investing 50s guide final

8/6/2019 Investing 50s Guide FINAL

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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


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


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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.

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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


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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


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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

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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

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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%


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.

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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.

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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.

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15/32


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.


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.


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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


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


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.


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


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.


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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.


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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


25/32


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


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


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


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


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


31/32


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

investing 50s guide final

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