What's important to you

Should I save or invest?

When it comes to saving money, keeping your cash in the bank can seem like the safest option. But over the long term, if the rate of inflation (how fast the prices of goods/services increase) exceeds the bank’s interest rate (what the bank pays you for holding your cash with them), then keeping it in the bank means the value of your savings will actually go down in real terms.

While having some of your cash in a bank to cover unexpected expenses is sensible, it is important to consider the impact of inflation when making decisions about your savings over the long term.

Investing aims to accumulate money for longer term goals however generally it comes with more risk. Investments tend not to be as accessible as cash and the value of them and income from them can fall as well as rise and are not guaranteed.

How long should I invest for?

We believe leaving your wealth invested over longer time periods has the greater potential for it to maintain and grow its value. In investment terms this tends to be five years or more.

Although our focus is on long-term potential returns we still watch what’s happening on a day-to-day basis. We’ll use our expertise to try and take advantage of short-term opportunities with the aim of generating additional returns, or to protect its value if we see potential risks on the horizon.

Just as we’re advised not to put all our eggs in one basket, it’s very unlikely a single investment type (shares, for example) will give you the best performance all the time and so we also recommend holding a broad spread of investments.

Finally, any return you expect to receive from your investment should match the degree of risk you take to achieve it. So we work with you to find the right strategy. But remember, all investments carry a degree of risk and results cannot be guaranteed and you may not get back your initial investment.

What's important to you

How can I invest tax efficiently?

Over the years successive governments have created various tax-efficient savings regimes to encourage us to put something aside for the future. The two most commonly used are:

ISAs (individual savings accounts) which allow you to save or invest up to a set limit each tax year: this year it’s £20,000. Once saved or invested within an ISA, any income or capital growth is free of tax both within the account and when you decide to take it out.

Pensions allow you to save for your retirement by putting money in your pension pot free of income tax. Again, any capital growth or income reinvested is free of tax. However, you cannot access your savings until you reach the age of 55 (although this is due to rise to 57 in 2028). When you come to withdraw your investments the first 25% is tax free and the remainder is taxed as normal income.

Are onshore bonds tax efficient?

Onshore bonds are a type of life insurance policy that allow you to invest tax efficiently. This is because any income or capital growth within the bond is taxed at the corporation tax rate of 20%. HMRC regards this as equivalent to the policyholder having effectively paid capital gains tax (CGT) and basic rate income tax.

Basic rate taxpayers have no further tax liability when withdrawing from an onshore bond.

You can also withdraw up to 5% of the initial premium every year tax free as this is simply taking back your funding capital. Anything above this is taxed alongside your other income so for a higher rate tax payer this could mean an extra 25%. The bond pays out any remaining balance either on the maturity date or when you die and any gains will be taxed as income.

They usually comprise between 20 and 100 segments, which can be cashed in at any time; either singly or in total. The same rules apply: any profits are taxed as income if you are a higher rate tax payer.

What's important to you

Is protection insurance expensive?

We believe having the right protection in place can be the cornerstone of a holistic financial plan, yet is a need that is often overlooked. Thanks to our existing relationships with Scottish Widows and Legal & General we could help provide financial protection for you and your family.

But what makes us unique is that we won't charge you payment or commission when you purchase protection products.

By removing commission payments, the amount it costs for the insurer to cover you is the price you'll pay. It's important to us that we invest our time to help address the protection gap that exists in the UK today.

Plus, we employ our advisers so they're rewarded for meeting your needs, rather than selling products.

Can protection products reduce inheritance tax?

A life insurance policy could cover the cost of an inheritance tax (IHT) bill rather than it being paid from your savings or sale of assets when you die. Even better, if you place the policy in trust, it will be paid outside of your estate, therefore not incurring any further IHT.

The downside of placing your life insurance policy in trust is that it can be difficult to amend or remove from trust once it's set up. There are circumstances under which changes to the policy can be made but you may risk invalidating the cover. Certainly, it's best to consult your solicitor before making any alterations to your policy.

Life insurance is designed to pay out a lump-sum when you die. You can state that you wish your loved ones to use this money to pay part or all of the IHT when you die. This could provide valuable peace of mind that your family should be able to cope from a financial perspective when the worst happens.

Tax treatment depends on individual circumstances and may be subject to change in the future.

What's important to you

What age should I start saving for my retirement?

Building a nest egg for your retirement could be easier the younger you are – starting with what you can afford to put away.

Saving a little bit early rather than a lot later on means that it could be a more achievable way of reaching your goals. You could benefit by starting your pension savings sooner, through compound interest – it’s like growth on growth through reinvesting interest, rather than paying it out.

And there are tax benefits that can be enjoyed once you start saving for your retirement. For every £80 you put in your pension pot, the government provides £20 in tax relief.

You should also take advantage of your workplace pension too, if your employer offers one. By contributing whatever is needed to ensure that you receive the maximum employer contribution, if you can afford to do so, you could give your future retirement income a great start.

Remember to review your pension contribution as your salary increases so that you’re always saving in line with your income.

Are there any other ways I can save for my future?

Pensions are not the only option when it comes to saving for retirement. You can also hold investments in ISAs or Onshore and Offshore Bonds. Both could provide a tax-efficient income and/or a lump sum when you retire.

General Investment Accounts (GIA) offer a flexible savings option outside of your pension and ISA allowance. Investing in a GIA has the benefit of potentially using your annual Capital Gains allowance (the amount of profit you can make before tax). You can also make regular withdrawals and contribute as much or as little as you like

What's important to you

Is there an investment option which will help me buy my first home?

A Lifetime ISA (LISA) can be a great way to save if you're hoping to get on the property ladder one day. This is a sort of hybrid between an Individual Savings Account (ISA) and a pension plan and is open to anyone between the ages of 18 and 40. The government tops up any investment with a 25% bonus to a maximum of £1,000 a year.

But unlike a normal ISA, the money can only be accessed as part of the deposit on a first home, or to fund retirement once the owner reaches the age of 60. If you take money out for any other reason there’s a withdrawal charge of 25%.

How can my family help me get on the property ladder?

Your family may be in a position to help you benefit from the security and stability of owning your own home. But the significant rise in house prices over recent decades, means this isn’t always easy to achieve.

The two things you need to have in place to buy your first home are a deposit (typically 10% to 15% of the property’s value) and a mortgage agreement . And your family could potentially help with both.

They could gift all or part of your deposit as a lump sum but if your vision is to buy a property in the longer term then they may wish to pay money into an ISA or LISA which could make funding a deposit a lot easier when the time comes.

They may also wish to help out with the mortgage. The first option is to help out with the monthly mortgage payments under the surplus income rules. But there are other ways they can help, some of which don’t require them to put up any immediate funding such as acting as a guarantor.