An Introduction to Investment

If we are in the fortunate position to invest capital then it is sensible to consider all the options. It is our job to ensure that you know what the options are and put you in a position to decide which investments are suited to your needs.

Our philosophy is simple and may be illustrated by following these steps

• Decide and spell out your financial objectives.
• Think about the timescales involved, when do you want access to money?
• Consider investment risk and how much you are prepared to lose.
• Take professional independent advice, formulate a plan and stick to it.

There are no guarantees of success but whatever your plan may be, you can be sure of disruption along the way. Flexibility is vital, panic to be avoided, and try to steer your course calmly, whatever the financial weather.

Tax Efficient Investment

Tax efficiency lies at the heart of quality financial planning advice. Having the wrong assets in the wrong vehicles may prove costly and irritating. It is important to consider the benefits of the vast array of Individual Savings Accounts (ISAs), Personal Equity Plans (PEPs) for transfer purposes only as these are no longer available for new investment, pensions, National Savings & Investments and even lesser known investment media such as Venture Capital Trusts (VCTs) and offshore funds.

Assets

The financial world is full of jargon and sometimes this is unavoidable. However most investors will only be faced with a limited number of investment asset choices, commonly

• Cash
• Property
• Stocks and Shares
• Gilts and Fixed Interests

All of the above have a place in most financial plans. Their significance can depend on the individual’s timescales or investment risk tolerance. We believe a mixture of these assets will satisfy your needs. How the mixture is made up is entirely individual and that is where we come in. There are other assets or asset classes however these can be more sophisticated and difficult to understand. Some assets behave more predictably than others and innumerable evidence tells us that certain assets perform better than others over the short, medium and long-term.

The success of your plan will be determined in the main by asset allocation; in other words how much of your money you invest in these various areas. This selection far outweighs other possible determinants, such as market timing, or stock selection. Major studies indicate that over 90% of performance is attributable to asset allocation.

Investment vehicles

The McDevitt Partnership provides advice in relation to “collective funds” and not individual stocks and shares. We believe it is important to have the correct match of asset to investment vehicle to maximise tax efficiency. For example many investors place money into ISAs because they are “tax free”. Closer examination reveals that this is incorrect and that the same investors are not enjoying any additional tax benefit they could not achieve by investing in a unit trust.

We ensure you understand the benefits of tax efficient vehicles such as PEPs, ISAs, VCTs, Pensions and many others, and maximise their efficiency, in terms of income tax, capital gains tax, and inheritance tax.

It is important to remember that deferring or mitigating tax is perfectly legitimate and not the sole bastion of the “super rich.” Well crafted planning will result in substantial saving whether you invest in cash or other assets.

The Financial Services Authority does not regulate National Savings nor all forms of tax planning.