My Favourite Underrated Products
By Chris JamesWe work with all kinds of financial products day-in day-out. Recently we wondered if our staff had any favourites among these products,so we put the question to Chris James, one of our Chartered Financial Planners. He couldn’t choose just one favourite,so we compromised and let him have two! Here’s what he had to say about them.PensionsI know it might sound a bit boring, but I am a massive fan of pensions. They offer huge tax benefits for clients,which can boost their overall financial position. There really is so much you can do with a pension, despite all the rules!Pensions are a brilliant way to start saving for both yours and your family’s financial future. You also havecomplete flexibility when taking money out of your pension in retirement, using flexi-access drawdown.Not only that, but you have the ability to pass these funds onto your family and loved ones outside of theestate which can avoid any potential inheritance tax on these funds.I always consider pensions as fundamental to client’s financial plans. They’re a great way to grow yourfinancial portfolio, especially with the tax relief you receive from contributions paid in. This continues allthe way up until age 75 and even if you are retired.The only time that I can’t usually make a case for some sort of pension contribution is if the client will needaccess to the funds before age 55 (or 57 from 6th April 2028). Other than that, they’re a firm favourite.VCTsI think Venture Capital Trusts (VCTs) offer an interesting option for the right type of client. However, theyare more volatile by their nature, so are not suitable for all clients.VCTs are a great route to investing into exciting new companies in the UK. It offers the potential for goodreturns whilst also helping to boost the UK economy. If supporting the local economy is something that’simportant to you, and you’re comfortable with the level of risk, it could be a great match for you. Anadditional benefit for the client is that there are tax benefits available through VCTs which can furtherboost a clients financial position.There are a few caveats here. As I mentioned, this is a higher risk option so is only suitable for clients whoare comfortable with market volatility. We only tend to discuss VCTs as an option after we have looked atthe lower-risk options, such as maximising ISA and pension contributions.You also need to have taxable income in order to invest in a VCT, as one of the benefits is the ability toclaim back some of the tax you have paid but unlike pensions, you are able to claim tax back oninvestment, rental or even pension income.I would usually recommend this to a client who has already got some invested assets in place as, given thehigh-risk nature of this type of investment, you wouldn’t want all of your money in this area.These are simply my favourite products in the abstract sense – of course, the products that are right foryou will depend on your specific aims and circumstances. If you would like to know more, please contactWealth Matters to have an initial discussion.
