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Investments

In such challenging times it seems strange to talk about investing, particularly in the stock market which has seen volatile times.

Whilst a nose-diving stock market may shake anyone’s confidence it’s worth remembering that markets by their nature go up and down. Sometimes the point of lower sentiment also represents the point of greatest opportunity for those willing to take a long term view. If it wasn’t bad enough that the stock market has fallen you may have also been affected if you had invested in property depending on where you are located in the UK and even saving rates have suffered with the average bank account only paying a paltry rate of interest.

The basis of investment is using money to make money. And if we’re honest, the idea of having more money appeals to almost everyone. The important thing is to choose the savings or investment that suits your goals and time of life. Here are some important questions you need to ask yourself in times of boom or bust.

If you answer ‘no’ to any of the following, investing may not be your top priority at the moment.

  • Are you free of debt, other than a mortgage?
  • If you have dependents, do you have enough life insurance in place?
  • Have you protected your income, in case you become ill or injured?
  • Have you built up an emergency fund of 3 – 6 months salary in an accessible savings   account such as Cash ISA?
  • Do you have a lump sum or surplus cash to invest each month?

Fox Payne Associates believe it is important to understand your goals for your money. Everyone’s objectives are different so we’ll start by finding out how long you want to invest for and exactly what you want to achieve. Next we will establish your attitude to risk for the money you’re investing. We will do this by asking you questions and from your answers we can tell you how adventurous or cautious you are. Having identified your goals and established your attitude to risk, we’ll design a solution that meets your needs. This will involve finding the right product, (for instance an ISA or pension plan), and an appropriate mix of investments, (a portfolio).

Short-term goals – For anything less than five years, you really can’t afford to take much risk, so you should stick to cash savings. But the traditional bank account that simply offers you interest are not your only choice. Many investors are attracted by the potential to gain from an investment linked to the stock market but don’t want the risk associated with such an investment; they can afford to commit their money for a period of up to five years and understand that this improves the likelihood of a favourable investment outcome. Our range of structured deposits are designed for just such an investor and offer the opportunity potentially to make better returns. These investments are available to personal account holders, cash ISAs and even for company investments and self invested pension accounts.

Medium and long-term goals – If you don’t need to access your money and can leave it to grow investing is an option for you. We will help you establish your personal attitude to risk for the money your investing. The lower the risk, the lower the return you can expect to make. A successful investment will combat the danger that over time your savings could be eroded by inflation, especially if you choose an account which is tax free.

Taking some risk with your capital for long-term goals is a sound strategy, but you should reduce risk by diversifying. There are a number of simple ways to achieve this such as investing through a collective investment fund which combines money for many investors to buy shares in a large number of companies.

Not all investment managers are equal and if you don’t have the time or inclination to manage your own funds our advisers can help guide you to a company that can manage your risk and diversify your investments on your behalf.

And don’t forget tax – investments like this can be made in an ISA wrapper which will build up broadly tax free and allow you to take your returns without any personal income or capital gains tax. If you are saving for retirement, these can work very well along side personal pensions.

If stock market investment is not for you, you could pay extra towards your mortgage. If the interest rate on your mortgage is higher than the net rate (the amount after tax) your savings earn, it makes sense to pay off more of your mortgage rather than keep the money in the savings account. It would be a good idea to check with your lender first to make sure your mortgage allows you to pay extra without paying a penalty charge.

Buy to let

Buying property to let has become increasingly popular in recent years. Low interest rates have made mortgages more affordable, and rental income can appear to be more attractive compared with what you could earn on other investments. Like any investment, Buy To Let comes with no guarantees, but for people who have more faith in bricks and mortar than stocks and shares, Fox Payne Associates can offer you friendly and professional advice.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP PAYMENTS ON YOUR MORTGAGE.

Some Buy to Lets are not regulated by the Financial Conduct Authority.

ISAs & Savings

(Individual Savings Accounts) are the Government’s way of encouraging you to invest for the future and should be a cornerstone of any investment plan. The ISA is designed as a medium to long term investment plan. If you are looking for an ideal tax efficient saving account, Fox Payne Associates can help you decide on the most suitable for your needs. When you invest in an ISA you pay no personal income or capital gains tax on the returns you receive, no matter how much your investment grows or how much you take out over the years. In fact you don’t even need to mention your ISA on your tax return.

Some people have built up considerable funds in cash ISAs and are disappointed with the returns on offer and are attracted by the potential greater returns available from a structured deposit accounts which are designed to offer returns based on stock market performance but without putting their initial capital at risk.  During the present tax year until 5th April 2017 you are able to save up to £15,240 per year individually, this means that a husband and wife can save up to £30,480 tax free in the given tax year increasing to £20,000 each from 6th April 2017. 

A popular way of investing in stocks and shares ISAs is through a regular savings program which actually takes advantage of volatile markets and removes the worry of investing all your funds at the wrong time. Once you have built up your funds you can use the ISA to provide regular withdrawal payments – so it can be particularly useful if you’re retired or no longer earning. These can be regular or one off amounts as the need arises. The best thing of all, there is no tax to pay!

If you already have ISAs and are not happy with the funds performance, did you know that you can transfer them without upsetting the tax free status?

If you would like to apply for or require further information on investment products please call: 01189 187570.

It is important that we make sure that investment products are suitable for your needs. You will be encouraged to meet with one of our consultants for an initial risk assessment or no obligation financial review.

Please remember that the value of investments and the income from them can go down as well as up and you may not get back the amount originally invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

 

Autum Newsletter 17
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*Some of these links will take you to external sites which are not regulated by the Financial Conduct Authority. Fox Payne do not endorse or accept responsibility for the content of the sites.