Investment FAQs
If you are unfamiliar with investing, there can be lots of questions. Therefore, to make it easier for you, we have prepared some Investment FAQs (Frequently Asked Questions).
We are committed to offering our clients the highest possible standards of service at all times. In doing so, we are pleased to support the Financial Conduct Authority initiative “Treating Customers Fairly”. We want each of our clients to receive a level of service which enables them to fully understand all the implications of our advice.
Meeting a new adviser can be a daunting prospect and it’s best to feel prepared. In addition, we hope the following will help explain how we work and assist you in your preparation for our initial meeting.
Is there anything I need to do in preparation for investing?
We recommend an initial meeting to find out more about what you are looking to achieve. At that meeting we will tell you more about how we may be able to help and which level of service may be most appropriate. This meeting will last up to an hour, is free of charge and is completely without any obligation.
Considerations
Before this meeting, you may like to consider:
- What are your financial objectives?
- Why do you want to invest?
- What would you like your money to achieve?
- Do you need income from your capital or just growth?
- Will your need change? For example, you may require growth now and income in the future, or a combination of the two.
- How long are you looking to invest the money?
- Do you have definite plans to spend the money at some future date? Or, do you just need flexibility to change how the money is used?
- What existing investments and savings do you have?
- You may require advice on a specific sum of money. However, our advice will be influenced by what other monies you have and how this has been invested. Have you used your ISA allowance? What short-term money do you have ‘in case of need’?
- What rate of tax do you pay? Making your investments as tax efficient as possible is a key part of investment planning. To help us do this we would like to know what rate of tax you pay now and if this is likely to change in the future.
Further advice and assistance in answering these questions is available from your adviser. We can also provide you with guides from the Money Advice Service. If you prefer, you can see the guides on the Money Advice Service website www.moneyhelper.org.uk
As our name suggests, at Choice Financial Solutions we offer you the widest level of choice and access to the whole of the market.
What is the difference between ‘savings’ and ‘investments’?
Savings and Investments both refer to ‘capital’ that you have accumulated.
- Savings: ‘Cash- based’ deposit accounts generally refer to savings. Normally these are held with Bank and Building Societies in savings accounts. Such as; ‘instant access’, ‘notice accounts’ ‘Fixed Rate Bonds’ or ‘Cash ISAs’.
- Investments: Capital that is working for you over the medium to longer term is generally referred to as investments. This will usually incorporate an element of risk. ‘Investments’ would normally be expected to produce a higher return than ‘savings’ over the longer term. However, their value can fall as well as rise.
How much of my money should I be investing?
The amount of capital that you should invest will depend on your individual circumstances. In addition, what objectives you are trying to achieve.
We always recommend that you have at least four to six months income held in savings accounts. This is ‘in case of need’ before you consider investing any capital.
What is the minimum/maximum term over which I should invest?
This very much depends on what your investment objectives are. It also depends on your attitude to risk. We will ascertain these at our first meeting.
Whilst you will generally be able to access the value of your investments ‘as and when’ required. ‘Medium to higher risk’ investments will include some equity (share) exposure. Therefore, some capital fluctuation can be expected. This should level out over the longer term. We would generally not invest capital unless you were prepared to leave it to work for you over the medium term. The medium term would be on average, at least five years.
Most investments have open-ended terms. This means the money can usually remain invested until it is required. Of course, we could consider shorter time scales for lower risk investments. This will be bespoke to your specific requirements and objectives.
How often should my investments be reviewed?
You can leave your capital invested as long as required. However, we recommend that your portfolio is reviewed at least annually. This is available as part of our ‘Silver Service’.
On the other hand, more regular reviews may be appropriate for larger sums. If you take advantage of our ‘Choice IPS Model Portfolio Service’, we will review and rebalance your investment portfolio on a quarterly basis.
How do I get the best return without risking my capital?
Before you invest your money, we will have a detailed discussion with you about your investment objectives and your ‘attitude to risk’.
Also, we will make sure that you have sufficient short-term capital in your savings accounts. This is to ensure that the money you invest can remain invested until your objective has been achieved.
Once the amount to invest and risk profile has been agreed, we will construct a suitable portfolio. The portfolio will diversify across the key asset classes. The key asset classes are ‘cash’, ‘equities’, ‘property’ and ‘bonds’.
How much we invest in each asset class will depend on your risk profile, investment time scales and objectives.
What is meant by ‘investment volatility’?
‘Volatility’ refers to the level of fluctuation you can see in the value of your investment over a given period of time.
Generally speaking, the higher the level of risk, the greater the level of fluctuation you could experience in the value of your investments.
Also, it is true that over the longer term, investments with higher level of volatility are generally able to generate greater levels of returns.
How much will it cost to invest?
Our first meeting is always provided ‘free of charge’. We will assess your needs and discuss your investment objectives.
Next, when we meet, we will tell you more how our different levels of service are structured. We will also agree the most suitable investment strategy for you.
We offer four levels of service: Diamond, Ruby, Sapphire and Emerald. They offer different levels of ‘advice time’ and are priced accordingly.
Usually, we can provide discounts on the fund management costs of your investment. This will help offset the annual costs of our services. Our annual costs range from 0.50% to 1.00%. This will be dependent on the amount you wish to invest and the level of service you require.
What is an investment platform?
Investment Platforms are administrative tools. They enable us to manage your investments in a very cost effective way.
They allow us to reduce the running costs of your investments. In addition, we can deliver an efficient and scalable means of running your investment portfolio.
This is done by centralising the administration of your investments. This leaves your individual investment fund providers to concentrate on their most important job – making your money grow.
In the main we use the Standard Life WRAP and Aviva Platform to manage client investments.
These provide investor access to the Choice Investment Portfolio Solution Service and our range of Wealth of Choice Model Portfolios.