01704 898 570

Savings and Investments

Our aim is to help you choose the right investments in order to help you meet your objectives.What you need to give some thought to is what those objectives are. This is an area in which compromise and self understanding are essential.Most people want investments which are safe, in the sense that they cannot fall, and which offer high returns. This ideal combination is not available. Beware anyone who claims otherwise.

Sensible investment planning revolves around understanding what your investment aims are.

Broadly speaking the longer that your investment is to be left alone, (e.g. for retirement), the higher level of short term risk that is acceptable. If however the money is needed in full in the near future (e.g. for a house deposit) then short-term safety is essential.

Sensible investing is all about dividing your monies into various sections to cover all your needs, and of course meeting your risk-reward profile.
Most people will end up with something along the following lines:

  • Rainy day fund. A deposit account set aside to cover any sudden spending need (such as car replacement) or deal with an emergency (such as becoming unemployed and needing income while seeking another job).

Each person needs a different such fund, but we would normally consider less than three months’ income would be insufficient, although if you have more than a year’s money on deposit then this is probably too much.

  • Investments to meet known expenditure within 1-5 years. These would range from deposit funds (e.g. for house purchase) to safe investments offering good rates of return over fixed periods (possibly deposits, perhaps National Savings, other fixed or near fixed rate of return investments).
  • Long term savings. Given that the money is not expected to be needed for 7 or more years the whole gamut of equity-based and managed funds can be used in order to seek the maximum long term growth in the major world economies.
  • Speculation. A speculative investment is one where the potential rewards are very high, but so are the risks. As WC Fields might have said the speculator is a man who accepts that his money might buy him nothing more than a hole in the ground, while hoping that it will buy him a swimming pool. Speculative investments may not be an area that we normally get involved with, except perhaps to alert you to any that you may have. We do find that some people have bought them in error, or inherited them. The commonest speculative investments are direct holdings in small companies, AIM listed shares, and certain unit or investment trust holdings where the trust is in emerging or technology markets. This type of investment does not include the security of capital which is afforded under a deposit account.

Once you have decided how much to put in each pot, there are then the many different tax wrappers that need to be considered such as ISAs, Direct Investments in OEICs and Unit Trusts as well as Investment Bonds and Structured Products all of which have their own individual advantages and disadvantages.We are here to help you determine an investment strategy appropriate for your needs, and using the investments best suited to your investment attitude and tax position. Please call us on 01704 898570 or email us at mail@OctagonWealth.co.uk to book a no obligation appointment to discuss your options in more detail.