Personal Investments

Robert Stone

Description

This Fourth edition of A Guide to Personal Investments is a comprehensive guide to the complexities of personal finance in 2017. Written against a backdrop of low interest rates, high inflation and low returns overall the information contained in the book will be particularly invaluable. The book is particularly suitable for small investors in all markets and also covers personal pensions, healthcare and education. It will prove an invaluable guide for all who are concerned to maximise returns from their investments.

Informations

• Publié par: Straightforward Publishing
• Date de parution: 25 avril 2017
• Nombre de lectures: 0
• EAN13: 9781847167439
• Langue: English

Extrait

A STRAIGHTFORWARD GUIDE TO PERSONAL INVESTMENTS
ROBERT STONE
Straightforward Guides
www.straightforwardco.co.uk
Straightforward Guides
Straightforward Publishing 2017
All rights reserved. No part of this publication may be reproduced in a retrieval system or transmitted by any means, electronic or mechanical, photocopying or otherwise, without the prior permission of the copyright holders.
ISBN: 978-1-84716-697-5 eISBN: 978-1-84716-743-9 Kindle ISBN: 978-1-84716-522-0
Printed by 4Edge Ltd www.4edge.co.uk
Cover design by Bookworks Islington
Whilst every effort has been made to ensure that the information contained within this book is correct at the time of going to press, the author and publisher can take no responsibility for the errors or omissions contained within.
CONTENTS
Introducion
Chapter 1 Maximising Your Savings
Cash returns
Tax on interest earned
The choice of accounts
Children s accounts
Instant access accounts
ISA s
Monthly income accounts
Notice accounts
Time deposits
Fixed-rate investments
Short-term fixed-rate investments
Escalator bonds
Fixed rate bonds
Guaranteed growth bonds
Guaranteed income bonds
National savings certificates
National savings pensioners guaranteed bonds
With profits savings plans
Friendly society plans
The purpose of saving
Chapter 2 investing a Lump Sum
The options available
Tax implications
Chapter 3 Protecting Your Income
Cover offered by banks and building societies
Chapter 4 Borrowing money
Caution before borrowing
Comparison of costs
Payment protection insurance
Borrowing to pay off other loans
Overdrafts
Credit cards
Personal loans
Payday loans
Secured or unsecured loans
Interest free or low-start credit
Hire purchase
Credit unions
Credit scoring
Chapter 5 Getting Financial Advice and the Role of Financial Advisors
Different types of advisors
Other types of advice
Fees and charges
Services offered by different advisers
Complaints
Complaint schemes generally
The Financial Ombudsman Service
The Pensions Advisory Service
The Pensions Ombudsman
The General Insurance Standards Council
The Property Ombudsman Scheme
The Financial Services Compensation Scheme
The Fraud Compensation Scheme
Chapter 6 Income tax Generally-How it Affects You
Income Tax rates
Personal allowances
Blind persons allowance
Married couples allowance
The employed
The self-employed
Capital gains tax
Tax on dividends
Inheritance tax
Exemptions
Gifts made before death
Chapter 7 Mortgages and Financing a Property Purchase
The options available
How much can you borrow
Deposits
Help to buy scheme
Main types of mortgage
Borrowing and the internet
Stamp duty
Solicitors fees
Advice for helping children on the property ladder
Chapter 8 Life insurance
Do you need it?
Different types of life insurance
Decreasing term insurance
Level term insurance
Family Income Benefit policy
Whole Life insurance
Critical Illness
Chapter 9 Funding Education
Generally
Bursaries, scholarships and other help
University
Student Loans
Chapter 10 Financing Health Care
Private medical care
Regulatory structure
Long-term care
LTC insurance
Immediate needs policy
Regulation
Chapter 11 Making Money From Stocks and shares
The Individual Investor
Purchasing assets
Hedging and speculation
The speculator
The markets
Chapter 12 How The Stock Market Works
What is a stock market?
Other UK markets
The basic order types
Chapter 13 Unit trusts
Investment trusts
Unit trusts
Tracker funds
Open-ended investment companies
Exchange traded funds
Chapter 14 Benefits of Owning Shares
Owning Shares in a Company
Long-term investment
Short-term investment
Perks of owning shares
Chapter 15 How to Buy Shares-Taxation of Shares
Buying through investment trusts
Unit trusts
Investment clubs
The cost of dealing in shares
Commission
The spread
Income tax
Buying shares
Taxation of shares
Dividends
Capital gains tax
Chapter 16 Planning Your Pension
Sources of pension and other retirement income
Income needs in retirement
What period to save over
Inflation
Chapter 17 Planning Ahead
Everyday needs
The impact of inflation
Chapter 18 Pension Savings-Options for Retirement
The state pension
Pension credits
The savings credit
The guarantee credit
Personal pension arrangements
Stakeholder scheme
Chapter 19 Pensions for Women
Particular issues for women
Changes to state pensions from 2016
Chapter 20 The State Pension
Qualifying for state pension
National Insurance contributions
Class 1 contributions
Class 2 contributions
Class 3 contributions
Class 4 contributions
National Insurance contribution credit
The state pension age
State pensions for people over 80
Additional state pension
Contracting out
Increasing pensions
Deferring pensions
Changes to the state pension from 2016
Useful addresses
Index
INTRODUCTION
It is easy to spend or waste money, and get ripped off, but not so easy to understand how to preserve and grow hard earned cash. Although we are still experiencing low interest rates and poor returns on savings, we have also experienced major changes in the way we can save and also use our pension pots in the future. The 2015 budget instigated many of these changes, such as the right to use your annuity pot how you wish (subject to tax).
Areas other than savings and pensions, such as the stock market, are performing well. The key to understanding the stock market is to know how it works and how you can invest in and make money from different share holdings.
In addition to the stock market and traditional savings accounts, there are investment in pension schemes to consider and also other key areas such as investment in property. Over and above all of this, there is the need to make tax efficient investments so you don t pay out too much of your hard earned income to Her Majesty s Revenue and Customs, known universally as the Taxman .
This book also looks at the role of financial advisors and how they are regulated. The area of financial advice has been tightened after decades of dubious practice. We look at mortgages available to ensure you get the best deal. We look at savings and investments generally and then take a more wide ranging look at costs of education, the stock market, taxation and pensions.
Overall, this book will be of great benefit to a wide range of people, whether you are looking after individual finances or are looking after family, thinking about now or the future.
Robert Stone 2017
Ch. 1
Maximising Your Savings
The fact that interest rates have gone down drastically at the time of writing means that people are now having to look very carefully at where they save their money in order to get the highest return.
People save for a number of different reasons, dependent on their circumstances and on age. Some people save in order to have enough to help their children and others save for a prosperous old age. Whatever the reason, it is important to understand the best vehicles for savings
Those skilled in the art of financial planning consider that a sum of between three and six months expenditure constitutes an adequate fund for emergencies. This will depend on your employment status as if you are self-employed then you may need more due to the fact that you will not get sick pay unless you are insured.
This emergency cash should be placed in an account that is readily accessible, probably in an instant access account which allows you to withdraw without penalty. However, these accounts traditionally pay the lowest form of interest and it is advisable to shop around.
There are a number of accounts which offer a higher rate of interest with instant access. You are provided with a card so that you can gain access to your money as and when you need it. If the account is joint then both partners should be provided with a card. Although some of the providers are large established institutions, some are smaller companies with far less capital. You should always think before investing with any company. Think about your needs and requirements and the security of your capital. Which? has a comparison site: www.moneycompare.which.co.uk/savings-and-isas/instant-access-savings-accounts-that you may find useful.
Cash returns
A lot of savers like to have more cash on deposit than they need for emergencies. If you do not need access to the money for emergencies then it is better to put your money in a higher rate account, one which generally needs notice of withdrawal. The longer the period of notice the more interest that you will get on your money.
Postal accounts pay higher than standard rates of interest and these are useful for those savers who do not require access to their savings over a foreseeable period. One good website which compares rates on postal accounts is: www.fairinvestment.co.uk/postal savings accounts.aspx
You can also get an idea of interest rates by perusing the pages of the dailies and weekend editions of papers, which compare the costs of borrowing and returns on savings. In the United Kingdom rates for deposits are usually quoted gross of tax.
The nominal rate is the rate of interest applied to the account, while the annual effective rate (AER) is the rate taking into account the frequency of interest payments.
The nominal rate is not affected by whether you draw your interest or leave it in the account. But if interest is paid more than once a year and you leave it there, you will earn interest in interest and end the year with more in your account.
If you plan to spend all your interest, you can compare different accounts on the basis of their nominal interest rates. If you plan to leave the interest to accumulate, as the table shows, an account with a lower nominal interest rate could giv