The information provided in this article was accurate at the time of publishing and should be read in the context of the date it was published. Views in this article are those of the author alone and do not necessarily represent the view of Scottish Friendly.
It seems that everyone is busy these days.
If you are a homeowner, especially, you will be more than aware of the time and effort, not to mention money that you have to invest in your property just to maintain it. And if you have kids, try doubling that cost! It seems like you have no longer re-decorated a room, repaired some chipped plasterwork or trimmed the hedge than some other calamity has reared its head.
It’s not easy – and it can be even more troublesome trying to get your finances in shape.
When it comes to thinking ahead and putting something away for a big project, or just to have the peace of mind that comes with having something set aside for a rainy day, it could pay to think for the long term. By investing your money and thinking in terms of 10 years, rather than the short term, you could utilise the growth potential of the stock market and in this time of low interest rates on cash, this may be an option that could be worth considering. And with Scottish Friendly’s affordable ISA products (from only £10 per month), it could be easier than you think to make a start.
ISA Investment funds
My Choice (ISA) gives you access to, currently, eight investment funds. Each fund has a different risk and reward profile and invests in different assets. It is important for you to carefully consider the level of risk and reward you are comfortable with. Generally speaking, the higher risk and reward funds are more susceptible to ups and downs in the market in the short term, however, over the longer term (for example an investment period of 10 years), these funds are designed to outperform the lower risk funds. Although, as with all investments, there are no guarantees.
We have provided an overview of the funds below.
Low expected risk & return funds
- The UK Government Bond fund is linked to an index of bonds issued by the UK Government and as such is linked to their growth potential and security. The performance of this fund is dependent on the credit worthiness of the UK Government and movement in UK interest rates.
- The Unitised With-Profits fund is linked to a cautiously managed portfolio of stock market, property, cash and bond assets and offers a guaranteed cash sum of at least as much as you have invested if you cash in on the 10th anniversary of your initial investment (provided you have made no withdrawals or switched out of the fund).
- The Lower fund is linked to a managed portfolio of safer assets (compared to the Medium Fund and Higher fund) such as bonds and cash and provides greater longer term growth potential than cash. The actual risk and return of the fund will depend on Scottish Friendly’s ability to efficiently allocate investments to meet the risk profile of the fund.
Be aware that your cash in value can rise and fall on a daily basis and you could get back less than you have paid in (except for the With-Profits Fund if you cash in on the 10th anniversary of your investment).
Medium expected risk & return funds
- The International Company Bond is linked to a portfolio of bonds issued by companies throughout the world. Your fund’s performance will depend on the credit worthiness of the company bonds purchased by the fund manager. Movement in long term interest rates and currency exchange rates also affect performance.
- The Medium fund is linked to a managed set of assets such as stock market and property which have greater levels of potential risk and return than the Lower Fund. This fund has greater longer term growth potential than the Lower fund but less than that of the Higher fund. The actual risk and return of the fund will depend on Scottish Friendly’s ability to efficiently allocate investments to meet the risk profile of the fund.
Again remember that for both of these funds, your cash in value can fall and rise on a daily basis and you could get back less than you have paid in.
High expected risk & return
All the investment funds below give your money access to the long term growth potential of the UK stock market so largely depend on the movement in the UK stock market.
- The UK Tracker fund is linked to an index of the UK stock market. It is designed to link to well known high street brands and companies such as Marks and Spencer and Sky. The fund’s performance will be mainly dependent on the movement in the UK stock market.
- The Higher fund is linked to assets with emphasis on higher long term expected return assets such as the stock market. This fund contains a higher degree of risk than an investment in the Lower or Medium fund which means that it is likely to experience greater price rises and falls than these funds. The actual risk and return of the fund will depend on Scottish Friendly’s ability to efficiently allocate investments to meet the risk profile of the fund.
- The UK Active fund is linked to an actively managed investment. This means stocks and shares are selected by an expert fund manager who will aim to outperform the market. This fund’s performance will also be dependent on the ability of the fund manager to select stocks and shares that grow.
Again, for these three funds, your cash in value can fall and rise on a daily basis and you could get back less than you have paid in. Tax treatment depends on individual circumstances which could change in the future.
No advice has been provided by Scottish Friendly. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk. Advisers may charge for providing such advice and should confirm any cost beforehand.