Savings & Investments
Saving to help your kids through University, to retire early, or just for a rainy day?
Whether you are investing to build up a nest egg for the future, or you already have a lump sum which you want to work harder for you, Longton FS can help.
Our expert advisers are completely independent and will provide you with impartial advice. We will choose the best investment and savings products from the whole of the market to help you achieve your goals.
We will work with you to understand your goals, both short and long term, and after assessing your attitude to risk, build a bespoke portfolio that will help you to save tax and grow your money.
Saving & Investment Options
You can hold a range of different types of investment in a stocks and shares ISA, think of it as the container you hold your investments in. Once your investments are in the ISA your income and growth are tax free.
As well as standard stocks and shares ISAs there are also Lifetime ISAs, to help save towards a first home or your retirement and Junior ISAs for children or grandchildren.
Collective Investment Funds (unit trusts and OEICs)
When you invest money in a unit trust or an OEIC (open ended investment company) it is pooled with other investors and overseen by a fund manager. It is generally a safer way to invest your money than buying shares directly.
You buy 'units' in a fund, which can then either rise or fall in price - multiply the price of each unit in your fund with the number of units, and you'll have the value of your investment.
Most funds have a specific theme around which the investments are based eg:
Geography (UK, North America, Asia etc)
Industry (pharmaceutical, infrastructure, technology, property etc)
Type of Investment (shares, corporate bonds, government bond)
Size of Company
Different funds have different risk levels. We will choose a range of funds that spread your eggs across many baskets, whilst meeting your requirements in terms of risk levels and relative performance.
Investment bonds are single premium life insurance contracts offered by the big name insurance companies. They can be a useful tool in certain circumstances. They allow withdrawals of 5 per cent of the original investment per year for 20 years without incurring an immediate tax charge. The tax is deferred and becomes payable when the bond is cashed in or matures. Any withdrawal allowance not used can carry over to the following tax year.
The opportunity to defer income tax is helpful to higher rate taxpayers who want to delay payment until they fall into a lower tax band, such as in retirement, and to investors who have already used up their annual capital gains tax allowance.
Investment trusts allow you to pool your money with that of other investors to get exposure to a range of assets through a single investment.
They are set up as companies and traded on the London Stock Exchange. As with any company quoted on the stock market, investment trusts have to publish an annual report and audited accounts. They also have a board of directors to which the manager of the trust is accountable. When you invest in an investment trust, you become a shareholder in that company.
Unlike unit trusts and open-ended investment companies (OEICs), investment trusts are closed-ended. They issue a fixed number of shares, which can then be bought and sold on the London Stock Exchange.
The value of the assets held by an investment trust is known as the net asset value (NAV). Shares in an investment trust may trade for less than the NAV (at a discount) or for more than the NAV (at a premium).
The level of premium or discount changes on the basis of changing market sentiment towards a sector and individual investment trust. If an investment trust is trading at a discount to its NAV and the discount reduces or moves to a premium, investors will make an additional return over and above any return from the trust’s underlying assets. However, if the premium on an investment trust reduces or a discount widens, this will detract from returns.
Investment trusts can borrow more money to invest, which is also known as gearing. This approach can magnify gains for shareholders in a rising market, but also lead to greater losses when markets fall.
Exchange Traded Funds (ETFs)
ETFs are investment funds that aim to track the performance of a specific index. An index is a basket of assets (shares, bonds or commodities) chosen to represent the performance of a market or asset class. The FTSE 100 is an index of the 100 largest companies in the UK and is used to gauge the performance and general direction of the UK stock market.
Usually the goal of an ETF is to provide a portfolio that mirrors an index, thereby providing investors with the performance of that index (minus the fees). They are passively managed and therefore tend to be cheaper than actively managed funds.
Types of ETF available now are much more varied than in the past and include:
Equity ETF (tracking a stock market index)
Fixed Income ETF (investing in corporate bonds or treasuries).
Commodity ETF (eg gold, oil, coffee)