Why are we encouraged to save money?

From childhood most of us are told to put away money to save for the future – perhaps for something special? Or perhaps to be sure that when we really need something we have the funds to acquire it, without taking on debt? Whether you place your money in a piggy bank, or in a multinational investment house, our aims are broadly the same; to provide for our future needs, and to protect ourselves against unexpected causes of expenditure.

When planning your finances, it is important to distinguish the difference between savings and investments. Savings are generally funds that you set aside, but can be accessed relatively quickly. These savings are often for a specific need or purchase, like a holiday or a new car. The most common way of ‘saving’ is into a bank account (‘deposit’ account) where the money can be accessed in an emergency, and for every £1 you put in, you will get £1 back (short of a bank collapse!), and possibly some interest.

Investments are designed to be held for a longer term, usually at least 5 years. You need to be comfortable with tying up this money for a period of time, and should not consider investments unless you have some savings in place. Most investments are not guaranteed to return your money in full, although do offer the prospect of potentially higher returns than deposit accounts. Returns, risk and volatility are the factors that will determine a suitable place for your savings.

Savings and Investment products range from a simple current account, which allows a small amount of interest, but facilitates regular payments and withdrawals without detriment to your savings. At the opposite end of the scale would be company shares, where you invest money in a company, with the prospect that the company will prosper and the shares will increase in value over time. Whilst the benefits are potentially high, the risks are also much greater.

We will be able to explain risk in more detail. Contact your financial adviser before making any decisions.

Investment Options

There are so many different mediums in which to invest, and here we look at just a few key areas:

Bank Accounts – current accounts may offer a very low rate of interest (if any) but they are the most flexible in terms of accessing your money. Banks can also offer savings accounts, with higher interest rates, and also notice accounts with very competitive interest rates, but you may have to give a certain amount of notice before making a withdrawal (60 or 90 days perhaps), or you must agree to invest the money for a set period of time.

National Savings & Investments – these products are backed by the government and operate like bank accounts to a certain extent. There are some tax-free products available and they are generally considered low risk since they are backed by the government.

Bonds & Gilts – Bond/Gilt Funds are generally considered to be lower risk than direct equity (share) investment although the value can still fall as well as rise. Bond markets can be split into two categories. Corporate bonds are investments based on business loans offered by private companies and are ‘rated’ based on the ability of the issuer to maintain interest payments and repay the loan. A corporate bond fund will invest in a wide range of these loans.
‘Investment grade’ stock within the fund is rated AAA to BBB, whilst stock rated a BB or below is termed ‘junk or non-investment grade’ and is sometimes referred to as ‘High Yield’. Some funds also invest in Government Bonds (known as Gilts in the UK).

The income yield that is available from fixed income investments varies according to the quality of stock. Lower quality (junk or non-investment grade) stock usually offers a higher yield to attract investors (as they may be otherwise put off by the increased risk/volatility) whilst gilts generally offer much lower returns, they are underwritten by the government and so the risk of default is much reduced. As things stand, in order to achieve a reasonable yield without taking too great a risk an actively managed fund that invests in both gilts and corporate bonds (i.e. investment grade and high yield) represents the most suitable option.

Property – The long term historic performance of commercial property has very little correlation with the performance of corporate bond or equity based investments. For investors looking to diversify their portfolio property funds have historically offered attractive returns. Income from commercial property funds is often derived from contractually binding contracts of rent paid by business tenants to occupy property. Consequently leases are often arranged over a long period and generally include an ‘upwards only clause’ which ensures that rents are not negotiated downwards during the lease period, even in times of falling markets.

Added to the rental incomes, property has the added attraction of potentially appreciating in value over time, and although property values do fall, the ‘bricks and mortar’ assets of a fund remain.  However, returns from a property fund are not guaranteed and the value of any investment can fall as well as rise.

Furthermore, because of the nature of property as an asset it may not always be possible to immediately switch or cash-in your investment, because the property in the fund may not always be readily saleable. If this is the case then a fund manager may defer your request to cash in for a period of time. You should bear in mind that the valuation of property is a matter of the valuer’s opinion, rather than a matter of fact.

Equities (shares) – Over the very long term equities have historically offered better returns for investors. Although this is not a guide to the future, it is felt that the increased risk of investing in company shares can potentially be rewarded by investment returns in excess of what is available from traditional bank or deposit accounts. However there are no guarantees.

Investment ‘Funds’ – Specialist investment managers will often manage a fund (a pool of investments) that invests in one or more of the above categories, the aim being to diversify the risk across a spread of shares, or bonds, or both. There are hundreds of investment funds available, each with their own specific aims and objectives. Investment funds can also specialise in one particular sector, such as only investing in companies that are listed on the FTSE100 index, or only investing in construction and mining companies. There are also funds that invest geographically, perhaps only buying shares in Japanese or American companies. Each sector has its own unique characteristics, and your adviser will be able to explain more about this.

All these types of investment are available through your financial adviser. You may be able to include your investment within a tax-efficient product such as an Investment Bond, ISA (Individual Savings Account), unit trusts or even a pension. There is a vast array of products available with which to save, and choosing the most suitable one can be difficult, so why not let your Financial Adviser help you to decide which is most suitable for you?

THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE NATIONAL SAVINGS & INVESTMENT PRODUCTS

Investment Options

There are so many different mediums in which to invest, and here we look at just a few key areas:

Bank Accounts – current accounts may offer a very low rate of interest (if any) but they are the most flexible in terms of accessing your money. Banks can also offer savings accounts, with higher interest rates, and also notice accounts with very competitive interest rates, but you may have to give a certain amount of notice before making a withdrawal (60 or 90 days perhaps), or you must agree to invest the money for a set period of time.

National Savings & Investments – these products are backed by the government and operate like bank accounts to a certain extent. There are some tax-free products available and they are generally considered low risk since they are backed by the government.

Bonds & Gilts – Bond/Gilt Funds are generally considered to be lower risk than direct equity (share) investment although the value can still fall as well as rise. Bond markets can be split into two categories. Corporate bonds are investments based on business loans offered by private companies and are ‘rated’ based on the ability of the issuer to maintain interest payments and repay the loan. A corporate bond fund will invest in a wide range of these loans.
‘Investment grade’ stock within the fund is rated AAA to BBB, whilst stock rated a BB or below is termed ‘junk or non-investment grade’ and is sometimes referred to as ‘High Yield’. Some funds also invest in Government Bonds (known as Gilts in the UK).

The income yield that is available from fixed income investments varies according to the quality of stock. Lower quality (junk or non-investment grade) stock usually offers a higher yield to attract investors (as they may be otherwise put off by the increased risk/volatility) whilst gilts generally offer much lower returns, they are underwritten by the government and so the risk of default is much reduced. As things stand, in order to achieve a reasonable yield without taking too great a risk an actively managed fund that invests in both gilts and corporate bonds (i.e. investment grade and high yield) represents the most suitable option.

Property – The long term historic performance of commercial property has very little correlation with the performance of corporate bond or equity based investments. For investors looking to diversify their portfolio property funds have historically offered attractive returns. Income from commercial property funds is often derived from contractually binding contracts of rent paid by business tenants to occupy property. Consequently leases are often arranged over a long period and generally include an ‘upwards only clause’ which ensures that rents are not negotiated downwards during the lease period, even in times of falling markets.

Added to the rental incomes, property has the added attraction of potentially appreciating in value over time, and although property values do fall, the ‘bricks and mortar’ assets of a fund remain.  However, returns from a property fund are not guaranteed and the value of any investment can fall as well as rise.

Furthermore, because of the nature of property as an asset it may not always be possible to immediately switch or cash-in your investment, because the property in the fund may not always be readily saleable. If this is the case then a fund manager may defer your request to cash in for a period of time. You should bear in mind that the valuation of property is a matter of the valuer’s opinion, rather than a matter of fact.

Equities (shares) – Over the very long term equities have historically offered better returns for investors. Although this is not a guide to the future, it is felt that the increased risk of investing in company shares can potentially be rewarded by investment returns in excess of what is available from traditional bank or deposit accounts. However there are no guarantees.

Investment ‘Funds’ – Specialist investment managers will often manage a fund (a pool of investments) that invests in one or more of the above categories, the aim being to diversify the risk across a spread of shares, or bonds, or both. There are hundreds of investment funds available, each with their own specific aims and objectives. Investment funds can also specialise in one particular sector, such as only investing in companies that are listed on the FTSE100 index, or only investing in construction and mining companies. There are also funds that invest geographically, perhaps only buying shares in Japanese or American companies. Each sector has its own unique characteristics, and your adviser will be able to explain more about this.

All these types of investment are available through your financial adviser. You may be able to include your investment within a tax-efficient product such as an Investment Bond, ISA (Individual Savings Account), unit trusts or even a pension. There is a vast array of products available with which to save, and choosing the most suitable one can be difficult, so why not let your Financial Adviser help you to decide which is most suitable for you?

THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE NATIONAL SAVINGS & INVESTMENT PRODUCTS

Investing and Risk

This page includes some of the good reasons for making investments into specialist ‘funds’ run by ‘fund managers’ on behalf of the investors.

Whether you are looking at investing in a pension, an investment bond or perhaps using an Individual Savings Account (ISA) you might consider using investment funds. Put simply, a fund is a collection of many different peoples money in one place. Buying large numbers of shares or achieving a portfolio of investments may well be beyond most average investors so they effectively club together to increase their purchasing power.

Typically these pools of money are run and managed by an investment specialist. He is paid to make the day to day decisions of where the pooled money is invested. Rather than individuals (who have no interest in markets and shares, or who don’t have the knowledge or time to study market information) choosing which shares to buy, to hold and to sell and at what time, the fund manager uses his expertise to make suitable investments in order for the value of the pooled fund to hopefully grow over time.

Another advantage of pooled investment is being able to diversify.

Diversification and Risk

All investments carry some element of risk. The value of the fund can fall as well as rise and you may not get back the full amount you originally invest. To enable funds to be able to manage the risks the manager will usually practice some level of ‘diversification.’ This works on the premise that holding 2 different shares is better than 2 of the same shares. This is because all shares react differently to investment conditions and changes.

For example, imagine that there are only 2 companies, one company making t-shirts and one company making woolly jumpers. If the weather forecast is for sunshine, then investors would be wise to buy shares in the t-shirt company as they expect demand for t-shirts to increase and sales to rise, increasing the company share price. However, we know that it is not always sunny and therefore a good manager would buy shares in both companies, so when one share price is static or even falling the other is able to support and perhaps offset the falls, meaning that the investor doesn’t suffer a loss.

Investment Assets

All investments carry some risk, and the Investing and Risk page includes some information on how we might manage this risk. We can learn more about the particular risks and rewards of different investment funds by looking at their sector and assets in more detail.

All types of shares have different characteristics and these characteristics are complex. Hence there are fund managers within the industry to assess and measure these features and make investment decisions based on their knowledge and market experience.

Investment funds will have a particular aim, and often have a specialist sector which allows them to be compared to other funds of a similar make-up and ensures that the actual assets of the fund (the investments made by the fund manager on behalf of individual investors) remain in proportion with the selected aims and specification of the fund.

Sectors and Assets – The fund sector identifies broadly the areas in which the fund will invest. This can be based on geographical terms, or in a particular industry. For example, there are funds that only invest in UK companies, or Japanese companies, just as there are funds that invest purely in ‘technology’ companies (IT, telecoms etc). In addition to this there are sectors that are a mixture of assets. A typical ‘balanced managed’ fund will have some money invested in shares, some in property and some in fixed interest investments or bonds.

Although there are no guarantees as to performance or returns from any sector, our knowledge and experience can indicate how we might expect investments to perform.

Testimonials

"Bluestone have been really helpful throughout the process and beyond. They have been very attentive with any issues I have had with the property and I couldn't recommend them more. "Aneela K

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"We were incredibly impressed and reassured by Gemma’s professional and proactive approach during the sale of our home. We would use Bluestone again. "B Patel
Vendor

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"Exceptional. Understood our objectives, marketed as promised, followed up diligently and efficiently, nursed through to exchange and completion and ultimately sold. A great team. "Michelle B
Vendor

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"We were First time buyers and have recently bought a house through Bluestone. It was a very stressful time as the sale fell through a couple of times due to it being part of a chain. It was through the dedication and expertise of Gemma and Ryan who guided us though everything and negotiated hard to get the sale back on track. We eventually completed on our property thanks to the determination of the Bluestone team. They all did a lot on our behalf and genuinely wanted to see us succeed. Thank you! "Catherine D
Buyer

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"Motivated, friendly, professional is how I would describe the staff at Bluestone. I have had the pleasure of doing business with them for over 3 years. They always handle my affairs with care and attention to detail and have always delivered on their promised without fuss. I would happily give them 5 stars for their genuine and professional customer service. Great work all round\" "Andrew A

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"A big thank you to Gemma Williams-Henn for the hands on help and support she gave during one of the most stressful times! She was efficient and professional all the way through. Bluestone were highly recommended to me by a friend and they did not disappoint. I found them friendly and easy to talk to; they offered lots of useful advice and paid attention to all the details. Fantastic job! "Thomas A

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"When I first decided to move to Newport, I approached Bluestone after seeing a property on Rightmove. I also had viewings with other agents but Bluestone were in a class of their own. They were friendly, very knowledgeable about the property and the area and genuinely seemed to really care about my move. They were helpful throughout my move, from helping me with arranging a removal company to sorting out my utilities. They even gave me advice and a guide on areas, finding schools for kids & places to visit. A top class estate agent with remarkable customer service. "David W
Buyer

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"Excellent service. Our agent Ryan Humphries came out at 6.30pm on a Friday evening to take us to our viewing as our car was off the road! Whenever I’ve called at the office the staff have always been friendly and approachable. Over the course of our dealings with Bluestone we found them to be very reliable, flexible and informative. "Arthur N
Buyer

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"A can do attitude and perfect customer service from start to finish. After getting news that we had to move out within 21 days or risk losing the sale the team at Bluestone pulled out all the stops and made our move possible on such short notice. They went over and above expectations, I cannot recommend highly enough, especially Gemma who handled our sale. "Melinda D
Vendor

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"As a property investor I have bought and sold many properties over the last 15 years, Ryan secured a sale on my property in 7 days and arranged 3 other sales to complete the chain. A true professional!  If I could give them more than 5 stars I would! "Bilal K
Vendor

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"A stress free experience from start to finish. A realistic valuation followed by a quick sale. I can’t ask for more! "Jason D
Vendor

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"The sales team worked really hard at selling our house and for the price we wanted. They were proactive in helping us buy our new home at the price we wanted to pay. I found everyone really helpful especially in getting us a new buyer when one dropped out, they came up with a plan and kept me informed. Ryan and Gemma were excellent and I'd highly recommend them. "Karen S
Vendor

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"Great staff! Really helpful. "Johnathan G

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"Professional and efficient. Approachable and helpful staff, great doing business with you Bluestone "Scilla N

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"Very helpful and friendly. I felt confident that staff wanted to help and were experienced. All the staff were approachable and keen to assist. "Shenice Gr

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"Fantastic experience! Staff are always happy and helpful, recommend them 100% if you’re looking for a trustworthy and reliable estate agent! "Lauren D

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"Currently renting through this company. Staff are very friendly and efficient when dealing with any issues/enquiries 5 stars! "Hannah R
Tenant

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"Fantastic!.. very helpful professional service in finding a place for my daughter. Would highly recommend to my friends, many thanks! "Daren W

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"Bluestone over the past year have promoted a professional service, dealt efficiently to any queries and issues that have arose. The staff are always polite, informative and helpful. "Jessica P

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"Most helpful, professional, genuine agent I’ve had the pleasure of having for the past few years. And continue to use! Thank you for all that you have done for me. I highly recommend!! 5****** "Sapphire Y

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"I have been using Bluestone’s services for the past 4 years and I have found all the staff very friendly and extremely helpful. They just cannot do enough for you! Great business and genuine people! Keep up the good work! "Jessica L

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"Would like to thank the staff at Bluestone for help and support on finding the right place for myself and family, and also helping me out with sorting my house insurance. Many thanks - highly recommended! "Caroline W
Buyer

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"Thanks for everything, you are very professional, and I can't believe that renting the property has gone so smoothly and I have such lovely tenants! Best regards"Stella P
Landlord

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"From start of our property search to moving in, Bluestone were fantastic, professional and very approachable. Any issues we've had have been dealt with and rectified quickly. From making our initial enquiry, the letting negotiator drove to our house to pick us up for our viewing knowing my mother couldn’t get around easily, our ongoing experience from the start, to moving in has been exceptional. The staff at bluestone were most helpful by meeting all of our needs and went above and beyond their service being most helpful and courteous. Although we are not planning on moving any time soon we would use Bluestone again. Highly recommend. "Mrs Ashworth
Buyer

Testimonials

"Thank you for the fantastic service you gave us right from the beginning to completion in selling our home on Oaklands Road. We’ve sold a number of properties in the past and I can say that you’ve managed to combine a great service with a personal touch. The pictures, video tour and the attention to detail you paid to us was outstanding. I was especially impressed that you sold our home within a week of our instruction and also very impressed that you kept us up to date through to completion. Keep up the good work! I shall definitely be recommending you to my friends and family. "Carol C
Landlord

Testimonials

"I know normally we only communicate when an issue needs addressing but I thought it would be a good time to send an e mail. I would personally like to thank you all for sourcing the tenants at 2 Joslin Road. Our neighbour had got in touch to say how nice the tenants were and how lovely the property is looking. Once again, it gives me great \"peace of mind\" in the knowledge that the management on both properties are handled so well. Thank you all ever so much. "Jeff L
Landlord

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"I have personally found Bluestone to provide a first class service to myself as a landlord. Having some negative experiences in the sector before I can say confidently that the service Bluestone offer significantly outscores other providers I have experience of. They offer a swift and effective services in all areas of property management . They sourced tenants swiftly, negotiated the rent at the right price and conducted all the usual checks efficiently and quickly. I would not hesitate to recommend or use their continued services and feel safe as a landlord knowing my property is going to be managed professionally. "Mark M
Landlord

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"Having worked with numerous local lettings agents and been continually disappointed, working with Bluestone has been a breath of fresh air.  Bluestone manage to combine a professional service with a personal touch, using initiative and a prompt and pro-active approach in all aspects of the service they provide.  Bluestone allow me the peace of mind that my investments are being protected and my properties run both efficiently and professionally. "Mark H
Landlord

Testimonials

"Just a note to thank you for all your help in renting our property in Croesyceiliog - successfully achieved within days of the flat being posted online by Bluestone! We were impressed from the start by the professional and courteous way you managed our brief and by your determination to customise the advertising to match our requirements. Feedback from our new tenant suggests that the photographs of the flat you published to back up the advert. were especially effective. From our point of view, it was reassuring that you took such care to keep us up to speed with the latest on prospective tenants' availability, contact details and so on. A nice personal touch! Thanks again and be assured that, in the event of any of our properties becoming vacant, we shall be back! "Alan and Jane C
Landlord