Investment advice

Investments

Why invest?

This is an interesting question. Would a 35 year old man with a large mortgage be better off investing for long-term capital growth or alternatively overpaying his mortgage to reduce his debt burden? Many people ask themselves this question. Once we have ascertained whether or not a client should have an investment portfolio, the question we usually ask ourselves is which way is the stock market heading? All advisers recognise that there is a positive relationship between risk and reward and investment decisions should take account of an investor's tax position, any existing investments and then allocate the asset based upon their attitude to risk. Where should your money be invested geographically? How much of the portfolio should be kept in cash? Any personal preferences need also be considered such as whether ethically constructed funds are important. read more

Do you know how much risk you are prepared to tolerate when you invest? This is the question that lies at the heart of investment planning ? and very often the discussions about risk take the longest. The basic investment choice is between the following asset classes:

Cash deposits in banks and building societies;

Fixed interest securities ? effectively loans to the government or businesses;
Property ? commercial or residential (very different from each other);
Equities ? shares in companies listed on stock exchanges.

These are the building blocks of investment portfolios. Your risk profile ? how much risk can and should be prepared to take on ? will help determine the appropriate mix of these basic components in your portfolio, usually called the asset allocation.

Investment Risk

Some investments have the potential to offer substantial growth but pose a high level of risk to an investor's capital. Whilst many other investments can be moderately low risk but in the long term may struggle to outperform inflation and fail to offer real growth on an investor's capital. In short, our investment advice will be directly correlated to your attitude to risk. A 'suitable' investment will be directly related to your age, attitude to risk, the amount of time you want your money invested/tied up for and an individual client's tax status. Depending on what category you fall under an investment may be high, moderate or low risk or a combination of these. In reality there are many different types of investments to choose from that have differing tax treatments, access rights and minimum investment amounts. Common investment choices available are:

Investment Bonds
Individual Savings Accounts
Open Ended Investment Companies
Unit Trusts
Investment Trusts
Venture Capital Trusts
Enterprise Investment Schemes
Investing in commercial property

Attitude to Risk

There will be risks involved with investments and it is important that we fully quantify your attitude to risk on a pre-determined scale. What do you think your attitude to risk is on a scale of 1 to 10? Find out by completing our online attitude to risk questionnaire!

Tax Efficient Investments

Not all investments are tax efficient. An Individual Savings Account (ISA) is an example of an investment that offers virtually tax-free returns. It can be made up of cash, and/or longer term investments like stocks and shares. You don't pay tax on the interest (investment income) and you also don't pay Capital Gains Tax on gains (profits) from investments in an ISA. There are also subscription limits on how much you can pay into an ISA each tax year. Other investments that are not as tax efficient are often considered as part of an overall investment portfolio for other reasons. Again this will depend on your own personal circumstances.

Fees and charges

Fees and charges on investments vary greatly depending on the type of contract in question. A common fee charged is an Annual Management Charge, but other charges are evident in some contracts such as an initial charge. As far as adviser remuneration is concerned we give all clients the option to pay by fee or commission from the investment itself.

More information on this is described in our Initial Disclosure Document - cost of services. The type of investment recommended will have differences in terms of the charges involved. For example, an investment trust may well have lower charges than a unit trust. It is essential that we review your investment portfolio and your circumstances on a regular basis.

For more information on investments please complete the following client enquiry form and one of our advisers will call you back to arrange an appointment. Alternatively you may telephone us on 08454 50 50 60 or email us at info@mcp-financial.co.uk

Or alternatively please complete the following client enquiry form and one of our advisers will call you back to arrange an appointment.