Investing In Gold: 5 Clear Advantages

Treat yourself to Physical Gold

When income is not a requirement but long term stability and growth is the aim, Gold is an attractive and simple investment tool that has a strong reputation for building a consistent foundation on which to build a portfolio of investments.

Gold is the basis of our entire financial structure and provides a safe haven, whether Governments or retail investors. When the stock market is particularly turbulent and economies are faltering, Gold is the investment of choice.

As a limited commodity, Gold is continuously in high demand, creating a value to the commodity which is forecast for growth both in the short and long term.

Stability Of Investment

As the global reserve currency, Gold is always going to have an inherent value which means that any direct investment in the physical product will create a tangible commodity that maintains its structural worth and creates a viable safe-haven for those that continue to choose to invest in it.

As we move into times of economic uncertainty, investment in such a stable commodity acts as a buffer against the ravages of inflation and global market events to create a more certain opportunity for growth than a high proportion of other more liquid forms of venture.

Tax Relief

When investing in certain gold coins, there is no demand to pay either VAT on the purchase or Capital Gains Tax (CGT) on any growth within the portfolio.

This offers significant savings for tax payers, especially those that are liable for a higher rate in the UK, and makes the investment in Gold even more attractive.

Though coins are ineligible for pension investment which means pension holders cannot take advantage of VAT and CGT benefits, the up to 40% tax relief that is available within a pension acquisition does ensure a discounted rate for the gold purchased or enable a greater quantity of gold to be bought for the same price.

Direct Ownership

Whether coins or gold bars are chosen, when capital is placed into physical gold the investor himself becomes the legal owner of the asset.

The gold can then be stored on the owner's behalf or alternatively cash investors are able to take physical ownership of their asset whenever they so wish.

This creates a certainty of wealth in the investment that is simply not possible with so many other alternative ventures.

Infinite Term

The term of any investment in gold is also purely down to the financial decisions made by the investor himself.

The asset can be sold at any point in time either privately or back to the gold broker in question. This means that any cash investor can place their wealth into gold when interest rates are low and then liquidate their asset when they so wish or at a point in time when they feel their investment has reached an expected level of growth.

Flexible Investment

An investment of this type requires no minimum level of capital and can be extended to a substantial level. Furthermore, cash investments can be made directly into gold, or gold bars can be bought within both a SIPP and SASS pension to create wealth for retirement and stable growth for the future.

For further information on how to purchase gold, contact Silvinvest by booking a product enquiry appointment top right of page.

A Simple Guide to UK SIPP's

A Simple Guide to UK SIPP's

This is a brief summary of the main rules of Self Invested Personal Pension and therefore will not cover every nuance or seek to apply to each individual. The information contained does not constitute advice and any questions arising should be discussed with a suitably qualified Financial Adviser. The thresholds and allowances are based on information and rules presently in force (Sept 2012).

Self Invested Personal Pensions (SIPP's) are, as stated, a form of Personal Pension available to UK residents. Generally, a SIPP is used by people who are comfortable making their own investment decisions. Unlike a conventional Personal Pension it allows you to invest in a wide range of different investments, including funds, shares, cash, alternatives and certain types of property.

Benefits can be accessed from age 55 and a tax free lump sum of 25% of the pensions value is available with the rest providing a taxable income. Benefits from a pension must be taken at age 75.

In most cases, annual contributions can match annual earned income. A £50,000 annual limit (2012/13) and a £1.5 million lifetime allowance also apply. On occasion, these limits can be affected by other factors. Carry forward (unused annual allowance from previous years) can ibe used to contribute more than the £50,000 annual allowance. Each new contribution made will apply   to the annual allowance within the tax year it is made (6th Apr - 5th Apr).

Tax relief is available to every eligible person. 20% of contributions are paid by the Government as basic tax relief. Higher rate taxpayers can claim a further 20%back directly via their local tax office and additional rate taxpayers can claim up to 30% (based on 2012-13 guidelines).

Non-earners or those earning less than £3,600 a year can contribute up to £3,600 gross per year (£2,880 net) each tax year and receive tax relief at 20%.

The potential advantages to having a SIPP arrangement can be :

Control: The greater control and flexibility to change contributions and investment direction

Choice: Diversify into your choice of investment and at levels you require.

Admin: All of your pension funds and investments can be held within one place.

Transferring existing pension plans into a SIPP is available. Many people have preserved pensions that have value with numerous providers. This can be from previous Employer Schemes, Final Salary Schemes, Stakeholder Pensions and SERPS. Many people think that the transfer process from personal pensions into a SIPP can be a nightmare but in effect it can be easy. That is not to say it is the right thing to do but if it is then the process is efficient.

Should you decide to transfer pensions, ensure that you understand how the transfer will be made. The vast majority of cases will transfer into the SIPP as Cash. Whilst you are deciding where the cash should be invested you will be outside of an investment and therefore not receiving returns. If seeking investment, remember that you can choose to invest across different investments and not just a single fund. This allows for diversification.

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What Are The Potential Benefits of a UK Self Invested Personal Pension (SIPP)?

Before discussing the potential benefits of a Sipp, it is worth briefly describing when Sipp's came into being and who are eligible to have a Sipp.

Self invested personal pensions started in 1999 as a product available to UK consumers. The Self-Invested Personal Pension (SIPP) is essentially a pension wrapper that is capable of holding investments and providing you with tax efficient savings for when you retire. As a form of personal pension scheme they differ in several ways from a standard Personal Pension product. Presently, there are over 600,000 SIPPS in force in the UK. Anyone is eligible to have one, even Children can benefit from receiving Tax Relief.

The benefits of a Sipp highlight the main differences when compared to a Standard Personal Pension.

SIPP Benefits: Children

A Sipp is held in Trust and forms part of Estate upon death so in effect any residual fund value in retirement can be left to your beneficiaries, on death. Personal Pension plans finish on death in retirement and the Annuity provider (Insurance Company) benefits from the pension finishing.

Nomination of Beneficiaries can take place when applying for a Sipp and can be changed if needed by altering the trust form.

SIPP Benefits: Cash

25% Cash Lump sum can be taken from the age of 55. Though this also applies to Personal Pensions, it does not apply to most Final Salary schemes which are taken from 60-65 years of age. However, a major difference when compared to a standard Personal Pension is once a lump sum has been taken, a SIPP allows the remaining fund to remain invested. What this means in effect is the remaining fund can continue to grow and provide increased retirement benefits going forward.

The level of income taken is also flexible so allowing greater choice. This is a really big difference that can benefit a retired person. Standard personal pension funds have to purchase an annuity and set conditions on how much income will be received in retirement and annuity rates are correlated against interest rates. Therefore, if retiring in an era of low interest rates this can have a massive effect on income received.

SIPP Benefits: Control

Most pension funds are correlated which means they are linked to the stock market. In recent times this has meant volatility and reduced returns. A dear friend of mine has recently received his annual statement and having paid in £1,500 gross over the last 12 months has seen his investment worth £592 taking into account charges and performance. The funds invested within are not high risk, just the general funds made available for pension investing.

A SIPP offers control over investments. Most alternative investments offer potential for higher growth than other "Standard Products". Though generally deemed high risk, investment returns are the single most important aspect of pension planning. The alternative to low returns is to pay greater contributions.

SIPP Benefits: Charges

Most people are not fully aware of the charges levied against their pension. With a SIPP the charges are transparent, with fixed costs and highlighted on annual statements. Charges against a SIPP can be seen to be high when applied to a small pension fund (<£20,000) but competitive when applied to a decent pension fund value (>£30,000+).

It is worth considering alternatives to standard pension products especially if you are concerned with the amount of contributions you would be required to make to achieve a reasonable pension pot prior to retirement. Preserved or Frozen pensions can be used to fund a SIPP and countless people have pensions from previous employers or previous personal pensions that are not working hard enough to achieve a retirement aim. Existing Personal pensions plans can also be used to fund a SIPP compliant investment.

Here at Silvinvest we can offer, via our partner firms, a free full pension review. We can also make you aware of how to track an old pension if you have lost track of any plans. Contact details can be found on our website.

Lastly, it is worth looking at the DirectGov site and take a look at the pension credit facility. This will allow you to gauge how much you are likely to receive at retirement from your own pensions and benefits provided by the UK Government.

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How Long-Term Investments Can Benefit You

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In uncertain times, with markets usually volatile, it is tempting to make long-term investments and hope to ride out any economic storms.

There are advantages and disadvantages to all types of investment terms so what are the specific benefits of Long-Term investments.

The most obvious benefit of long-term investing is compounding. This is the effect of dividends or interest being reinvested to achieve sustained Capital Growth.

If investing on a regular basis, this equates to cost averaging. This means that you may purchase shares or units monthly, for example, the cost of the units will differ short-term but as long as the overall investment increases long-term then any troughs or peaks are smoothed.

What about a lump sum long-term investment?

In this instance you are hoping that the investment increases over the long run to achieve capital growth or any income derived will outweigh capital depreciation. However, what if the investment actually grew over the long term, GUARANTEED.

If you think about it how many investments can you think of that physically grow and offers huge demand and markets.

For a long-term and stable investment, you couldn’t do much better than an investment in Timber. While many investments have been very difficult to predict returns, timber remains a solid investment opportunity for the savvy investor. The return on investment figures for the last forty years shows timber comes out as a top performer when measured against many other asset classes.

So how does a forestry investment work?

Usually, an investor will commit a lump sum. This will purchase saplings, fund the land lease, pay commissions and forester/management fees. The saplings are planted and they start to grow. Initially, the saplings are worth very little but as time passes the young trees start to gain in value due to growth. Weaker trees will be harvested and sold to allow the stronger trees to become more established. Usually, this first harvest will happen within the first five years. The income the harvested trees return will be passed to the investor as an income payment. The remaining trees continue to grow and all the time they increase in value. Further harvests will take place until the investor is left with high value, strong mature trees.

Please allow me to take you through a scenario. For example, an investor initially purchased 600 saplings. After year 4, 300 trees are harvested (assuming a return of £5000 in income). After year 8 a further 105 trees are harvested (assuming a return of £15,000 in income). After year 10 a further 68 trees are harvested (assuming a return of £20,000 in income). To this point it is assumed £40,000 has been returned in income.

For argument sake, lets me make the calculated assumption that a mature Melina tree (Gmelina Arborea) is currently worth £250 each and over a 12 year cycle the price increased by 5% per annum compounded, a mature Melina tree would be worth £453 approximately.

Therefore, 127 trees would remain after 12 years and harvested. Assumed returns would be 127 X £453 = £57,531. On this basis the overall return would be £97,531 for an initial investment of… £18,000.

Now what if I was to inform you Gmelina Trees in Costa Rica have risen in value 2005-11 on average 17.83% per annum.

As a long-term investment option, various bodies predict strong growth for the timber industry and for the foreseeable future. In the UK alone we use 50% more natural resources per person than what nature can replenish. When you weigh-up the long-term nature of timber an investment today is an interesting option to help secure your financial future.

Alternatively, if you are looking for UK Pension investment or a home for an existing pension, forestry may just provide the returns you need to start in building your financial security for the later years in your life.

Whatever way you look at it, investment in timber is a solid financial choice.

Always seek advice from a qualified professional before committing to an investment.

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Pay As You Grow

Pay As You Grow is a saving fund for toddlers and children. It is directed at parents or grandparent’s who want to invest money for their children or grandchildren (legal guardians can also contribute). Since most saving accounts’ interest pays a pittance, finding a growth investment makes perfect sense.

Why Invest For Your Child’s Future Benefit?

Well, think of rising university tuition fees. According to BBC, at 2010 tuition levels, a student may well end up with a staggering £25,000 debt. Now, imagine the amount of debt going forward as new university tuition fees massively increase from 2012 onwards. Should you have more than one child, the potential financial burden is huge for any normal professional working family.

Another reason to save and invest an amount of money every year is many parents would like their children to be able to get on the property ladder. Currently, the average first time buyer age is 37 and this could possibly increase in future years. Until, as adults, they are able to pay off their mortgage, most of today’s young people will face retirement without any significant savings. Couple this with the fact that most of us live longer lives which will need to be funded from an ever stretching retirement pot, and you get a very clear picture of your offspring’s future.

What is Pay As You Grow?

Pay As You Grow is an investment in teak wood forestry plantations. What the investment basically does is fund the planting and growing of teak tress. In other words, it is a commodity investment. Investment in teak wood and forestry plantations has been, until more recently, the preserve of big investment funds.

Teak wood is the wood of choice for many Asians as it symbolizes quality and durability. Actually, teak is one of the most valuable of hardwoods because it can be used in construction, furniture, and marine applications. This makes it a price full commodity which has been producing fantastic returns every year for the last thirty years.

The way Pay As You Grow works is to plant teak wood trees and let them grow for 25 years and then harvest them and reap the financial benefit Also, a massive plus is the investment has come from a sustainable source and relieves the pressure somewhat on the long-standing and protected natural teak forests from illegal logging. Timber is a massive industry which ranks below only oil and gas in its size. Timber has uses in so many ways, just look around and see. Annually we use 50% more timber based products than what nature can provide.

All you need to do to take advantage of this opportunity is to invest a minimum sum of £3,600 in your child’s name. Your child in return gets allocated 50 teak trees and sublease agreement for the land on which they stand. You can include the investment into a Self Invested Personal Pension (SIPP) in your child’s name and receive 20 percent tax relief. Though, bear in mind that this option has some small annual administration costs. If investing via a SIPP, under current rules your child would not have access to returns until age 55 but can obviously reinvest returns from Pay As You Grow after year 25. This really does go a long way to providing considerable funds for when your child enters retirement.

If investing cash, the returns will go a long way towards paying university debt or used as a deposit on a house, for example.

Here at www.silvinvest.co.uk we host a Sales Brochure in our registered members area. The brochure also outlines various important and fun benefits to an investment. Just pop in your name and email address and you will have full access to the relevant documents. If you feel you would like to discuss the investment further, we have consultants available to deal with your queries and help with applications. Call on 0151 420 1765 for further informationwww.silvinvest.co.uk/articles