How Have Your Investments Fared - in 2020 - www.accumulatecapital.co.uk - Accumulate Capital
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How Have Your
Investments Fared
in 2020
www.accumulatecapital.co.uk
Whilst this year has presented a Here we compare the performance
challenge in the volatility of the of the most common investment
investment market, it has also products for people with a small risk
provided a unique opportunity for and relatively high-return appetite.
reflection.
For ease of comparison we have
It´s time to review the new patterns of based the numbers on an investment
the stock market that materialised this of £20,000, an amount that can easily
year and re-evaluate your portfolio, be scaled upwards depending on
introduce some low-risk diversity your personal circumstances.
and, most importantly, ensure
that your investments continue to These figures are taken from data
accumulate wealth for you. driven research compiled by various
resources accessible online. The
corresponding references can be
found at the end of this document.
Average ROI 2020 Amount earned per
Investment Vehicle
to date £20k
Buy to let* 3% - 5% £600 - £1,000
Cash ISA 1.21% £242
Stocks & Shares ISA 5.14% £1,028
Innovative Finance ISA (IFISA) 5.87% £1,747
1 Year Fixed Rate Bond* 0.6% - 1.5% £120 - £300
Government Bonds (Gilts): 1.21% £242
5 Year 0.276% £55.20
10 Year 0.3% £60
30 Year 0.79% £158
Development Finance* 11% - 15% £2,200 - £3,000
* An average current rental yield across all regions of the UK
* An average taken from the annual percentage rate of interest earnings across various banks in the UK
* Figures taken from current rates with Accumulate Capital
Buy to Let The attractive, and almost immediate, financial viability from this investment method can overshadow the longer-term difficulties inherent alongside this. Generally the popularity of BTL investment has decreased in the past few years due to the many government-imposed changes to regulation and most recently the increase to capital gains tax (CGT) set to take effect in 2021. As reflected in the data, the return possibilities for the rental market vary largely depending on location. Whilst the successful end of this spectrum will invest following the most profitable rental regions in the UK, currently London and Yorkshire and the Humber, generally BTL investments do not have the highest long-term yields. For many their property portfolio is their pension pot and so it is important to keep in mind the longevity of this investment and keep an eye on the value of the property. Cash ISAs This method reached a new peak of popularity this year. With uncertainty abound many placed their faith in the safety of this scheme, and whilst this ensured protection from a decrease in value it did not provide much opportunity to increase in value either. Generally, this is regarded as a safe but rather low yield, as shown from the data above.
Stocks & Shares ISAs Innovative Finance ISA (IFISA) you agree with your bank a fixed money or charges you a penalty fee
amount of time for which your to do so.
Every adult in the UK is given an These are a relatively new feature money will remain in the account
annual £20,000 ISA allowance for having only been introduced by the and the security of this means the Government Bonds (Gilts)
the tax year. It is possible to split this UK government in April of 2016. In interest rates are higher than a
between various innovative finance some respects, these can be deemed current account. An advantage to this Similar to previous, a Gilt is a fixed
or stocks and shares ISAs. The main as a level of risk to the previous method is the low-risk factor as your return payment for a set amount
difference between these ISAs and stocks and shares ISAs and, of money is secure and guaranteed to of years and due to this they can
a cash ISA is with Stocks & Shares course, Cash ISAs. With an innovative earn a fixed amount of interest. There be an easily predictable return, an
ISAs you are able to actively invest finance ISA your return of investment is also the security of the Financial uncommon security in investment
your money and quite significantly relies on the success of the company Services Compensations scheme finance. As it is issued by the UK
increase your capital. ISAs are also and also the efficacy of the people with UK registered banks providing government it is also a very safe
exempt from CGT, a fact which is in a peer to peer finance approach. insurance of up to £85,000 per person investment prospect, the UK has not
attractive considering the recently However, as is the case, the higher and per institution. However, these yet defaulted on its debt. Although,
suggested increases to CGT rates risk element provides for a higher accounts are taxable and therefore as with the cash ISA the security of
in 2021. However, the turn-over for returns rate and on this basis it can can be susceptible to increases in tax this return also corresponds to a low
these increase with time and thus are be a favourable investment method. due to inflation and so it is possible returns rate.
a better long-term investment. They to lose money on interest earnings.
are also, by name, very susceptible 1 Year Fixed Rate Bond The no access rule to these accounts Property Development Finance
to volatility in the stock market and can become a problem if unforeseen
thus perhaps a much higher risk These are commonly used as a expenses arise and the bank either According to researchers at Nesta,
investment. ‘rainy day’ savings method as refuses to grant access to your development finance is one of the
fastest growing investment segments in the UK. When you invest in a construction project at the early stages, your capital is linked to the overall profit generated by the development. This maximises your potential to receive the best returns, whilst retaining a low-risk profile. A distinct advantage of an investment in development finance is that your funds form part of a capital stack. The capital stack generally comprises professional and institutional investors as well as private individuals, which serves to reduce overall risk. You are also assured that sufficient due diligence has been conducted on the development project by others in the capital stack to support your own decision-making. Development finance investments are more accessible to a wider group of investors, mainly because of a low entry level. This means that they provide more opportunity for you to diversify your investment portfolio by project, location and time. Development finance is essentially a mechanism that will help reduce your overall investment risk. A quality that has become considerably more attractive due to the volatility of the investment climate this year. To find out more about Accumulate’s opportunities in development finance, contact an adviser today.
Canterbury Innovation Centre
University Road, Canterbury, Kent. CT2 7FG
Email: info@accumulatecapital.co.uk
Tel: 01227 936 996
www.accumulatecapital.co.uk
References
https://www.landlordnews.co.uk/best-areas-for-house-price-growth-and-rental-yields/
https://www.globalpropertyguide.com/country-comparison
https://www2.deloitte.com/uk/en/insights/industry/financial-services/financial-services-industry-outlooks/
investment-management-industry-outlook.html
https://www.thetimes.co.uk/money-mentor/guide/guide-investment-trends/
https://moneytothemasses.com/saving-for-your-future/savings-best-buy-tables/fixed-rate-bonds
https://www.woodruff-fp.co.uk/is-your-fixed-rate-bond-a-dud/You can also read
