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Beat inflation
You need to safeguard against the effects of inflation
on the income that your investments generate. Since
1978 inflation has whittled down the value of £1,000
to £260 (Source: Barclays Capital 2001). In
other words, £1,000 will buy you just over a quarter
of the goods it would have done 20 or so years ago.
To buy £1,000 worth of goods in 1978 terms, you would
now need £3,418, according to government statistics.
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Since
1978 inflation has whittled down the value of
£1,000 to £260.
(Source:
Barclays Capital 2001)
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Existing provision
You need to assess your current holdings. It may be
that you want to switch some or all of your existing
growth investments into income-generating ones. We
can ensure that any new investments complement your
existing assets.
Taxing times
If applicable, you also need to consider your current
income and what rate of income tax you pay. If you
generate further income by investing, as a basic-rate
taxpayer you could be pushed into the higher-rate
tax band. Using tax-efficient investments will not
count towards your tax bill. If you are married, assets
could be shared out so the lower-rate taxpayer holds
the most income-generating investments.
Risk for reward
As a general rule, the longer you have to invest and
the larger your investment portfolio, the more risk
you could potentially take with new investments. When
choosing investments linked to the stock market, you
need to give yourself at least three years, and preferably
five, so you have enough time to ride out any short-term
fluctuations in the market.
Ultimately, you need to ask yourself at what age you
will no longer be willing to take too much risk with
your money.
If you would like to investigate how you could
improve your existing portfolio or lay the foundations
of a new one, please
e-mail or
contact us for further information.
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