top of page
piggy bank

Savings and Investment Advice in Dunmow

Maximise your wealth with Howlett Reid Wealth Management's expert savings and investment advice. We offer tailored strategies to grow and protect your financial assets.

Give us a call to speak with a professional today.

Over 30 Years' Experience

Fully Qualified

Free Initial Consultation

Savings and Investments

Why are we encouraged to save money?

From childhood, most of us are told to put away money to save for the future – perhaps for something special; or maybe to be sure that when we really need something we have the funds to acquire it, without taking on debt.  People’s aims are broadly the same; to provide for future needs, and to protect ourselves against unexpected expenditure, events and inflation.

​

When planning your finances, it is important to distinguish between savings and investments. Savings are generally funds that you set aside that can be accessed relatively quickly. These savings are often for a specific need or purchase, like a holiday or a new car. The most common way of saving is into a bank account (‘deposit’ account) where the money can be accessed in an emergency, and for every £1 you put in, you will get £1 back and possibly some interest. In other words, the original capital is guaranteed.

​

Investments are designed to be held for a longer term, usually at least 5 years. You need to be comfortable tying up this money for a period of time and should not consider investments unless you have some savings in place. Most investments are not guaranteed to return your money in full, although do offer the prospect of potentially higher returns than deposit accounts. Returns, risk and volatility are the factors that will determine a suitable place for your investments.

 

The value of investments may fall as well as rise. You may get back less than you originally invested.

There are so many different mediums in which to invest, here we look at a few key areas: 

​​

•â€¯Bank Accounts – Current accounts may offer a very low rate of interest (if any) but they are the most flexible in terms of accessing your money. Banks also offer savings accounts with higher interest rates and notice accounts with competitive interest rates, but you may have to give a certain amount of notice before making a withdrawal (60 or 90 days perhaps), or you must agree to invest the money for a set period.  
 
•â€¯National Savings & Investments – These are generally considered low risk as they are government backed. Many National Savings products are tax-free. 
 
•â€¯Bonds & Gilts – Are generally considered to be lower risk than direct equities, although the value can still fall as well as rise. Corporate bonds are investments based on business loans offered by private companies and are ‘rated’ based on the ability of the issuer to maintain interest payments and repay the loan. A corporate bond fund will invest in a wide range of these loans. ‘Investment grade’ stock within the bond fund is rated AAA to BBB, whilst stock rated a BB or below is termed ‘junk or non-investment grade’. Some funds also invest in government bonds (known as gilts). 
 
The income yield that is available from fixed income investments varies according to the quality of stock. Lower quality (junk or non-investment grade) stock usually offers a higher yield to attract investors (as they may be otherwise put off by the increased risk/volatility) whilst gilts generally offer much lower returns, they are underwritten by the government and so the risk of default is much reduced.  
 
 Property – The long-term historic performance of commercial property has very little correlation with the performance of corporate bond or equity-based investments. For investors looking to diversify their portfolio, property funds have historically offered attractive returns. Income from commercial property funds is often derived from contractually binding contracts of rent paid by business tenants to occupy property. Consequently, leases are often arranged over a long period and generally include an ‘upwards only clause’ which ensures that rents are not negotiated downwards during the lease period, even in times of falling markets.  
 
Added to the rental incomes, property has the added attraction of potentially appreciating in value over time, and although property values do fall, the ‘bricks and mortar’ assets of a fund remain. However, returns from a property fund are not guaranteed and the value of any investment can fall as well as rise.  
 
Furthermore, because of the nature of property as an asset, it may not always be possible to immediately switch or cash in your investment, because the property in the fund may not always be readily saleable. If this is the case, then a fund manager may defer your request to cash in for a period of time. You should bear in mind that the valuation of property is a matter of the valuer’s opinion, rather than a matter of fact.  
 
•â€¯Equities (shares) – Over the long-term, equities have historically offered better returns for investors. Although this is not a guide to the future, it is felt that the increased risk of investing in company shares can potentially be rewarded by investment returns in excess of those available from traditional deposit accounts. However, there are no guarantees.  
 
•â€¯Investment ‘Funds’ – Specialist investment managers will often manage a fund (a pool of investments) that invests in one or more of the above categories, the aim being to diversify the risk across a spread of equities, bonds, or both. There are hundreds of investment funds available, each with their own specific aims and objectives. Investment funds can also specialise in one particular sector, such as only investing in companies that are listed on the FTSE 100 index, or only investing in construction and mining companies. There are also funds that invest geographically, perhaps only buying shares in Japanese or American companies. Each sector has its own unique characteristics, and your adviser will be able to explain more about this.  
 
All these types of investment are available through your financial adviser. You may be able to include your investment within a tax-efficient product such as an ISA (Individual Savings Account) or a pension. There is a vast array of products available, and choosing the most suitable one can be difficult, your adviser will be able to help you decide which are suitable for you.  
 
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE NATIONAL SAVINGS & INVESTMENT PRODUCTS 

 

The value of investments may fall as well as rise. You may get back less than you originally invested. 

Looking to grow your wealth? Contact us today for investment advice.

Contact Us

Business Hours

Mon-Fri: 9am-5pm

Sat: Closed

Sun: Closed

Follow Us

  • Google G Icon
  • Yell business page
Read out reviews on Yell.com logo in colour
bottom of page