Investments & Savings

The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested.

Tax treatment varies according to individual circumstances and is subject to change.

Tax Planning is not regulated by the Financial Conduct Authority.

Investors do not pay any personal tax on income or gains, but ISAs do pay unrecoverable tax on income from stocks and shares received by the ISA managers.

We are seeing the first indications that interest rates are set to rise after 10 years of painfully low rates. Although with inflation approaching 3% it is important to talk to your local financial adviser for financial advice in Sutton Coldfield, to see if your savings and investments could be working harder for you. Contact us to see how we can help you with savings and investments that are not available on the high street.

The benefits of working with one of our local Financial Advisers is that they will discuss your financial goals and give you advice on an appropriate way to invest which can reduce the amount of tax paid, by investing in tax-free products such as ISAs (see below) or recommending alternative ways to save (see below).

Our Advisers provide financial advice in Lichfield and financial advice in Sutton Coldfield. They use all their experience and knowhow to maximise your return on the funds you invest via Four Oaks Financial Services and, through our practice our clients also have access to the expertise of a Chartered Financial Planner and Fellow of the Personal Finance Society.

Talk to us about how our financial advice and lifestyle financial planning skills can help your savings and investments grow.

Investments and savings can become an important part of your retirement planning in addition to pensions. To see how we can advise you on your pension take a look at our pensions advice page.

Investment Planning – The Basics

Savings and investments are about balancing the risks you are comfortable with alongside the potential rewards. As a general rule, the higher the risk, the bigger the potential rewards – but also the potential losses. When we start working with you we will find out your attitude to financial risk. We refer to this as a client’s risk profile. Whatever your investment objectives for the long-term, we always recommend that our clients set aside short-term savings of at least three months take-home income to meet emergencies and unexpected expenses.This should be held where you can access your money easily. However, it is important not to hold too much money in these low interest rate accounts for too long, see Alternative Ways to Save below.

Your investment goals and attitude to risk are personal and will change over time, particularly as you near retirement. You may find you need to review your approach to investing as time goes on. Depending upon our clients’ individual needs we will meet on a regular basis to review how their investments are performing and recommend when changes need to be made. Gone are the days when you can leave your savings and investments untouched and unmanaged year after year – if you want your savings and investments to grow you need to get financial advice and we encourage our clients to learn a little about the products they are investing in. Here is some basic information to help you understand more about the types of investments and savings that are available.

Basic Savings

Banks and building societies are normally safe homes for your money where you can usually expect to get back the money you’ve saved £1 for £1. In return for that security, your money may not grow very much and inflation could even reduce the value of your savings.

Tax Free Savings – ISAs

Each year the government gives each person an ISA allowance. This is the amount of cash you can put into an Individual Savings Account (ISA) each tax year. You don’t have to pay personal income tax or capital gains tax on any interest your cash savings earn in an ISA making this a very tax efficient way of saving.

ISAs do attract unrecoverable tax on income from stocks and shares received by the ISA managers and your Financial Adviser will explain this in more detail, but for you as an individual with an ISA you don’t pay any tax on the interest that is generated for you by the ISA.

For the tax year 2018/2019 the tax free ISA allowances remain at £20,000 the allowance for Junior ISAs are increased to £4,260. You have until 5th April 2019 to use these allowances. Otherwise you lose them. You cannot carry these allowances over into another tax year. If you are unsure whether you have used your allowances for the current tax year, speak to one of our Financial Advisers in Lichfield and throughout the Midlands.

There are different kinds of ISA each designed for a specific purpose.

Cash ISAs, and Stocks & Shares ISAs

These are options for savers and investors. Cash ISAs are a safer option for money that you want to save tax-free but may need to access in the short-term.  Stocks & Shares ISAs are an alternative for money you want to invest for the longer term and for investors who are prepared to take an element of risk.

Junior ISAs

Junior ISAs are for children under the age of 18 who are living in the UK. The ISA allowance for junior ISAs for the tax year ending 5th April 2019 is £4,260.  Cash and Stocks & Shares ISAs are available, you can invest in one or both types.

Help To Buy ISAs

These are designed for people saving to buy a home.

Lifetime ISAs

These are designed for people who are saving to buy a home or who wish to save until age 60.

Alternative Ways To Save – Investment Funds

Many of our investment clients say they want a balanced approach to savings. This means that they want to see their money grow by more than inflation but still want the peace of mind of having their money invested in a relatively cautious way.

Investment funds are available and over the longer term they’ve shown that they can provide investors with a return that beats inflation, sometimes by a significant amount. However, these funds are suitable for people who are prepared to take an element of risk with their longer-term savings and want to invest for five years or more.

As an example we looked at one of the most popular types of balanced investments*. Of 146 funds, 113 of them had been running for more than five years. Over the last five years all of the 113 funds had made a return for their investors. The best performing fund had grown 59.3% over the five years and the worst performing fund in this sector had grown by 10.3%, which is well above the current level of inflation at around 3%. Note that investor charges will reduce the growth enjoyed.

*Source: Trustnet 6.6.18 – IA Mixed Investment 20-60% Shares sector

Other Investments & Savings

  • Corporate and government bonds – these are ‘loans’ to the government or companies that pay you interest in return. Government bonds are also referred to as gilts
  • Investment bonds – these are products from life assurance companies which invest your money in other funds and assets to provide you with returns over the medium to long- term
  • Open-ended investment companies (OEICs) – these also invest your money in other funds and assets to provide a return
  • Stocks and shares ISA – here your money may be invested in funds which invest across several assets including stocks and shares. This type of ISA also has tax benefits in that you don’t pay any personal income tax or capital gains tax on any profit you may make
  • National Savings & Investments – these are a range of savings and investments that are backed by the Treasury, which promises to guarantee your capital
  • Property – this may involve investing in residential properties or a holiday home to rent out
  • Shares – direct investment in individual companies. Here you take a stake in the company and if it does well you may get a dividend, which is a share in the profits. The value of your share may rise or fall depending on many things including how well the company has performed

Why not put our Advisers to the test and see what they could achieve for you by making your savings and investments work harder. Contact us to book a no obligation meeting with one of our financial advisers.

Our Financial Advisers provide savings and investments advice as part of our holistic approach to financial planning for Lichfield and financial planning for Sutton Coldfield based individuals and businesses.