About Investment Plans
The investment plans featured on this site have defined investment terms where the investment objectives and investment risks are clearly outlined in the plan literature available on request. The investment plans we feature can be classified under two categories:
Deposit Plans or Structured Deposit Plans offer a return of initial capital and a potential return linked to the performance of an underlying asset such as the FTSE 100. These plans are cash based and should be seen as an alternative to cash deposits such as fixed rate bonds. They are taxed in the same way as cash deposits ( returns are generally taxed as income in the hands of investors) and are attractive to risk averse investors as they are given the same protection falling under the Financial Services Compensation scheme (FSCS).
Investment plans or structured investment plans are designed to meet the requirements of different investors as either a complement or alternative to traditional direct equity or fund investment. Plans are designed taking into account investment risk versus investment return, protection and timescales. Structured investment plans are typically equity linked and provide exposure to market risk but often with protection built in so restricting the upside but also mitigating the downside. This balance of risk is attractive particularly in uncertain markets. Plans are backed by major financial institutions who provide the assets for the plan (known as the counterparty). Investment returns from investment plans often fall under CGT tax rules which can be attractive particularly to higher rate tax payers.
Benefits of Investment Plans
Both structured deposit and investment plans provide investment opportunities allowing investors to make investment returns on markets over set periods of time while maintaining a level of risk control. Investors depending on their plans can also gain access to a range of alternative asset classes including world major equity indices, commodities and currencies. Most of the investment plans featured on this site are equity linked and offer different levels of capital risk and market exposure.
Capital at risk plans often offer features to reduce risk exposure to market falls by the use of a barrier. Typically the barrier will be set at 50% of the initial level of the underlying asset. The two main types of barrier are the final day barrier (European barrier) where the underlying asset is only observed on the final day of the investment. Variations of the European barrier may include plans where the barrier is based on the value of the underlying asset based on average e.g. an average of the underlying asset over the last 3 months of the plan. This averaging again is a risk control reducing the impact of any sudden falls in the last stages of an investment term, although conversely it can also restrict growth potential in a rising market. The second type of barrier often used is the closing/intra day barrier (American barrier) where the value of the underlying asset is observed throughout the life of the investment plan on a daily basis. In the event of a breach of the barrier the capital invested will be at risk in some way depending on the plan terms.
With investment plans an individual savings account (ISA) can be used as a wrapper to provide investors with tax efficient returns. For 2013/14 the HMRC set ISA allowance is £11,520 per individual, of which up to £5,760 can be invested in a deposit plan. With an investment ISA the full £11,520 can be used to benefit from tax efficient returns.
Investment Plans & Ideas for Short Medium and Long Term Growth
In assessing the top investments ideas we make a distinction between income and growth investors and provide a range of options depending on your requirements:
For investors seeking growth investment opportunities on this site we feature a range of different plans that have different features. The investment plans we promote may include kick out investment plans which offer investors a pre-determined rate of return based on the performance of the underlying asset performing sufficiently well at a given series of dates. Accelerated Growth Plans which offer investors the potential of leveraged exposure to the upside performance of an underlying asset. Digital plans that offer a fixed investment returns providing the plans requirements are met. Typically these plans will either return the original capital and the payoff or just the original capital.
For investors requiring income we regularly offer a range of income investment plan options. For investors who require capital protection deposit based plans can provide an attractive alternative to fixed rate bonds although income payments will be linked to the performance of an underlying asset so are usually not guaranteed. For investors who are comfortable with capital risk, reverse convertible or income plans provide a fixed income on a monthly, quarterly or annual basis. With these plans income payments are fixed and capital will be returned as long as the underlying asset does not fall below the set barrier.
Using your ISA allowances should be your first port of call when investing to mitigate any tax resulting from income or capital gains. With an investment ISA you can invest up to £11,520 per individual. Most investment plans and investment funds can be placed in an ISA, although always check the terms and conditions.
Other Savings & Investment Opportunities
In considering the best investment and savings options for you could also consider the following:
High Interest Savings Accounts
If you need short term access to your money, high interest savings accounts provide a way for savers to get a better rate of interest with capital security. Notice savings accounts which require savers to provide notice before withdrawing savings of anything up to 180 days often pay better interest than easy or instant access savings accounts.
If you looking to save tax efficiently for the 2013/14 tax year you can put up to £5,760 per individual into a cash ISA and shelter any interest from the taxman.
Fixed Rate Bonds
If you are happy locking up capital for a set period of anything from 6 months to 5 years a fixed rate bond will generally provide higher interest rate returns than instant access savings accounts. Fixed rate bonds are a low risk investment as your original capital will be returned at maturity.
For investors looking to invest in funds we offer a fund supermarket service which allows you to select your own income or growth funds at low cost. With over 1500 funds to choose from including many of the top investment performing funds with most available at no initial charge and many with discounted annual charges you can choose from some of the best investment funds available in the UK, including funds that have a low risk investment profile to funds that provide the potential of higher returns but also with a higher risk to capital.
Our Fund Supermarket service provides you with online access to your investment accounts 24/7 so you can monitor fund performance.