Savings & Investments
Investments can be used for short term or long term needs. Examples of short term needs include, saving for a car, holiday or home improvements. Longer term needs would include saving for future school fees, saving for retirement or simply building up a capital sum to use in the future.
The investment market is a very interesting place as there are thousands of different fund and investment vehicles available to use, each with their own unique features and tax treatments. The range of funds available now can cater for almost every type of risk appetite, from the cautious to the most eccentric. Here at MH Wealth Management we can guide you through the options available and help you select the most appropriate investments based on your objectives.
Diligent investors should regularly assess their portfolio to make sure that it continues to match their risk profile and investment aims over time. It’s truly remarkable how often last year’s top performing funds are this year’s worst, so, Rule one – Don’t put all your eggs in one basket. Consistency and reliability is key over the longer term, even if the performance doesn’t hit the headlines. Inflation erodes your spending power and impacts your returns. When cash savings rates are very low it’s very important to protect your capital against inflation AND to diversify your investments.
At MH wealth management we strongly believe in creating a portfolio based on your specific risk appetite, objective, goal and required time frame in mind.Managing investments takes time. This is where we can help, both in advising you on your investment needs and assisting you in managing your portfolio.
Please contact us so that we may assist you in determining an investment strategy best appropriate for your needs and circumstances.
A brief explanation of the most common types of investments vehicles that are available in the market place today.
New ISA Saving accounts (NISAs).
From July 1 2014 all ISAs became New ISAs (NISAs). This applied to all existing ISAs and new accounts opened after 1 July 2014. Cash and shares ISAs are now merged into single New ISA (NISA) with annual tax-free savings (£20,000 for tax year 2019/20). This is to make the system “simpler”. You can use the full limit for either cash, investments or a mix of both.
Saving in a NISA provides you with certain tax benefits, primarily that growth is not subject to Capital Gains Tax and any income or interest earned within the NISA is free from any further income taxation (dividend income carries a 10% income tax credit that cannot be reclaimed, even within the NISA).
Unit Trusts.
A unit trust reduces your risk of investing in the stock market by pooling your savings with thousands of others, and then spreading the money across a wide range of shares or other types of investment.
OEICs.
Open Ended Investment Companies were introduced into the UK in 1997, from Europe. Open-ended means shares in the fund will be created as investors invest and cancelled as they cash in.
OEIC’s quote a single price, and a levy which shows the costs of buying/selling.
Investment Trusts.
Investment Trusts are companies that buy and sell shares in other companies. When you invest in an investment trust company, you become a shareholder of that company. Your shares will rise and fall in value according to supply and demand for the shares.
Unlike a Unit Trust and an OEIC, the number of shares within an investment trust is limited (there are only so many that can be bought and sold at any time). This means that as well as being influenced by the value of the assets held by the Investment Trust, their price is determined by investor demand, rising with popularity, and vice versa. This means that a share in an Investment Trust can be more expensive than the total costs of the relative assets in the investment: this is called trading “at a premium”. If the reverse is true, it is said to be trading “at a discount”. This adds another layer of risk for investors in an Investment Trust, but can also create buying opportunities.
Investment Bonds
Investment Bonds are Single Premium Life Insurance policies, they have a small element of Life Insurance that is paid out in the event of death, however, it is an Investment rather than Insurance in the general sense.
You can choose from a range of funds within the bond, it can be used for Income Withdrawals and Tax Planning Benefits.
Fixed Interest Securities (also known as bonds)
Essentially a loan you make to the government or a company in return for a fixed return (interest) over a given time (maturity). These are considered as lower risk that investing in equities.
Properties
Investing directly into physical commercial or residential buildings, with a view that the property value will increase over time as well as receiving rental income. This is a fairly popular method of investing, however requires a lot of capital upfront.
Cash
The most popular mode of investing and usually held in savings accounts with banks and/or building societies. Considered a ‘safe’ as there is no fluctuation in the monetary value of your savings account, however it is very susceptible to inflation and can rapidly loose its value over time in real terms.
THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE NATIONAL SAVINGS.
THE TAX TREATMENT IS DEPENDENT ON INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN FUTURE.
TAX PLANNING ADVICE IS NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.