Investment advice

Although the idea of investing to provide for future financial security is gaining wider acceptance, for the would-be investor, finding the most appropriate investment can be a daunting prospect.

There is a whole range of opportunities open to the investor wishing to generate capital growth or extra income from their capital.

All the forms of investment open to UK investors can, broadly speaking, be split into two main categories – direct investments, such as stocks & shares, or collective investment schemes.

Direct investment, for the majority of UK investors, generally means shares or bonds or gilts. Although the spread of share ownership has widened considerably in Britain since the early 1980s, and with it public awareness of what share ownership means, there are potential pitfalls of direct share investment for the individual investor. Any company is at the mercy of conditions in its own particular business sector, and even companies in generally profitable sectors can fall victim to bad times. Correctly identifying which companies to invest in is therefore vital for direct share investment. Warning against putting all your eggs in one basket may seem a little obvious, but relevant in this context.

Potential investors often find the prospect of constantly keeping tabs on their share portfolio too daunting and for this reason, many opt to take their first step into these markets via collective investment schemes rather than direct stocks and shares investment.

Direct investment in shares is conducted through stockbrokers who will buy or sell shares on your behalf for a commission. The shares which offer the greatest potential for high returns may also present the greatest risk to your capital. So unless you intend to invest directly in a broad range of stocks and shares, you should probably consider a collective investment scheme instead.

Collective investments can be bought directly from the provider of the fund but it is really worthwhile to discuss your options with an Independent Financial Adviser (IFA). An IFA will consider your individual circumstances and make recommendations specific to you. An IFA can help establish what level of risk you should take with your investments and is also in a position to consider the range of different collective investment types there are on the market from all providers.

It makes sense to take advantage of all the existing tax allowances, such as an Individual Savings Account (ISA) and an IFA will be able to help you do this.

Whatever the nature of the investments you are considering the starting points should be the same. An Independent Financial Adviser will be able to help you identify the type of vehicle best suited to your needs, based on your own preferred balance between risk and return.

Optimum Independent Financial Advisers can advise on all types of investment. Please use our online contact form or other contact details if you would like to discuss your investment options with an adviser.