Nowadays, more and more people are approaching the investment market. Among the new investors, there are not only young people but also older ones. In any case, when it comes to investing money, such a decision needs to be considered with prudence, since the investments are subject to the market’s fluctuations and volatility. However, today there are several tools to invest in, which may also offer some tax advantages, and they may be or not be suitable for a certain category. Probably, if you are later in age and you are approaching this world, you have been doing some research in order to gather as much information as possible, and you’ve come across retirement plans and ISAs. For instance, maybe have you asked yourself “why put money into an investment ISA for over 60s?” or “does it make sense to start a retirement plan if I am not too far from the pension?” These are two common options among UK citizens, they allow to save or invest money in a tax efficient way. However, depending on your financial situation, age and needs, there are different options to consider, each one with different characteristics from the others.
Make a Plan and Consider Tax-Efficient Options
First thing first, when embarking on an investment journey it is crucial to make a strategy. The financial plan has to be made according to the needs, and risk tolerance of the investor in order to create an accurate portfolio. No matter what the age is, generally everyone who is approaching investments looks for the options which allow to save or invest through tax efficient mediums. Let’s see some of these options available for UK citizens:
Make Your Pension Plan
Starting a retirement plan may be a very good decision. Bear in mind that you can save £40,000 and the government is going to repay the associated tax. If you are considering this alternative, keep in mind that it will take a while before you can withdraw your sum.
Stocks and Shares ISA
When you turn 18, you are eligible to invest up to £20,000 in a Stocks and Shares ISA. Later in life, you may take advantage of this money’s tax-free growth.
Lifetime ISA
For younger people, there is also the option of a Lifetime ISA. Anybody before turning 40 can open this account, and up to £4,000 can be deposited each year until you are 50. Only a first-time house down payment or later-life support may be paid for with this money, but the government will double your credit up to £1,000 annually.
Retirement as Main Goal
Are you thinking about retiring? Are you aware of the pension plan offered by your employer and you worry that it will not be enough to support you once you stop working? There are several options to consider in order to try to create a reliable source of income in the UK for when you retire. Finally, make your own research, consider your overall situation and, in case, ask professionals for help. After taking into account your present and future, you may find a particular product that will be suitable for your finances.
The Risk
Another important factor to consider is the risk you are willing to take when investing. The length of time of your investments is crucial, since it may determine right away the level of risk you can take on. If you want to allocate your money for a short amount of time the products to pick are the ones with the least risk possible, even though they might have lower returns. In this approach, the risk you face should decrease progressively the closer you get to the moment when you want to get your money.
