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Free Advice on Savings and Investments
 There
are 6 points to consider when assessing how to invest.
- Immediate requirements (emergencies, home, pension)
- Objectives (provide for children? boost income now?)
- Use incentives (tax breaks, discounts)
- Risk (chance of gaining or losing and uncertainty of the future)
- Monitoring (are plans on course to meet objectives?)
- Caution (take some responsibility for yourself)
Other important considerations:
- Inflation - allow for the reduction in purchasing power over
time with inflation. This affects your target value and the amount
you must increase savings by each year.
- Interest rates on your emergency fund - too often banks and
building societies leave your money in lower rate accounts without
informing you that there is a higher paying account available.
- How long can you leave money tied up? - some investments allow
more access to your capital than others. Generally the greater
the access the lower the returns in the early years.
- Tax rates paid on income - depending on whether you are a non-,
basic, or higher rate taxpayer will determine which is the best
investment plan. The attraction of a tax-free account to a non-taxpayer
is minimal compared to a higher rate taxpayer. Similarly, a tax-free
investment paying 5% interest is more valuable to a higher rate
taxpayer than a taxable investment paying 7% (7% interest less
40% tax = 4.2% net gain).
- Your property as an investment - for most people the home is
a place to live in but at the same time property can be a valuable
investment. Many people move down market at retirement often releasing
equity which can help make their retirement more comfortable.
Although pension plans are the main vehicle to provide income
in retirement, the property proceeds could be regarded as a potential
addition, especially where the mortgage (leads to mortgages) is
likely to have been repaid.
- Tax efficiency - this is important to consider and a matter
on which you should seek advice. The following areas may require
further explanation - ISAs, IHT,
CGT,
Stamp Duty, EIS, VCT.
For more information or to apply now. |
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