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As we move along the investment
lifeline, our savings requirements and objectives change
as do our attitudes towards risk-for-reward. We may
seek capital growth in those earlier years, but eventually
this changes to income-producing assets. So what are
some the issues we need to consider throughout the years?
20 somethings.
Investing for your future while in your 20s is not
the top priority for your hard-earned cash. You might
even still be paying off some debts from those student
days. So spending rather than saving will usually
be the order of the day.
However, doing something will
almost always be better than nothing! Start by building
an emergency fund in a top-paying easy-access deposit
account. Then look to the future. Consider putting
some money aside for a longer period, say five years
or more. A tax-friendly ISA based around a low-cost
UK unit trust is one option.
If you are offered membership
of your company pension scheme, make sure that you
join.
30 somethings.
You might have some free shares from the building
society and insurance company conversions of the last
few years. Then there are those PEPs that you invested
in during the early and mid 1990s. When was the last
time that you reviewed them?
Depending on your attitude
towards risk-for-reward, now will probably be the
time to investigate building on your ISA portfolio
and taking advantage of other investment vehicles,
in particular unit trusts and investment trusts. We
can help you find the best-performing fund managers
for your money.
Now might be an appropriate
time to look further afield than the UK stock market.
For example, in one tax year you could take out an
ISA built around a strong European unit trust. The
following year, you could possibly consider a US trust,
then maybe a broad global or specialist fund.
40 somethings.
It's important to keep a check on your portfolio for
balance. Is it too heavily weighted towards one country
or sector? Diversity is important to keep a good spread.
We can help you review the different stock markets
and industries.
If your risk-for-reward profile
is more adventurous, around half of your investments
could be allocated to UK funds, and an equal slice
to European, American and international funds, possibly
including Far Eastern funds and up to 10% in emerging
markets.
At this stage of your life,
if you have accumulated capital from earlier years,
you might wish to talk to us about spicier investments
such as Venture Capital Trusts (VCTs) or Enterprise
Investment Trusts (EISs). However, as these are positioned
at the high-risk end of the spectrum, they are not
for the faint-hearted.
50 somethings.
Now is the time to pull together all your different
investments, savings, pensions and insurance plans.
We can help you assess your situation and will check
that you are covering all the key investment themes
and areas, so you can collect growth wherever it arises.
Balance is still important.
Don't forget to check those PEPs you may have taken
out more than a decade ago. Some might no longer suit
you and a collective fund such as a unit trust could
be a better option.
This is also the stage in your
life when you need to work out just what you can expect
in retirement. Check the state pension and any company
or personal schemes you have belonged to.
As you approach retirement
you don't want to see money wiped off the value of
your investments because of a stock market correction.
It could be appropriate gradually to move some of
your money into more cautious investments. These might
be corporate bond funds, or equity-based investments
that promise to give you a slice of future stock market
growth but with a floor below which your fund cannot
fall if markets slump.
In the run-up to retirement,
it can pay to move from pure growth funds into income
producing alternatives - but without actually drawing
the income. You can have it reinvested to boost the
value of your fund for the final years of your career,
knowing that you can start to withdraw it at any time
in the future when your needs change. Equity income
unit trusts - which concentrate on high-dividend shares
on the stock market - or mainstream corporate bond
trusts are some of the options available. And you
can move PEP or ISA money from pure growth funds into
these income optional trusts without losing the tax
break.
Wherever you are on the
investment lifeline, if you would like to review your
investment portfolio and ensure that it is on target
to achieving your objectives, please
e-mail or contact
us for further information.
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