Our Services - Savings & Investments

It may be that you have built up a tidy nest egg by regularly saving over the years, sold your business, inherited money or won the lottery, but if you find yourself with a sum of money to invest, it is important that you receive proper independent financial advice to ensure the money is invested wisely so that its spending power is not eroded over time.

Leaving large sums of money in a bank or building society account is unlikely to be the long-term answer.  Whilst cash is an important asset class, the returns on it, especially in today’s low-interest environment, are likely to be limited and may not even keep pace with inflation.

So what alternatives are there?  The other main asset classes are property, equities (shares) and gilts and other bonds.  Direct investment in equities, gilts and bonds is generally conducted through stockbrokers who will charge a commission for dealing on your behalf, either as a flat fee or as a percentage of the value (subject to a minimum charge).  Because of the cost of dealing, it is not worthwhile investing directly unless you are buying a large amount of a particular share, gilt or bond.  However, in order to avoid losing a substantial percentage of your investments if, for example, a company which you own shares goes bust, it is vital that you own a wide selection of shares in different companies – you don’t want all your eggs in one basket.  The problem is that owning a large number of shares in a large number of companies is only possible for very large investment pots.

The solution to this is the other way of holding shares, gilts and bonds, which is indirectly, through “pooled” investment vehicles such as unit trusts, open-ended investment companies (OEICs) or investment trusts.  These vehicles pool the money of a large number of investors and put it in the hands of a professional fund management company.  The manager will choose of a broad spread of instruments to invest into, the type of which will depend on the stated aim of the fund.  Because of the amounts of money involved, the manager will negotiate very cheap terms for dealing in the shares, gilts or bonds, so reducing costs, and will also have a wide spread of investments, so should one company fail, it will have a very much reduced impact on the value of your investment.

So why should we be suggesting that you, who has been happy to build up your nest egg in a bank or building society deposit account, should move into the riskier environment of investing in equities or bonds?  The main reason is to try to achieve a higher return than is possible in a deposit account.  Provided you are prepared to be patient (as we said before, a 5-year minimum time frame is usually required) you should be able to expect a higher return.

In the current low-interest environment, returns on your deposit accounts are very low, but there is no threat to your capital (assuming your bank manages to stay afloat).  However, investing in equity funds is different.  If the shares or bonds in which the fund invests falls and circumstances dictate that you are forced to sell the investment, you may not get back the amount you invested.

When advising an investor, we always establishing what level of risk is appropriate for that investor to take and the investor’s capacity for loss. We then structure the investment portfolio accordingly.

Since none of us likes paying more tax than necessary, we encourage investors to make use of any tax breaks available. The UK’s principle tax-efficient investment plan is the Individual Savings Account (ISA). An ISA is not an investment in itself, rather it is a tax-efficient “wrapper” which can be used to hold a range of investments. An ISA can be used to hold cash or stocks and shares, either directly or through the pooled investment vehicles we described earlier. The maximum sum which can be invested into an ISA is announced in the Budget each year and for 2016/17 it is £15,240 per person. It is now possible to switch freely between cash and stocks and shares and back again.

Only those aged 18 or over may invest into Stocks and Shares ISAs, but those under 18 can have a Junior ISA, or “JISA”. The annual investment limit for 2016/17 is £4,080 and the fund can be invested in cash or stocks and shares. The JISA has to be opened by a parent or guardian where the child is under 16. The child cannot access the money in the Junior ISA until age 18, at which time the Junior ISA automatically converts to an adult ISA.

Those children with Child Trust Funds can now transfer them in a JISA.

Whatever the nature of the investments you are considering, the starting points should be the same.  We will be able to help you identify the type of vehicle and investment best suited to your needs, based on your own preferred balance between risk and return.

You will want to know about the cost.  All collective investment schemes have built-in charges, but these vary and can be difficult to understand so it is important that they are explained properly.

Another key factor is how long you intend to invest. We will be sure to understand your intentions clearly when it comes to short, medium and long-term investments.

Lastly, we will make sure you understand all the risks of your chosen investment.