Current accounts offer maximum flexibility but usually very little interest. Savings and notice accounts pay more, but may require you to give notice — 60 or 90 days isn’t unusual — before you can withdraw.
Generally considered low risk, since they’re government-backed. Many NS&I products are also tax-free.
Usually lower risk than direct equities, although values can still fall as well as rise. Corporate bonds are rated from AAA (investment grade) down to BB or below (often called “junk” or non-investment grade) based on the issuer’s ability to keep up interest payments. Gilts — government bonds — typically offer lower returns but carry a much reduced risk of default.
Commercial property has historically shown little correlation with bonds or equities, making it a useful diversification tool. Income often comes from long leases with an “upwards only” rent clause, protecting against falls during the lease term. That said, property values do fall as well as rise, valuations are a matter of professional opinion rather than fact, and because property isn’t always instantly saleable, a fund manager may sometimes defer requests to cash in.
Furthermore, because of the nature of property as an asset, it may not always be possible to immediately switch or cash in your investment, because the property in the fund may not always be readily saleable. If this is the case, then a fund manager may defer your request to cash in for a period of time. You should bear in mind that the valuation of property is a matter of the valuer’s opinion, rather than a matter of fact.
Historically, shares have offered better long-term returns than deposit accounts, in exchange for higher risk. Past performance is never a guarantee of future returns.
A fund pools money from many investors and is professionally managed to spread risk across a range of equities, bonds, or both. Some funds focus on a specific sector (construction, mining) or region (Japan, the US); others aim for broader diversification. Funds can often be held within tax-efficient wrappers such as an ISA or a pension.
All these types of investment are available through your financial adviser. You may be able to include your investment within a tax-efficient product such as an ISA (Individual Savings Account) or a pension. There is a vast array of products available, and choosing the most suitable one can be difficult, your adviser will be able to help you decide which are suitable for you.
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