Mark Andrew Woodcock
With the current financial climate so turbulent, alternative solutions to protecting your finances are becoming increasingly popular, especially as the UK’s banks have lost a significant amount of trust and respect in recent years. But what are the safest ways in which we can protect our money? There are several options to choose from, be it spreading your savings over a number of banks so that every penny is protected, taking a risk on stock and share investment, opening a pension scheme or purchasing real investment products, like precious metals. This article is intended as an introduction to protecting your money in the long term, and presents an opportunity to make a profit out of some of the options.
The safest form of investment has to be gold bullion. Research covering the twentieth century has shown gold bullion investment to be a constantly popular form of wealth protection due to the value of gold remaining fairly level, even whilst the currency of individual countries depreciates. Record levels of interest in gold investment have led to the World Gold Council expanding its US team and demand is continuously outweighing supply. Once you begin to understand the gold bullion market, you can quickly make money off existing investments and then reinvest, meaning that you are constantly adding to your gold shares.
However, before you jump right in and pour all of your wealth straight into gold, ask yourself these questions; do I want the real asset or just exposure to the real gold price? How will I store the physical product? And finally, can I afford the additional costs including taxes, commission, storage and insurance? If, after answering these questions, gold bullion investment is still for you, there are several options you can consider. Bullion coins and small bars are an easy way to invest and their value is based on their fine gold content. Commemorative coins on the other hand are valued for their design, rarity and finish. A bonus of purchasing gold for investment purposes is that the EU does not charge Value Added Tax on top of the purchase price. So, with gold bullion investment, your wealth is protected and you even have the chance to make more money if you follow the market closely.
In the UK, our national banks are regulated by the Financial Services Authority FSA which has implemented the Financial Services Compensation Scheme FSCS. The scheme was set up to protect some of our money in the unfortunate event that a bank goes bankrupt, as we have seen happen in the US and the UK. Although the government has tried to ward off complete collapse as much as it can, with nationalisation, mergers and bail outs, the financial sector remains on shaky territory so it is important that we secure all of the money we have invested in UK banks. The FSCS protects the first £50,000 per person, per institution. This means that if you have less than £50,000 in one bank, it is all protected. However, if you have a total of £60,000 for example in two accounts at the same bank, £10,000 of that will be at risk. So to protect as much of your money as possible, limit your savings in any one bank to £49,500 as this will also protect any interest you have built up.
It is important to note the amalgamation of some banks into one institution, for example HBOS has Halifax and The Royal Bank of Scotland under its institution so if you had more than £50,000 between these two banks, you would still only be protected for £50,000.
Investing your money in stocks and shares is a risky form of investment and as such, the FSCS protection covering risk based assessment is complex. You are not protected if the company you personally invest in goes bust or one of your funds performs badly. However, if a product provider like a bank offering a Shares ISA goes under, you will be protected. Pensions and Life Assurance policies are similar. However, as they are considered to be long term investment, they do offer a bit more protection. The first £2000 is covered and 90% of the rest is also protected. But investment protection differs from product to product so it is important that if you are investing rather than saving, you check the protection offered for every product you use.
These are harrowing times for many people with savings that they want to protect. Whilst I am not advising a run on the banks, spreading your money across a variety of savings and investment opportunities will protect your money in the long run and you may find that your monetary assets actually grow.
With the current financial climate so turbulent, alternative solutions to protecting your finances are becoming increasingly popular, especially as the UK’s banks have lost a significant amount of trust and respect in recent years. But what are the safest ways in which we can protect our money? There are several options to choose from, be it spreading your savings over a number of banks so that every penny is protected, taking a risk on stock and share investment, opening a pension scheme or purchasing real investment products, like precious metals. This article is intended as an introduction to protecting your money in the long term, and presents an opportunity to make a profit out of some of the options.
The safest form of investment has to be gold bullion. Research covering the twentieth century has shown gold bullion investment to be a constantly popular form of wealth protection due to the value of gold remaining fairly level, even whilst the currency of individual countries depreciates. Record levels of interest in gold investment have led to the World Gold Council expanding its US team and demand is continuously outweighing supply. Once you begin to understand the gold bullion market, you can quickly make money off existing investments and then reinvest, meaning that you are constantly adding to your gold shares.
However, before you jump right in and pour all of your wealth straight into gold, ask yourself these questions; do I want the real asset or just exposure to the real gold price? How will I store the physical product? And finally, can I afford the additional costs including taxes, commission, storage and insurance? If, after answering these questions, gold bullion investment is still for you, there are several options you can consider. Bullion coins and small bars are an easy way to invest and their value is based on their fine gold content. Commemorative coins on the other hand are valued for their design, rarity and finish. A bonus of purchasing gold for investment purposes is that the EU does not charge Value Added Tax on top of the purchase price. So, with gold bullion investment, your wealth is protected and you even have the chance to make more money if you follow the market closely.
In the UK, our national banks are regulated by the Financial Services Authority FSA which has implemented the Financial Services Compensation Scheme FSCS. The scheme was set up to protect some of our money in the unfortunate event that a bank goes bankrupt, as we have seen happen in the US and the UK. Although the government has tried to ward off complete collapse as much as it can, with nationalisation, mergers and bail outs, the financial sector remains on shaky territory so it is important that we secure all of the money we have invested in UK banks. The FSCS protects the first £50,000 per person, per institution. This means that if you have less than £50,000 in one bank, it is all protected. However, if you have a total of £60,000 for example in two accounts at the same bank, £10,000 of that will be at risk. So to protect as much of your money as possible, limit your savings in any one bank to £49,500 as this will also protect any interest you have built up.
It is important to note the amalgamation of some banks into one institution, for example HBOS has Halifax and The Royal Bank of Scotland under its institution so if you had more than £50,000 between these two banks, you would still only be protected for £50,000.
Investing your money in stocks and shares is a risky form of investment and as such, the FSCS protection covering risk based assessment is complex. You are not protected if the company you personally invest in goes bust or one of your funds performs badly. However, if a product provider like a bank offering a Shares ISA goes under, you will be protected. Pensions and Life Assurance policies are similar. However, as they are considered to be long term investment, they do offer a bit more protection. The first £2000 is covered and 90% of the rest is also protected. But investment protection differs from product to product so it is important that if you are investing rather than saving, you check the protection offered for every product you use.
These are harrowing times for many people with savings that they want to protect. Whilst I am not advising a run on the banks, spreading your money across a variety of savings and investment opportunities will protect your money in the long run and you may find that your monetary assets actually grow.
