It’s a good time to think about investment plans
Nov 7 2009 by Iain Laing, The Journal
Alok Dhanda of Dhanda Financial explains the benefits of the Government’s National Savings accounts and talks about alternative investment options
AS WE move towards Christmas and the end of 2009, there is no better time to sit down and review your personal finances. Reflecting on the year and planning for 2010 provides the ideal opportunity to decide on the place to invest some of your hard-earned money for the future.
One very attractive scheme on offer at the moment is the Government's no-risk National Savings and Investments. The schemes are beneficial in offering interest rates of 3.95% on their one-year fixed-rate Guaranteed Growth Bond. It also presents a wonderful opportunity for wary investors who don't want to incur any risk. Savers who take part are protected by the Treasury's unlimited guarantee.
Naturally, this appealing safety net does mean that banks and building societies, with their limited £50,000 guarantee, find it very difficult to compete. Moreover, in a National Savings account, the maximum investment which can be made is a healthy £1m, so this no-risk guaranteed product can reap many rewards. It is definitely worth considering making an investment in this scheme, but make sure you seek the advice of an independent financial adviser to discern the best option for your circumstances.
There are other savings options available of course, such as ISAs. Over 50s can now pay up to £5,100 into a tax-free cash ISA. Those below 50 can pay £3,600 into the account until April next year, when the same changes come into force.
However, those wanting to take slightly more of a risk with their money can consider investing in a stocks and shares ISA, corporate bonds or equity income funds. Similarly, adventurous investors with a higher risk appetite can invest in emerging markets.
Brazil, Russia, India and China (BRIC) are swiftly proving to be the big four openings for investors. Many people are being swayed into investing in these emerging markets as they have a promising outlook for the coming years.
Financial expert Anthony Bolton, the well-known former fund manager at Fidelity, gives his backing to the benefits of investing in emerging markets. He recommends that investors should be looking to increase their portfolios to about 20% exposure and expects the Asian region to continue to be the growth engine for the global economy. China is expected to grow at 9% this year, with India expected to finish slightly behind at 6%.
It is important to remember that although these investments have the potential for a much greater growth rate, they can usually be volatile as well – remember that values can go down as well as up. Although the UK is still trying to ease itself out of recession, there are some very positive signs of recovery. Now is undoubtedly a really good time to start to invest as the FTSE 100 index is currently hovering over the 5000 mark – a far more optimistic figure than we have seen over the last six months! Make the most of investing now to reap the benefits of the next five to 10 years and hopefully you should see some fruitful returns.
However, it is very important that you seek advice from an independent financial adviser who will guide you towards the best financial option for your individual financial circumstances.
Contact Dhanda Financial, 52 Dean Street, Newcastle, NE1 1PG, tel (0191) 255-8960, email alok@ dhandafinancial.com or visit www.dhandafinancial.com.
