Investment & Saving..

Selecting the right savings or investment plan can seem like negotiating a minefield. With so many options, and so many factors that have to be taken into account, it's not difficult to end up with the wrong scheme. With so many options, and so many factors that have to be taken into account, it is important to ensure that the scheme you select meets your individual needs and circumstances.

The reality is that professional advice is a necessity for anyone who is investing over anything other than the shortest term. Whilst most investors are reluctant to expose their money to any risk, the simple fact is that even money in a deposit account is usually subject to the risk of seeing it’s value eroded by inflation, especially over the longer term. For this reason, longer term investors need to consider all alternatives. This would include some of the riskier area of investment in equity or bond markets as these offer the chance of a higher return than can be obtained from deposit accounts. The general rule is that if the investor is prepared to be patient, over the longer term he or she should be able to expect a better return.

The usual starting point is to decide what you are investing or saving for. Is it towards a future need, for example university fees? Or is it towards a current need, for example obtaining the best income from a nest egg already built up?

You then have to select how you might want to invest. All the forms of investment open to UK investors can, broadly speaking, be split into two main categories – direct investments, such as stocks & shares, or collective investment schemes. With direct investment you decide which shares or bonds to buy, how long to hold them for, and when to sell them. With a collective investment scheme you delegate those decisions to a professional fund manager who will take the pooled monies of a large number of investors and choose a broad spread of instruments in which to invest, depending on their investment remit. In brief, all decisions about what to buy and when to sell are made by the fund manager.

In the UK there are three principal types of mainstream collective investment schemes – unit trust, investment trust and Open Ended Investment Company (OEIC). This choice is further complicated by the option of both onshore and offshore schemes. Whilst offshore schemes have usually only been considered by expatriates who intend to return to the UK on retirement when they have a more favourable tax position, certain types of funds can offer tax efficency to the UK investor. However, not all offshore investment centres meet UK regulatory standards and therefore in some cases the investor does not enjoy the same level of protection as offered in the UK.

Then there are the tax implications to consider. How is the investment itself taxed? How will it affect your own tax position? This is especially relevant to non-taxpayers, higher rate taxpayers and those over the age of 65 caught in the age allowance “trap”. Whilst there are certain schemes that offer significant tax advantages, such as an Individual Savings Account (ISA) which can be used to hold a range of investments, there are usually restrictions on the amount that can be placed within them.

You must also, as outlined above, consider the question of risk. In a low interest rate environment the return on your deposit account may decrease, but there is normally no threat to your capital, alhough inflation may erode it’s value. Investing in other assets including shares is different. Potential returns can be much greater than those offered by cash deposits. But if the shares in which you have invested were to fall in price, there is a risk to your capital itself. If you are forced to sell your shares at a time when they are performing poorly, you could actually end up with less money than you started with.

However, investment attitudes to risk are not universal. For example, an investor who is independently wealthy may take a different approach to investing a lump sum than someone taking their first steps into investing with limited savings.

Put all these together, and you end up with a situation that every investor has their own unique situation. For this, there can only be one remedy – fully Independent Financial Advice which can provide unique answers to these unique situations. Add to this the fact that there literally hundreds of collective investment schemes to choose from, many under different tax “wrappers”, and the need for professional advice is obvious.

At Coast to Coast we have the experience and specialist qualifications that enable us to provide personalised independent financial planning advice for your specific savings and investment needs, no matter how complex they may be.

Following an initial meeting which is conducted without charge or obligation, and at which we will examine all relevant issues, we will also discuss the appropriate payment options if you wish us to act for you. In the overwhelming majority of cases this will be through a fixed fee which will be based on the complexity of the advice required, and which will be agreed with you prior to any work being done. If part of the process involves arranging investment products that pay a commission, this can be offset against the agreed fee.

By working on this basis, you get a guarantee that you won’t be “sold” anything, and that the advice you will be getting is truly independent.