The return of volatility – as valuations and investor complacency remain elevated – will make it vital for investors to consider hedging against downside risk and cut back on ‘me too’ investments this year, according to the BlackRock Investment Institute’s (BII) 2015 Investment Outlook.
In performance terms, the attraction of investment trusts is consistently evident. They allow you to pool your money with that of other investors to get exposure to a range of assets through a single investment and are listed companies that issue a fixed number of shares quoted on a stock market, such as the London Stock Exchange.
It’s vital to know why you’re investing. The first step is to have a good think about your financial situation and your reasons for investing. Whatever your personal investment goal may be, it is important to set your time horizon at the outset, as this will impact on the type of investments you should consider to help achieve your goals. It also makes sense to revisit your investment goals at regular intervals to account for any changes to your personal circumstances.
If you are keen to take advantage of the New Individual Savings Account (NISA) allowance, now increased to £15,000, and make the most of your tax-efficient savings, time is running out. You only have until 5 April to fully utilise your 2014/15 NISA allowance, after which it will be lost forever.
Tax planning is a very complex area covering many forms of tax. No one likes paying more tax than they legally have to, but one of the challenges of wealth is the high taxation it attracts. For some individuals the need for specialist professional advice has never been greater. With the current tax year end rapidly approaching, we’ve provided some tax planning areas for you to consider before 6 April 2015.
During difficult economic times, one of the tools available to the Bank of England to stimulate the economy is interest rates. Lower interest rates mean that it is cheaper to borrow money and people have more to spend, hopefully stimulating the economy and reducing the risk of deflation.
An investment bond is a single premium life insurance policy and is a potentially tax-efficient way of holding a range of investment funds in one place. They can be a good way of allowing you to invest in a mixture of investment funds that are managed by professional investment managers.
Investment trusts are based upon fixed amounts of capital divided into shares. This makes them closed ended, unlike the open-ended structure of unit trusts. They can be one of the easiest and most cost-effective ways to invest in the stock market. Once the capital has been divided into shares, you can purchase the shares. When an investment trust sells shares, it is not taxed on any capital gains it has made. By contrast, private investors are subject to capital gains tax when they sell shares in their own portfolio.
Open-ended investment companies (OEICs) are stock market-quoted collective investment schemes. Like unit trusts and investment trusts they invest in a variety of assets to generate a return for investors.
The New Individual Savings Account (NISA) rules were introduced in July 2014 designed to help and encourage people to save more for their future and give savers and investors more flexibility and a larger tax-efficient allowance than ever before. This tax efficient ‘wrapper’ can hold investments such as unit trusts, other collectives such as OEIC’s, shares and cash.
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