The recent volatility of global markets has tested the nerves of even the most experienced investors, making it a difficult time for individuals who rely on income from investments for some or all of their needs.
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Pooled investments
If you require your money to provide the potential for capital growth or income, or a combination of both, provided you are willing to accept an element of risk pooled investments could just be the solution you are looking for. A pooled investment allows you to invest in a large, professionally managed portfolio of assets with many other investors. As a result of this, the risk is reduced due to the wider spread of investments in the portfolio.
Spreading risk in your portfolio
One of the principal tenets of spreading risk in your portfolio is to diversify your investments whatever the time of year. Diversification is the process of investing in areas that have little or no relation to each other. This is called a ‘low correlation’.
Diversification helps lessen what’s known as ‘unsystematic risk’, such as reductions in the value of certain investment sectors, regions or asset types in general. But there are some events and risks that diversification cannot help with – these are referred to as ‘systemic risks’. These include interest rates, inflation, wars and recession. This is important to remember when building your portfolio.
7 steps to surviving investment volatility
Many investors may have had a roller-coaster ride recently. Fallout from the eurozone crisis has created the most turbulent period in world stock markets since the downturn began in 2008. However, amid all this gloom there is some good news. The simple truth is that volatility is a fact of investing life; you’re often better served staying in the markets over the long term than pulling out. Here’s why, and how, you can do it.
Maximise the lifetime income from your pension at retirement
Why shopping around for an annuity could increase your income
Thousands of people could end up with bigger pensions as new rules will force insurers to inform customers about better annuity options. The Association of British Insurers’ (ABI) new code of conduct forces insurers to give more information about how consumers can ‘shop around’ for a better deal, while ensuring that those with health problems receive a higher income as a result.
The critical factor
Providing financial security at an emotional and difficult time
It’s easy to think “it won’t happen to me,” but if the worst should happen, your critical illness insurance could help provide financial security at an emotional and difficult time. Whether it helps pay off your mortgage, funds a relaxing holiday to recover from treatment, or just help you cope with the bills and expenses, the lump sum pay-out from critical illness insurance cover could relieve worries and let you concentrate on getting better.
Shelter up to £11,280 from the tax man this tax year
ISA limits will now increase each year in line with the increase in CPI
The need for long-term care and how it should be paid for is arguably one of the greatest causes for concern among our growing elderly population. Almost half a million people are now in residential care homes, nursing homes and long stay hospitals.
Venture Capital Trusts raise £330 million
Fundraising levels sixth highest since launch
Figures published by the Association of Investment Companies (AIC) show that £330 million (value of new shares issued), was raised by the Venture Capital Trust (VCT) sector during the 2011/2012 tax year compared to £365 million in the 2010/11 tax year and the sixth highest amount since VCTs were first launched in 1995.
Unexpected increase to tax-free cash allowance
Good news for some occupational pension scheme members
In amongst the technical papers issued by HM Revenue & Customs (HMRC) on the back of the Budget 2012 changes, Skandia has discovered a hidden gem. An alteration in the formula for calculating tax-free cash for pre 6 April 2006 (A-Day) members of occupational pension schemes could lead to people receiving more tax-free cash when they retire.
Mind the gap
Britons want £7,000 extra income to be comfortable
Britons face an income gap of £411 per month between their current net income and what they feel would allow them to live comfortably, according to a new report from Aviva. The Times of our Lives report1 found that this additional desired income would be equivalent to an extra £7,236 per year (gross).