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INVESTMENTS
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If you would like to have advice about your investments, be they PEPs,
ISAs or otherwise, or you simply wish to find out who is paying the
best interest rate on deposit accounts or Cash ISAs, please contact
us
For a simple generic guide to some investment forms - it is not possible to cover all investment
styles here - please read below. For extremely detailed fund information, please
visit Citywire.
There are many different forms of investing, but there are only four
different investment asset classes. These are: Equities Which of the above you invest in will be determined by your personal
attitude to investment risk, investment objectives and investment timescale. For example, if capital preservation is your priority, or if you require
your capital within say, 5 years, you may choose to invest wholly in
cash. On the other hand, if you have a longer investment timescale and are
willing to accept the possibility that your funds may fall in value,
for the possibility of greater gains than may be realised through simply
investing in cash, you may choose to invest in one or more of the other
three asset classes. If you initially invest in assets which can fluctuate in value, then
as the time draws closer to the point at which you will need to realise
your funds, it may be wise to change the asset mix, perhaps moving over
to cash, thereby reducing the risk of, for example, “stock market falls”
reducing the value of your fund shortly before you need it. There is a risk attached to each of the above asset classes, and people
generally accept that the value of equities, gilts & bonds and property
can fall as well as rise. However, even a cash investment is not “risk
free” - inflation can erode the real value of a cash fund or the institution
with whom your cash is deposited may run into financial trouble. There is interaction between the above four asset classes. For example,
in the past few years, there has been a dramatic worldwide rise in the
value of residential property, which may be directly attributable to
people shying away from equity investment, due to the worldwide slump
in stock markets since 2000, and choosing instead to invest in property.
COLLECTIVE INVESTMENTS: A collective investment is simply one where many people will make an
investment in a fund which is managed by a professional fund manager.
Nowadays, funds exist which are designed to track a particular stock
market index. A fund managed by an investment team or individual is known as an actively
managed fund, while a tracker-type fund is known as a passively managed
fund. Until the fairly recent past, the main way that people in the UK saved
over the long-term was by means of an investment-linked insurance policy,
such as an endowment
,
insurance bond
, or a maximum
investment plan. For more information on the taxation regime for life insurance policies, please
click here. Investment
Trusts have also been around for a very long time, some going back
150 years. Unit
Trusts are comparative newcomers, having only really taken off in
the past quarter of a century or so. However, with the introduction, in the 1980’s of PEPs and TESSAs,
and their replacement, the ISA, in 1999, things took a turn for the
better in the mass market savings world. PEPs, TESSAs and ISAs are not investments in themselves, they are,
or were, simply a more tax-efficient wrapper, within which could be
held, either stocks and shares or cash. Very often, the underlying investment
was an investment trust or unit trust. Personal
Equity Plans (PEPs) were introduced by the Conservative government
to encourage people to invest in stocks and shares. They also introduced Tax-Exempt
Special Savings Accounts (TESSAs) for people who wished to invest
in deposit accounts. PEPs and TESSAs have since both been replaced by
Individual Savings Accounts
(ISAs), which were introduced by the Labour government
on 6 April 1999. It has, since 6 April 1999, not been possible to make an investment
in a PEP, but previously-invested monies can continue to be held in
a PEP, and it is possible to transfer a PEP to another fund management
company if desired. ISAs have several different components, including Maxi ISAs and Mini
ISAs, and the underlying investment may be either in stocks and shares or cash.
There was, until recently, also an “insurance” component, but this is no longer available. There are differing investment
limits for each component, and there is interaction between the
components, for example, it is not possible to invest in both a Mini
ISA and a Maxi ISA in the same tax year. An ISA may also be a CAT
standard, which is a government designation, and stands for “charges,
access and terms”. A Cat standard ISA does not mean that such an ISA
is “better” than a non-Cat standard ISA, it simply means that it fits
in with the design criteria laid down by government. The government has a wide range of products available through National Savings, for more information
on these, please click
here. INVESTMENT SERVICES ARE BASED ON THE WHOLE OF THE MARKET
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