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What are these?

INVESTMENTS

Please find information on investments options available to the individual consumer. Each product can be applied for and generally controlled online; and are suitable for both the casual and serious investor.

Savings Accounts

Putting money into a savings account is a low-risk alternative to direct investment. Money sitting in a savings account gathers interest over time and is not exposed to major market fluctuations. An aspect that may change, however, is the amount of interest you earn. This is because the UK base interest rate can change – so to avoid being affected you can elect to take a Fixed Rate savings account. In this case, the interest rate will be fixed (usually at an attractive level) for a set period of time. During this period, you may not be able to access the money in the account.

Whether you want to put money aside for retirement, wish to pay for your children's higher education, a wedding or perhaps build up capital for a property purchase, a savings account can offer a useful way to do so. A downside to savings accounts compared with an investment plan is that the amount you accumulate on the money could be small. If you are prepared for higher risk, an investment plan (such as a pooled investment fund or trust) could bring higher returns – yet also exposes your capital to the risk of loss.

ISA – Individual Savings Account

Are you looking for a way to save or invest your hard-earned money? An ISA provides a useful, tax efficient and straightforward way to do this. There are two main types of ISA: a Cash ISA or a Stocks and Shares (Investment) ISA. A Cash ISA is very similar to a regular savings account offered by your bank but for one important difference. Interest in a Cash ISA is paid gross of tax instead of net of tax.

A Stocks and Shares (Investment) ISA allows you to place your money into long-term investments. You could place the money into the stock market, bonds, indices….the possibilities are varied. Which one you choose might depend on how risky an investment is and your level of experience. Most Investment ISA providers will give you plenty of advice and guidance in choosing suitable investments.

What type of ISA you choose is up to you – all UK adults have the right to put up to £3,600 (from April 2010 this will rise to £5,100) into a cash ISA each tax year (April to April). Alternatively, you can use a Stocks and Shares ISA – into which you can place up to £7,200 per year. You can 'mix and match' – place up to £3,600 of your £7,200 allowance into a cash ISA and the rest into a Stocks and Shares ISA.

Pensions

It is no secret that the earlier you begin to put money aside for retirement, the better. The basic state pension in the UK might give you a very minimal income when you reach pensionable age, but most people find that they will not be able to live above a very basic standard.

Today, there are many pension schemes on offer in order to boost your income at retirement. You can even secure an income after you die for loved ones – this is a great security for many people. To get started, you will first need to decide what your goals are – how much would you like, ideally, to be living on once you retire? Next, make sure that you find out what (if at all) your employer is offering in the way of a pension scheme. If you are self-employed, you can also find a good range of pension plans to suit you.

Finally, check that you have covered yourself/your loved ones with a lifetime annuity – there are many on offer including specialised plans for smokers or people with a medical condition or disease. These can guarantee an income for yourself and/or your family/partner after you have died.

Pension Releases

Releasing equity from your pension means you can have more access to cash now. You can request a pension release if you are between the ages of 55 and 62 with a pension plan that is not currently giving you income.

Nowadays, many people elect to 'release' or 'unlock' their pension, to access benefits before they reach retirement. In doing so, they receive a tax-free lump some and / or early retirement income. So if you have spent years building up your pension pot and wish to access some of it early – you can!

Wills

Have you sorted your Will? It might seem like something that you won't need to worry about for many years to come, but life is full of unexpected change – so making sure that your estate is left in the right hands is essential. Creating a Will is very easy these days, with plenty of experts that offer their assistance online.

You might assume that when you die, your estate will automatically fall into the hands of your family and dependents; unfortunately this is not actually what happens. Instead, your money and estate will be taken over by the government – they will then decide what happens to it. If you have your Will already in place, you can rest assured that your wishes are carried out and that your property is left in the right hands.

Child Trust Funds

Every child born after the 1st September 2002 in Britain and is eligible for Child Benefits can receive a head start with a Child Trust Fund (CTF). Each newborn baby receives a CTF voucher from the Government, worth £25 which the parents can then use to open a CTF account.

There are lots of companies offering CTF accounts, with a variety of types – including stakeholder and non-stakeholder accounts. You can also find specialist Shariah-compliant or ethical accounts which can suit your personal circumstances.

You may also choose between savings/deposit accounts or shares accounts and which one you go with is up to you. A shares account does contain an element of risk, because the value of the fund could go up and down. This is because the money within the account is used to invest in shares - which fluctuate in value.

When the child reaches the age of 7 the Government will make an additional contribution. You, your family and friends can all make contributions up to a maximum of £1,200 each year. However, no-one but the child can access the money when he or she reaches the age of 18.

Selling Endowments

Over the past few years, growing numbers of people have chosen to sell or surrender their endowment policy to free up some capital when it is most needed. In fact, according to the Association of Policy Market Makers, only one third of all policies actually reach maturity while 30% of policyholders cancel their policy within the first few years.

There are a number of ways to end an endowment. You can surrender the policy back to the life company you originally purchased it from. Another option is to sell endowment policy – this is often a preferred choice as it can get the seller a much better price than if they were to surrender it back to the issuing company.

Before deciding whether to sell or surrender, you can compare the options. There are now many mediating companies that offer to take your policy to the market, in order to find you the best price. There are also specialist policy traders who can also offer good cash prices for the policy. Have a look at what each provider offers, what (if any) the costs are and whether or not you can find a suitable price for your policy. If in any doubt, seek independent financial advice.

 

 

 

 

 

 

 

 

 

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