Banks and building societies savings accounts
With savings accounts you'll always get back at least the money you paid in plus interest at the rate advertised. There's a wide range of accounts to choose from, with key differences being how quickly you can get at your money, the minimum amount required to keep the account open and the type and rate of interest rate paid.
Cash ISA (Individual Savings Accounts)
Most banks and building societies also offer tax-free savings and investment accounts called ISAs. The Cash ISA (one type of ISA) generally contains only cash, so there's no risk to your money. For the tax year 2008-2009 you can save up to £3,600 in a Cash ISA if you're a UK resident aged 16 or over. Read more about ISAs in the section on investment products below.
National Savings and Investments
National Savings and Investments (NS&I) are savings and investment products backed by the government. As a result, any money you invest is totally secure. NS&I offers tax-free products (including premium bonds); products offering guaranteed returns; monthly income products; children's savings products - and more.
Shares
When you buy shares you buy a stake in a company. If the company does well the value of the shares may rise and you may be able to sell them at a profit. You may also get a share of the profits through income payments called dividends. If the company doesn't do well, you may not get any dividends and the value of the shares could fall or, in some cases, cease to have any value at all.
Pooled or collective investments
Pooled or collective investments are where small contributions from lots of people make up a single investment fund. They include:
Authorised Unit Trusts
Open Ended Investment companies (OEICs)
Investment Trusts
Exchange Trade Funds
Unit linked life assurance
Investment Bonds
ISAs (see next section)
Individual Savings Accounts (ISAs)
An ISA offers tax-free returns. It can be made up of cash, and/or longer term investments like stocks and shares or insurance. You don't pay tax on the interest or dividends (investment income) from an ISA, apart from the 10 per cent tax credit which is deducted from dividend payments before you get them. You also don't pay Capital Gains Tax on gains (profits) from investments in an ISA.
There are limits to how much you can pay into an ISA each tax year.
Bonds
Bonds are loans to a company, a local authority or the government. They pay a set amount of interest and are traded on the stock market, so their value can rise or fall.
Armed with this basic information which is designed to take the myth out of the complexities of investment, are you now willing to ask the experts for guidance as to what is most appropriate for your situation and risk tolerance level? If so, contact us NOW!
If you would like to know more about this service we offer then please contact us.
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