Savings & Investments.
Given recent market volatility would-be investors could be forgiven for thinking that the best home for their money would be under the bed! Whilst you are most likely to get the money back when you need it, it is likely to leave you poorer over the longer term.
Why invest at all?
Cash does not protect against
inflation. Even though we are in a relatively low period of inflation, think what £500
would buy you today compared with twenty years ago.
Cash is an important asset but it is important to consider diversification
What is diversification?
Definition: spreading your
investment across different asset classes such as stocks & shares (equities), bonds,
property, alternative investments and cash. The main aim being to reduce the overall
risk in your investments compared to the risk of just investing in one asset class.
In theory, by diversifying and spreading your investment across different assets, if one asset is underperforming, the positive performance of another will help to compensate for this.
See our Guide To Diversification for more information or contact us
Individual Savings Accounts (ISA's)
There are now just two types of ISA, the Cash ISA and the Stock & Shares ISA - your overall allowance for both is £7,200 (2008/09). Within this, the limit for Cash ISA's is £3,600 with the balance being able to be invested into a Stocks & Shares ISA.
In addition, you can now transfer existing Cash ISA holdings to a Stocks & Shares ISA without affect this year's ISA allowance.
See our Guide To ISA's for more information or contact us
Saving For Children
It is as if children have become a luxury item. From their first squeal through to the end of their time at university, you will pay out more than £185,000*. This can be a hefty chunk of your after-tax income and it is therefore worth planning ahead to minimise the burden.
However much you have available, you can find an option which is suitable. Some will be specifically designed for children - and some will even have tax benefits thrown in.
Choosing the right option
First, there is the Child
Trust Fund which the Government starts for you by offering a donation. Invested well, this
can make an important contribution to future costs, particularly if you - and other relatives
or friends - top it up over the term. Second, there are the friendly society children's bonds,
with low minimum investment levels, available to anyone connected with you, including friends
and god parents as well as close relatives.
Both these options come with tax breaks. However, the list does not end there. With many generic products also now offering minimum investment levels of just £20 or £30 a month, a standard fund may be just as suitable. Taking costs, your tax position and your attitude to risk into account, some could be used instead of - or perhaps as a top up to - the more tax efficient options.
Planning for your children's future
With such a large
range of options available, making the right choice can be difficult - and take a significant
amount of your time as you search through the different offerings.
Alternatively, we can help. Not only can we quickly outline what the different options mean for your child's future, we can also assess your needs in the context of your situation, with full knowledge of the wide range of products available.
* Source: Liverpool Victoria, Annual cost of a child survey 2007, to age 21.
