UK Basic Investing Information Guide at Money sorter

Investing Guide

This is where we explain some different ways to invest in various types of investments. Click on any of the links below to find out more about each one.

If you want a bit of background info on investing check the section Want your money to Grow?

If you've got money which you're not really sure what to do with, check the savings guide intro to savings, to see more options).

Ways to invest your Money

Endowments

ISAs

Green / Ethical investments

Guaranteed Income and Growth Bonds

High Income and Growth Bonds

Latest UK press and media shares and Investments tips

Guaranteed Income and Growth Bonds

This type of investment provides a guaranteed income or growth for a set period of time with a guarantee that capital will be returned at the end of the investment period.

These types of investments are ideal for investors looking for a no-risk investment.

Bond rates vary with market conditions but once the Bond has been taken out the rate cannot be altered.

These Bonds are attractive to tax payers as the Bond provider (usually a life insurance company) pays the basic rate tax on its own funds. However, higher rate tax payers will have to pay the additional tax. This type of investment is regulated by the FSA.

Investing Guide Contents

High Income and Growth Bonds

A bond is a generic term for a type of investment. There are a number of different types of bonds.

This type of Bond provides a high level of income usually payable monthly, quarterly or annually. Growth Bonds are also available. Whilst the income or growth is fixed, the return of capital is not guaranteed and is subject to the level of the index to which the return of capital is linked to being the same or higher at the end of the investment period.

Some Bonds offer a safety net which allows the index to drop and still repay the capital.

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Investment Bonds

A bond is a generic term for a type of investment. There are a number of different types of bonds.

This type of bond is for lump sums invested in funds of the investor's choice.

Most Bonds have a variety of funds from which to choose with different risk profiles, for example, Managed Funds, International Funds, Equity Funds, Cash Funds.

These Bonds are flexible - withdrawals can be made whenever required.

Those people seeking income could consider a Distribution Bond. This type of Bond pays income monthly, quarterly, half-yearly, annually or termly and is usually referred to as a low risk investment.

This type of investment is regulated by the FSA.

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With Profit Bonds

A bond is a generic term for a type of investment. There are a number of different types of bonds.

A With Profit Bond is a lump sum investment into a life insurance company's With Profit Fund. It is considered to be a low risk investment with the bond benefiting from the annual (reversionary) bonuses and in many cases a Terminal Bonus.

These types of bonds are very flexible. Capital can be withdrawn at any time (subject to early redemption penalties) and regular income can be taken, usually, monthly, quarterly, half-yearly, termly or annually. This type of investment is regulated by the FSA.

Investing Guide Contents

Endowments

These types of policies pay the sum assured on a set date or on the death of the policyholder if sooner.

There are many types of Endowment, for example With Profit, Unit Linked, Flexidowment, Lowstart and Non Profit.

They can be used for many types of investment purposes, for example for repaying a mortgage, saving for a specific purpose or school fees planning.

If you want information on how to sell an existing endowment click here

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Green / Ethical investments

Many investment companies are aware of people's concerns as to where their money is invested. To address this concern some of them have set up Green/Ethical investment schemes.

Typically, this involves the Fund Manager researching and subsequently investing in companies not connected with, for example, tobacco, weapons, testing on animals and anything harmful to the environment.

This type of investment is regulated by the FSA.

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ISAs

Individual Savings Accounts replaced the old TESSAs and PEPs.

ISAs are a type of savings/ investment where you benefit from tax breaks.

The rules concerning ISAs are quite complex. Very basically the government allow you to invest a certain amount of your earnings on a tax free basis. This is to encourage you to save.

There are various types of ISAs: Cash ISAs, Stocks & shares ISAs / Equity ISAs and Self-select Investment Equity / Stocks and Shares ISAs

Each type has its own rules and investment limits.

This type of investment is regulated by the FSA.

Investment Trusts

An Investment Trust is a limited company in which the investor buys shares and therefore becomes a part owner of the company.

Investment Trusts invest in shares quoted on the world's major stockmarkets and unlike Unit Trusts they are able to "gear up" by borrowing money in order to maximise any investment opportunity.

Potential investors need to remember that as with all Equity type investments there is an element of risk and the returns on an Investment Trust will be influenced by market conditions.

Investments can be made by either lump sums or regular savings schemes. This type of investment is regulated by the FSA.

Investing Guide Contents