Savings
Individual Savings Accounts
Maximum Investments Plans
Friendly Society Plans
Child Trust Fund
Endowment Policies
How to save on a regular basis
Individual Savings Accounts
From 6th April 2008 the maximum amount you can pay into an ISA each year has increased from £7,000 to £7,200, of which £3,600 can be paid into a cash ISA. For the first time you can save £3,600 in a Cash ISA and invest the remainder of your ISA allowance in a Stocks and Shares ISA. For example; you save £1,200 in a cash ISA at the start of the tax year. In the same year, you could invest up to another £2,400 in the same cash ISA or up to £6,000 in a stocks and shares ISA with either the same or a different provider.
For the first time, funds are now transferable from a cash ISA into a stocks and shares ISA, giving your money a better chance to grow over the medium to long term. Making the transfer won’t affect your ISA allowance, so if you make a transfer from a previous year’s ISA, it will not use any of the current year’s allowance. In addition, there will be no tax to pay on the returns you earn from your ISA. However you cannot transfer from a stocks and shares ISA to a cash ISA
Maximum Investments Plans
This is a form of endowment plan (with profit or unit linked funds) which is made up of minimal life assurance and a savings plan. It has a term which will usually mature after ten years, although there may be an optional facility to remain invested after this date.
Friendly Society Plans
Friendly societies offer endowment policies where contributions of up to £25 per month or £270 per annum can be invested into tax-exempt funds.
Child Trust Fund
The Child Trust Fund, or CTF, is a new financial product designed by the government. The idea is that all children born after 1st September 2002 will have a tax free lump sum locked away until their 18th birthday, at which point the money is theirs to spend as they wish. The government has pledged to kick-start each fund with at least £250. More government money is promised, parents and relatives can add extra money every year and there's no tax to pay on any of it.
Endowment Policies
An endowment is a combination of life assurance and regular savings and is often used as security to pay off the outstanding debt on an interest only mortgage. If the client dies during the term of the loan then the life assurance will be sufficient to repay the outstanding amount on the mortgage. If the client survives to the end of the term the savings should have been sufficient to repay the outstanding capital at this time, although there is no guarantee with this.