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www.InvestmentGuide.co.uk Other types of
Investment Trusts
Unit Trusts
Offshore Funds
How Best to Invest in Stocks and Shares
INVESTMENT TRUST
A commitment to save a minimum amount regularly, usually monthly which is invested in shares in an investment trust (a company investing mainly in ordinary shares managed by professionals). Investment Trust Shares broadly reflect the value of the ordinary shares held by the trust but can be less or more. You can top up with extra lump sums, raise or lower the monthly amount, or stop saving at any time. If you stop, you either sell the shares at the market price or continue holding them.
An Investment Trust Savings Plan is a good way of regularly investing in shares. It's more flexible than an Investment Trust ISA . It usually has lower charges than a Unit Trust Savings Plan and income can be paid to you or accumulated.
Who can invest Anyone.
How worthwhile Flexible and potentially good value for taxpayers who want to invest regularly in a fund of ordinary shares. If you have less than £500 a month (£6,000 a year) to invest consider instead Investment Trust ISA. Also compare with Unit Trust Savings Plan.
Minimum £20 to £500 a month (usually £25 or £50) or £200 to £2,500 lump sum. You can buy more when you feel like it.
Suitable Regular savings.
Maximum None.
Money back About 5 working days after you sell. Managers, unlike stockbrokers, don't usually deal every day. You get the market price when you sell. Some allow partial withdrawals.
Interest Variable. Called dividend.
Interest paid The dividends can be paid to you by cheque, direct to a bank account or used to buy rnore investment trust shares.
Tax 10% tax is deducted from the dividend (called a tax credit). Non- taxpayers cannot reclaim the tax credit from the Inland Revenue. Higher rate taxpayers have to pay extra; basic taxpayers don't. Gains on shares may be liable to capital gains tax though the managers pay no capital gains tax when they make gains on ordinary shares held within the trust.
Fees to pay When you buy and sell: stockbrokers' commission usually nil to ¼%. Fees vary between managers. A few have high charges, like 4%, where commission is paid; you may be able to avoid them by dealing direct. Stamp duty ½% when you buy only.
Passbook None. Statements of shares and dividends sent half-yearly or monthly.
Children Under 18 shares must be held in an adult's name and can be desiqnated with a child's name or initials.
Risk By buying regularly you even out fluctuations in the market price eg. you buy when prices are high as well as low. You still need to choose the right time to sell. Otherwise the same as Investment Trust Shares.
How to invest Choose a trust which operates a scheme. Phone the managers and ask for their literature and an application form.
Where from Many Investment Trust Companies. They are listed at Find - the entries on the first page are paid for (doesn't mean they are better) so look at the second one too.
Other types of
Investment Trusts
Unit Trusts
Offshore Funds
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Last updated 14 June 2002