Bishops Financial Planning offers a comprehensive service. As part of this we can advise on investment portfolio management and monitor its performance on your behalf. Our commitment to providing an exceptional service means that we will either contact you as and when changes to the portfolio would be beneficial, or, if you would prefer, we can make changes without your prior approval. The fact that many of our clients trust us to manage their finances on a discretionary basis supports our professional and thorough approach.

Please note that the value of investments and income from them can fall as well as rise, and you may not get back the full amount invested.

Investment portfolios are arranged on a purely bespoke basis, tailored to an individual’s circumstances and requirements. They can include any of the following products from the list below. (For more information on investment protection, please visit the Financial Services Compensation Scheme website here.)

Cash Deposits

Cash deposits are provided by banks and building societies and are a low risk investment because they are protected by the UK Government up to a certain threshold. Interest is usually earned on the account’s funds, which can typically be accessed instantly. However, some accounts that offer a higher interest rate may require for notice to be given before money is withdrawn, to ensure that no financial penalties are applied.

Current accounts typically give very little interest while high street banks or building societies give modest rates of interest on deposit accounts. Accounts that are set up and managed via the telephone or internet – rather than in a branch – usually give a better rate of interest.

National Savings & Investment (NS&I)

Products offered by NS&I are fully backed by the UK Government, making them a secure form of investment. While the NS&I investment account is similar to savings products offered by banks and building societies there are other investments available, such as premium bonds, which give people the chance to win up £1 million each month, with any prizes immediately exempt from tax. Income bonds are another option with NS&I, and they can provide a monthly income.

Savings certificates or index-linked savings certificates are other investment options, but returns are likely to be limited unless there is a period of high inflation in the economy.

There are many different NS&I products available, and we can guide you through them.

Government Stock

When the UK Government wants to borrow money it issues stock – often referred to as ‘gilts’ – on which it guarantees to pay a fixed rate of interest, and it also guarantees to repay the face value of the stock at a set maturity date. Gilts are a very secure investment if they are purchased at issue and kept until they mature.

The UK Debt Management Office also offers a Gilt Purchase and Sale Service. Some managed funds also include them.

Gilts are particularly effective if purchased when interest rates are likely to fall, because they will continue to pay a higher rate of interest than may become available from a variable rate investment, and they are likely to increase in value. However, if interest rates are at low levels gilts are not usually the best possible form of investment, even if held to maturity.

Corporate Bonds

Similar to gilts, corporate bonds are issued by large companies. However, this means that they are a higher risk than gilts because the company could default on its obligations. As they have a higher level of risk attached to them, corporate bonds generally offer a higher level of interest.

They are classified according to degrees of risk, as identified by the major credit rating agencies. The greater the interest rate provided on a bond of this type, the greater the risk.

Guaranteed Income Bonds

Insurance companies sometimes issue short-term policies that offer a fixed level of income and guarantee to repay the capital at a set period between one and five years. This is a very secure option for any investors that have no need to access their money for a given period.

Unit Trusts

These work by collecting together money from a broad range of investors. The trust managers will then invest the total fund in a managed portfolio of shares on the UK or other international stock markets. Unit Trusts give private investors the chance to have a globally diversified investment portfolio, and there is less risk involved compared to holding direct investments in a small number of separate companies.

Investors need to be aware that the value of the unit trusts could fall, as well as rise, in response to stock market movements. Units can be sold at any time, but it may be wise to keep the investment during periods when the market is not performing well.

With unit trusts the level of risk can vary between separate funds so advice is needed before investing, especially if an individual is seeking to minimise all risk.

Investment Trusts

Like unit trusts, the managers of investment trusts invest and look after a diversified portfolio of shares. However, the main difference is that an investment trust issues a fixed number of shares in the company which are then traded on the stock market. The shares can trade at either a higher or lower value of the underlying investments. It is also possible for the investment trust to issue different classes of shares, so they are more complex investments and carry a higher degree of risk than unit trusts.

Investment Bonds

Insurance companies offer investment bonds that can be linked to funds invested in equities, fixed interest funds, property funds, or with-profit funds. They also offer income flexibility – it is possible to withdraw a monthly income at a level determined by each investor, as long as the income amount withdrawn is not more than the money generated by the fund.

Investment bonds can also be useful for tax planning. Higher rate taxpayers can withdraw five per cent income for up to 20 years, with no personal liability.

Individual Savings Accounts (ISAs)

The amount that an individual can invest in an ISA depends on the tax year in which the investment is registered.

There are two types of ISA: a cash ISA and a stocks and shares ISA (you must be over 16 for a cash ISA and over 18 for a stocks and shares ISA). You can save anything up to the maximum amount in one type of ISA account or split the allowance across both types.

Cash ISAs are offered by banks and building societies and are different to normal deposit accounts in that any interest earned is not subject to tax. The stocks and shares ISA, on the other hand, can include shares in companies, unit trusts, investment funds, corporate bonds and government bonds.

ISAs are exempt from capital gains tax on increased capital values. They are also exempt from higher and additional rate income tax on dividends, although the 10 per cent standard rate income tax will still be applied.

Investments in stocks and shares do not have the same degree of capital security as those with cash deposits. Junior ISAs are also available and give investors the chance to save for their child’s future.

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