No one can fail to be aware of the problems encountered
by the world financial markets over the last two months and
many of our clients have expressed concern about the security
of their cash deposits as well as the impact on their pension
funds and other investments.
With interest rates set to fall still further on your deposit
accounts this may be the time to take a fresh look at an
investment strategy for your savings or pension funds.
Whilst it is inevitable that most investors remain nervous
about stock market movements this could be a good opportunity
to seek out investments that will protect against downward
movements in the immediate future but offer the potential
to achieve substantially better returns than cash accounts
are likely to offer over a 3 to 5 year period, as the financial
markets eventually recover.
Some examples of this are a plan that offers 100% capital
protection but will produce a return of 115% of the gains
achieved by set portfolio of unit trusts, another that offers
100% capital protection but provides returns of up to 40%
(7.5% a year) over 5 years, or one that is directly linked
to the FTSE index but provides full protection again a fall
of up to 50% from the current levels and will produce returns
4 times the those achieved by the index, subject to a maximum
of 100%. The returns from each of these investments
would be regarded as a capital gain in the year in which
the plan matures and so be tax free within your annual Capital
Gains Tax allowance. Even if you went over your CGT
allowance the maximum tax you would pay would be 18%, as
opposed to the 40% you could be exposed to on a cash deposit.
For anyone seeking income from their capital it is possible
to obtain a tax efficient return of 0.62% per month (7.5%
a year), fixed for five years, with the capital being protected
from a fall of up to 50% from the current depressed levels
of FTSE index.
We can help you decide if any of these options would fit
in with your personal circumstances and objectives.
For further details please contact either Lisa@mdcnet.co.uk or
Trevor Simms on 01438 840888
