Savings & Investments
If your income exceeds your outgoings or you are given a lump sum, you have a decision to make as to where and how to invest the money.
It is important to differentiate between savings and investments. Savings are funds that you put aside for the shorter term and that you can access easily and have your capital returned, plus some interest.
Investments are designed to be held for the longer term, usually in excess of five years. Investments are not usually guaranteed to return your initial investment although with careful investment planning they can produce better returns than a bank account. A wide range of factors will influence your choice of investments, including your attitude to risk, target return, how long you can invest the funds for, and any requirement for regular or ad hoc withdrawals.
Everyone needs an emergency fund of cash which is available for easy access without any risks; the best place for this money is in a bank or building society deposit account. The capital is protected up to a maximum of £85,000 per person in any given UK banking institution. Cash ISAs (Individual Savings Accounts) are also available for risk-free money up to a maximum of £5,100 in any one year and the interest on these is tax-free.
For longer term savings there are National Savings and Premium Bonds although there is no guarantee of any return from the latter.
If you are prepared to take some risk, and we will always assess the level of risk that you are comfortable to take, there are many different types of investment available. These may include shares, government bonds, corporate bonds and property, all of which may be directly owned by an investor, or via a collective investment scheme where your money is pooled with other investors to reduce risk and increase availability of funds.
Collective investments are available in many different types of products such as pensions, ISAs and investment bonds. There are also products for children’s savings.
All investments have different tax treatment and are not always suitable for everyone. We will assess your needs and objectives, your tax status and assist you with recommendations for your savings. Many of our clients use our Wealth Management Service to ensure investments are frequently reviewed, with regular reporting and valuations.
