Please also see our Dedicated Investment Website:
Click this link for our INVESTMENT Website
Grange Financial Services provides Independent Investment Advice.
You may want to save for a rainy day or to fund future expenditure like school fees? You may have a lump sum that you want to Invest for income or capital growth? Either way, we can help you choose the right products and strategy to achieve your goals. Whether you’re investing a lump sum or putting aside regular amounts, we’ll help you to make the most of tax-efficient savings vehicles like ISA’s.
Whether you have:
- monies from a legacy
- a matured endowment plan
- a work-related bonus
- retirement or redundancy package
- or just some spare cash that you don’t need at this moment
Investing in a well-balanced, tax efficient portfolio can be far more advantageous than putting the whole amount in one place. We can help you to create an investment portfolio specifically to meet your individual short and long terms needs. By using a combination of products such as Investment Bonds, ISA’s or Unit Trusts we can reflect your financial objectives and your requirements for access. We can also assist in meeting any ethical investment requirements.
You don’t need a lump sum to start saving – most people save by putting aside regular sums from their disposable income. The best way to invest your money varies from person to person, we complete a full Financial Questionnaire to ascertain your personal investment objectives and ‘your attitude to risk’. We can help you to tailor a savings and/or investment portfolio that is designed to maximise your returns and meet your requirements precisely. Before we make a recommendation we will discuss topics such as:
- what you want to achieve i.e. capital growth and/or income
- do you want access to your savings and/or investments
- how long you want to save and/or invest for
- discuss your ‘attitude to risk’ and any particular requirements i.e. to invest Ethically etc.
Funding for a future event, such as your children’s education, a new car or that holiday of a lifetime, is slightly different from other forms of savings. You know in advance how much you’ll need to provide, together with when the monies are required. We can help you to build up the savings you require and put together a structured and highly tax-efficient plan that meets your needs.
There are numerous investment products and schemes, many of these are classed as pooled investments. What are the advantages of a collective investment scheme?
- Spreading risk, even if you have only a small amount to invest (from say £50 a month or £500 as a lump sum), you can spread your money across a wide range of investments. This is a lower risk strategy than putting all your money into just one or two investments.
- Reduced dealing costs, if you yourself were to buy a large number of different investments, you would probably only be able to invest a small sum in each. This means dealing costs would take a large chunk out of your profits. Pooling your money with that of other investors means you have the advantage of buying in bulk.
- Reduced administration, if you hold investments direct, there is often a lot of paperwork involved in buying, selling, collecting dividends, and so on. Also dealing with foreign stock exchanges and brokers can be tricky and time consuming. With a collective investment, the fund manager deals with all of that.
What investment funds are available?
Usually, a fund manager specalises in a particular investment type i.e. Equities and they switch investments within their fund from one investment to another as market conditions change. The investment funds offered by Unit Trusts, Investment Trusts and OEIC’s are numerous for example:
- Money market – invest in deposits. These are low risk but cannot be expected to give high returns over the long term.
- Bond-based – invest in corporate bonds, gilts and/or similar stocks. Medium to low risk and usually aim at providing income rather than growth.
- General – invest in a wide range of investments. They are suitable if you want a medium-risk investment. They can be aimed at providing income, growth or both.
- Tracker – unlike the other funds listed here, there is no fund manager actively choosing and switching stocks. Instead, the investments are chosen to move in line with a selected stock market index – such as the FTSE 100. Because there’s no active management, charges are usually lower.
- Property – investing directly in commercial property, such as office blocks and shopping centres, and/or in the shares of property companies.
- UK Equities
- Specialist – investing in particular sectors, such as Japan, or particular types of shares, such as small companies. Suitable only if you are comfortable with higher risk.
- Ethical – these can be general or specialist funds, but some investments (for example, shares in defence companies) are excluded and others (say, shares in companies with good employment practices) are actively selected.
What are Open-Ended Investment Companies (OEIC’s)?
An OEIC is a company whose business is managing an investment fund.
You take a stake in the fund by buying the shares of the OEIC. It is an ‘open-ended fund’ which means that the fund gets bigger and more shares are created as more people invest. The fund shrinks and shares are cancelled as people withdraw their money.
The price of the shares is based on the value of the investments the company has invested in.
You usually pay an initial charge when you buy and sell OEIC shares, but otherwise there is no difference between the buying and selling price of shares. Because of this OEIC’s are referred to as being ’single priced’. Some OEIC’s have no initial charge – sometimes there is an ‘exit charge’ instead when you withdraw your money. The company takes a yearly management fee direct from the investment fund.
What are Unit Trusts?
A Unit Trust is an investment fund shared by lots of different investors. It is an ‘open-ended fund’ which means the fund gets bigger as more people invest and gets smaller as people withdraw their money. The fund is run by a fund manager who makes the investment decisions.
The fund is divided into segments called ‘units’. Investors take a stake in the fund by buying these units. The price of a unit is based on the value of the investments the trust has invested in.
You usually pay an initial charge when you buy (this charge leads to a difference – called the ’spread’ – between the prices at which you can buy and sell units). Some Unit Trusts have no initial charge – sometimes there is an ‘exit charge’ instead when you withdraw your money. With all Unit Trusts, the company running it takes a yearly management fee direct from the investment fund.
What are Investment Trusts?
An Investment Trust is a company whose line of business is investing in other companies.
The Investment Trust company has shares and is quoted on the stock market. You take a stake in its fund by buying the shares of the company. It is a ‘close-ended fund’ because there are a set number of shares and this number does not change regardless of the number of investors.
The price of the shares reflects the value of the investments in the fund, but is affected by other factors too. If there are more people wanting to sell their shares than people wanting to buy, the share price tends to fall. If there are more buyers than sellers, the share price tends to rise. The company can borrow money and use it to buy more investments – this boosts the company’s returns when the investments perform well but magnifies losses if investments do badly.
Investment Trusts often issue different types (‘classes’) of shares to suit different types of investor. Some suit investors seeking income; others suit investors wanting growth.
You usually pay dealing charges when you buy and sell Investment Trust shares and the difference between the prices at which you can buy and sell (the ’spread’) is in effect another charge. There is also a yearly management fee which comes out of the investment fund.
Often Regular Savings are completed within an ISA. What is an ISA?
ISA stands for Individual Savings Account. ISA’s are accounts which can be used to hold your savings and investment products. They have replaced Personal Equity Plans (PEPs) from April 1999.
ISA’s can include one or more components:
- cash ISA (including bank and building society savings accounts, National Savings & Investments)
- investment ISA (i.e. stocks and shares including unit trusts, OEIC’s, shares, bonds and so on).
There are strict rules regarding the maximum amount allowed for each component and the overall amount you can invest in any one tax year.
Short term savings and Emergency fund
This means building up a fund for your immediate needs and for any emergencies (often called ‘rainy day’ savings).
If you are thinking about saving for the short term i.e. for immediate needs and emergencies, you should think about opening a Bank, Building Society or National Savings and Investment account. These will give you quick and easy access to your money. If you pay tax, all of these have a cash version ISA, which could be a good home for your emergency fund.
Short/Medium-term saving and investing (up to 5 years)
A bank or building society can still be a good choice. Many of these accounts pay more interest if you have to give a period of notice before you withdraw your money, often up to several months.
If you pay income tax, you could consider a cash version ISA. However, if you do not pay tax there is no tax advantage to you in saving through an ISA.
Longer-term saving and investing (more than 5 years)
If you pay tax and can afford to leave your money for 5 years or longer, it’s worth considering a stocks and shares ISA. Over the longer term you are likely to get a better return for your money than with a deposit-based bank account.
Once you have used your ISA allowance you should then consider an Investment product.
But remember there is a risk involved as the value of your investment could go down, as well as up. Also remember that if you take your money out after only a few years you may get back less than you put in.
If you have money that you do not need to touch until you are over 55, you may want to consider a Pension instead of an ISA.
Once you have completed your Savings and/or Investment product purchase……..
Please don’t forget these must be reviewed regularly.
As your life and the world around you change, your financial plans will need to adjust and adapt. So review your financial plans:
- Regularly for short to medium-term goals, to check that you are still on track.
- Once a year in the case of major long-term goals, such as paying off your mortgage or building up a Pension fund, to check that you’re on track.
- Whenever your circumstances change – for example, if you get a pay rise, lose your job, get married or divorced, have children, buy a house, a family member dies, you get an unexpected windfall, and so on.
- You need to review the performance of your contracts to ensure that they are performing in accordance with your expectations. Also do your contracts still match your current “attitude to risk”?.
Always seek Independent Investment Advice
There are hundreds of investment products available from many different companies, choosing one that’s right for you might seem like an uphill struggle.
Not all Advisers can give Independent advice. Some are tied to specific providers and/or a panel of providers, please make sure that the Adviser you deal with provides Independent Financial Advice.
We give totally independent unbiased advice, from the “Whole of Market” so before you apply for your new mortgage or remortgage contact us and let us help you make the right decision.
Please note & remember
Do not rely on past investment performance
How well your investment grows will usually be the single most important factor determining how much money you get back from your investment. But this is not something you can predict.
You might be tempted to look at past performance – how well a provider’s investment funds have grown in the past. But a lot of detailed professional studies have found only a very weak link, if any, between past performance and how well a provider’s investments grow in the future. These studies suggest that funds which have performed badly in the past may continue to perform poorly in future, but that past good performance is not a good indicator of future winners.
Take past performance claims with a ‘pinch of salt’. Nearly all companies can select a short run of figures which make them look better than their competitors.
Why not contact us for all your ’Investment & Savings Advice’ requirements.