As far as investment options are concerned, there are a number of different varieties available to the prospective investor. Naturally, the type of account you choose will depend on many factors; most notably, your own financial goals, your age, and your current economic standing. Here is a no-nonsense guide to two of the most popular forms of investment account.
Individual Savings Accounts (ISAs)
ISAs were only introduced in the late nineties, but their popularity has risen steadily since then. And after a quick look at the how these accounts function, it’s very easy to understand why. With most savings accounts, you’ll pay income tax on any interest you earn. With an Individual Savings Account however (for instance, a Cash ISA from James Hay or another popular firm), you’ll pay no tax whatsoever on the interest earned. Furthermore, if you’re looking to invest over a variety of different outlets (such as property, stocks and shares or government/corporate bonds), a Stocks and Shares ISA will protect you from capital gains tax, and may also reduce the income tax paid on any additional gains.
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Hedge funds, although a popular form of investment, are generally only suitable for people with large amounts of expendable income. They also require a substantial amount of work, and as such, will only be offered to investors who fit specific financial criteria. That being said, for the right candidate, hedge funds can be a very bankable investment, not least of all because they generally tend to outperform more conventional investment accounts. The basic premise of this approach is to buy stocks when they’re low, and then sell them high. Often this involves purchasing assets such as property when the current market trends suggest that they will rise in value over a given period, naturally creating good profit margins. On the whole, hedge funds can be very risky and accordingly, hedge fund managers tend to charge a premium for handling these accounts. However, for those with big capital, who are prepared to lose in order to gain big, they can be a platform for massive economic returns in the long run.
Knowing How and Where to Invest
Knowing how and where to invest your money is a conundrum that all prospective investors must tackle. Hopefully with this simple guide, you will have a better idea about which investment account may be more suitable for your needs.