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Regular Savings

What savings options are available?
There are a number of options available when it comes to medium and long term savings products. Key issues to consider when looking at the various savings products are the length of time over which you wish to save, what level of access you may require to your money, what level of risk you are prepared to take and the tax efficiency of the product. A particular product that maybe ideal for one investor may be a poor choice for another.

At Provident Solutions we believe we have an important role to perform in helping people to make the right choice. We will consider our client's existing arrangements, their saving's objectives and the various product features to ensure our clients make an 'informed choice'.

We believe that advice on the most appropriate recommendations for medium and long term savings can only be given after fully evaluating a customer's current financial circumstances together with their future aims and objectives. We have therefore listed below the various savings products available with a generic description for each. We strongly recommend that you call us now on 0116 2592371 so we can arrange to visit you and conduct a thorough analysis of your savings requirements before making any specific recommendations.

What are the main types of savings vehicles available?
The main savings vehicles are collective investment vehicles - ISAs, OEIC's, Unit and Investment Trusts, Endowments and Friendly Society Tax Exempt Savings Plans - or a balanced mix of these. Obviously different investments also have varying decrees of tax efficiency so it's important to utilise as many tax-sheltered vehicles as possible. Lets have a look at some of the more common types of products that can be utilised for medium and long term regular savings:

Unit Trusts and OEIC's
These are pooled funds where individuals buy units in a fund at a published price. The fund then buys assets in Equities within their investment remit and the fund is wholly reliant on the performance of the assets. The fund is open i.e. unlimited numbers of people can invest in the fund - the fund just issues more units and invests the money in more assets. Your money is pooled with that of other savers and invested by a professional fund manager. Generally these funds invest in the stock market. With more than 1,000 to choose between from dozens of investment companies, it is possible to find funds investing in the most exotic stock markets and the most complex financial instruments.

OEIC's are open-ended investment companies. Although an OEIC is structured along similar lines to a Unit Trust, it differs in having no bid/offer spread. This means buyers and sellers get the same, single price. Additionally, OEIC's have an umbrella structure allowing numerous sub-funds investing in different types of assets, so the investor can switch more easily between different specialist areas.

ISAs (Individual Savings Accounts)
ISAs can be viewed as a 'Tax Efficient Wrapper' that is placed around collective investments such as Unit or Investment Trusts & OEIC's. You can invest up to £20,000 in a 'Stocks & Shares' Investment ISA or you can deposit up to £20,000 into a Cash ISA or any mixture of the two subject to the overall maximum of £20,000. (Figures are for the 2017/2018 Tax Year)

Investment Trusts
This is actually a company, which invests in other companies. Investment Trusts are listed on the Stock Exchange, have an independent board of directors and a pool of shareholders like other public companies. An investment trust has a team of salaried staff or, more commonly, contracts the services of a specialist fund management company.

With-Profits Savings Plans
A standard with-profits endowment is probably the most basic savings plan. Level regular premiums are paid, usually monthly or annually, although quarterly and half-yearly plans are also available. This purchases a guaranteed sum assured, payable on maturity or earlier death. Many such policies have a ten-year term which is the minimum for qualification status. To this guaranteed sum assured are added bonuses, at the life office's declared rate, each year. When the policy matures (or on earlier death), an additional terminal bonus is added. This is often based on a percentage of the total annual bonuses already allocated. The eventual return will thus be the total of the guaranteed sum assured, annual bonuses and terminal bonus. Because bonuses are not directly linked to investment performance in the same way as unit-linked policies, it is possible for a life office to utilise its reserves and so produce a 'cushioning' effect which irons out the sharp rises and falls which characterise unit-linked investments. Most with-profits savings plans are now unitised with-profits, rather than conventional with-profits. These type of policies offer a decree of tax efficiency because providing they remain 'Qualifying Policies' then there is normally no Capital Gains Tax Liability or Basic Rate Tax Liability. However there can be a liability to Higher Rate Tax depending on an individual's circumstances when they encash (or take withdrawals from) the policy.

Unit Linked Savings Plans
The alternative to a with-profits savings plan is a unit-linked contract. Under these contracts, premiums are applied to buy units in a unit-linked fund run by the life office or possibly in a unit trust run by the life office or an associated institution. These type of policies also offer a decree of tax efficiency because providing they remain 'Qualifying Policies' then there is normally no Capital Gains Tax Liability or Basic Rate Tax Liability. However there can be a liability to Higher Rate Tax depending on an individual's circumstances when they encash (or take withdrawals from) the policy.

Friendly Society Tax Exempt Savings Plans
These are investment products that are essentially the same as an endowment policy, but there is no tax to be paid at the maturity of the policy. The value of the 'with profits' version is that the plan should grow each year in line with the addition of bonuses. You can invest up to £25 a month, tax-free.

How do I find out more?
Call us now on 0116 2592371 and we can arrange to visit you and conduct a thorough analysis of your Regular Savings requirements and provide you with the appropriate recommendations.

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