A look at innovative investment ideas
It may be that recently you have managed to clear down your mortgage, maybe you have inherited some extra money, or perhaps you are just feeling more pro-risk as you get closer to retirement. Either way, any surplus cash each month, after clearing regular debts such as loans and credit cards, should be invested wisely.
The financial landscape is always changing
With an ever-changing financial landscape, it isn’t easy to stay on top of the latest investment options, and these are generally testing times for investors – finding the right combination of assets to provide a decent return over the coming year is a challenge.
At Dental & Medical Financial Services we continually research the market to ensure you have the best guidance on how to best invest.
With interest rates set to remain low for potentially longer than expected, sluggish growth in investment portfolios is a possibility for the next year.
Globally, many of the big investment sectors and asset classes are looking unattractive right now, and whilst this doesn’t mean they won’t pick up in 2016, diversification of investments will be key in the coming months.
‘The key to success over the coming 12 months will be choosing your investments with real care’ Nick Samouilhan, Aviva Investors
How to invest your money this year
Global equities are still a key consideration for investors, however, industry experts do have some concerns about the future of this market, and so are generally coupling these investments with other asset classes such as commercial property, fixed interest, corporate bonds and absolute return funds.
There are significant pros and cons with each investment, so a balanced exposure is considered sensible to avoid excess risk.
Fixed interest investments are somewhat an expensive choice, and could come under pressure if interest rates rise considerably. Some investors using fixed-interest investments as a means of portfolio protection could find the adverse effect if anything unusual or unpredicted happens with the interest rate.
Then there are emerging markets, which some more pro-risk investors are opting for as a longer-term investment, despite the expectation that they are likely to fall further before they rise again. However, some are proving a bargain-buy right now, it all depends on your expectations, your appetite for risk and the length of time in which you need a return.
Buy-to-let property investments
Buy-to-let has been given a proverbial punch in the face lately with several changes in legislation.
First the increase in Stamp Duty Land Tax (SDLT) from April 2016 that will add significant costs to a property investment transaction.
Then there is the reduced tax relief on mortgage interest, which could further deter potential landlords from investing their money in rental property.
Of course, there will still be those who find an opportunity to invest in property and have to suck up the extra costs in the hope that their return will eventually pay off.
If property investment is on your agenda for 2016, then act before 1 April to avoid the extra SDLT.
Or consider commercial property investment, and global real estate is also getting noticed too.
Low risk ISAs, JISAs and pensions
ISAs and JISAs continue to be an essential part of investment planning, although returns are low due to the low interest rates, they are tax-efficient way to keep money for a rainy day.
Most doctors and dentists will utilise their ISA allowance and many contribute to a JISA for their children’s future too.
Investing into a Self-Invested Pension Plan (SIPP) is also still very much part of retirement planning and it isn’t uncommon for people to invest excess cash into a pension fund to see their retirement pot grow faster and larger.
Bespoke investment planning
As with most things financial, bespoke advice is of the highest value. A financial adviser can take into account yours and your family’s specific circumstances and make an investment work towards your combined short and long-term goals.
Maybe your child is going to university and investing in a student house could be profitable. Or, maybe another child is struggling to get onto the property ladder so you can act as an official “bank of mum and dad” by earning interest for your input, at a higher rate than an ISA or investment.
Sometimes there is a win-win to uncover!
Points to remember when investing:
- Do you need to be able to access the original funds in the short, medium and long term?
- How quickly do you need a return on any investment?
- How tax-efficient can we be with the suggested investment?
- How prepared you are to take risks (your risk tolerance)
- How sensitive you are to fluctuations in investment values (your capacity for loss)
Dental & Medical Financial Services can help. Call Darren to discuss your 2016 investments and get started today in building your wealth.