ISA's    Investment Bonds    With Profit Bonds    Distribution Bonds
Guaranteed Income Bonds    Investment Trusts    Unit Trusts

There are many different opportunities available for both lump sum and regular payment Capital Investments. Dependent upon your circumstances, attitude and objectives we can provide advice across a wide range of no, low, medium and high risk options.



INDIVIDUAL SAVINGS ACCOUNTS - ISAs
Since the beginning of the 2008 / 2009 tax year, there are two types of ISA - Cash or Stocks & Shares. You can invest into a Stocks & Shares ISA, a Cash ISA, or a combination of both.

During the 2009 /2010 tax year, the annual ISA limits increase from October 6th 2009 for those over 50. These increased limits will apply to all ISA investors from 6th April 2010.

ISA LIMITS	2009 / 2010 tax year			2010 / 2011 tax year
	Under 50	Over 50 from 06/10/2009		all investors
Maximum overall subscription	£7200	£10200		£10200
Cash only ISA	£3600	£5100		£5100
Stocks & Shares ISA	£7200	£10200		£10200

Alternatively, you can invest in a combination of Cash and Stocks & Shares ISAs. Here you can invest up to the relevant limit shown above in a Cash ISA and you then have the option of investing any remainder (from your overall ISA limit) in a Stocks & Shares ISA.

Transfers from a Cash ISA to a Stocks & Shares ISA are again allowed during the 2009 / 2010 tax year. This means you can transfer any existing Cash ISA funds (both current and any previous year) into a Stocks & Shares ISA. Doing so will not affect your Cash ISA allowance for the 2009 / 2010 tax year. If for example, you invest in a Cash ISA during the 2009 / 2010 tax year and later transfer that money to a Stocks & Shares ISA, you retain the option of funding up to £3600 (or £5100 from 6 Oct 09 if you’re over 50), into a Cash ISA by the end of the same tax year. Please note you cannot transfer from a Stocks & Shares ISA to a Cash ISA.

If you save in a Child Trust Fund (CTF), the money can roll in to an ISA when the child becomes 18, maintaining its tax benefit.

ISAs may not be written on a joint basis or in trust.

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INVESTMENT BONDS Medium / high risk
An investment bond is technically a single premium life assurance contract although the life cover aspect is only nominal. Bonds are collective investments in which the investments of many individual investors are pooled. This pooling enables relatively small investors to benefit from the economies of scale made available to institutional fund managers.

A wide choice of managed, general and specialist funds are available offering investment opportunities in equity, property and fixed interest securities. Bonds enjoy the facility to switch between these internal insurance company funds at a reasonable cost if desired. Although classed as single premium investments, 'top up' facilities are offered so further amounts can be invested on either a regular or ad hoc basis.

The value of units may fall as well as rise. Because this investment may go down as well as up, you may not get back the amount invested.

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WITH PROFIT BONDS - Medium / high risk
As an alternative to managed, general and specialist funds, With Profit Bonds aim to provide a less volatile investment link. Essentially, these are quite simply single premium investment bonds linked to unitised With Profit funds, some of which enjoy a switch facility. Other With Profit Bonds are not 'switchable' to other funds so it is important to decide at the outset whether such an alternative is of importance, as it affects the choice of product.

The underlying investments comprise a broad spread of stocks and shares, government gilts and commercial property. Suitable reserves are accumulated and used to smooth out the actual return to the investor. With Profit funds provide growth each year when the company declares its annual compound reversionary bonus rate and bonuses, although these are not guaranteed, once added, cannot be taken away. A Market Value Adjustment factor can be applied in certain circumstances. Whilst this means the investor still sees some growth in a year when market values end the year lower than they started, in years of outstanding stockmarket performance With Profit returns will lag far behind. Bonuses will either be added via the medium of the unit price, which on unitised With Profit funds is guaranteed never to fall, or via the addition of bonus units, where the price stays the same and more units are added to the policy.

Although encashment is usually possible 'on demand', most companies reserve the right to introduce Market Value Adjustment factors (MVAs) to discourage the mass outflow of funds which might result from intense and unpredictable market pressures. Most With Profit bond contracts also stipulate encashment penalties to be applied in the early years to encourage investors to take a longer term view. With Profit Bonds should therefore only be considered as medium to long term investments.

Income withdrawals are achieved by selling units. Provided annual withdrawals do not exceed 5% of the initial investment, no liability to tax will arise until the bond is encashed in full, thus providing an important tax deferral opportunity. Withdrawals in excess of 5% per annum are liable to UK Income Tax at your highest rate as is the overall gain on final encashment.

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DISTRIBUTION BONDS - Low / medium risk
A Distribution Bond is technically a single premium, life assurance contract, although the life cover aspect is only nominal. Distribution Bonds are collective investments in which the investments of many individuals are pooled. This pooling enables relatively small investors to benefit from the economies of scale and to benefit from the day to day decisions of professional fund managers.

The advantage of this type of investment bond is that it is possible to take income withdrawals without disposing of units from the main distribution fund holding, provided that the level of withdrawal chosen is less than the actual percentage yield received by the fund from its underlying investments). The income you need is therefore achieved by effectively passing on the income received within the fund itself in an efficient manner. By leaving the capital within the fund intact, the idea is to reduce the risk of capital erosion. Furthermore, the level of risk adopted by the fund managers is usually a little lower than that of the average managed fund, as a higher proportion of the fund is held in more secure, fixed interest investments and sometimes in property.

The value of units can fall as well as rise. Because this investment may go down as well as up, you may not get back the amount invested.

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GUARANTEED INCOME BOND - Low risk
A Guaranteed Income Bond is a simple contract which guarantees a fixed regular income payment for the duration of the period required. The income figures are quoted net of basic rate tax which makes them very attractive. Non taxpayers are unable to claim back this tax deducted at source. The amount invested is returned at maturity.

There is usually no liability at all to Income Tax on the first 5% of each years' income. Higher rate taxpayers may pay tax of up to 20% (higher basic rate=20%) on income over this amount. Withdrawals over the 5% level will also reduce the age allowance for those entitled to it.

On maturity there may also be a charge to tax of up to 20% of the final income payment, together with the total of the 5% withdrawals. This type of bond should not be used if you are at all likely to cash in early. Surrender values are often not available and if they are given, will usually result in a yield much lower that the guaranteed rate.

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INVESTMENT TRUSTS Medium / high risk
A suitable way to achieve cost efficient and professional management of your capital is via an Investment Trust. An Investment Trust is a company whose shares are quoted on the stock exchange like those of public limited companies. Unlike companies engaged in manufacturing or the service sector, the sole activity of an Investement Trust is to invest in the shares of other companies.

An Investment Trust is essentially a collective investment scheme whereby the smaller investor can benefit from the economies of scale and fund management expertise of the larger institutional investors.

Investment Trusts have one advantage over Unit Trusts. Unit Trust investors tend to cash in units when stockmarkets are low. To meet these withdrawals, unit trust managers may have to sell the underlying assets of the fund at what may be an inappropriate time from an investment perspective. Investment Trust shareholders redeem their holdings by selling the shares on the stockmarket, not by selling them to the fund managers. Investment Trust managers are therefore not forced to dispose of stocks when prices are low and are more able to pursue their long-term investment objectives uninterrupted.

The value of shares can fall as well as rise. Because this investment may go down as well as up, you may not get back the amount invested.

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UNIT TRUSTS - Medium / high risk
A Unit Trust is a collective investment vehicle which pools the assets of many small investors into one large fund. The size of the fund enables the manager to deal in these holdings at a fraction of the cost of any private investor. The funds themselves are run by professional managers who who specialise in the particular areas concerned. The large range of product providers means there is a great incentive for managers to achieve good performance.

Any dividend income generated (whether distributed or not) is liable to Income Tax. Each dividend carries a tax credit as the fund itself has already been subject to Income Tax. This means that basic and lower rate tax payers usually have no further tax to pay. Higher rate tax payers can set off the tax credit against their full liability.

Capital gains made on the disposal of Unit Trust holdings are subject to capital gains tax, although the fund itself does not pay tax on any capital gains. This means you are able to utilise your own capital gains tax free allowance. With appropriate advice it is therefore likely that you will be able to avoid this tax altogether.

The value of units can fall as well as rise. Because this investment may go down as well as up, you may not get back the amount invested.

NB: Bases, levels and reliefs from taxation are subject to change.

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