Investments

If you are in the lucky position to have a lump sum of money you will be looking for a product, account or an investment vehicle to put it into. You may not have a lump sum but want to use disposable income to save into an investment on a regular basis normally monthly. The investment arena is vast and it is not possible to cover all the options and choices here in this one page. We will try and give a brief overview of a few possible options that you may want to consider.

As IFA’s we see a lot of people with different investment needs. If you are considering an investment you need to be first happy and comfortable with the amount of money you are investing. This is the same rule for a regular contribution as it is for a lump sum. You need to be happy that the amount of regular contribution is surplus to requirements and don’t have any immediate use for a lump sum.

Secondly you need to be comfortable with the risk you are taking with your investment. If you are starting down the investment route you will start to read about “risk to reward”. In layman’s terms this means the higher level of risk you open your money up to the potential higher return, but also you have to be aware of the higher downside that comes with it.

Thirdly, you need to be ready to commit to a certain amount of time. This will be linked with how much you want to invest and what level of risk you are considering taking. For example a £1000 invested in a normal bank deposit account can be viewed as a short term investment and would be considered low risk. Whereas a £1000 invested into a stock and shares ISA with funds in the Far East would be seen as a longer term investment and higher risk.

With investments you need to consider also any tax implications. How will the growth/interest be treated for tax purposes? Will you need to declare any interest on your tax return? Is there an element of the growth you can take tax free or return of capital? Is there any more tax you need to pay as a higher rate tax payer? Will interest taken be added to your annual income? What are the tax implications when the investment matures or you want to cash it in? We would always ask you to consider using any suitable tax free investments before moving on to those which involve some element of tax.

Investments can also be done on behalf of trustees and where there is a power of attorney in place. At Thinking Finance we will be there to help you through the investment process. As a company we will always discuss any options or recommendations with you and make you fully aware of any risk that are recommendations could pose. We will make you aware of any costs, penalties or tax that an investment could have.