment permitted for the current tax year is £15,240 in an ISA. You can choose to invest the total amount of up to £15,240 in a Stocks and Shares ISA. On the 1st July 2014 the ISA became a NISA and the following rules apply.
You could use the Pound Cost Averaging technique to Invest over the year and benefit from the smoothing out of short term fluctuations.
These are flexible equivalents of Investing in Unit Trusts. The general idea is that you invest in the Stock Market and pool your investment with many other investors. This gives more people access to the Market and it spreads the risk.
Investment Bonds are unit-linked, life insurance-based investments. They are suitable for those who want to invest a lump sum of over £5,000 for the medium to long term. They can be used to increase the value of your money or to provide a regular income of up to 5% per year. This income is regarded as a return of your capital rather than investment gain and has no tax liability. Investment Bonds are particularly useful in 3 situations: