INVESTMENT PLANNING

You have to take responsibility for your own finances and many people find they need expert help to do so simply because of the complexities of the UK tax system and the legislation surrounding tax-efficient investment plans (such as Pension Plans and ISAs for example).

Because everyone has different goals and expectations, everyone has different reasons for investing. Understanding how to match those reasons with your investments is simply one aspect of managing your money to provide a comfortable life and financial security for you and your family.

Investments and Savings

There are a variety of reasons to begin saving money. Different people save for different reasons. Here are just a few reasons that you may consider saving for.

An emergency fund – It is important to have an emergency fund set aside to cover unexpected expenses. This could cover an unexpected car repair or a sudden job loss.

Save for a deposit on a house – Your “negotiating power” goes a lot further when you have a significant deposit.

Save for a holiday and other “luxury” Items – You can save up for that Caribbean cruise. Additionally, you can be saving for fun “large ticket” items such as a new car or a boat.

Education – Another good reason to begin saving money is for a child’s education, be it at a private school in the early years or for university fees in later years.

Generally, bank and building society cash accounts are the best option for this purpose (and, obviously, Cash ISA accounts are often the first choice as they offer tax-free savings). However, saving for the longer term may also involve the use of other types of savings plans.

“Investing” is the potential to grow your money over the medium to longer term if you are willing to tie-up your money and take a level of risk to get a better return whilst balancing the risk of short term losses against the chance of possible longer-term gains.

Putting money away for the longer term usually means investing your money in schemes or funds based on stock markets and other financial assets/instruments.

When investing, you take calculated risks to increase your chance of getting higher returns on your money, especially over the longer term (generally money you can afford to tie up for five to seven years or longer).

There are different types of investments and basically you take a risk with your money by investing in assets (generally on UK and global stock markets) that could rise or also fall in value.

There is generally no guarantee you will make a return on your investment, or even that you will get back the same amount you invested initially. The advantage is that you often get a greater return than you would with cash savings, which will give you better protection against Inflation over time.

Investing your wealth is a decision that needs careful assessment of your goals and your needs and the tax “wrappers” available at the time.

There are a number of factors that need to be considered before an appropriate financial strategy can be created.

CSAL will carry out a thorough analysis of:

  • your current situation
  • your needs and objectives
  • your “risk profile” using a risk-profiling questionnaire
  • your capacity for loss