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Investments

There are various types of investment and all have a varied level of risk. However, you always need to check out the tax implications, how easily you can access your funds and what charges may apply if for example you request that your investment be withdrawn before time:-

Investment Bonds

Generally classed as low risk but due to this can have low returns, there are a number of different types of bonds available such as:-
Read on for more information on the various types of Bonds available.

Permanent Interest Bearing Shares

Are provided by Building Societies and are intended to raise capital. They can be bought and sold on the London Stock Exchange in round amounts from 1000 to 500000. They work in the opposite way to Index Linked Bonds and if the interest rises they reduce in value and when the interest rate drops they are worth more. Another risk in owning PIBS is that is the Building Society which provided you with the PIBS goes into difficulty and becomes insolvent then all other investors will be paid first and only if there is enough monies left after this will the PIBS owners be paid. Tax wise, you would be exempt from capital gains but you would pay income tax on the interest earned. However this would be your responsibility and you would be paid in full and then have to declare the interest earned on your personal tax return.

High Yield Shares

Are shares which pay dividends that are above the UK market average. The idea of this type of share is that they will produce an annual income which exceeds the rate of inflation, creating a very good return on your investment. Always check the risks with any type of investment as even though the returns may be high, the risk may be also.

Growth Shares

Are shares offered by companies whos past record proves to show that they often produce above average earnings. Due to the above average earnings, their shares are expected to grow over a period of time and the idea is to invest in the companies shares and over time watch your money grow to provide a good return on your investment.

Stocks

Are classed as high risk and can have high returns but can also have no returns or negative returns. A stock is classed as a small portion of a company which provides the owner of the stock a share in profits of that company (stocks are also known as shares or equity)

Mutual Funds or Unit Trusts

Offer a more even risk, with your monies being pooled together alongside many other investors. Your monies are then passed to a professional manager and they then invest your monies in stocks or shares and a wide range of other investments. It makes this type of investment cost effective and you also benefit from the having the expertise of your manager. You are able to set up a unit trust as your see fit and you are able to choose from income now, income later, growing your income or building your investment.

Endowment Policies

Are designed to be a savings account as well as provide life insurance and the shortest term which can be taken is 10 years. When the policy reaches maturity a cash tax free value is paid out or, if earlier, upon death. Policies can be surrendered early, however this option usually incurs penalty charges and endowment policies usually have charges applied as standard. Because of this you must always read the key features document and make yourself aware of what charges may apply. Types of endowment policies include Low Cost, Unit Linked, With Profits, Low Start, Flexi Endowment and Friendly Society Plans.

Capital Investments

The term capital relates to any form of goods, an item of worth such as a property or to the amount of wealth a person has access to and, or control of.
With regards to capital investment, this is usually referring to a business where an amount in monetary form is used to buy or make improvements to a service or product making the business more profitable or the product more desirable. The money used to make the capital investment may come from profits of the business, the company shareholders or from a loan. When making a capital investment you must be sure that the return on your investment will indeed be worth the monies put into it as without this you could end up owing money back on an improvement which did create additional profit.

High Yield Investments

Are mythical types of investment which have caused many problems in the investments industry. High yield investments promise very high returns on your investments of around 45% per month, though they never clearly state how exactly your money will be invested to actually provide this, usually you would find that they will just say that they invest in stocks and shares and will not provide anything more specific and the reason for this is that your money is not usually invested at all.
Over the years many people have lost money in high yield investments and yet people are still being tempted to part with their money due to the temptation of the alleged high interest rates. Beware, anyone offering exceptionally high returns on investments are more than likely not legitimate, if it seems too good to be true, it probably is.

Ethical Investments

Are relatively new types of investment and have been designed to provide capital to projects which are good for the community and environment.
With people becoming more aware of protecting the environment and becoming more inclined to assist not just your own community but others as well, it seems the right time for people to be applying this train of thought to everything including their investments. Ethical investments focus on areas such as Forestry, Farming, Alternative Energy, Eco Housing and Micro Finance, (which provide money to under privileged villages to enable them to create their own source of food and water) and are definitely worth while considering when looking at making investments.

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