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Wednesday, 20 March 2013 09:43


Capital sums for investing are acquired in many ways. These include inheritance, maturing savings policies, windfalls and proceeds from many years of saving. Investment types & requirements can be divided into short and long term needs.

Short term investment needs

These include saving for a car or a holiday. The most suitable investment type is usually a deposit account such as a bank or building society account.

Long term investment needs

These can be saving for retirement, school fees or providing capital for children as they grow up. You may wish to consider savings other than bank deposit accounts for longer term needs.

Whatever the investment type, you'll need to consider a number of important factors including ease of access to funds, charges and any tax implications,

Wednesday, 20 March 2013 09:43


Whether you would like to plan for your retirement, secure your house or protect your family, employing a good financial adviser can take the uncertainties away from you and move it into the hands of a specialist.

The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK.

Please note:
•That the above rates may not be available or suitable to all customers as lending criteria is dependent upon your individual circumstances.
•That the above rates may become out of date at short notice and may not be available at the point of enquiry.
•That the page may not contain all the information needed to make a decision and you should seek independent advice.

For Residential mortgages we do not normally charge a fee as we are usually paid commission by the lender. However, you have the option to pay us a fee if you prefer and receive any commission which we are paid by the lender. If you choose this option, we estimate that the fee will be £350.

For Equity Release/Lifetime Mortgages an initial fee of £500 for arranging the scheme is payable at outset. A further 1.5% of the loan amount is payable when monies are offered to you; for example if you release £100,000 from your home you will need to pay a further £1,500 (1.5% x £100,000) subject to a minimum of £750. Any commission received from the product provider upon completion will be retained. You will receive a key facts illustration when considering a lifetime mortgage, which will tell you about any fees relating to it.

Tuesday, 19 March 2013 08:57

Annuities explained

What is it?

A lifetime annuity pays a guaranteed income for your life from the funds you have built up in your pension plan. Your annuity provider will pay you a regular income taxed in the same way as earnings. The amount of income payable is dependent on your age and health, the size of your pension fund, economic factors, the type of annuity and the options you select. You should also be aware that once you have purchased an annuity you cannot cash it in or make changes to your selected options.

Annuity options include:

Single-life or joint-life - A joint life last survivor annuity pays out until the second life dies. It is possible for the annuity to continue at the same level to a survivor but most couples elect for a survivor’s income of between 1/3rd and 2/3rds of the original amount. It is not necessary for a couple to be husband and wife and any person of either sex may be eligible for a survivor’s pension, although it may be necessary in such circumstances to show financial dependency (the rules on who can be paid a survivor’s pension were relaxed from 6th April 2015 although annuity providers will have their own restrictions in place). With some pension schemes a spouse’s pension must be provided. The higher the level of survivor’s pension included, the lower the starting income will be.

Frequency of Income - You may select at the outset how often you want to receive your income payments. Most people choose monthly, but you can be paid quarterly, half-yearly or annually.

Income paid in advance or in arrears - Payments can be made either in advance or arrears. If you opt for monthly income and purchase your annuity on 1st January and you receive your payment on that day, you are being paid in advance. If your first payment is not made until 1st February, you are being paid in arrears. Payments made annually in arrears would give the highest income figure but the first payment would not be received until a year after annuity purchase.

With Or Without Proportion - When you die, an annuity with proportion will pay a proportionate amount to cover the period from the last payment until the date of death. This is most valuable when income payments are made on an annual basis. This option is only available for payments made in arrears. Without proportion represents the cheaper option.

Level, Escalating or Decreasing - A level annuity pays the same amount of income year after year. It pays a higher income compared to the initial starting income available under an escalating annuity, which will take a number of years to catch up and exceed a level annuity. An escalating annuity, on the other hand, is designed to increase each year. The greater the level of escalation chosen, the lower the initial income will be. It is possible to select a fixed rate of increase each year normally in the range of 3% to 8.5%. Alternatively, you can choose to link increases to reflect changes in the Retail Prices Index (RPI) - however, your income is not guaranteed to increase each year as the RPI may not rise and if it did fall, so might your income. Some annuities arising from occupational pension schemes can also escalate by Limited Price Indexation (LPI). LPI means your income increases each year in line with the RPI but only up to a maximum of 5% or 2.5% depending when the pension was earned. It is also now possible to purchase an annuity that has the facility to be decreased.

A guarantee period - If you select a guarantee period and you die within the period chosen, payments will continue for the balance of time remaining. Normally the guarantee period will be either 5 or 10 years although providers are free to offer their own choice of guarantee periods as there is no longer a maximum period set by the government. Remaining instalments would be paid as an income to the nominated beneficiary and would be tax free if you die before age 75 and subject to income tax at the beneficiary’s marginal rate(s) if you die after age 75. The longer the guarantee period, the more costly the option is.

Annuity protection lump sum death benefit - This option allows for a return on death equal to the difference between the cost of annuity purchase and the gross income payments received. If you die before age 75 the payment to your beneficiaries will be tax free and if you die aged 75 or over it will be taxed at the beneficiary’s own income tax rate(s).


  • - You must be aged 55 or over or, if younger, meet ill-health conditions.
  • - The annuity must be purchased using funds from your uncrystallised rights held in a money purchase pension or from drawdown funds.

Some annuity providers offer annuities which pay you a higher than normal income if you have a medical condition(s) which can affect your normal life expectancy. These are called impaired life annuities.

An enhanced annuity may be available if you smoke regularly, are overweight, if you have followed a particular type of occupation or live in certain parts of the country.

Tuesday, 19 March 2013 08:57

Endownment policies explained

An endowment policy is a savings and life assurance policy for an agreed period, the minimum term being 10 years. A tax free benefit is normally paid out at maturity or on earlier death.

The policyholder may sell the policy in the traded endowment market, as an alternative to surrender before the end of the term, although this must be carefully considered as financial penalties will often apply.

There are charges on all endowment policies and the Key Features document from endowment providers will explain these.

Early surrender will usually incur further charges from the provider.

Endowment policy types

Types of endowment policies include With profits, low cost, unit linked, low start, flexi endowment, and friendly society plans. Please click on the links below for more details.

If you withdraw from this type of investment in the early years you may not get back the amount invested.

With profits endowment policy

With profits endowment policies are normally enhanced with regular bonus payments. Bonuses are added to the sum assured and once added can be withdrawn at certain times. Please follow links below for more information.

Bonuses may be added annually (known as the reversionary bonus) and at the end of the term (a terminal bonus) depending on investment performance.

Low cost endowment

Low cost endowment policies were invented by insurance companies to reduce the cost of the with profits policy, and provide a means of paying back an 'interest only mortgage.'

It is a combination of a with profits endowment policy and decreasing term assurance (to ensure the capital sum borrowed is repaid in the event of death).

Bonuses are added to the endowment sum assured with the intention that there should be sufficient cover to repay ,say, a mortgage at the end of the period. Low cost endowment policies are not guaranteed and maturity levels depend on investment performance.

Low start endowment

Low start endowment policies were Introduced to help young 'first time house buyers'. Low start endowments are another type of with profits policy where bonuses are added to the endowment sum assured. The level of cover is the same as the low cost endowment, but premiums start at a lower level and then increase at a set percentage for five years. The eventual premium is higher than the level premium under a low cost endowment policy.

Unit linked endowment policies

Premiums buy units in a fund of the investor's choice. Units will be cancelled each month to buy life cover. There is investment flexibility as funds can be switched.

Units will be purchased at the offer price and sold at the bid price (usually lower) incurring a bid offer spread charge of around 5%. Set up costs will be taken off the fund value.

Flexi endowment

A policy is written say for a total term, say to the age of 65, with options to encash after 10 years without penalty. The policies are usually written in segments to allow some to be encashed and some to be continued. This may be suitable for school fees planning.

Friendly society plans

Friendly society funds enjoy favourable tax treatment and are tax -free to the investor.

Level and bases of, and reliefs from taxation are subject to change.

Tuesday, 19 March 2013 08:57


Open ended investment companies were introduced into the UK in 1997, from Europe.

Open-ended means shares in the fund will be created as investors invest and cancelled as they cash in. Closed-ended funds like investment trusts have a fixed number of shares to be bought and sold.

OEICs have a structure somewhere between an investment trust and a unit trust.

A single price is quoted for OEIC shares, and a levy shows the cost of buying and selling the shares. This is shown on investment documentation along with the:

      gross amount invested; 

      initial charge;

      net amount used to buy shares.

OEICs are intended as a medium to long term investment. Because this investment may go down in value as well as up, you may not get back the amount invested.

Please contact us for more information on Open Ended Investment Companies.

Tuesday, 19 March 2013 08:57

Unit Trusts

A unit trust reduces your risk of investing in the stock market by pooling your savings with thousands of others, and then spreading the money across a wide range of shares or other types of investment.
Unit trusts are also cost effective, charging a fraction of what it would cost you to invest in a broad basket of shares by yourself. The beauty of unit trusts is that professional fund managers are employed to look after your money.

Unit Trust Performance

So what is a unit trust and what are the risks?
By diversifying your investment, a unit trust will spread the risk automatically. You could therefore benefit from stock market returns without limiting your investment to a small number of companies.
Whatever your objective, income now, income later, a growing income or building up a large investment, a suitable unit trust can be found. There are many unit trust plans available, and we can find a unit trust to meet your risk profile. Please contact us for further information

Unit Trusts & Income Tax

Income from unit trusts is liable to income tax and capital gains are potentially liable to capital gains tax if personal allowances and reliefs are exceeded.
Tuesday, 19 March 2013 08:57

Investment Bonds

An investment bond is in fact a whole of life policy usually paid for with a lump sum or single premium.

Proceeds can be taxable if the investor is a higher rate taxpayer and may also be taxable for lower rate taxpayers.

The money invested is used to buy units in a selected fund. Most insurance companies offer a wide range of funds from low to high risk.

Investment Bond Special features

5% of the original investment can be withdrawn each year for 20 years (until entire capital is returned), deferring taxation until final encashment. The main Advantages of an investment bond are given below.

  • a packaged investment for growth;
  • can take income by cashing in units;
  • simple to operate;
  • wide range of geographical funds available.

Types of investment bond include With profits, distribution, guaranteed growth and unit linked.

These are intended as a medium to long term investment. If you withdraw from this investment in the early years you may not get back the amount invested.

With profits bonds

With profits bonds tend to be very popular with the more conservative investors as returns are smoothed. The underlying investment funds usually consist of a balanced portfolio of UK investments, overseas equities, fixed interest stock, cash deposits and sometimes property.

Annual bonuses are usually added to the policy, but there is no guarantee of the bonus rate from year to year. This depends on the performance of the underlying investments within the bond and the level of smoothing adopted by the life company.

Part of the with profits fund growth is held on reserve - the balance is declared as a bonus. Using reserves allows a 'smoothing out' of performance.

The with profit bonus rate may not look very competitive in years of good stock market returns, however the reverse is generally true when stock market returns are poorer. There is also a bonus payable on maturity known as the terminal bonus although this is not guaranteed.

Distribution bonds

These provide income and the underlying investment fund tends to be invested in income producing assets. This type of fund is useful for the investor taking withdrawals from a bond, as interest or dividend is taken rather than original capital.

Guaranteed income and growth bonds - Income bonds offer a regular, annual or monthly payment at a guaranteed rate for a fixed term. At the end of the term the original investment is returned.

The guaranteed growth bond, as its name implies, offers guaranteed growth on capital at the end of a fixed term say five years. These types of bonds should not be used if you are at all likely to cash in early.

Surrender values are often not available and if they are given they will result in a lower yield than the guaranteed rate. Some guaranteed growth and income bonds are written as single premium endowment policies.

Stock market bonds

These products allow exposure to the stockmarket, and generally offer the greater of the return of the capital invested or the performance in the FT-SE or other stockmarket index over a given time period.

This is intended as medium to long term investment. If you withdraw from this investment in the early years you may not get back the amount invested.

Tuesday, 19 March 2013 08:57

Investments Trusts

Investment Trusts are companies that buy and sell shares in other companies.
When you invest in an investment trust company, you become a shareholder of that company. Your shares will rise and fall in value according to supply and demand for the shares.
Investment trusts enable you to spread risk by investing in numerous other companies - without the hassle of having to buy, monitor and sell shares individually.

Investment Trusts and Shares

You can have shares in as many different trusts as you like.
The investor is taxed as for any other share - Dividends are received with a tax credit of 10%. Non-taxpayers cannot reclaim this tax. Lower rate and basic rate tax payers have no further liability. Higher rate taxpayers are liable to a further 22.5% on the grossed up dividend.
Charges include a bid/offer spread of around 5% for buying and selling shares and a management charge of between 0.3% and 0.5% per annum. The overall charges of an investment trust are generally cheaper than a unit trust.
These are intended as a medium to long term investment.
You are not certain to make a profit, you may lose money / make a loss.
Level and bases of, and reliefs from taxation are subject to change.
Thursday, 05 January 2012 09:30

Your Modules

Your site has some commonly used modules already preconfigured. These include:

  • Blog roll. which lets you link to other blogs. We've put in two examples, but you'll want to change them. When you are logged in, click on edit blog roll to update this.
  • Most Read Posts which lists articles based on the number of times they have been read.
  • Older Articles which lists out articles by month. 
  • Syndicate which allows your readers to read your posts in a news reader.

Each of these modules has many options which you can experiment with in the Module Manager in your site Administrator. Joomla! also includes many other modules you can incorporate in your site. As you develop your site you may want to add more module that you can find at the Joomla Extensions Directory.

*Please note we have updated our email address and trading style to LenRose Wealth Management but still under Active Financial Partners Ltd and part of the Harwood Wealth Management Group PLC.

The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK.

Jonathan Hales

Independant Financial Advisor

This email address is being protected from spambots. You need JavaScript enabled to view it.

T: 01795 477744

M: 07886 516087