Posts Tagged ‘FTSE’
Income needs are a top priority for both savers and investors, evidenced by the increasing number of our existing customers and those new to Fair Investment looking for income solutions. With this in mind, we have put together our Top 10 income ideas for 2015, including fixed income investments, investment funds and other high yield opportunities. We also give you our in-house view of each from Oliver Roylance-Smith, our Head of Savings and Investments and for those who are yet to use their ISA allowance, all are available within an ISA so you could benefit from tax free income.
1. Income best seller – 5.16% fixed income, monthly payments
The Enhanced Income Plan from Investec was our most popular income investment in 2014 and continues to be a best seller. The main appeal is that it offers a fixed income for a fixed term, regardless of the performance of the FTSE 100 Index, so you know exactly how much you will receive, when and for how long. The annual income is currently 5.16% (paid as 0.43% each month) which is high when compared to typical yields currently being paid by equity income funds. Capital is at risk if the FTSE drops by more than 50% during the plan and fails to recover by the end of the term, in which case your initial capital will be reduced by 1% for each 1% fall, so you could lose some or all of your initial investment.
Fair Investment view: “5.16% tax free income (if held in an ISA) is the equivalent of 6.45% taxable income for a basic rate tax payer and 8.60% for a higher rate tax payer. This high level of fixed income and the monthly payment frequency are popular features and with limited options for anyone looking for a fixed income over 5%, this plan offers a competitive balance of risk versus reward that could be considered by both savers and investors”
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2. High yield opportunity – up to 6% income, quarterly payments
The FTSE Contingent Income Plan from Focus (Credit Suisse acting as counterparty) offers the opportunity for up to 6% per year. Your income is dependent on the performance of the FTSE 100 Index and a quarterly payment of 1.50% is made provided the Index at the end of each quarter is at or above 75% of its level at the start of the plan. If the Index is below this level, no income payment will be made for that quarter. Additionally, the plan offers the opportunity to mature early from year 3 onwards returning your original capital plus a final income payment. If the plan runs for the full term you will receive your initial investment back unless the FTSE has fallen by more than 40%, measured at the end of the fixed term only. If it has fallen below this level, capital will be reduced by 1% for each 1% fall and so you could lose some or all of your initial investment.
Fair Investment view: “The ability for the FTSE to fall 25% and investors to still receive 6% income could be an attractive investment proposition in the current climate, especially for those who are looking for income but are not convinced the FTSE can continue to rise. Combined with some capital protection against a falling stock market and this plan is certainly worth a closer look.”
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3. High fixed income – 7.50% fixed income, monthly payments
The FTSE 5 Monthly Income Plan from Meteor (Commerzbank acting as counterparty) offers a fixed income that is paid to you regardless of the performance of the stock market, the current version offering 7.50% annual income, paid as 0.625% each month. This high level of income is in exchange for a higher level of risk as the return of your initial capital is dependent on the performance of five FTSE 100 shares rather the Index as a whole. Should the value of the lowest performing share at the end of the five year term be less than 50% of its value at the start of the plan, your initial capital will be reduced by 1% for each 1% fall, so you could lose some or all of your initial investment.
Fair Investment view: “The fixed income on offer equates to a total return of 37.5% over the term of the investment and has been particularly popular with our ISA investors since if held within an ISA, there is no tax to pay on the income. The plan might also appeal to investors looking for a high level of fixed and regular income however, the fact that the return of your initial capital is based on the performance of five shares rather than the Index as a whole does make this a higher risk investment.”
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With the FTSE recently passing its highest level on record, plans which offer the opportunity for investment level returns if the stock market only goes up a little, or even goes down slightly, may be of interest to many investors. By using your ISA allowance of £15,000 for 2014/2015, you could maximise the tax-free potential of any investment you make while the FTSE is high. Additionally, some investment ISAs allow you to invest next year’s ISA allowance of £15,240 at the same time, offering you the potential to invest up to £30,240 per individual (or £60,480 per couple), tax free.
The end of the tax year is fast approaching, so don’t delay. Applications must be received by us by Wednesday 1st April 2015.
Investments with the ability to mature early
One particular type of fixed term investment which seems to be popular in all kinds of market conditions is the autocall investment or ‘kick out’ as it is more commonly known. These investments have the ability to mature early thereby offering the potential for attractive returns after a relatively short period of time.
Whether the plan kicks out in the future is usually dependent on the FTSE being at a particular level at a particular date, which is then normally referenced to its level at the start of the investment. If it does not meet any of the required levels throughout the investment term, no returns will be paid and your capital may be at risk. The early maturity feature which is unique to these plans brings a new element to the investment opportunity and means that although your longer term view of the FTSE is important, so is your view on the potential for the FTSE year on year.
With the 2015 ISA season in full flight, time is running out to maximise the valuable tax benefit of your ISA allowance before the deadline on 5th April 2015 – otherwise it is gone forever. Many investors will be looking for the opportunity to receive tax-free income from their ISA allowance, which currently stands at £15,000 until the end of the tax year. With the potential to use this entire amount in either a cash or investment ISA, now could be a great time to make the most of tax-free income opportunities for your 2015 ISA allowance as well as looking towards high-income ISA options for the new tax year ahead.
Why seek income from your ISA allowance?
Generating an income is one of the most common goals when it comes to investing, and so the opportunity to receive tax-free income is one that investors will not want to miss out on. As record low interest rates continue, and the returns available from fixed rate bonds remain unappealing, it is understandable why many investors are turning to income generating investment opportunities. Using your ISA allowance allows you to receive all the benefits of this income tax-free, thereby protecting more of your hard-earned capital from the taxman.
Get frequent income payments
There are many options to consider when seeking income from your capital via an ISA, including the level of income offered, degree of risk, and frequency of income payments. Many investment plans offer the option of annual, bi-annual, quarterly payments, but for those seeking regular income, a plan which offers monthly income payments is often the most appealing.
Take advantage of ISA transfers
Another priority at this time of year is to review your ISA transfer options. Make sure that you don’t squander the valuable tax efficient benefits of an ISA by keeping your capital in a poorly performing investment. If you find that your current ISA is no longer paying a competitive rate, most ISAs permit you to transfer existing ISAs to them without charge – although don’t forget to check whether there are any penalties from your existing provider. All of the plans listed below are available for both new ISA investment and ISA transfer.
With the FTSE 100 at its current levels, investors considering their options are often split down the middle – on the one side are those who feel confident that the Index can break through the 7,000 point barrier and keep going, and then there are those on the other side who remain uncertain that the market can continue to rise. With this in mind, we take a look at a newly launched investment plan that aims to cover both eventualities, in order to find out whether this could make for an attractive opportunity in the current investment climate.
Investors looking to gain a broad exposure to the UK stock market often look to investments linked to the performance of the FTSE 100 Index. But with the Index continuing its run at historically high levels, many investors are finding it difficult to decide if now is a good time to invest or not.
For those who think that the market may either stay relatively flat or will go up in the medium term, the FTSE Kick Out Supertracker from Start Point Investments offers investors two opportunities for competitive returns.
According to a number of market analysts, the index of UK’s leading blue chip companies could surge ahead in the short term. With the FTSE 100 Index opening this morning over the 6,700 point mark, what could this mean for our investment decisions? We take a look at what the experts are saying as well as consider some investment options to match your view of what the future could hold.
Citigroup tips FTSE to reach 8,000
The FTSE 100 could be on course to break its previous record high and hit 8,000 points by the end of 2014, according to a bold prediction from market strategists at Citigroup. A recent note by the bank’s analysts, reported in the Telegraph, argues that improving bank balance sheets and stronger corporate earnings, alongside easing fears of a eurozone breakup, will lift investor sentiment towards equities, helping to fuel a strong run in the FTSE 100.
Experts at the bank believe a revival of so-called ‘animal spirits’ within UK company boardrooms will spur a pick-up in merger and acquisition activity and act as further support for share prices helping to push them higher.
Fair Investment Company has launched a new cash management service aimed at those with £100,000+. The service is designed to provide customers with a consistently competitive rate of interest rate while maintaining security for their savings:
- Comparing best buys from across the savings market
- Offering a range of terms – fixed rate, notice and instant
- UK-only institutions providing FSCS peace of mind
- Simple, secure and time-saving
The biggest problem for both savers and investors this ISA season is finding a high enough level of income that could beat inflation and still offer a decent overall return. With the potential for 8% income each year, the Money Builder Deposit Plan from Societe Generale offers the opportunity to do both.
Your return is based on the performance of five FTSE 100 companies rather than the Index itself. Provided all five shares are at or above 95% of their starting levels at the end of each year, you will receive an 8% payment. If one or more shares are below this level, no income will be paid.
If you’re looking for an alternative to low savings rates, then the opportunity to link your returns to the FTSE 100, and then multiply them by 150%, could be a compelling one. Whilst the FTSE 100 is at historically high levels, it can be difficult to know which course to take, but not only does the Growth Deposit Bond from Legal & General offer full capital protection, it also multiplies any growth in the FTSE 100 over the 6 year term by 150% (subject to averaging and a maximum return of 40%).