Attitude to Risk
& Capacity for loss
One of the starting points when determining an investment strategy for a client is attitude to risk – where we consider how comfortable the client will be with fluctuations in the value of their portfolio and their capacity for loss. A key aspect is striving for competitive performance, without taking more risk than the client is willing to accept or afford.
We ask our clients to fill out a risk profile questionnaire, which measures risk attitude and risk personality. Based on the results the client will be designated a risk profile from 1 to 10 (1 being the lowest risk and 10 being the highest). The result will always be discussed and agreed upon prior to any recommendation.
In the short-term it is essential to maintain a foundation of cash savings that will be readily accessible should you need them. Starting to build up a pot of savings as soon as begin earning a steady income may allow you to build up an emergency fund to last through your working life and into retirement. We research many forms of cash deposit accounts offered by banks and building societies comparing interest rates and suitability. We can advise on investing with NS&I who offer Government-backed products such as Premium Bonds and Income Bonds.
Investing for capital growth
Entering the world of asset-backed stock market investments can be daunting but with sound financial advice and an understanding of the risks involved, many of our clients have been able to build up a substantial portfolio of long-term investments based on comprehensive and sophisticated advice. It is the job of our advisers to assess the individual needs and objectives of the client, explain market volatility and implement a personalised investment strategy. If you are under our Wealth Management Service, your investments (whether they are held within a collective investment such as an OEIC, an investment bond or other investment vehicle) will be managed and tweaked to suit your ever-changing needs and to ensure they are as tax efficient as possible.
Individual Savings Accounts
The many types of ISA
ISAs remain a popular investment solution due to their tax-efficiency and in recent years have become more flexible. For 'low-risk' individuals, Cash ISAs are offered by an increasing number of banks and building societies. 'Stocks & Shares ISAs' are an attractive option for the potential of long-term growth in a tax-efficient environment and Star House can help advise how your funds should be invested based on your circumstances. Some providers also offer Lifetime ISAs and Junior ISAs if you meet the specific criteria. It should be noted that there are limits on how much you can contribute into ISAs annually.
School Fee planning
For those who are considering sending their children to private school and/or university, we can consider education fees as part of a holistic financial plan and we provide a comprehensive cashflow planning service to assess initial and ongoing feasibility.
Ethical investment requirements
Some of our clients prefer to filter their investments to exclude investment in companies that may be involved in non-ethical practices. The underlying funds within our model portfolios can be tailored to incorporate specific ethical and 'socially responsible' funds while retaining the same diversification and asset allocation.
Capital Gains Tax
For those with high value (or strong performing) investment portfolios, especially those that have been held for a number of years, it is important to consider capital gains tax (CGT). Star House will keep track of any capital gains realised within your portfolio and ensure that your annual CGT allowance (which under current rules does not carry over to a new tax year) is utilised but not exceeded. By using your allowance via fund switches, you may avoid a tax charge when you come to withdraw your funds.
Using your ISA allowance
Whether as part of an initial financial plan or an ongoing review, we will always encourage utilising your annual ISA allowance where possible. If you have surplus cash available or recently received a lump-sum that you don't anticipate needing immediate access to, Star House can put together a comprehensive recommendation concerning putting the funds away for long-term growth in a tax-efficient environment. In addition, if you have a a portfolio of investments held outside of an ISA wrapper we can advise on moving a portion of these funds into an ISA (via "Bed&ISA") for which we don't charge a fee for our existing clients.