Investments
As a company, our advice is focused on investments into single premium collective arrangements. These are where investors money is held with one or more providers that can offer the facility to access a spread of asset classes that can be managed by a broad range of fund managers.
A collective investment comprises a range of assets. This provides our investors with the opportunity to benefit from a lower risk approach than would be the case with a single or restricted asset class. Collective investments are held within a range of products that offer different benefits and tax regimes. By utilising a combination of products it is possible to construct an investment portfolio that can use specific features that are appropriate to our clients needs and objectives.
Unit Trust (UT) and Open Ended Investment Companies (OIEC)
These arrangements offer the investor the opportunity to hold a wide range of shares within a single arrangement which are managed on behalf of the investor - usually within a specific geographic or asset sector. These Unit Trusts are open ended and usually arranged with a difference between the purchase and sale prices. Arrangements can benefit from an individuals annual capital gains allowance. It is also possible to access a wide range of different low cost funds and fund management groups within the umbrella of a fund supermarket. This provides the investor with the flexibility of a low cost switching facility and, where appropriate, allows the option of modifying holdings and fund managers without the necessity of selling funds.
Individual Savings Account (ISA)
ISA’s have a limit on the amount that can be invested of £7,200 per annum, which can be made up of a cash element up to £3,600 or fully into investment funds for the maximum £7,200. The underlying investment, Unit Trusts or OEICs, are held within a ‘Tax Wrapper’. The benefits are that no personal taxation is liable either on income, if taken, or upon final encashment.
Investment Trusts
This is a closed company arrangement whereby funds are invested in other companies shares, fixed interest securities, property, cash deposits and, like OIEC and Unit Trusts, they spread the risk by investing in many different stocks and shares. The value of the Investment Trust moves up and down depending upon demand and supply and does not necessarily reflect the value of the investments owned. As a company, an Investment Trust has a facility to borrow which, together with the uncertainty of the value of the company depending upon demand, can make it a higher risk arrangement than a similar Unit Trust or OIEC.
Investment Bond
This is a non qualifying single premium life assurance policy. These are usually arranged as segmented plans set up for the benefit of one of more investors. They can be written with a trust wrapper and can be an efficient product to ensure transition of assets to beneficiaries inside and outside one’s estate. The investor can produce an investment with a range of funds to match their general investment approach. For many investors they offer a simple arrangement that can meet their investment objective of spreading an investment across a range of assets within one product. Many providers also offer the facility to access a range of fund management groups within one plan. Growth within the plan increases the underlying value of the unit price.
As a product the Investment Bond offers the facility for investors to take annual withdrawals of up to 5% of the original investment which is treated as a capital withdrawal and the effective income may be drawn for up to 20 years tax free. As an open ended contract, it is possible to partially or fully encash the bond. These encashments are seen as chargeable events which may give rise to a liability to income tax in the hands of an investor who is, or is likely to become by virtue of part or all of the ‘profit’, a higher rate taxpayer.
As an investor it is possible to combine a range of each product and construct a portfolio of holdings to match the attitude to risk linked to an agreed timescale. Investments are usually viewed as medium to long term arrangements which need to be reviewed and adjusted to suit changing income/growth requirements whilst taking advantage of the different tax benefits that each product offers.
The value of investments may fall as well as rise.
