Investing for capital or income or both
A financial adviser will work with you to help you achieve ways of growing your capital or to generate an income from either a single investment or from a portfolio of investments.
Following a gathering of the facts, such as your financial and tax situation, an understanding of your goals and attitude to risk, many will present you with a report and summary of suggestions to consider.
Some financial advisers offer an annual investment management service to keep an eye on the performance of the underlying investments and may make suggestions to alter the shape of the portfolio from time to time.
Below is a quick guide designed to give you a brief overview of different investment vehicles currently available.
Cash deposits which tend to be at the lower end of the risk scale may be held in:
- Commercial banks
- Building societies
The Government National Savings and Investments offer a number of different products*:
- Premium Bonds
- Income Bonds
- Investment account
Asset-backed investments include:
- Shares – Issued by companies to raise money
- Gilt-edged Securities – Government guaranteed
- Unit trusts – Investors’ money pooled to form large fund
- Investment trusts – Pooled investments run by limited companies
- Open ended investment companies (OEICs) or unit trusts
- Investment bonds – Single premium (i.e. lump sum investment)
- Stocks and shares ISAa
*These products and services are not regulated by the Financial Conduct Authority (FCA).
Aside from a financial adviser being able to help you choose either a single or range of investments depending on your personal circumstances and requirements, they should explain that equity based investments do not provide the same capital security as a deposit account and that the value of investments and income from them may go down.
This can mean that you may not get back the original amounts invested and the levels, basis and reliefs of taxation are subject to change.
This is not intended as an exhaustive guide and you should always seek professional financial advice from a qualified adviser.