Investment Overview

Summary of investment products

We have put together a handy list of the main investment options open to you. This is not exhaustive and only includes minimum definitions, but aims to help you make sure you've considered all the main products.

Cash deposits can be invested in:

  • Commercial banks
  • Building societies
  • Individual savings accounts (ISAs)
National savings and investments:

  • Fixed interest savings certificates
  • Children's bonus bonds
  • Fixed rate savings bond
  • Income bonds
  • Investment account
  • Please note the Financial Conduct Authority does not regulate these products and services
Investments backed by assets:

  • Shares
    • - Issued by companies to raise money from private investors
    - Dividends given in relation to profit
    - Any capital gains tax when shares sold

    • Gilt-edged securities
      • - Government guaranteed
      - Fixed rate of interest or coupon
      - Interest can be taxed
      - Full nominal value repaid when redeeming
      - Some are index-linked
      - No capital gains tax

      • Unit trusts
        • - Money taken from a syndicate of investors to make a larger fund
        - Used as medium to long-term investments in stocks and shares
        - Greater security comes from a wide range of investments
        - Managed by a professional fund manager
        - Value of underlying investments determines the value of the unit
        - Income is either distributed among investors or invested again
        - Tax implications, including capital gains tax

        • Cash individual savings account (ISA). You can now invest up to £20,000 a year overall into a cash ISA and can transfer funds to a stocks and shares ISA or the other way round

          • Stocks and shares individual savings account (ISA). You can invest your full £20,000 overall limit a year into a stocks and shares ISA, which has to have a stocks and shares element. You won't pay any persona tax on income or profits, but within the funds themselves ISAs will pay tax on any stocks and shares income.

            • TESSA only ISA (TOISA). Tax exempt special savings account (TESSAs) have been replaced by ISAs so if you had one it will have been changed to a TOISA.

              • Investment trusts
                • - Syndicate of investments run by limited companies
                - Form medium to long-term investments
                - Run by a professional manager
                - Tax may be paid on income and profits
                - Price is determined by the stock market so shares can be traded above or below the underlying asset value
                - Closed-end funds, so the number of shares are fixed

                • Open ended investment companies (OEICs)
                  • - Syndicate of investments run by limited companies
                  - Form medium to long-term investments
                  - Run by a professional manager
                  - Tax may be paid on income and profits
                  - Value of underlying investments determines the value of the unit
                  - Each investor liable for own fees
                  - Open-end funds

                  • Investment bonds
                    • - Bought with a lump sum single premium
                    - Non-qualifying life assurance policy
                    - Medium to long-term investment
                    - Either with profit or unit-linked
                    - Withdrawals are possible
                    - Exempt from basic rate income tax and capital gains tax liability
                    - But higher tax rates or loss of age allowance for over 65s may be triggered by withdrawals.

                    Please note that levels of tax relief can change and are determined by individual circumstances.

                    Equity based investments do not afford the same capital security as a deposit account. The value of investments can go down as well as up. Your final income will be determined by the size of the fund, interest rates and tax legislation and may not be the amount you originally invested.

                    Related Articles

                    Asset-backed Investments | Deposit Based Investment | Individual Savings Accounts (ISAs)

                    This article (Investment Overview) is intended to provide a general appreciation of the topic and it is not advice.

                    For more information please contact Nurture Financial Planning Ltd on 01603 673502 or email ask@nurturefp.co.uk and we will be happy to assist you.

                    Article expiry: 05 Apr 2018