Author Archives: David Morley

Flexible Trusts With Default Beneficiaries

Flexible Trusts are similar to a fully Discretionary Trust, except that alongside a wide class of potential beneficiaries, there must be at least one named default beneficiary. Flexible Trusts with default beneficiaries set up in the settlor’s lifetime from 22 March 2006 onwards are treated in exactly the same way as Discretionary Trusts for Inheritance Tax purposes.

Flexible Trusts With Default Beneficiaries

Different Inheritance Tax rules apply to older Trusts set up by 21 March 2006 that meet specified criteria and some Will Trusts. All post-21 March 2006 lifetime Trusts of this type are taxed in the same way as fully Discretionary Trusts for Inheritance Tax and Capital Gains Tax purposes.

Default beneficiary
For Income Tax purposes, any income is payable to and taxable on the default beneficiary. However, this doesn’t apply to even regular withdrawals from investment bonds, which are non-income-producing assets. Bond withdrawals are capital payments, even though chargeable event gains are subject to Income Tax. As with Bare Trusts, the parental settlement rules apply if parents make gifts into Trust for their minor children or stepchildren.

Significant differences
When it comes to beneficiaries and control, there are no significant differences between fully Discretionary Trusts and this type of Trust. There will be a wide range of potential beneficiaries. In addition, there will be one or more named default beneficiaries.

Naming a default beneficiary is no more binding on the trustees than providing a letter of wishes setting out whom the settlor would like to benefit from the Trust fund. The trustees still have discretion over which of the default and potential beneficiaries actually benefits and when. Some older Flexible Trusts limit the trustees’ discretionary powers to within two years of the settlor’s death, but this is no longer a common feature of this type of Trust.

Pension Lifetime Allowance – Take It To The Max

If you’ve been diligently saving into a pension throughout your working life, you should be entitled to feel confident about your retirement. But, unfortunately, the best savers sometimes find themselves inadvertently breaching their pension lifetime allowance (LTA) and being charged an additional tax that erodes their savings.

If you are a high-income earner or wealthy individual, you could be putting too much into your lifetime pension and risk exceeding the pension lifetime allowance. The government will maintain the pension Lifetime Allowance at its current level until April 2026, removing the usual annual incremental rises.

Pension Lifetime Allowance

The following questions and answers are intended to help you avoid this tax charge.

Q: What is the lifetime allowance?
A: The LTA is a limit on the amount you can withdraw in pension benefits in your lifetime before you trigger an additional tax charge. By pension benefits, we mean money you receive from your pension in any form, whether that’s a lump sum, a flexible income, an annuity income or through any other method.

This allowance applies to your total pension savings, which may be in different pensions.

Q: How much is the lifetime allowance?
A: In the 2021/22 tax year, the LTA is £1,073,100. This allowance has now been frozen until April 2026.

Q: What happens if you exceed the lifetime allowance?
A: Once you have received your full LTA in pension benefits, you will be required to pay an additional tax charge on any further benefits you receive.
If you take your remaining benefits as a lump sum, you’ll pay a tax charge of 55%. If you take your remaining benefits as multiple withdrawals, you’ll pay a tax charge of 25% on each one.

Q: How is the usage of your lifetime allowance measured?
A: Each time you access your pension benefits (for example, by purchasing an annuity, receiving a lump sum or establishing a flexible income), this is recorded as a ‘benefit crystallisation event’. There is an additional benefit crystallisation event when you turn 75, and finally, upon your death.

Q: Is lifetime allowance protection available?
A: You can only protect your pension from the LTA if your savings were worth more than £1 million on 5 April 2016. You may be able to protect your pension savings up to £1.25 million, or up to the value of your pension on that date, depending on the type of protection you have.

Q: Is it possible to avoid the lifetime allowance?
A: If you do not have LTA protection and you are approaching the limit, there are various actions you can consider. These include stopping your contributions (and, instead, investing your money into an alternative tax-efficient environment), changing your investment strategy or starting retirement earlier.

Q: Who does the lifetime allowance affect most?
A: The LTA affects high earners and those approaching retirement age the most, including those with defined benefit pensions. As the value of high earners’ pensions rises over the next five years towards a lifetime limit that will remain fixed, more and more individuals may find they need to stop contributing to avoid breaching the limit.

Q: When should you seek professional advice?
A: The rules around the LTA are very complex and making the right decisions can feel difficult. Receiving professional financial advice will help to identify if you have a problem and offer different solutions to consider, based on a full review of your unique circumstances.

The Big Opportunity – Responsible Investing Through Your Pension

Sustainable, environmentally friendly and responsible investing is here to stay. But, while demand is growing among all age groups, genders and income bands, some savers and investors are missing their biggest opportunity for responsible investing, which is through their pension.

We all want to make responsible choices as more of us are becoming aware of global challenges, such as environmental issues, human rights and climate change. We’re also starting to care more about how our behaviours affect the planet and society.

FUTURE SUCCESS

Taking ESG (Environmental, Social and Governance) factors into consideration when investing is becoming more mainstream. It is acknowledged that companies that act responsibly to their employees, the environment and the public have a better chance of future success than those that don’t. Investing in these companies is a logical approach financially as well as ethically.

Many pension holders understand this approach and see the value of it. In a recent survey, more than one-third of respondents said that the option to invest their pension only in sustainable companies is important to them [1]. Nearly two-thirds said having clearly branded funds for investing in environmentally and socially responsible companies is important.

PENSION INVESTMENTS

The same survey suggests that pension holders feel that sustainable investing isn’t just important, but interesting. More than half of respondents said that a fund focused on clean energy and lowering carbon would make them more interested in their pension. A similar number felt that way about a zero[1]plastic fund. But while pension holders feel these issues are important and interesting, that isn’t yet affecting the way they invest.

Most people don’t manage their pension investments themselves, instead leaving their pension invested in the default options set by a provider chosen by their workplace. So, more than two-thirds of pension holders do not know how sustainable their pension is.

ENVIRONMENTALLY FRIENDLY

Many pension holders don’t know that they can choose their own funds, and therefore that they can choose sustainable or responsible funds. Around half are unaware of ways to ensure their pension is environmentally friendly. Clearly, there is a large audience of individuals who would like to invest their pension more sustainably and responsibly but don’t know where to start. There are plenty of options, but without specialist experience, it can be difficult to select those that are truly responsible and environmentally friendly and will also deliver the financial return you’re seeking.

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Contact the Farnham-based Fish Saltus team today for independent expert advice on responsible/ESG investing and all other financial planning matters.

Source data: [1] //adviser.scottishwidows.co.uk/ assets/literature/docs/2020-09-responsible[1]investment.pdf

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028). THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE. YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS. THE TAX IMPLICATIONS OF PENSION WITHDRAWALS WILL BE BASED ON YOUR INDIVIDUAL CIRCUMSTANCES, TAX LEGISLATION AND REGULATION WHICH ARE SUBJECT TO CHANGE IN THE FUTURE. YOU SHOULD SEEK ADVICE TO UNDERSTAND YOUR OPTIONS AT RETIREMENT

Bourne Blades FC Celebrate Medals Day In The Sunshine

Sunday 12th June 2022 – The Bourne Blades FC Medals Day was held in the sunshine on the Bourne Green. There were close to 1000 there as players and their families got together to celebrate the achievements and highlights of the 2021-22 season.

With the support of Fish Saltus as proud Principal Partners, the Club now boasts 442 registered players and operates 33 teams, including: 28 minis/juniors teams, 4 dedicated girls teams, 2 mens veterans teams and a fledgling ladies vets team.

Bourne Blades FC supported by Principal Partners Fish Saltus

Fish Saltus Guide to Investing for Children and Grandchildren

Fish Saltus Guide to Investing for Children and Grandchildren – Free to Download

Turning growing pains – into long-term gains!  With many of us living longer, you may be thinking about how you can support your family at the moments that matter. Sharing your wealth during your lifetime – especially with younger generations facing the pressures of rising house prices and university fees – can really make a difference and bring you great joy too.

Download your free copy of the Fish Saltus Guide to Investing for Children and Grandchildren today

Fish Saltus Guide to Investing for Children and Grandchildren 2022 cover

Split Trusts Explained

Split Trusts are often used for family protection policies with critical illness or terminal illness benefits in addition to life cover. Split Trusts can be Bare Trusts, Discretionary Trusts, or Flexible Trusts with default beneficiaries. When using this type of Trust, the settlor/life assured carves out the right to receive any critical illness or terminal illness benefit from the outset, so there aren’t any gift with reservation issues.

Split Trust

In the event of a claim, the provider normally pays any policy benefits to the trustees, who must then pay any carved-out entitlements to the life assured and use any other proceeds to benefit the Trust beneficiaries.

Trade-off
If terminal illness benefit is carved out, this could result in the payment ending up back in the life assured’s Inheritance Tax estate before their death. A carved-out terminal illness benefit is treated as falling into their Inheritance Tax estate once they meet the conditions for payment.

Essentially, these types of Trust offer a trade-off between simplicity and the degree of control available to the settlor and their chosen trustees. For most, control is the more significant aspect, especially where any lump sum gifts can stay within a settlor’s available Inheritance Tax NRB.

Maximum control
Keeping gifts within the NRB and using non-income-producing assets such as investment bonds can allow a settlor to create a Trust with maximum control, no initial Inheritance Tax charge and limited ongoing administrative or tax burdens.

In other cases, for example, grandparents funding for school fees, the Bare Trust may offer advantages. This is because tax will fall on the grandchildren, and most of the funds may be used up by the age of 18. The considerations are slightly different when considering family protection policies, where the settlor will often be dead when policy proceeds are paid out to beneficiaries.

Policy proceeds
A Bare Trust ensures the policy proceeds will be payable to one or more individuals, with no uncertainty about whether the trustees will follow the deceased’s wishes. However, this can also mean that the only solution to a change in circumstances, such as divorce from the intended beneficiary, is to start again with a new policy.

Settlors are often excluded from benefiting under Discretionary and Flexible Trusts. Where this applies, this type of Trust isn’t suitable for use with joint life, first death protection policies if the primary purpose is for the proceeds to go to the survivor.

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For independent expert advice about all things financial, please contact the Farnham-based Fish Saltus team today and we’d be happy to help!

Preserve Your Wealth For Future Generations

Whether you have earned your wealth, inherited it or made shrewd investments, you will want to preserve your wealth for future generations and ensure that as little of it as possible ends up in the hands of HM Revenue & Customs.

Preserve Your Wealth

With careful planning and professional financial advice, it is possible to take preventative action to either reduce or mitigate a person’s beneficiaries’ Inheritance Tax bill – or mitigate it altogether To preserve your wealth for future generations, these are some of the main areas to consider.

1. Make a Will
A vital element of effective estate preservation is to make a Will. Making a Will ensures an individual’s assets are distributed in accordance with their wishes. This is particularly important if the person has a spouse or registered civil partner.

Even though there is no Inheritance Tax payable between both parties, there could be tax payable if one person dies intestate without a Will. Without a Will in place, an estate falls under the laws of intestacy – and this means the estate may not be divided up in the way the deceased person wanted it to be.

2. Make allowable gifts
A person can give cash or gifts worth up to £3,000 in total each tax year, and these will be exempt from Inheritance Tax when they die. They can carry forward any unused part of the £3,000 exemption to the following year, but they must use it or it will be lost.

Parents can give cash or gifts worth up to £5,000 when a child gets married, grandparents up to £2,500, and anyone else up to £1,000. Small gifts of up to £250 a year can also be made to as many people as an individual likes.

3. Give away assets
Parents are increasingly providing children with funds to help them buy their own home. This can be done through a gift, and provided the parents survive for seven years after making it, the money automatically moves outside of their estate for Inheritance Tax calculations, irrespective of size.

4. Make use of Trusts
Assets can be put in an appropriate Trust, thereby no longer forming part of the estate. There are many types of Trust available and they can be set up simply at little or no charge. They usually involve parents (settlors) investing a sum of money into a Trust. The Trust has to be set up with trustees – a suggested minimum of two – whose role is to ensure that on the death of the settlors, the investment is paid out according to the settlors’ wishes. In most cases, this will be to children or grandchildren.

The most widely used Trust is a Discretionary Trust, which can be set up in a way that the settlors (parents) still have access to income or parts of the capital. It can seem daunting to put money away in a Trust, but they can be unwound in the event of a family crisis and monies returned to the settlors via the beneficiaries.

5. The income over expenditure rule
As well as considering putting lump sums into an appropriate Trust, people can also make monthly contributions into certain savings or insurance policies and put them into an appropriate Trust. The monthly contributions are potentially subject to Inheritance Tax, but if the person can prove that these payments are not compromising their standard of living, they are exempt.

6. Provide for the tax
If a person is not in a position to take avoiding action, an alternative approach is to make provision for paying Inheritance Tax when it is due. The tax has to be paid within six months of death (interest is added after this time). Because probate must be granted before any money can be released from an estate, the executor may have to borrow money or use their own funds to pay the Inheritance Tax bill.

This is where life assurance policies written in an appropriate Trust come into their own. A life assurance policy is taken out on both a husband’s and wife’s life with the proceeds payable only on second death. The amount of cover should be equal to the expected Inheritance Tax liability. By putting the policy in an appropriate Trust, it means it does not form part of the estate.

The proceeds can then be used to pay any Inheritance Tax bill straight away without the need for the executors to borrow.

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For independent, expert advice on financial planning, wealth management, investments and more, please contact Farnham-based Fish Saltus today on 01252 931265 or complete our short enquiry form and we’ll call you back.

Discretionary Trust

With a Discretionary Trust, the settlor makes a gift into Trust, and the trustees hold the Trust fund for a wide class of potential beneficiaries. This is known as ‘settled’ or ‘relevant’ property. For lump sum investments, the initial gift is a chargeable lifetime transfer for Inheritance Tax purposes.

Discretionary Trust

It’s possible to use any available annual exemptions. If the total non-exempt amount gifted is greater than the settlor’s available Nil-Rate Band (NRB), there’s an immediate Inheritance Tax charge at the 20% lifetime rate – or effectively 25% if the settlor pays the tax.

Other planning

The settlor’s available NRB is essentially the current NRB less any chargeable lifetime transfers they’ve made in the previous seven years. So in many cases where no other planning is in place, this will simply be the current NRB, which is £325,000 up to 2021/22. The Residence Nil-Rate Band (RNRB) isn’t available to Trusts or any lifetime gifting.

Again, there’s no initial gift when setting up a Loan Trust, and the initial gift is usually discounted when setting up a Discounted Gift plan. Where a cash gift exceeds the available NRB, or an asset is gifted which exceeds 80% of the NRB, the gift must be reported to HM Revenue & Customs (HMRC) on an IHT 100.

Family protection
When family protection policies are set up in Discretionary Trusts, regular premiums are usually exempt transfers for Inheritance Tax purposes. Any premiums that are non-exempt transfers into the Trust will be chargeable lifetime transfers. Special valuation rules for existing policies assigned into Trust apply.

As well as the potential for an immediate Inheritance Tax charge on the creation of the Trust, there are two other points at which Inheritance Tax charges will apply. These are known as ‘periodic charges’ and ‘exit charges’. Periodic charges apply at every ten-yearly anniversary of the creation of the Trust.

Investment bond
Exit charges may apply when funds leave the Trust. The calculations can be complex but are a maximum of 6% of the value of the Trust fund. In many cases, they’ll be considerably less than this – in simple terms, the 6% is applied on the value in excess of the Trust’s available NRB.

However, even where there is little or, in some circumstances, no tax to pay, the trustees still need to submit an IHT 100 to HMRC. Under current legislation, HMRC will do any calculations required on request. For a Gift Trust holding an investment bond, the value of the Trust fund will be the open market value of the policy – normally its surrender value.

Retained rights
For a Loan Trust, the value of the trust fund is the bond value less the amount of any outstanding loan still repayable on demand to the settlor. Retained rights can be recalculated as if the settlor was ten years older

For Discounted Gift schemes, the value of the Trust fund normally excludes the value of the settlor’s retained rights – and in most cases, HMRC are willing to accept pragmatic valuations. For example, where the settlor was fully underwritten at the outset, and is not terminally ill at a ten-yearly anniversary, any initial discount taking account of the value of the settlor’s retained rights can be recalculated as if the settlor was ten years older than at the outset.

Open market
If a protection policy with no surrender value is held in a Discretionary Trust, there will usually be no periodic charges at each ten-yearly anniversary. However, a charge could apply if a claim has been paid out and the funds are still in the Trust.

In addition, if a life assured is in severe ill health around a ten-yearly anniversary, the policy could have an open market value close to the claim value. If so, this has to be taken into account when calculating any periodic charge.

Chargeable event
Where discretionary Trusts hold investments, the tax on income and gains can also be complex, particularly where income-producing assets are used. Where appropriate, some of these complications could be avoided by an individual investing in life assurance investment bonds, as these are non-income-producing assets and allow trustees to control the tax points on any chargeable event gains.

Bare Trusts give the trustees discretion over who benefits and when. The Trust deed will set out all the potential beneficiaries, and these usually include a wide range of family members, plus any other individuals the settlor has chosen. This gives the trustees a high degree of control over the funds. The settlor is often also a trustee to help ensure their wishes are considered during their lifetime.

Trust provisions
In addition, the settlor can provide the trustees with a letter of wishes identifying who they’d like to benefit and when. The letter isn’t legally binding but can give the trustees clear guidance, which can be amended if circumstances change. The settlor might also be able to appoint a protector, whose powers depend on the Trust provisions, but usually include some degree of veto.

Family disputes are not uncommon, and many feel they’d prefer to pass funds down the generations when the beneficiaries are slightly older than age 18. A Discretionary Trust also provides greater protection from third parties, for example, in the event of a potential beneficiary’s divorce or bankruptcy, although in recent years this has come under greater challenge.

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For independent, expert advice on financial planning, wealth management, investments and more, please contact Farnham-based Fish Saltus today on 01252 931265 or complete our short enquiry form and we’ll call you back.

Ensure You Leave Your Legacy To The Right People

Thinking about death isn’t easy. Talking about it is even harder. The reality of our own mortality is a tough subject, but planning ahead and seeking advice on how to pass your assets on tax-efficiently can ensure you leave your legacy to the right people.

Ensure You Leave Your Legacy To The Right People

If you want to be sure your wishes are met after you die, then it’s important to have a Will. A Will is the only way to make sure your money and possessions that form your estate go to the people and causes you care about.

Unmarried partners, including same-sex couples who don’t have a registered civil partnership, have no right to inherit if there is no Will. One of the main reasons also for drawing up a Will is to mitigate a potential Inheritance Tax liability and to ensure you leave your legacy to the right people.

Statutory rules
Where a person dies without making a Will, the distribution of their estate becomes subject to the statutory rules of intestacy (where the person resides also determines how their property is distributed upon their death, which includes any bank accounts, securities, property and other assets they own at the time of death), which can lead to some unexpected and unfortunate consequences.

The beneficiaries of the deceased person that they want to benefit from their estate may be disinherited or left with a substantially smaller proportion of the estate than intended. Making a Will is the only way for an individual to indicate whom they want to benefit from their estate. Failure to take action could compromise the long-term financial security of the family.

Implications of dying without making a Will

  • Assets people expected to pass entirely to their spouse or registered civil partner may have to be shared with children
  • An unmarried partner doesn’t automatically inherit anything and may need to go to court to claim for a share of the deceased’s assets
  • A spouse or registered civil partner from whom a person is separated, but not divorced, still has rights to inherit from them
  • Friends, charities and other organisations the person may have wanted to support will not receive anything
  • If the deceased person has no close family, more distant relatives may inherit
  • If the deceased person has no surviving relatives at all, their property and possessions may go to the Crown

Legal responsibility
Without a Will, relatives who inherit under the law will usually be expected to be the executors (someone named in a Will, or appointed by the court, who is given the legal responsibility to take care of a deceased person’s remaining financial obligations) of your estate. They might not be the best people to perform this role. Making a Will lets the person decide the people who should take on this task.

Where a Will has been made, it’s important to review it regularly to take account of changing circumstances. Unmarried partners have no right to inherit under the intestacy rules, nor do step-children who haven’t been legally adopted by their step-parent. Given today’s complicated and changing family arrangements, Wills are often the only means of ensuring legacies for children of earlier relationships.

Simplifying the distribution of estates for a surviving spouse or registered civil partner
Changes to the intestacy rules covering England and Wales, which became effective on 1 October 2014, were aimed at simplifying the distribution of an estate and could mean a surviving spouse or registered civil partner receives a larger inheritance than under the previous rules.

Making a Will is also the cornerstone for Inheritance Tax and estate planning.

Before making a Will, a person needs to consider:

  • Who will carry out the instructions in the Will (the executor/s)
  • Nominating guardians to look after children if the person dies before they are aged 18
  • Making sure people the person cares about are provided for
  • What gifts are to be left for family and friends, and deciding how much they should receive
  • What provision should be taken to minimise any Inheritance Tax that might be due on the person’s death

Preparing a Will
Before preparing a Will, a person needs to think about what possessions they are likely to have when they die, including properties, money, investments and even animals. Prior to an estate being distributed among beneficiaries, all debts and the funeral expenses must be paid. When a person has a joint bank account, the money passes automatically to the other account holder, and they can’t leave it to someone else.

Estate assets may include:

  • A home and any other properties owned
  • Savings in bank and building society accounts
  • Insurance, such as life assurance or an endowment policy
  • Pension funds that include a lump sum payment on death
  • National Savings, such as premium bonds
  • Investments such as stocks and shares, investment trusts, Individual Savings Accounts
  • Motor vehicles
  • Jewellery, antiques and other personal belongings
  • Furniture and household contents

Liabilities may include:

  • Mortgage(s)
  • Credit card balance(s)
  • Bank overdraft(s)
  • Loan(s)
  • Equity release

Jointly owned property and possessions
Arranging to own property and other assets jointly can be a way of protecting a person’s spouse or registered civil partner. For example, if someone has a joint bank account, their partner will continue to have access to the money they need for day-to-day living without having to wait for their affairs to be sorted out.

There are two ways that a person can own something jointly with someone else:
As tenants in common (called ‘common owners’ in Scotland)
Each person has their own distinct shares of the asset, which do not have to be equal. They can say in their Will who will inherit their share.

As joint tenants (called ‘joint owners’ in Scotland)
Individuals jointly own the asset so, if they die, the remaining owner(s) automatically inherits their share. A person cannot use their Will to leave their share to someone else.

Partial intestacy
This can sometimes happen even when there is a Will, for example, when the Will is not valid, or when it is valid but the beneficiaries die before the testator (the person making the Will). Intestacy can also arise when there is a valid Will but some of the testator’s (person who has made a Will or given a legacy) assets were not disposed of by the Will. This is called a ‘partial intestacy’.

Intestacy therefore arises in all cases where a deceased person has failed to dispose of some or all of his or her assets by Will, hence the need to review a Will when events change.

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For independent, expert advice on financial planning, inheritance tax, wealth management, investments and more, please contact Farnham-based Fish Saltus today on 01252 931265 or complete our short enquiry form and we’ll call you back.

Have You Considered Pooled Investment Funds?

Pooled Investment Funds are usually large funds built by aggregating relatively small investments from individuals. A professional fund manager (or a team of fund managers) determines which assets to invest in and then purchases accordingly. They are also known as ‘collective investment schemes’.

Pooled Investment Funds 2022

By pooling resources with other investors, you are all able to achieve something greater than what you could achieve on your own. There is a diverse range of funds that invest in different things, with different strategies – high income, capital growth, income and growth, and so on.

Popular types of pooled investment fund

Unit trusts and Open-Ended Investment Companies
Unit trusts and Open-Ended Investment Companies (OEICs) are professionally managed collective investment funds. Managers pool money from many investors and buy shares, bonds, property or cash assets, and other investments.

Underlying assets
You buy shares (in an OEIC) or units (in a unit trust). The fund manager combines your money together with money from other investors and uses it to invest in the fund’s underlying assets. Every fund invests in a different mix of investments. Some only buy shares in British companies, while others invest in bonds or in shares of foreign companies, or other types of investments.

Buy or sell
You own a share of the overall unit trust or OEIC – if the value of the underlying assets in the fund rises, the value of your units or shares will rise. Similarly, if the value of the underlying assets of the fund falls, the value of your units or shares falls. The overall fund size will grow and shrink as investors buy or sell.

Some funds give you the choice between ‘income units’ or ‘income shares’ that make regular payouts of any dividends or interest the fund earns, or ‘accumulation units’ or ‘accumulation shares’ which are automatically reinvested in the fund.

Higher returns
The value of your investments can go down as well as up, and you might get back less than you invested. Some assets are riskier than others, but higher risk also gives you the potential to earn higher returns.

Before investing, make sure you understand what kind of assets the fund invests in and whether that’s a good ft for your investment goals, financial situation and attitude to risk.

Spreading risk
Unit trusts and OEICs help you to spread your risk across lots of investments without having to spend a lot of money. Most unit trusts and OEICs allow you to sell your shares or units at any time – although some funds will only deal on a monthly, quarterly or twice-yearly basis. This might be the case if they invest in assets such as property, which can take a longer time to sell.

Investment length
However, bear in mind that the length of time you should invest for depends on your financial goals and what your fund invests in. If it invests in shares, bonds or property, you should plan to invest for five years or more.

Money market funds can be suitable for shorter time frames. If you own shares, you might get income in the form of dividends. Dividends are a portion of the profits made by the company that issued the shares you’ve invested in.

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For independent, expert advice on financial planning, wealth management, investments and more, please contact Farnham-based Fish Saltus today on 01252 931265 or complete our short enquiry form and we’ll call you back.