Investments are something you buy or put your money into to get a profitable return.  Most people choose from four main types of investment, known as ‘asset classes’:

  • Cash – the savings you put in a bank or building society account
  • Fixed interest securities (also called bonds) – you loan your money to a company or government
  • Shares – you buy a stake in a company
  • Property – you invest in a physical building, whether commercial or residential

Each asset class has particular advantages and risks.  Getting to know their different characteristics will help you work out which investment options are best for you.


When you start investing, it’s usually a good idea to spread your risk by putting your money into a number of different products and asset classes.  That way, if one investment doesn’t work out as you had hoped, you still have your others to fall back on.  This is called ‘diversifying’.


There are many different types of investment products, some you can contribute to on a regular basis or lump sums only, some are open-ended whilst others have set end dates.  Some investments are more tax efficient than other too.


Individual Savings Accounts

ISAs (sometimes called NISAs) are tax-efficient savings and investment accounts.  You can use them to save cash or invest in stocks and shares.  The current annual limit you can invest in an ISA is £15,240.00.  You can pay your whole allowance into a Stocks and Shares ISA, or into a Cash ISA or a combination of both.

You pay no Income Tax on the interest or dividends you receive from an ISA and any profits from the investment are free of Capital Gains Tax.

However, ISAs can’t be held in joint names.


Unit trusts and Open-Ended Investment Companies (OEICs)

These are professionally managed collective investment funds.  You buy shares (in an OEIC) or units (in a unit trust).  The fund manager puts your money together with money from other investors and uses it to buy shares, bonds, property or cash assets and other investments.


Every fund invests in a different mix of investments.  For example, some only buy shares in British companies, while others invest in bonds or in shares of foreign companies, or other types of investments.


The overall fund size will grow and shrink as investors buy or sell.


There is no annual limit on the amount you can invest in a Unit Trust or OEIC and you can hold these in joint names.


Any profit you make when selling your shares or units counts towards your Capital Gains Tax annual exempt amount. Losses can be offset against other gains in the same tax year or carried forward to future years.


Many unit trusts and OEICs can be held unwrapped or in a tax efficient wrap like an ISA.


Investment Bonds

Investment Bonds are life insurance policies where you invest a lump sum in a variety of available funds.  Some Investment Bonds run for a fixed term whilst others have no set investment term.


When you cash-in Investment Bonds, how much you get back depends on how the investment has done.


Remember that the value of units can fall as well as rise, and you may not get back all of your original investment.


For more information, please contact us and we will be happy to assist you.