investing 50s guide final
TRANSCRIPT
-
8/6/2019 Investing 50s Guide FINAL
1/32
Th
PockeT Guideto
Finances inyour
-
8/6/2019 Investing 50s Guide FINAL
2/32
Hg Lo cllg sq sth
ah r
Btl
Bs1 5HL
Tlph: +
.hl..k
Disclaimer: The information contained in this guide provides only general
guidance and does not constitute financial advice. You should not rely on this
information to make (or refrain from making) any decisions. All information
contained within was correct as at April 2011. Note tax rules can change and any
reliefs depend on your personal circumstances. For advice tailored to your own particular situation, always seek independent advice from an expert or
professional.
Illustrated by Howard McWilliam
2
-
8/6/2019 Investing 50s Guide FINAL
3/32
conTenTs
1) F pg 4
invstmnt gals pag 5
2) ctt f thB itt Ptfl pg 6 cash pag 6
Fx intrst pag 7
Shars pag 8
inm r Grwth? pag 12
3) sg t pg 14 Pnsns pag 14
iSAs pag 19
VcTs pag 21
iHT pag 21
4) oth pt t pg 23 Lmp sm r rglar savngs? pag 23
Hw t hs an nvstmnt pag 25
Hw i hs a fn? pag 25
5) abt t t? pg 27
6) cl pg 31
3
-
8/6/2019 Investing 50s Guide FINAL
4/32
Foreword
Th tm whn ppl sally bm mst ntrst n nvstmnts s rng
thr ffts. Ths s n srprs, rtrmnt s nt s far away an thr s ftnmr mny avalabl fr nvstmnt. earnngs ar ftn at thr hghst, th
mrtgag may b ls t b bng pa ff an hlrn ar lly t hav flwn
th p. Th psht s hghr nm an fwr tgngs.
Rtrmnt fr many wll man lvng n a smallr nm than prvsly
njy, bt thrgh fftv fnanal plannng t s pssbl t mnms th
hang n fnanal rmstans.
Frst y wll n t what mattrs mst t y an thn hw ths
gals ar gng t b ahv. Ths g an hlp.
Th g fss manly n st mart nvstmnts. W hav nt sss
prprty. Prprty an brng xtra vrsfatn t an nvstmnt prtfl.
it s r pnn that prprty shl b trat smlarly t any thr spalst
ara f nvstmnt, an, ts yr wn hm, w blv nly 10% f a
prtfl shl b nvst hr.
Any lng-trm fnanal plan shl als nl sm lmnt f lf
nsran t vr yr lablts an prv fr yrslf r lv ns n
as f an ant, llnss r ath. Fr sm ths mattrs shl b
arss bfr nstrtng a prtfl.
4
-
8/6/2019 Investing 50s Guide FINAL
5/32
H ll h tt gl?
Fr mst f s th mprtant mattr s havng ngh mny t lv n rng
rtrmnt. Thr ar thr sss that may n t b arss - has th
mrtgag bn pa ff? Ar thr any pnants an what ar thr ns?is thr ngh ash n pst? What s th rrnt val f yr prtfl,
what s t n t b wrth at rtrmnt, an what s yr tmsal?
Fsng n ths qstns wll ma an xllnt startng pnt fr an
nvstmnt plan.
5
-
8/6/2019 Investing 50s Guide FINAL
6/32
2) consTrucTion oF THe Basic invesTmenT PorTFoLio
Th thr lmnts that shl b prsnt n any bas nvstmnt prtfl
ar: ash, fx ntrst, an shars. Hw mh xpsr y hav t ah fths lmnts wll vary pnng n yr prsnal rmstans bt th
pyram blw shl prv a gln fr th avrag nvstr n thr 50s.
ch
dpst shl frm th bass f any
prtfl an t s vtal t hav a gsavngs ant. Ths s yr
mrgny fn fr nxpt vnts.
Y nvr nw whn yr hs may
rqr majr rpars, r a famly
mmbr may all pn yr aptal
nxptly.
only y wll b abl t hw
mh ash t hl, as t s trmn
by prsnal rmstans, bt a g
gnral rl s at last 6 mnths
xpntr.
Th mprtant thng s that th ash s raly assbl. W wl sggst
that y hs an ant wth nstant ass. it pays t shp arn t fna g rat an thr ar vars mparsn sts n th ntrnt. car mst
b tan whn hsng an ant as thr an b aths. Fr xampl sm
ants wll pay n ntrst n any mnth n whh thr s a wthrawal.
othrs ffr mr attratv ntrst rats at th bgnnng nly fr ths t fall
latr n th trm. if ntrst rats mv hghr b prpar t mv yr
mny lswhr f yr rrnt prvr s nt nras thr rat
arngly.
SHARES
Shares | VCTs
Unit Trusts | Oeics
Investment Trusts
FIXED
INTEREST
Gilts | Corporate Bonds
CASH
Bank/Building Society Accounts
6
-
8/6/2019 Investing 50s Guide FINAL
7/32
-
8/6/2019 Investing 50s Guide FINAL
8/32
lswhr n 100 an gnrally b bght fr lss than 100. Ths nt nly
affrs a aptal gan n rmptn, bt als a stay stram f nm.
captal gans an lsss n glts ar xmpt frm aptal gans tax.
crprat bns wr n th sam prnpl, xpt thy ar ss bympans r thr nstttns. As mpans ar lss sr than th Brtsh
gvrnmnt thy tn t pay a hghr yl t mpnsat nvstrs fr th
nras rs.
crprat bns fall nt tw bra rt lassfatns: nvstmnt-gra
an splatv-gra (r hgh-yl) bns. Splatv-gra bns ar
ss by mpans prv t hav a lwr lvl f rt qalty mpar
t mr hghly rat, nvstmnt-gra, mpans.
W thn n f th bst ways t nvst n rprat bns s thrgh a
rprat bn fn. Ths nvst n hghr r lwr rs bns, r a mxtr,
s y an p a fn whh mts yr ns. Fx ntrst nvstmnts an
b a g vrsfr fr a prtfl, prvng a rlatvly stay nm
stram.
invstrs wth svral yars ntl rtrmnt sally hav lss n fr fx
ntrst nvstmnts. Hwvr, as y apprah rtrmnt y may wsh t
nras yr xpsr t ths asst lass bas thy ar typally lss
vlatl than shars. if y wr havly xps t shars an th st mart
sffr a stba t l svrly afft th val f yr prtfl an
thrfr th nm y wl rv thrgh rtrmnt. Als y may n
t thn abt gttng yrslf nt a pstn whr y an spplmnt yr
nm thrgh th ntrst paymnts frm an nvstmnt n ths ara.
sh (qt)
Hstrally nvstmnts n shars hav lvr sprr rtrns mpar
t thr asst lasss vr th lngr trm, althgh ths s at nras rs
an plas rmmbr past prfrman s nt a g t th ftr. W blv
8
-
8/6/2019 Investing 50s Guide FINAL
9/32
ths trn s lly t ntn an th majrty f nvstrs savng fr
rtrmnt shl hav sm gr f xpsr t th st mart n thr
prtfls.
in r pnn t s rarly t lat t start nvstng. unlss y ar nsrngrtrng n th mmat ftr an nvstmnt n th st mart s lly t
pr a prft f hl fr fv yars r mr.
dvrsfatn n a prtfl s vtal t nsr rs s spra bas shars
an fns fall n val smtms, s y l gt ba lss than y
nvst. Hwvr, ta ar nt t vr-vrsfy - wrsfatn n th
wrs f star fn managr, Nl Wfr.
Cash performed
best
Stock market
performed best
Cash performed
best
Stock market
performed best
Each 5yr period across last 111yrs Each 10yr period across last 111yrs
CASH OR THE STOCK MARKET?
Performance of the stock market and cash over 5 and 10 year periods100
80
60
40
20
0
Num
berofperiods
The chart above shows the number of 5 and 10 year periods that the stock market has outperformed cash and vice versa
since 1900. The stock market has historically been the best performer and the longer the investment period the higher the
probability of the stock market beating cash. That is not to say you cant make money in the short term, but the probability
increases significantly the longer you invest, as the graph shows. Of course, there are no guarantees. Cash offers complete
security of capital, so its value wont fall, whereas stock market investments can fall in value as well as rise so you could get
back less than you invest however long you invest for. Past performance should not be seen as a guide to the future.
Source: Barclays Equity Gilt Study 2011
9
-
8/6/2019 Investing 50s Guide FINAL
10/32
ovr th yars t s asy t amlat a spra f nvstmnts frm a w
rang f strs. Ths an lav yr prtfl spra t thnly.
W blv th bst apprah s t hav r nvstmnts an thn a arn
th prphry t ths strs whh shw th mst prms. Mntrng yrprtfl prally wll allw y t nsr y nt bm vrwght
n a partlar ara, r nrwght n anthr whh shws prms. Th
favr strs wll hang vr tm an y may n t aapt yr
prtfl arngly. Th p hart vrlaf shws th asst hlng that w
blv s a g startng pnt fr th nvstmnt prtfl fr a typal
nvstr n thr m-ffts. Whn y rtr t s lly yr lablts wll b
n Strlng. Thrfr w blv t mas sns fr th bggst prprtn f
yr pr-rtrmnt prtfl t b nvst hr n th uk.
10
G t llt %
This is based on the Lipper Balanced Managed Sector Average as at January 2011. Do not feel you needto follow it slavishly. It is a benchmark that you can flavour with your own preferences to take accountof your attitude towards risk, personal circumstances and what you need from your investments.
UK Equity 31%
North America 11%
Japan 3%Europe 13%
Asia Pacific
ex Japan 7%
EmergingMarkets 2%
Alternative
Assets 9%
UK Fixed
Interest 8%
Overseas
Bonds 9%
Cash 7%
-
8/6/2019 Investing 50s Guide FINAL
11/32
Hwvr, thr ar plnty f pprtnts avalabl vrsas. Th uS, erp,
th Far east an mrgng marts all ffr ptntally attratv rtrns,
althgh ah mart ffrs ffrng lvls f rs. Plas rmmbr that
nvstng vrsas may nras rs thrgh fltatns n rrny, nlss
th fn tas stps t prvnt ths.
Byng nval shars an prv xpsr t ths marts, bt
mntrng a prtfl an b tm nsmng. if y hav spalst
nwlg abt a mpany r str y may b abl t trn ths t yr
avantag. An altrnatv s t nvst n a lltv nvstmnt, sh as a nt
trst r oeic. Ths ar rn by fn managrs wh wll nvst n a rang f
shars n a prtfl. Y an hs a fn arng t whr t nvsts, ts
str r ggraphal rgn.
A trar fn s sgn t mrrr th prfrman f th nx whr t
nvsts. Ths mans t s nlly rtrns wll vr b n xss f ths f th
nx.
it s r vw that vr th lngr trm nvstrs wll njy bttr prfrman
frm a g atvly manag nt trst r oeic. insta f byng vry st
n an nx th fn managr wll slt nly ths sts that thy blv
hav th ptntal t tprfrm. if thy gt ths rght th rtrns wll b n
xss f th nx. Ths an als hlp t prtt th fn f th mart falls,
as f th sts thy hav hsn tprfrm thy shl nt fall as far as th
nx. of rs th val f all st mart nvstmnts an fall as wll as
rs an th val f bth typs f fn ar lly t sffr n a fallng mart.
An altrnatv lltv nvstmnt s an nvstmnt trst. in th sam way asa nt trst r oeic ths wll nvst n a rang f ffrnt shars n bhalf f
prvat nvstrs wthn a prtfl. Hwvr, thr ar sm fnamntal
ffrns. unl a nt trst an nvstmnt trst s a mpany n ts wn
rght, an lst n th st mart. As th natr f Mars an Spnrs
bsnss s sllng lths an f, th natr f an nvstmnt trsts
bsnss s t l t prft frm byng an sllng shars. L nt trsts
an oeics, nvstmnt trsts ar fns nvstng n shars an thr assts.
11
-
8/6/2019 Investing 50s Guide FINAL
12/32
Hwvr bas thy ar mpans n thr wn rght, whs shars tra
n th st mart, thr shar prs an tra at a snt r prmm t
th val f th nvstmnts thy hl. Bas rtrns vary wth th man
fr th nvstmnt trst as wll as th rtrns n thr hlngs an bas
managrs an brrw mny t nvst, nvstmnt trsts ar gnrally rsrthan smlar nt trsts an oeics.
i gth?
Th majrty f ppl n thr ffts ar nvstng fr grwth t bl twars
thr rtrmnt pt. Hwvr, t s mprtant t plan aha as rng
rtrmnt y may wsh t swth t nm prng nvstmnts t
spplmnt yr pnsn. Ths s asy t wth fns.
12
-
8/6/2019 Investing 50s Guide FINAL
13/32
Swthng btwn th amlatn an nm nts f th sam fn s
trat as a shar rrgansatn, nt a spsal, an ths s nt nr a tax
harg. Plas nt that ths s th rrnt statn an ths rls l
hang. Ths an b vry sfl whn plannng fr rtrmnt as t nabls
nvstrs t by th amlatn nts f a fn whl thy want aptalgrwth n th yars lang p t rtrmnt an thn swth t th sam fns
nm nts, assmng thy ar avalabl whn thy wl l t trn n an
nm stram.
Hwvr, ths rls nt apply fr swthng btwn ffrnt nt trsts.
Y annt swth btwn th amlatn nts f fn A an th nm
nts f fn B; y wl b sllng n t by anthr. unlss hl wthn
an iSA r pnsn, nr tays tax lgslatn ths wl b trat as aspsal fr aptal gans prpss an y may b labl fr a tax harg.
if y hav ma a sbstantal aptal gan n yr nvstmnts ts an
iSA r pnsn, rrntly n xss f 10,600 n th 2011/12 tax yar, y wll
b labl fr aptal gans tax (cGT) pn sal. carfl plannng s n
whn spsng f yr nvstmnts. As th l aag says, prvntn s bttr
than r. in thr wrs t s bst t ma s f th vars allwans
avalabl t av a ptntal tax prblm latr n.
13
-
8/6/2019 Investing 50s Guide FINAL
14/32
-
8/6/2019 Investing 50s Guide FINAL
15/32
-
8/6/2019 Investing 50s Guide FINAL
16/32
16
th nm that wll b tax. Shl y bfr rtrmnt (an whl
nr 75) th fn s nrmally pa t fr f nhrtan tax. on y ar
n yr 50s y may start t thn abt rawng yr pnsns, bt y an
stll ma ntrbtns f y want t tp p yr xstng prvsns. Mh
wll pn n whn y ntn t start tang an nm frm yr pnsns.Thr s n lngr any rqrmnt t ta an nm by any st ag an y
an ntn t ma ntrbtns ntl yr 75th brthay.
Bas tax rlf s a t th mny y pt nt a prsnal pnsn, th
fn an grw t a sbstantal sz vr th lng trm. S jst bas y ar
n yr 50s an gttng narr t rtrmnt, y nt hav t gv p n
pnsn savngs. Fr nstan, f y wr t start by payng 5,000 grss
(4,000 nt) (417 a mnth) nt a prsnal pnsn ah yar an nrasthat paymnt ah yar by 2.5%, aftr fv yars yr pnsn l b wrth
30,448. Aftr 10 yars, th pt l b wrth 75,072, an aftr 20 yars th
fn l b wrth an mprssv 229,725. Ths xampls assm a 7%
annal grwth rat an a 1% annal managmnt harg. Thy nt ta nt
ant th fft vr tm f nflatn, whh wll r th prhasng
pwr f yr savngs. Th amnt y rv wll pn n th prfrman
f yr nvstmnts s l b mr r lss than ths. if y wl l t rat
yr wn xampls, try r pnsns allatr at www.hl..
common TyPes oF Pension
cp P
on f th bst ways t sav fr yr rtrmnt s thrgh an patnalpnsn shm f n s avalabl t y. Yr mplyr wll ta pnsn
ntrbtns frm yr pay bfr tng tax, bt nt Natnal insran
ntrbtns, s y nly hav t pay tax n yr rmanng salary. Ths
mans that f y ar a hghr rat tax payr y gt th fll rlf straght away.
if yr mpany pnsn s a grp prsnal pnsn thn tax rlf s btan
n th sam way as fr an nval prsnal pnsn, as xplan n th
nxt pag.
-
8/6/2019 Investing 50s Guide FINAL
17/32
17
Whats mr, f y jn a mpany pnsn yr mplyr s lly t ma
ntrbtns t an mght als prv thr bnfts sh as lf nsran,
s t s sally wrth nsrng mpany pnsns bfr any prsnal
arrangmnts y mght st p.
Pl P siPP
Prsnal pnsns an Stahlrs ar th mst mmn typ f prvat
pnsn an ar wrth nsrng f y nt hav ass t an patnal
pnsn shm, r f y want t spplmnt yr patnal pnsn
ntrbtns.
in rnt yars Slf invst Prsnal Pnsns (SiPPs) hav bm
nrasngly pplar fr astt nvstrs. its nt fflt t s why. cmpar
t thr frms f pnsn a SiPP ffrs a far gratr rang f nvstmnts fr
y t hs frm, s y an ta ntrl f whr yr pnsn s nvst.
Rathr than nly havng th h f th pnsn prvrs ftn mr
fns y an hs frm a hg rang f nvstmnts, nlng nt trsts,
oeics, nvstmnt trsts, r shars frm arn th wrl. Y an vn mv
nt ash f y wsh. Ths nabls y t hanp yr wn nvstmnts,
manag yr rs, an hpflly gnrat hghr rtrns whh an b s
t prv y wth a bttr nm n rtrmnt, althgh th val f
nvstmnts an g wn as wll as p, s y l gt ba lss than y
nvst.
Ths flxblty an b partlarly mprtant whn y nsr that as y
nar rtrmnt, th nvntnal wsm s t mv nt mr sr fnst hlp gar aganst avrs mart mvmnts.
Hargravs Lanswn s a lang SiPP prvr. or Vantag SiPP s n f
th lwst-hargng plans avalabl n th uk. W als ffr mart-batng
snts n Stahlr pnsns. Fr mr tals, vst www.hl.. r
all s n 0117 980 9926.
-
8/6/2019 Investing 50s Guide FINAL
18/32
18
stt P
Th mnmm ag at whh y an raw th stat pnsn s rrntly 65 fr
mn. Th stat pnsn ag fr wmn wll rs t 65 by 2018 an thn rs t
66 fr bth mn an wmn by 2020. T fn t yr stat pnsn ag vstwww.thpnsnsrv.gv.
Ppl ar lvng lngr than vr bfr. it s mprtant t fatr ths nt yr
plans. on y rah rtrmnt ag t may b harr fr y t fn
mplymnt, mang t fflt t gnrat an nm whh an b sav. it
s thrfr vtal that y hav alray sav ngh t lv n.
cltg tg p
By th tm ppl rah thr 50s many wll hav amlat a nmbr f
prvat an wr pnsns. Wth ffrnt prvrs snng statmnts at
ffrnt tms f yar ths an ma t fflt t nw xatly what y hav.
T t wn n paprwr an sav tm t may b wrth nslatng yr
pnsns n a mrn plan wth lw sts an nln ass sh as th
Vantag SiPP. Bfr transfrrng y shl h that y wll nt ls any
valabl garants r thr bnfts r nr havy xt pls.
if h p p
if y hav n pnsn prvsn, an nlss y wll b n a lw nm n
rtrmnt whr y mght qalfy fr bnfts frm th stat, y shlnsr nvstng mmatly. evn a small ntrbtn ah mnth wll
a p vr tn yars, spally f th paymnts ar arflly nvst.
if h lg p
Thr s als a lmt n ttal pnsn savngs - a Lftm Allwan f 1.8
-
8/6/2019 Investing 50s Guide FINAL
19/32
19
mlln n 2011/12. Ths wll fall t 1.5 mlln frm 6 Aprl 2012. if yr ttal
pnsn bnfts x th Lftm Allwan, r mght x ths n th
ftr, y may hav t pay a tax pnalty harg f 55% n th srpls whn
y ta rtrmnt bnfts nlss y hav rgstr fr prttn. Yr
pnsn bnfts nl all pnsns apart frm th stat pnsns. Thsnls pnsns n paymnt an Fnal Salary shm bnfts, whh ar
gvn a val that nts twars th lftm allwan, as wll as prsnal
an stahlr pnsns. Th majrty f ppl n th uk ar vry nlly
t brah th Lftm Allwan. Hwvr, f y ar n any bt whthr
ths wll afft yr pnsn, y shl s fnanal av.
il sg at - isa
inval Savngs Ants (iSAs) ar tax ffnt wrapprs whh an shltr
sm nvstmnts frm aptal gans an nm tax. Bas y an nl
vars typs f nvstmnt, nlng ash savngs, shars, nt trsts,
nvstmnt trsts an oeics, t mas sns t s yr iSA allwan bfr
thr nvstmnts.
iSAs an b s fr rglar savngs r lmp sms, an rrntly allw y t
nvst p t 10,680 a yar nt a Sts & Shars iSA, r p t 5,340 n a cash
iSA wth th balan (wthn th 10,680 lmt) nvst n a Sts & Shars
iSA. T. Fr frthr nfrmatn n iSAs, plas rqst r invstrs G t
iSAs by allng 0117 900 9000 r vstng www.hl...
Thr s n aptal gans tax t pay n iSA nvstmnts, thr s n frthr nm
tax lablty, an y nt hav t gv tals n yr tax rtrn. Thr s a f-nt aptal gans tax avantag t hlng nvstmnts wthn an iSA, as pps
t ts, whr y mst pay tax n gans vr th annal xmptn amnt
(10,600 n 2011-2) at 18% r 28%, pnng n th rat f nm tax y pay.
Thr s als an nm tax avantag t hlng ash savngs n a cash iSA,
as ts y wl hav t pay nm tax n th ntrst. Whn t ms t
vn nm n shars an fns, hwvr, th tax pstn s th sam
-
8/6/2019 Investing 50s Guide FINAL
20/32
20
fr lwr an bas rat taxpayrs whthr vns ar rv ns r
ts an iSA. Hghr rat taxpayrs ar bttr ff hlng shars ns an
iSA, as ts thy wl hav t pay an atnal 22.5% f th grss
vn. Plas nt that tax rls an hang an th val f any bnfts
pns n yr rmstans.
Th f f pkt - g t
Th avnt f th fn sprmart has rvltns th nvstmnt
nstry. it nabls nvstrs t p all thr nvstmnts n n pla, rv
statmnts an valatns frm jst n prvr an nvst n a w rang
f ffrnt prts. Rathr than bng rstrt t jst n prvrs fnsy an hl a mxtr f nt trsts an oeics. Y an vn hl ffrnt
typs f nvstmnts n n iSA, .. a mxtr f shars, nt trsts, nvstmnt
trsts r vn ash. W blv ths s th bst way t nvst as y an mv
arn btwn nvstmnts t maxms rtrns fr yr rrnt
rmstans wtht havng t swth prvrs. Pls t nabls y t al
wthn yr iSA qly an asly. Ths an b vtal f a hang n th mart
prmpts y t sll an nvstmnt qly, as y l rnvst th sam ay.
P isa
Pnsns an iSAs ar ffrnt nvstmnts bt thy an mplmnt ah
thr. Bth shms ffr hghly attratv tax bnfts. Y rv tax rlf
n pnsn ntrbtns, whh s nt th as fr iSAs. Pnsn nm s
taxabl whras y wnt pay tax n th nm y ta frm yr iSA.crally iSAs ffr rt ass t yr aptal f n. on y hav ma
a ntrbtn t a pnsn y annt ass th aptal ntl y ta th
pnsn, sally frm ag 55. Thrfr, mst nvstrs wll bnft frm
nvstng n a mbnatn f th tw, wth th prs mx trmn by
nval rmstans. VcTs prbably ffr n f th mst tax-nntvs
nvstmnts avalabl n th uk, bt thy ar hghr rs.
-
8/6/2019 Investing 50s Guide FINAL
21/32
21
vt ptl tt (vcT) g p
VcTs ffr smthng n thr nvstmnt an - ass t sm f th smallst,
mst ynam ntrprnral mpans n th uk an as an nntv t
nvstrs t ta n th rs th gvrnmnt has ffr gnrs tax bras.VcTs prbably ffr n f th mst tax-nntvs nvstmnts avalabl n
th uk, bt thy ar hghr rs.
Thr s a tax rbat f p t 30% (vn t bas rat taxpayrs). if y nvst
10,000 y an rlam 3,000 tax, prvng y hav pa at last 3,000
n nm tax that tax yar. in atn all nm frm a VcT s fr frm
nm tax an all gans ar fr frm cGT. in rr t p th ntal tax rlf
y mst hl th nvstmnt fr at last fv yars. Hwvr, as VcTs arrtanly lng-trm nvstmnts, w wl sggst that all nvstmnts n ths
ara shl b hl fr svn t tn yars.
in xhang fr ths gnrs tax bras nvstrs hav t b prpar t
ta n hghr rs. Hwvr, rs an rwar m han n han an th
mr rs y ar prpar t ta th hghr th ptntal rwar. As wth all
spalst nvstmnts thy shl nly ma p a small prprtn f yr
prtfl.
iht T
if y plan t lav a lgay t yr sps an/r hlrn, y shl ta
stps t r yr stats lablty t nhrtan tax (iHT). Aftr tng
yr nl rat ban (th stanar nl rat ban s 325,000 n th 2011/12 taxyar), yr rmanng stat s labl t iHT at 40%. S, vn f yv nvr
pa hghr rat tax rng yr wrng lf, y l han vr tw-ffths
f vrythng y wn n xss f th nl rat ban whn y . in mst
ass y wll amlat walth p ntl th pnt f yr rtrmnt an
thrfr nhrtan tax plannng s nt nrmally nsr ntl thn. if
nhrtan tax s f a partlar nrn, plas ntat r fnanal
prattnrs n 0117 317 1690 fr tals f r srvs. Altrnatvly, fr
-
8/6/2019 Investing 50s Guide FINAL
22/32
22
frthr nfrmatn plas rqst r G t Savng inhrtan Tax by
allng 0117 900 9000 r vstng .hl..k.
mk wll pl h
if y wl l t hav a say n what happns t yr assts an pssssns
aftr y , thn y mst hav a Wll. othrws, yr stat wll b
strbt arng t th smwhat nwly ntstay laws, whh an
as majr psts, famly rfts an vn lgal battls. it s als a sn a
t nsr gvng smn y trst th lgal rght t ta vr th
managmnt f yr fnans f y ar mntally r physally nft t p
wth yr affars, sng what s nwn as a lastng pwr f attrny (LPA).
a Fl nt sg T
on f th thr mprtant nsratns fr ppl nvstng n thr 50s s
mang sr th nvstmnt aptal, an nm frm t, s n th nam f th
sps wh pays th last tax. clarly f n partnr n a marrag s a taxpayr
an th thr s nt, th nm prng nvstmnt shl b n th hans
f th nn-taxpayr. if n partnr pays 40% tax an th thr pays 20% y
may wsh t nsr plang th nvstmnts wth th lwr rat tax payr.
dnt lt th tax tal wag th nvstmnt g, .. nvr nvst fr tax rasns
aln. Althgh sm f th tax nntvs tln hr ar hghly attratv
th frst sn anyby mas shl b nvstmnt-bas, nt tax-bas.
Th tax bras ar an atnal bnft bt shl nt b th trmnngfatr. An nvstmnt that prvs a larg rtrn vn thgh tax has bn
nrr s bttr than a tax xmpt nvstmnt whh prvs vry lttl.
it s als mprtant t rmmbr that tax rls, an rlfs, an b hang at
anytm by th gvrnmnt. Th xat amnt f any bnft wll pn n
yr rmstans.
-
8/6/2019 Investing 50s Guide FINAL
23/32
23
4) oTHer PoinTs To consider
Lp gl g?
on f th man rasns fr nvstng bfr rtrmnt s th fat that
mplymnt wll prv a flw f nm fr nvstmnt prpss. Whlst
sm ppl prfr t amlat a fw thsan pns an thn by an
nvstmnt, thrs fn t mr nvnnt t ta t a rglar savngs plan.
if y nt hav a lmp sm t nvst n r vw a rglar savngs plan s th
fnst way fr mst prvat nvstrs t amlat aptal. Thr ar many
rasns t nsr a rglar savngs plan:
) Frst f all, tmng s th mst fflt part f nvstmnt. By savng
rglarly y wll nt pla t mh aptal nt th mart at any
n tm. Prvng th nvstr waths th partlar nvstmnt
lsly, thr wll gnrally b xllnt tms whn th savngs plan
an b sl. Th mny an thn b pla n lss vlatl nvstmnts
r s t by an nvstmnt that wll pr an nm thrgh
rtrmnt.
b) Falls n th mart an atally wr n yr favr. Th rasn s
pn st avragng as th xampl ppst shws. Fallng marts
allw y t by nts n yr hsn fns at lwr prs, s f th
mart vntally rgans ts lst grn thy wll nt fr mh
mr.
Rglar savngs plans ar avalabl bth ns an ts an iSA an wthna pnsn.
-
8/6/2019 Investing 50s Guide FINAL
24/32
24
THe aTTracTion oF monTHLy savinGs:rgl sg Lp s
Th 10,000 lmp sm nvstr wl prhas 10,000 nts, whhwl b wrth 10,000 at th n f ths pr. Hwvr, 1,000
nvst mnthly bys mr nts as th shar pr falls, amlatng
a ttal f 15,510 nts - wrth 15,510 at th n f th pr.
if st mart vlatlty s pttng y ff mang a lmp sm
nvstmnt, thn why nt nsr rglar savngs? Falls n shar prs
l atally wr n yr favr vr th lngr trm, as mnstrat
abv. Th graph s smplf t mnstrat th pnt that t s pssbl
t ma mny frm a mart whh gs nwhr, bt nvrsly t
shl b rmmbr that f th mart rss abv th startng pr,
y by fwr nts. S t s nt a mplt sltn, bt nvstng
rglarly an gnrally smth t th ps an wns f st martvlatlty. Hwvr, th spln nhrnt n rglar savngs, pls th
fat that f y hav a lmp sm y ar nt partng wth t n n bg
sn, mas rglar savngs a favrt rt fr many.
100p
UnitPrice
No. of units purchased
50p
1,000 1,316 1,587 1,852 2,000 2,000 1,852 1,587 1,316 1,000
10,000
investment
worth 10,000
1,000 permonth
investment
worth 15,510
-
8/6/2019 Investing 50s Guide FINAL
25/32
-
8/6/2019 Investing 50s Guide FINAL
26/32
Th p f t
Fn sprmarts an als sav y mny, sntng th ntal harg f
fns, whh an la t largr gans vr tm as mr f yr mny wll g
twars prhasng nts n th fn. on tp f that, sm nvstrs atallygt pa smply fr hlng thr nvstmnt n a fn sprmart bas
sm wll shar th annal mmssn thy rv wth thr lnts.
mkg th f
if y ar fnng t har t whr t nvst thr ar thr ptns pn.
Fr xampl, a nmbr f nvstmnt prvrs ffr mlt-managr fns.Ths s whr a fn managr nvsts n thr fns wthn thr nt trst,
prvng nvstrs wth a w sltn f nrlyng hlngs. All y wll
n t s slt yr ara f ntrst an th managr wll th rst,
ng hw mh t nvst n ah fn.
Altrnatvly y an g n stp frthr an rlv yrslf f all th
sn-mang by ntrstng yr mny t a prtfl managmnt srv.
in ths as an avsr wll nrmally mt y, assss yr xat fnanal
ns, an a prtfl wll b rat fr y bas n ths nfrmatn. Th
avsr shl b abl t hlp y wth many aspts f yr fnanal
rqrmnts, nt jst yr nvstmnt prtfl, an ths srv rally s
hlp y t lav all yr wrrs bhn.
26
-
8/6/2019 Investing 50s Guide FINAL
27/32
27
5) aBouT To reTire?
wh tk p?
Mst pnsns an b rawn n y hav rah th mnmm rtrmnt
ag f 55. Hwvr, sm typs f shm may als mps rstrtns n
whn y an ta bnfts, nlng th pssblty f a rtn n val
fr arly wthrawal, s t s always bst t h wth yr pnsn prvr
whn bnfts an b rawn. Thr s n lngr an ppr ag lmt by whh
y hav t start tang an nm.
H tk p?
Whn y ta yr pnsn y an nrmally raw p t 25% f th val f
th fn as a Tax Fr Lmp Sm. in sm ass ppl wh wr mmbrs f
patnal shms prr t Aprl 2006 r wh hav rgstr fr Prmary
-
8/6/2019 Investing 50s Guide FINAL
28/32
r enhan Prttn may b abl t ta mr than ths. Th rmanr wll
thn b ma avalabl t prv y wth a taxabl nm, thr n th
frm f an annty r va rawwn.
at
if y ta an annty y swap th aptal val f yr pnsn fr a sr
nm fr lf. Ths s th rt tan by mst ppl tang bnfts frm
thr pnsn. Hwvr, t s mprtant t rals that y nt hav t ta
an annty frm yr pnsn prvr. Y an shp arn fr an annty
t gt a bttr rat than th n thy ffr y. Shppng arn n th pn
mart l rslt n y gttng p t 40% mr nm ah yar.
insta f apprahng mpans yrslf t try an gt a hghr rtrmnt
nm, lt th Hargravs Lanswn Annty Sprmart sarh th mart
fr y. Jst vst r wbst at www.hl../annty r all 0117 980 9940
wth yr pnsn val. W wll thn mmatly gv y a FRee, n
blgatn qt f th hghst annts w an fn frm r panl f tp
prvrs. if y t g aha, w wll hlp y wth th paprwr, as
wll as hasng yr xstng pnsn prvr.
d
A rawwn plan allws y t p yr pnsn fn nvst n y hav
tan yr tax fr ash sm. Hpflly yr fn wll ntn t grw, bt t
s pssbl that t l fall n val, an s rawwn s typally sn as amh rsr ptn than an annty. Th maxmm lvl f nm y an
ta ah yar frm a rawwn plan s st by th gvrnmnt an an b mr
than th nm y wll rv frm a sngl lf lvl annty. Altrnatvly
y an ta th tax fr ash bt raw n nm frm th plan. Mvng yr
fns nt rawwn an b a g mv, bt b warn t hangs th ath
bnfts s y may want t h ths bfr mang yr sn.
28
-
8/6/2019 Investing 50s Guide FINAL
29/32
29
A falty all Flxbl drawwn s nw avalabl. Fr ths ptn y wll
n t mt st rtra nlng bng n rpt f a sr pnsn nm
f at last 20,000 (frm th stat pnsn, mst annts an fnal salary
pnsn nm). if y an mt all th rqrmnts y an thn s
flxbl rawwn t ma nlmt wthrawals (tax as nm) frmyr pnsn fn as an whn y n.
if y ar ntrst n nm rawwn, Hargravs Lanswns Vantag
SiPP l b a grat lw-st wrappr fr yr pnsn f y ar happy
mang yr wn nvstmnt sns. T fn t mr plas vst
.hl..k r all 0117 980 9926.
Ppg f tt
As y apprah rtrmnt y shl thn abt hw y wll b tang
bnfts frm yr pnsns. if y plan t by an annty, y shl
nsr rng yr xpsr t shars n th 5 yars bfr rtrmnt.
Fx ntrst shl braly mv n th ppst rtn t annty rats
s that f annty rats fall th val f yr fx ntrst fn shl nras
an v vrsa. cash shl b avalabl t prv y a tax fr lmp sm.
if y wr havly xps t shars an th st mart sffr a stba
t l svrly afft th val f yr pnsn pt an thrfr th nm
y wl rv thrgh rtrmnt.
shl tk p lt?
if y nt n yr pnsn nm y may nsr layng tang
yr bnfts. Thr ar a nmbr f fatrs that y may wsh t ta nt
ant:
at rt - Annty rats an hang n a rglar bass. ovr th past
a th gnral trn fr annty rats has bn wnwars, as ntrst
rats hav falln an ppl ar lvng lngr. it s mpssbl t prt
-
8/6/2019 Investing 50s Guide FINAL
30/32
what wll happn n th ftr. if y lay tang yr annty n th hp
that rats l rs, y mght atally n p wrs ff. Hwvr, f thy
rs y l b bttr ff.
y g - Th lr y ar, th bttr th annty rat y wll gt, allthr thngs bng qal.
F gth - Th lngr y lav yr pnsn nvst th mr
han t has t grw n val, althgh grwth s nt garant an th
val l fall.
y t tt - Th nm y raw frm yr pnsn s taxabl, s f
y ar rrntly n a hghr tax ban bt nw y wll b n a lwr banat a latr at, ths mght prv an nntv fr layng tang yr
pnsn.
Rmmbr vry yar y pstpn tang yr pnsn mans anthr yars
lst nm. evn f y gt a bttr annty rat by layng, r yr pnsn
fn nrass n val, t wll ta a g fw yars fr y t ma p ths
lst nm. if y wl l a fr annty rprt s y an nsr yr
ptns all s n 0117 980 9940.
on ptn s t ta th tax fr ash frm yr pnsn fn an fr tang
nm.
Th t ptt t:
is yr tax fr ash an mprtant part f yr rtrmnt savngs? if ths mny
s spnt n thr thngs, ths wll lmt yr nm n rtrmnt.
on y hav tan tax fr ash, th ath bnfts hang an any
rmanng mny n yr SiPP wll hav a 55% tax harg payabl n yr
ath. Ths hang s als trggr whn trnng 75. Prr t th arlr f
ths vnts mny n a pnsn an nrmally b pa t nmnat
bnfars fr f tax.
30
-
8/6/2019 Investing 50s Guide FINAL
31/32
-
8/6/2019 Investing 50s Guide FINAL
32/32
HarGreaves Lansdown
our services
.hl..k
Hargravs Lanswn Asst Managmnt Lt, on cllg Sqar Sth, Anhr Ra, Brstl, BS HL.
enqrs:
Athrs an rglat by th Fnanal Srvs Athrty
Annts 0117 980 9940
By & sll shars 0117 980 9800
crrny srv 0117 311 3257
Fnanal av 0117 317 1690
invstmnt hlps 0117 900 9000
SiPPs/Pnsns/drawwn 0117 980 9926
iSA/unt Trst 0117 900 9000