This “Statement of Investment Principles” outlines the eight key aspects of how I seek to invest and manage client’s money. I believe that these principles shape the advice I provide to meet long-term investment goals.
Balancing the risk you are willing to accept with the investment returns you need to meet your investment objectives will help determine which investments to choose.
The lessons are twofold. Firstly, deciding on a medium to longer-term strategy backed by a prudent cash reserve. Secondly, not being distracted by short-termism part way through that longer journey.
Your inclination is just to leave the money on deposit because investing is too risky. Risk means different things to different people and, if you've never invested before, the prospect looks scary.
The key issue is that of inflation and the “real value” of money on deposit. If inflation averages just 2½% per annum, the value of the pound in your pocket reduces by one-quarter every 12-years. Even with interest accumulating, with rates as low as those currently available, particularly after tax, those balances are not keeping pace with inflation.
An Individual Savings Account (ISA) is a “wrapper” for cash and/or investments which confers some valuable tax benefits to UK resident savers and investors.
The charges for passive investments are significantly less; in some cases just 5% of the charges for some of the most costly actively managed funds, which is a compelling reason in its own right to invest passively.
That's the whole story in a nutshell. Investment is really not that complicated. In fact, the more complicated that people make it sound the more you should be sceptical.
An Investment Trust is a limited company whose business is the investment of shareholders' funds, the shares being traded like those of any other public company.
An investment – lump sum or regular savings - into an offshore bond written under a Discretionary Trust could be a particularly attractive way of pre-funding these costs.
Unlike investing money for yourself, where caveat emptor – “let the buyer beware” – applies, investing as a Trustee is governed by a whole series of rules and regulations, which you ignore at your peril.