Investments & Pensions

Investments and Pension Plans

Whether you are looking at investing in a pension, an investment bond or perhaps using an ISA or a Trust for tax reasons you might consider using investment funds. Put simply a fund is a collection of many different peoples money in one place. Buying large numbers of shares or achieving a portfolio of investments may well be beyond most average investors, an alternative is to use an investment fund.

Typically these pools of money are run and managed by an investment specialist, or fund company. They are paid to make the day to day decisions of where the pooled money is invested. Rather than individuals (who have no interest in markets and shares, or who do not have the knowledge or time to study market information) choosing which shares to buy, to hold and to sell and at what time, the fund manager uses his expertise to make suitable investments in order for the value of the pooled fund to hopefully grow over time.

Another advantage of pooled investment is being able to diversify.

Diversification and Risk

All investments carry some element of risk. The value of the fund can fall as well as rise and you may not get back the full amount you originally invest. To enable funds to manage the risks, the manager will usually practice some level of 'diversification.' This works on the premise that holding 2 different shares is better than 2 of the same shares. This is because all shares react differently to investment conditions and changes. Of course, more than two shares are held in funds!

Trusts, for estate preservation, and estate creation

The use of a trust can add real benefits to estate planning. Whilst this website is not sufficient for us to go into detail, the use of a trust can have the following benefits:

• Potentially reduce inheritance tax.
• Pass assets to beneficiaries without delays of probate.
• Maintain a control over what you gift (subject to restrictions).
• Plan for Inheritance Tax whilst taking an income (Discounted Gift Trust).
• Create an estate outside your taxable estate, providing for future generations.

As you would expect, we advise on a wide range, but prefer to talk face-to-face regarding your requirements.

The value of investments can fall as well as rise and you may not get back the full value of your original investment. Contact your Financial Adviser before making any decisions.