Investments

When investing for your future it is important to get the right advice and for your adviser to fully understand your requirements. At Rowlands & Hames we undertake a full review of your existing investments and your circumstances as well as obtaining an understanding of your attitude to risk and capacity for loss before making our recommendations.

We will also advise on Inheritance Tax where required as it is only by planning ahead that you can look to mitigate any potential inheritance tax liability. With this in mind all clients should ensure that they have an up to date and valid will in place.

There are various investment solution the most common being:

Investment Bonds

Investment bonds are life insurance policies, in which you can invest a lump sum, which goes into a variety of funds. They’re not the same as corporate bonds, premium bonds or fixed-rate bonds. In fact, strictly speaking, investment bonds are not really bonds at all – they are effectively a type of investment fund.

You have a choice of two types of funds within investment bonds – with-profits or unit-linked. Both have the same tax rules: tax is paid on both growth and income accrued in the fund by the insurer. Investors can withdraw up to 5% of their initial investment a year without incurring an immediate higher or additional-rate tax charge. When the bond is cashed in, or matures, or when withdrawals of more than 5% of the capital are made, there is no extra tax to pay unless you are a higher-rate or additional-rate taxpayer.

ISA – Individual Savings Account

An ISA is a ‘wrapper’ designed to go around an investment, to make it more tax-efficient.

The two main types of ISA investment are:

Cash ISA: this is like a normal deposit account – except that you pay no tax on the interest you earn.

Stocks and shares ISA: this gives you the chance to invest your money in equities, bonds or commercial property without paying personal tax on any returns you might make.

The ISA limit for 2022/2023 is £20,000.

The annual ISA allowance is for every eligible adult. This means a husband and wife, for example, could put up to £40,000 between them into ISAs this tax year.

You can invest one off lump sums or regular monthly contribution payable by direct debit.

Unit trusts and OEICs?

Unit trusts and open-ended investment companies (OEICs) are investment funds which pool together investors’ money which is then invested in a broad range of shares and other investments. Few investors could afford to do this on their own so the funds are a cheap and easy way of achieving this and by investing in such a well diversified portfolio of investments, investors are able to reduce their investment risk.

The minimum investment into these funds is typically £50 a month (although some accept as little as £25) or a lump sum of £500. Funds can invest in a range of investments including shares, corporate bonds, gilts, property and other unit trusts. Unit trusts and OEICs are subject to Capital Gains Tax on encashment.

Other more specialist investment options are:

• Offshore Bonds
• ETF’s
• UCIS

For further information please contact our Financial Planning division.