Deposit Accounts
Bank and Building Society deposit accounts offer a fixed rate of interest, which will be based upon interest rates prevailing at the time. There are a wide variety of different types of deposit account from Instant Access, through to Notice Accounts and Individual Savings Accounts.
We continually monitor the rates available from leading institutions, which ensures that we are able to provide you with the most competitive terms.
Advantages
- Your investment is completely safe and secure. You have access to your capital at short notice.
Disadvantages
- Long term investments in cash deposits generally offer poor investment returns when compared to stock market returns.
The Financial Services Authority does not regulate bank and building society deposit accounts.
National Savings
National Savings are safe secure investments, which are backed by the Government. National Savings offer a wide range of investments varying from Instant Access Accounts to 5 year investments. They can provide income or capital growth.
Advantages
- Your investment is completely safe, backed by the Government and will never fall in value.
- There are a wide range of options available.
- Savings Certificates are tax free, which makes them particularly attractive for higher rate tax payers.
Disadvantages
- Long term investments in cash deposits generally offer poor investment returns when compared to stock market returns.
- Interest rates vary from time to time, and sometimes Bank and Building Society deposits offer better returns.
The Financial Services Authority does not regulate National Savings.
Guaranteed Bonds
As the name implies Guaranteed Bonds offer a guaranteed return in an otherwise uncertain world. A fixed rate of interest for a fixed period of time is offered, typically between 1 and 5 years.
Guaranteed Bonds offer the option of either capital growth or regular income payments.
We continually monitor the rates available from leading institutions, which ensures that we are able to provide you with the most competitive terms.
Advantages
- You will know exactly what you will get back at an agreed date in the future.
- By careful timing you can fix a rate into the future at a point when interest rates are about to fall.
Disadvantages
- Long term investments in cash deposits generally offer poor investment returns when compared to stock market returns.
- Interest rates vary from time to time, and sometimes Bank and Building Society deposits offer better returns.
- Sometimes there are penalties if you need to withdraw cash before the expiry date of the investment.
The Financial Services Authority does not regulate all Guaranteed Bonds.
Packaged Stock Market Linked Investments
Stock market linked investments allow you to participate in stock markets performance around the world. An investment manager will make the decisions for you, and your investment will be held in a wide range of companies which would be more varied than you could achieve on your own.
Such investments are available through Unit Trusts, OEIC’s or Investment Trusts.
This type of investment is particularly suited for capital growth over the long term. However, it is possible to generate a modest level of regular income from these investments.
Advantages
- Over the long term stock market linked investments are likely to produce better returns when compared to cash deposits.
- Your capital will be held in an investment managed by a professional fund manager.
- Your capital will be spread amongst a large number of companies, therefore reducing the risk.
Disadvantages
- These investments can increase and decrease in value.
- These investments should be held for at least 5 years.
Investment Bonds
Investment Bonds invest in a wide range of investments from deposits, property, through to stock market investments and with profits funds. They therefore offer investors a wide range of investments with the ability to switch between investment sectors at little or no cost or any personal capital gains tax liability. Whilst these investments are purely for capital growth, withdrawals can be made each year to provide an income.
Advantages
- Your money can be invested across a wide range of diversified investments managed by one manager.
- Withdrawals can be taken at a rate of 5% per annum without any immediate tax liability.
- Simple administration and paper work.
Disadvantages
- These investments can increase and decrease in value.
- These investments should be held for at least 5 years.
Individual Savings Accounts (ISA)
An ISA is a tax efficient investment scheme which can invest in three “Components”.
- Unit Trust, OEICS, Investment Trusts and Shares
- Cash
- Insurance
There are two types of ISA, Maxi and Mini, which affect the amount you can invest in each tax year. You cannot contribute to both types in the same tax year.
The maximum amount you can invest in a Maxi ISA during this tax year is £7,000.
The maximum amount you can invest in a Mini ISA during a tax year is £3,000.
More about ISAs
A maxi ISA can invest in the three component parts, cash, life assurance and unit trusts, OEIC’s, Investment Trusts, & shares. There is a contribution limit of £1,000 into each of the cash and life assurance components. If you do not use these limits you may apply them to the stocks and shares component.
A mini ISA invests in only one of the eligible components. This is £1,000 for the cash and life assurance components and £3,000 for stocks and shares. You can purchase up to 3 Mini ISAs in a tax year, one for each component – cash, insurance and stocks and shares.
If you take out a Mini ISA for any amount, you may not invest in a Maxi ISA and you will therefore not be able to use your full ISA allowance.
What are CAT Standards
The Government introduced CAT standards to provide guidance on whether an ISA offers a “fair deal”, by laying down criteria to meet minimum Cost, Access and Terms.
Our view is that, whilst these CAT standards will provide you with a “fair deal”, they cannot guarantee value for money as performance is not taken into account.
Whilst CAT standards should be considered when buying an ISA, we believe consistent good investment fund performance is a more relevant consideration.
Our selection of ISA’s is therefore primarily based upon consistent good past investment fund performance and value for money.
How do I invest in an ISA
You can invest by making a lump sum payment or by saving on a monthly basis up to the annual limit.
You must be age 18 or over, a UK resident and to obtain the tax benefits be paying tax in the UK.
Should you wish to receive specific advice on which ISA might be best for you, email us using our online form.
Shares
Shares or equities are investments in an individual company that is quoted on the Stock Exchange. Investing in a single company, gives scope for significant capital growth, but at the same time the capital losses can also be large.
Shares can be held with an ISA or an existing PEP to provide tax efficient returns.
Advantages
- Excellent long term capital growth potential.
Disadvantages
- Investments should be held for the medium to long term (at least 3 years).
- Average to above average risk.
We are not stockbrokers, and so we do not advise on individual shareholdings, but we can introduce you to a stockbroker who can provide you either with an advisory or discretionary service.
Government Securities
Government Securities or Gilts are loans issued by the Government to assist funding its borrowing requirements.
Government Securities offer investors a fixed income return and the possibility of capital growth.
Advantages
- Offer fixed income over a specific term.
- Cheap to buy or sell.
- Any gains made are free of Capital Gains Tax.
Disadvantages
- There is the possibility of capital loss.
- Generally they have provided less attractive investment returns than equities over most periods since the war.