INVESTMENTS

The first step in our investment advice is to obtain a clear picture of your objectives, for example whether income, capital growth or both is required. We must also determine time periods involved and the level of investment risk that you are happy to take. We must also consider the taxation consequences of various investments and the most tax efficient structure for your particular circumstances. Once we are satisfied that we have a total understanding of the above, we can start to select suitable products and investments.

Typically, there are five asset classes within our investment portfolios:

Fixed Interest – When we talk about 'fixed interest' as an asset class, we mean bonds. Bonds are loans to a government or a company for a set period of time. They offer a pre-determined rate of return and the repayment of your original investment on a set date, known as a redemption date. UK Government bonds are also known as 'gilts'. Bonds from companies are known as corporate bonds.
UK Equity – this asset class is made up of UK shares. There are blue-chip funds, which invest in FTSE100 companies, funds that generate income, mid-cap funds, small-cap funds and "aggressive" funds. You might even prefer to opt for a fund that invests in environmentally friendly companies and avoid so-called sin stocks such as tobacco and nuclear shares.
International Equity – this type of holding is made up of non-UK shares and again you can invest in a variety of different types with varying levels of investment risk.
Property - these funds typically purchase, own and manage commercial property on behalf of fund members or shareholders. These funds are popular because they offer strong returns without the investor having to worry about employing a successful exit strategy to realise profits, (e.g. renting out the property / reselling).
Cash - Cash is the generic term for investments that are highly liquid, designed to be extremely safe and invested for a short-term period. Cash also carries the lowest level of return and the investment may be affected by inflation. An example of a cash investment is a short-term bank deposit, bill or treasury note. Generally, cash does not offer investors the potential for capital growth.

The above asset classes can be accessed through a variety of different investment wrappers. We recognise that no single investment wrapper can be pre-eminent in every area of investment all of the time.

As independent Financial Planners, we're able to select from a wide range of investment vehicles to suit your needs such as ISA's, unit trusts, OEICs, investment bonds, offshore bonds and inheritance tax planning.

Individual Savings Accounts (ISAs)

ISAs allow people to save their money in a combination of cash and stocks and shares. Unlike investing directly in these products, investing through an ISA provides certain benefits. An ISA is often referred to as a tax wrapper which goes around your savings, protecting them from paying certain taxes.

Subject to eligibility criteria everyone can invest up to £10,200 in an ISA in each financial year. There are two types of ISA and the choice of ISA will dictate how much you can invest in each type.

Investment ISAs require you to invest with only one ISA plan manager in any tax year. Should you wish, you can choose to invest the entire annual ISA allowance (currently £10,200) in an Investment ISA but by doing so, you may not then elect to switch your holdings into the Cash ISA.

Cash ISAs allow you to invest up to £5,100 and can be with a different plan manager from your Investment ISA.

The total amount invested across both types of ISA cannot exceed £10,200 in any one tax year.
Please note that Wallwork Ludlow Ltd do not offer Cash ISAs.

You must be aged over 18 to take out a stocks and shares ISA (if you are aged 16 or over you can invest in the Cash ISA) and you must reside in the United Kingdom for tax purposes (or be a Crown employee currently working overseas and treated as resident, or are married to a person who performs such duties). You cannot hold an ISA jointly with anyone else, or hold one on behalf of another person.

Unit Trust

Unit trusts are one of the most popular types of investment fund in the UK, and involve large numbers of investors pooling their money and entrusting it to a unit manager. This manager will be a specialist investor, using their expertise to invest these pooled funds in financial markets, looking for attractive investment opportunities. The structure of a unit trust works by dividing up the pooled money into units. The number of units is not fixed and will fluctuate according to demand, as will the price of each unit. The unit price is calculated by taking a valuation of all the individual companies that the pooled funds are invested in; the value is then divided by the number of units held in the fund at that time to give the unit price.

Open Ended Investment Company (OEIC)

OEIC stands for open-ended investment company. An OEIC has a company structure so that when you invest you will hold shares as opposed to units. An OEIC is open-ended which means that the fund can get larger or smaller depending on the number of investors who wish to buy or sell shares. OEICs are a relatively new form of investment vehicle which are increasingly replacing unit trusts, which are more complex in legal terms. An OEIC has a single price, for both buying and selling shares, directly linked to the value of the fund's underlying investments. This contrasts with unit trusts, which have different buying and selling prices.

Investment Bonds

Investment bonds are sold by life insurance companies and allow you to invest in a variety of funds managed by professional investment managers. They are normally designed to produce long term capital growth, but can also be used to generate an income.

The minimum investment is typically £5,000 or £10,000. When you buy a bond you will be allocated a certain number of units in the funds of your choice. Each fund will hold a portfolio of investments, such as shares or bonds, and the price of your units – in other words the value of your capital – will normally rise and fall in line with the value of these investments. Technically investment bonds are single premium life insurance policies. This means an element of life insurance is provided. But it is tiny, typically adding an extra 1 per cent or less to the value of your investment, if it is paid out after your death.

The main advantage of an investment bond is the facility to take a 5% income with has no immediate tax-liability. This would therefore be suitable for retired clients who want to supplement their income but are in danger of falling into the age allowance trap.

Offshore Bonds

The most popular form of offshore investment is offshore bonds, a wrapper in which you can hold a variety of investment funds such as unit trusts and open-ended investment companies (OEICs).

Offshore bonds can also work well for people saving for retirement if they know they will be paying a lower rate of tax after they retire. If you are a higher-rate taxpayer when you take out the bond but become a basic-rate taxpayer after retirement, you avoid paying the higher rate of tax on your investment as the bond rolls up free of tax while it's invested.

As with onshore bonds, holders of offshore bonds can withdraw 5% of the money placed in the bond at outset tax-free each year, as HM Revenue and Customs considers this to be a 'return of capital'.

Offshore bonds are also particularly useful for people with surplus assets, intending to assign them to someone else. By placing the money in an offshore bond which you assign away, you can avoid paying tax at your own rate.

This can be a particularly tax-efficient way for wealthy parents to help their children and one example is to take out the bond on behalf of a child and assign it to them when they go to university - this is an increasingly popular choice.

Ongoing Investment Advice

We believe that in an ever-changing investment market regular review of your investments is essential to ensure that your plans are meeting your expectations which is why our advisers will contact you as often as you would like them to in order to provide valuations, investment performance analysis and ongoing advice through the life of your plans.

Where agreed, we then can provide "active" portfolio management - contacting you every three months to review your investments, discuss general trends and any particular need for change; six-monthly we would look to meet in person, to discuss your investments and any life changes which could impact your financial investments. Finally, as recent events have shown, our true value comes when unpredictable, massive events which shock the whole system occur; whilst we may not be able to prevent such occurrences, we can keep you immediately appraised of the effect on your investments and the options available to you.