Types Of Investment

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by: webrepairservice Total views: 19 Word Count: 565

Many people see the value of investing their extra funds in order to increase their wealth. There are so many different types of investment products available that it can be very confusing. Depending on what you are looking to accomplish, certain types of investments may be ideal for you and others would not suit. Here are some of the most common types of investment products and a bit about them.

Individual Savings Account (ISA):
An ISA is a very popular savings vehicle. It grows tax efficiently which is a great benefit. Currently you are allowed to contribute 7,000 pounds each year with a deadline of April 5th. An ISA can be a mixture of stocks, shares, and cash. Individual savings accounts are available for any resident and ordinarily resident who is over 18 years of age. Individuals who are 16-17 years old can contribute to a cash only ISA.

Investment Trusts:
An investment trust is a company that buys and sells shares of other companies. These types of investments allow you to own parts of several different companies without having to purchase those shares individually. It is a medium to long term investment that is usually cheaper than purchasing individual units.

Unit Trusts:
Basically, a unit trust combines your money with a lot of other investors to purchase a wide range of stocks. Unit trusts are really suitable for pretty much anyone. There are different risk levels and the cost to buy in is much less than buying individual stocks. You are liable for taxes on the income you receive.

Open Ended Investment Companies (OEICs):
OEICs are intended to be a medium to long term investment. There is some risk involved as the prices fluctuate. The term open ended refers to the fact that shares are created as investors buy in and then cancelled as the shares are sold. The documents when you purchase OEICs show the initial cost per share and what will be charged to buy and sell shares thereafter.

Endowment Policies:
Endowment policies carry a minimum 10 year period. If you cash it in before this time you will pay early withdrawal penalties. These investments are a savings and life assurance policy that pays out tax free upon maturity or death. There are many different types of endowment policies, so make sure you consider all of your options.

Investment Bonds:
An investment bond is a whole of life policy that you pay for in one lump sum, and it may be taxable depending on your tax rate. Your money is used to buy into funds, but the good thing is that there are usually a lot of funds to choose from. You can invest in a low or high risk fund. Another benefit is that 5% of the funds can be withdrawn tax deferred each year for 20 years. The taxes will be paid when the investment is cashed in.

Annuities:
A conventional annuity is one in which a person pays an insurance company a set amount of money. In return, the insurance company will pay the investor dividends either monthly, quarterly, bi-annually, or annually. The amount paid is determined by your age and life expectancy. Usually, the initial investment is not returnable even upon early death. You can, however, invest in a capital protected annuity which would return the remaining balance upon death.

About the Author

Mansion House Securities, at http://www.mansionhousesecurities.co.uk/, is a London based Investment House providing unique access to high growth business investment opportunities.

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