InvestmentWe offer a wide variety of investment products and as we are independent we can research the entire market for the most suitable provider as well as product. Here are a few of the types of investment we arrange for our client’s. Our Investment Selection Process
Investment trusts are a type of collective investment. They are structured as companies and exist purely to invest in a portfolio of shares and securities in other companies to make money for their own shareholders. They pool investors’ money and employ a professional fund manager to invest in the shares of a wider range of companies than most people could practically invest in themselves. This way even people with small amounts of money can gain exposure to a diversified and professionally run portfolio of shares, spreading the risk of stock market investment.
Individual Saving Account (ISA)
Anyone, who is an income tax payer and has some money to save or invest, should know about Individual Savings Accounts (ISAs). ISAs are wrappers within which a wide range of savings and investment products can be held, free of UK income and capital gains tax by anyone aged 18 or over (16 or over for cash ISAs). ISAs serve as a ‘wrapper’ to fully protect savings from tax, allowing individuals to invest monies up to maximum limits (by way of regular or single amounts) each tax year in a range of savings and investments and pay no personal tax at all on the income and/or profits received.
There are five types of ISA:
- Stocks & shares – in the form of either individual shares or bonds, or pooled investments such as open-ended investment funds, investment trusts or life assurance investments.
- Cash – usually containing a bank or building society savings account.
- Innovative Finance (IF-ISA) – in the form of loans made through peer-to-peer (P2P) platforms.
- Lifetime ISA (LISA) – for those aged between 18 and 40 designed to help them save up for their first home or retirement.
- Help to Buy – aimed at helping first time buyers to save for their mortgage deposit. Available until 30th November 2019. It is not possible to subscribe to both a cash and a Help to Buy ISA in the same tax year.
Structured products is the name given to a group of investments that are designed to deliver a known return for given investment circumstances and combine two or more underlying assets in order to offer growth or income potential, whilst usually offering some degree of capital protection. Such investments normally share the following characteristics:
- Fixed term which means they are not as liquid as deposit accounts or investments in equities
- All of the return or interest only is linked to the performance of a stock market index/indices
- Offers enhanced returns because of the additional risk taken
- Offers growth or income options, or both
- Can be held within a variety of product wrappers including ISAs
- Varying degrees of capital protection may be available. For example, maximum loss being defined at outset or full protection given in all but extreme market conditions
- Tend to be offered for a limited period and for a limited amount of funds. The investment company will set a maximum amount that can be invested and once this level or the closing date is reached, the offer closes
There are two main types of structured product:
- Structured Deposit
- Structured Investment
Structured deposits and structured investment products with some capital protection are often purchased by those looking for alternatives to saving accounts and other deposit-based products.
These products offer growth that is linked to stock market performance – usually via an Index, such as the FTSE 100 Index, although the amount of return you may receive is sometimes capped.
Some structured products expose your capital to risk, although these plans are often set up with a “safety net feature”, which means that the stock market can fall by a certain percentage without affecting your capital return.
Other structured products protect your capital and are designed to return your capital whatever happens to the stock markets, these generally offer lower rates of return. The rewards or potential rewards offered by structured products are usually closely linked to the level of risk you are prepared to take. Many products offer you a choice of income (monthly, quarterly, annually) or growth and this is often a fixed percentage in each case.
You should carefully assess the potential rewards against the risks you will be taking. For example, you may be offered a fixed income for a period of time but with the risk of losing some, or all, of your capital. Or you may be offered capital security with lower potential returns.
Onshore Investment Bonds
An investment bond is a single premium life assurance contract although the life cover aspect is only nominal. Bonds are collective investments in which the investments of many individual investors are pooled. This pooling enables relatively small investors to benefit from the economies of scale made available to institutional fund managers.
A wide choice of managed, general and specialist funds are available offering investment opportunities in equity, property and fixed interest securities. Bonds enjoy the facility to switch between these internal insurance company funds at a reasonable cost if desired. Although classed as single premium investments, ‘top up’ facilities are offered, allowing further amounts to be invested either on a regular or ad hoc basis.
Investors benefit from the ‘5% rule’ which allows them to withdraw up to 5% of the initial premium each year (until such time as all of the original investment has been withdrawn) with no immediate personal tax liability (which may be particularly attractive to higher and additional rate taxpayers).
Offshore Investment Bonds
Offshore Bonds are collective investments in which the investments of many individual investors are pooled. They are technically single premium life assurance contracts and therefore normally have nominal life cover attaching. A wide choice of funds is available ranging from managed to specialist funds. A number of companies market offshore life policies, particularly single premium bonds. The most popular are those issued by subsidiaries of well known UK life offices in countries such as Luxembourg, the Republic of Ireland, the Channel Islands and the Isle of Man. The income and gains of an offshore bond fund will normally be free of tax in the relevant jurisdiction. Hence, they are often referred to as benefiting from “gross roll-up”.
Enterprise Investment Scheme (EIS)
The Government introduced Enterprise Investment Schemes (EIS) to encourage people to invest in smaller companies. They are designed to help smaller higher-risk trading companies to raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies. The initial investment qualifies for up to 30% tax relief on investments up to £1 million in a tax year (subject to maximum relief equal to the amount of your income tax liability for the tax year). There is a ‘carry back’ facility which allows all or part of the cost of shares acquired in one tax year, to be treated as though they had been acquired in the previous tax year.
Venture Capital Trust (VCT)
The Government introduced the Venture Capital Trust Scheme to encourage people to invest in smaller companies whose shares and securities are not listed on the main stock exchange with the aim of making capital returns. VCTs are themselves listed companies and are run by a fund manager. Income tax relief is available at up to 30% on investments of up to £200,000 per tax year into newly issued shares provided the shares are held for at least five years.
Source: Threesixty LLP Online 2019
Socially Responsible Investing
Sustainable investing is about investing in companies that operate in a responsible way and provide services that tackle global issues like climate change, world health and population growth. It is based on the belief that in a fast-changing world, the companies that will survive and thrive are those which:
Improve people’s quality of life, be it through medical, technological or educational advances.
Drive improvements in the efficiency with which we use increasingly scarce resources.
Help to build a more stable, resilient and prosperous economy.