Investment & Savings

Investments and Savings – What are the options?

Putting money aside is important to help achieve big plans and projects in the future. Even a small amount can make a big difference if it is left to grow over a few years. But what options are available to you and how can you decide where best to put your money?

Investing:

What is investing?

Investing is buying something that you hope will go up in value over time. People invest in all sorts of things, from property and gold to rare books and art. But most commonly people invest in shares, bonds or funds on the stock market.

Generally, investing is not a way to ‘get rich quick’, it takes years to generate a good return on your money. It is also more risky than saving, as your investments can go down in value as well as up.

Which investment options are available to me?

There are all sorts of investment options, but here at CT Wealth Management we believe the most effective way to grow your money with low risk is through funds rather than individual stocks and shares. The main fund types are:

Protected funds – Protect some, but not all of your capital, whilst aiming for growth. The protection element is not always guaranteed.

Smoothed funds – Offer better returns than cash deposits, without direct links to the daily ups and downs of the stock markets.

Money Market funds – Aim to provide a higher return than a bank account.

Property funds – Invest directly in commercial property. There may be a delay of up to a year before you can access your money.

Income or Distribution funds – Usually suitable if you are more interested in income than capital gains.

Sector funds – Invest in a specific asset class or geographical area, making it more specialist. They offer potentially higher returns, but carry more risk.

Cash funds – aim to provide returns similar to bank deposits. Rates of interest are often very low.

Lifestyle funds – In the final few years before your retirement, the fund will reduce the investment risk by automatically moving your underlying investments from shares to cash.

Stakeholder-friendly managed funds – Among the cheapest funds available, as they stay within the government’s price cap for Stakeholder Pensions.

How much risk should I take?

WIth any investment products, you need to consider the level of ‘risk’ – because there’s always the chance that you could lose some or all of your money.

In investments, ‘risk’ is basically how much an investment is to go up or down. A high risk product could increase in value more quickly, giving you a bigger return, but equally it can lead to a much bigger loss.

Your attitude to risk is personal – but the main considerations are:

• Your age, especially if you are nearing retirement
• The amount you can afford to lose
• How long you will invest your funds for – higher risk tends to be more favourable if you invest over a longer time
• How much risk you can personally tolerate – some people find high risk investments too stressful

Investment calculators can give you an idea of the potential growth of your funds according to different levels of risk.

How can I get started?

It is always best to seek financial advice, to get an idea of the type of investment accounts that might suit you and make sure you have everything set up the way you need it – so that you can get access to your money and make changes when you need to.

Savings:

Saving is about putting money aside into a bank account that will grow over time in line with interest rates. Unlike investments, there is barely any risk involved, but your money is likely to grow more slowly in a savings account.

Which options are available?

There are a few options to consider:

• Regular Savings Accounts – The money you put in earns interest, giving a guaranteed lump sum. Your annual tax-free Personal Savings Allowance is £1,000 (£500 for higher rate taxpayers) in interest, so most saving interest is tax free.
• Fixed Rate Savings Accounts – You can often find better interest rates with a fixed rate account, where you agree to leave your money in place for a set number of years.

• Cash ISAs – You earn interest on your money and it is exempt from tax. You can currently save up to £20,000 per tax year in an adult ISA. Alongside cash ISAs are Investment ISAs where your money goes into stocks and shares.

How do I get started?

As savings accounts are simpler and less risky, you might choose to compare the different interest rates and criteria and open a savings account direct.

But for a wider discussion about how best to get your money to grow, it is worth having a chat with a financial services professional.

How can CT Wealth Management help me invest and save my money?

As qualified professionals we have years of experience in helping people make the most of their money, designing suitable ways for each individual to achieve their financial goals.

We have all the tips, tools and expertise to help you find suitable financial products for total peace of mind.

The value of investments and any income from them can fall as well as rise. 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.