How to invest your money

How to invest your money in ISAs

Individual Savings Accounts (ISAs) are tax-free savings accounts which mean you do not have to declare any income from them. You can use an ISA to save cash, or invest in stocks and shares.

ISAs can be used to:

• save cash in an ISA and the interest will be tax-free
• invest in shares or funds in an ISA - any capital growth will be tax-free and there is no further tax to pay on any dividends you receive

To pay into an ISA you must be:

• a UK resident - with two exceptions: Crown employees, such as diplomats or members of the armed forces, who are working overseas but paid by the government; and their husbands, wives or civil partners
• 16 or over for a cash ISA
• 18 or over for a stocks and shares ISA
• An ISA must be in your name alone; you can't have a joint ISA.

How to invest your money in banks and building societies

With savings accounts you'll always get back at least the money you paid in plus interest at the rate advertised. There are a wide range of accounts from which to choose.

When considering a bank or building society account you should consider how quickly you can get at your money, the minimum amount required to keep the account open and the type and rate of interest rate paid. Many organisations offer accounts which manage via the internet or by post. Accounts may be opened by individual investors or as joint accounts with two or more investors.

How to invest your money in the stock market

Shares

Purchasing shares gives you a stake in a company. If the company flourishes the value of the shares may go up allowing you to sell at a profit. You may also get a share of the profits through dividends. If the company doesn't do well, you may not get any dividends and the value of the shares could fall or, in some cases, cease to have any value at all.

Investing in shares is more risky than some other investments.

Pooled or collective investments

With these investments contributions from lots of people make up a single investment fund. Types of funds include:

• Authorised Unit Trusts
• Open Ended Investment companies (OEICs)
• Investment Trusts
• Exchange Trade Funds
• Unit linked life assurance
• ISAs

There are a number of companies who offer collective investment products and a wide variety of different funds.

How to invest your money in bonds

Bonds are loans to the government companies, local authorities or companies raising money to invest in their business.

Bonds usually pay an annual fixed rate of interest and will return the capital at the end of a given period. Corporate and government bonds are traded on the stock market and their value can rise and fall.

Bonds investments can include:

• corporate bonds - issued by companies
• gilts - bonds issued by the UK government
• bond funds - pooled investments investing in a range of bonds

With a wide range of bonds available it is advisable to seek professional advice before choosing this type of investment.

How to invest your money in a pension fund

There are three key types of pension scheme:

• State Pension,
• Personal pension
• Company (occupational) pension.

With the wide assortment of pension products available it can be very difficult to decide upon the best way of planning for a comfortable retirement.

• How much should I save into my pension?
• How much can I save without incurring a tax penalty?
• What are extra options under the new rules and are they appropriate to me?
• What are my options when I come to take benefits from my pension?
• Now the tax treatment for all types of pensions is similar, how can I tell which are best suited to my needs?

How to invest your money in National Savings and Investments

As National Savings and Investments is backed by HM Treasury, you can be sure that all your capital will be completely secure, however much you have to invest.

NS&I offer a range of savings and investment product designed to meet a variety of needs.

While NS&I offer advice on choosing their products the help of an independent professional may ensure you get the product most suited to your needs.

How to invest your money in Premium Bonds

Instead of paying interest, Premium Bonds are entered into monthly prize draws with £1 million jackpot and over a million other prizes.

Premium Bond prizes are free from UK Income Tax and Capital Gains Tax.

Over time inflation can reduce the true value of your money.

For advice on how to invest your money in the above and other investment vehicles contact Roger Smith IFA

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