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National Savings <ul><li>Where do you advise your clients to invest their cash? </li></ul><ul><li>Cash management </li></u...
National Savings <ul><li>Definite alternative to bank deposits </li></ul><ul><li>Perhaps should form a part of planning of...
National Savings <ul><li>Wide range of different offerings: </li></ul><ul><li>Premium bonds </li></ul><ul><li>ISA’s </li><...
National Savings <ul><li>http://www.nsandi.com/products/index.jsp </li></ul>
Offshore <ul><li>GB (PM) has recently said that the offshore centres must be more closely regulated. Isle of Man, Channel ...
Offshore <ul><li>The driving reason behind offshore investments is taxation in that the rate of growth is likely to be gre...
Offshore <ul><li>Likely that UK will follow this example. </li></ul><ul><li>Even now, when an offshore asset (rollup) is r...
Offshore <ul><li>Many offshore funds are operated by subsidiaries of well-known onshore institutions.  </li></ul><ul><li>I...
Offshore <ul><li>That is not to say that you can necessarily avoid paying UK tax. You may still find you will have to pay ...
Offshore <ul><li>Offshore bonds  do not pay corporation tax on income and gains within the fund, although withholding tax ...
Offshore <ul><li>Withdrawals  in excess of 5% per annum are liable to UK Income Tax at your highest rate as is the overall...
Guaranteed Products <ul><li>Attractive sounding, especially in the current market conditions, but how safe are they? </li>...
Guaranteed Products <ul><li>Under normal investment conditions “total return” is made up from combination of capital appre...
Guaranteed Products <ul><li>You need to read the small print & fully understand how the “guarantee” works – it can sometim...
Guaranteed Products <ul><li>Often it will be a large bank, do I need to say more?! E.g. the late Lehman Bros,  </li></ul><...
Investment Overview <ul><li>Continue with banking sector write downs over next 18 months. Toxic asset protection schemes o...
Investment Overview <ul><li>Now could be a good time for clients to buy Index-linked gilts with this likely inflation spik...
Investment Overview <ul><li>Market sectors that are least affected by recession, e.g. Food producers, food retailers, Phar...
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National Savings Where do you advise your clients to invest ...

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National Savings Where do you advise your clients to invest ...

  1. 1. National Savings <ul><li>Where do you advise your clients to invest their cash? </li></ul><ul><li>Cash management </li></ul><ul><li>Are the banks safe? </li></ul><ul><li>Are they covered by the depositors’ compensation scheme? </li></ul><ul><li>National Savings & Investments are backed by HM Government – sovereign debt, lowest threat of default. </li></ul>
  2. 2. National Savings <ul><li>Definite alternative to bank deposits </li></ul><ul><li>Perhaps should form a part of planning of client’s short term (5 year) cash consideration </li></ul><ul><li>Taxable and tax free options </li></ul><ul><li>Relatively simple products </li></ul><ul><li>May get better rates elsewhere but question over risk & security </li></ul>
  3. 3. National Savings <ul><li>Wide range of different offerings: </li></ul><ul><li>Premium bonds </li></ul><ul><li>ISA’s </li></ul><ul><li>Fixed interest/index-linked savings certificates </li></ul><ul><li>Income bonds – monthly income </li></ul><ul><li>Guaranteed income/growth/equity bonds </li></ul>
  4. 4. National Savings <ul><li>http://www.nsandi.com/products/index.jsp </li></ul>
  5. 5. Offshore <ul><li>GB (PM) has recently said that the offshore centres must be more closely regulated. Isle of Man, Channel Islands, Caymans, Liechtenstein etc. </li></ul><ul><li>US residents are assessed for tax on all worldwide assets, income etc. In other words, there are no tax shelters. </li></ul>
  6. 6. Offshore <ul><li>The driving reason behind offshore investments is taxation in that the rate of growth is likely to be greater given a lower tax regime </li></ul><ul><li>Different locations have different tax conditions </li></ul><ul><li>Usually low or no income tax or no capital gains tax </li></ul><ul><li>Offshore investments may attract unwanted HMRC attention </li></ul>
  7. 7. Offshore <ul><li>Likely that UK will follow this example. </li></ul><ul><li>Even now, when an offshore asset (rollup) is returned to the UK it is subject to tax, income, CGT etc </li></ul><ul><li>Offshore only works when individual is currently offshore & is likely to remain so </li></ul>
  8. 8. Offshore <ul><li>Many offshore funds are operated by subsidiaries of well-known onshore institutions. </li></ul><ul><li>Income distributing funds pay their income gross which is particularly attractive to non-taxpayers. </li></ul><ul><li>An ‘offshore’ bond is liable for no UK tax and therefore grows virtually tax-free at a potentially higher rate. </li></ul>
  9. 9. Offshore <ul><li>That is not to say that you can necessarily avoid paying UK tax. You may still find you will have to pay some but, with careful planning, you can control when you pay. </li></ul><ul><li>Of course if you are living abroad currently, or you plan to move abroad during the life of your investment, you may object to paying UK taxes, especially as these are non-recoverable, and therefore an offshore bond enables you to invest without any liability to UK taxes. </li></ul>
  10. 10. Offshore <ul><li>Offshore bonds do not pay corporation tax on income and gains within the fund, although withholding tax on dividends is not reclaimable. This 'gross roll up' of income and gains has the effect of causing the fund to grow more quickly than an onshore fund. </li></ul><ul><li>If annual withdrawals do not exceed 5% of the initial sum, no liability to tax will arise until the bond is encashed in full , thus providing a tax deferral opportunity </li></ul>
  11. 11. Offshore <ul><li>Withdrawals in excess of 5% per annum are liable to UK Income Tax at your highest rate as is the overall gain on final encashment. On final encashment any 'gain' in the value of the Investment Bond, taking into account any previous withdrawals, is added on to your income and is subject to tax in the normal way. There is relief for any period you are resident outside the UK. </li></ul>
  12. 12. Guaranteed Products <ul><li>Attractive sounding, especially in the current market conditions, but how safe are they? </li></ul><ul><li>Remember, the guarantee can only cover the income or the capital of the product but not both! </li></ul><ul><li>When the capital is guaranteed, the investor loses right to any dividend income </li></ul>
  13. 13. Guaranteed Products <ul><li>Under normal investment conditions “total return” is made up from combination of capital appreciation & dividend. </li></ul><ul><li>Current FTSE All share yield is approx 8%. </li></ul>
  14. 14. Guaranteed Products <ul><li>You need to read the small print & fully understand how the “guarantee” works – it can sometimes be very complicated and different parties involved </li></ul><ul><li>When is a guarantee not a guarantee? There will be circumstances when the plan will not be guaranteed – do you know when these are? </li></ul><ul><li>Who is actually giving the guarantee? Very often it is not the marketing firm </li></ul>
  15. 15. Guaranteed Products <ul><li>Often it will be a large bank, do I need to say more?! E.g. the late Lehman Bros, </li></ul><ul><li>The onus is on advisers to fully understand the products they are recommending to their clients – you must NOT rely on the providers’ literature </li></ul><ul><li>Even a traditional “with profits” policy is a form of guaranteed product as you will usually get 101% death benefit </li></ul>
  16. 16. Investment Overview <ul><li>Continue with banking sector write downs over next 18 months. Toxic asset protection schemes or so called “bad banks” </li></ul><ul><li>President Obama’s US $250bn banking slush fund. </li></ul><ul><li>Economy: moving into a period of deflation, hopefully short-lived, then… </li></ul><ul><li>Moving back into inflation, which could rise quite sharply </li></ul><ul><li> </li></ul>
  17. 17. Investment Overview <ul><li>Now could be a good time for clients to buy Index-linked gilts with this likely inflation spike in mind </li></ul><ul><li>Income is as important as always in determining which investment to choose – the current yield on the FTSE All share index is 6.6%. </li></ul><ul><li>Therefore dividend cover is crucial. </li></ul><ul><li> </li></ul>
  18. 18. Investment Overview <ul><li>Market sectors that are least affected by recession, e.g. Food producers, food retailers, Pharmaceuticals, tobacco, miners. </li></ul><ul><li>Mining sector, has been very overvalued & hard hit recently but potentially buying into the long term growth potential of developing world, i.e. Brazil, Russia, India & China </li></ul><ul><li>FTSE 100 is now more representative of UK plc than previously </li></ul><ul><li> </li></ul>

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