FINANCIAL ADVICE SERVICE SIMPLE GUIDE TO FINANCIAL PLANNING. · That your goals might have different time horizons and this should be considered when planning your finances. Being

SIMPLE GUIDE TO FINANCIAL PLANNING.

FINANCIAL ADVICE SERVICE

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HOW TO USE THIS FINANCIAL GUIDE.

This financial planning guide has been created to support you and your financial consultant when discussing your planning needs. It must only be used with dialogue from your financial consultant or to refer back to in the future, following conversations with your financial consultant.

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SHORT TERM

MEDIUM TERM

LONG TERM

YOUR SAVINGS GOALS?

SERVICES EXPLAINED.

Everyone’s financial goals will be slightly different, so we make sure our advice is personal to you. There are two types of advice available.

Printable comparison table available

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Who is this for? Those who haven’t used their full ISA allowance this tax year and are looking for a tax-efficient way to invest over the medium to long term (at least five years). Through this service you can invest up to the stocks and shares ISA limit for the current tax year

Minimum lump sum investment amount

£10,000

Can I invest regularly? Yes, you can invest regularly into an ISA from a minimum of £200 per month up to the ISA limit

Is there a cost? Yes, your financial consultant will discuss the charges associated with this service

THE SIMPLE ISA ADVICE SERVICE. 1 of 3

THE SIMPLE ISA ADVICE SERVICE

The tax efficiency of ISAs is based on current tax law and may not be maintained in the future. Tax treatment depends on your individual circumstances.

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Can I transfer an existing ISA? No, this is only offered under the advice service

How long does it take? 60-90 minute meeting with one of our fully-trained financial consultants

What do I receive? • Detailed assessment of your investing needs

• An analysis of your approach to risk for this investment

• ISA investment recommendation

• Letter from your financial consultant confirming your recommendations and why

What products are available? Stocks and shares ISA

Limitations of the service Please be aware that the advice given today is relevant to the money you’re looking to invest today.It doesn’t take into account your existing investments;• Whether they are aligned with your wider financial objectives • Whether they match your current attitude to risk• Any impact advice might have on the diversity or balance of

investments within your existing portfolio


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What funds are available? A carefully selected panel of four funds, to provide a choice of funds to match differing levels of risk and provide a suitable spread of investments

What happens after I invest? • A letter from your financial consultant confirming your recommendations and why

• A confirmation note or policy documents detailing your investment

• Annual statements for your investment

• You can monitor and manage your investments using the secure online IPS website

• If you choose to make further investments in the future, you’ll need to pay another adviser charge based upon the terms at the time. The details of which will be given to you at that time



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THE ADVICE SERVICE

Who is this for? If you have complex or multiple investment needs. We can give you advice across a wide range of investment solutions. We can also offer you support over the long term with our optional Ongoing Service

Minimum lump sum investment amount

£15,000

Can I invest regularly? Yes, you can invest from a minimum of £300 per month

Is there a cost? Yes, your financial consultant will discuss the charges associated with this service

Can I transfer an existing ISA? Yes

THE ADVICE SERVICE. 1 of 3

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How long does it take? • One hour meeting to clarify your aims• Followed by a 60-90 minute meeting to discuss your personal

recommendations, regarding possible investments and protection

What do I receive? • A detailed assessment of your financial circumstances and any existing investments

• An analysis of your approach to risk for this investment• Financial planning recommendations and why• Option to choose ongoing advice and support

What products are available? • Stocks and shares ISA• Unit trusts• Open Ended Investment Companies (OEICs)• Investment bonds• Protection policies

Limitations of the service • Legal & General only provide advice and information on products provided by Legal & General

• Our financial consultants do not provide advice on pensions products as part of this service

THE ADVICE SERVICE

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What funds are available?

We will make fund recommendations from a wide panel of Legal & General Investment Management funds and carefully selected funds from other fund managers and investment sectors. There are approximately 30 funds which we regularly review. Your consultant will discuss with you the current range, which includes multi-manager funds, fixed income funds and index-trackers

What happens after I invest?

• A letter from your financial consultant confirming your recommendations and why

• Confirmation note or policy documents detailing your investment

• Annual statements for your investment

• If you choose to make further investments in the future, you’ll need to pay another adviser charge based upon the terms at the time. The details of which will be given to you at that time

If you select our optional Ongoing Service you’ll get:

• Access to your financial consultant

• Twice-yearly personal financial report

• Annual review

• Online access to the Personal Finance Portal

• Monthly e-newsletter from your financial consultant

For further advice in the future, speak to your financial consultant


THE ADVICE SERVICE

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SHORT TERM

MEDIUM TERM

LONG TERM

YOUR SAVINGS GOALS?

CHECKLIST.

What’s been covered in this section

Services explained

Our advice services, and who they might be suitable for.

The advice service that is being recommended and why it is appropriate for your needs.

Limitations of the advice service you’ve been recommended.

CHECKLIST

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YOUR SAVINGS GOALS

0-5 years 5+ years 10+ years

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SHORT TERM

SHORT TERM. 0-5 years

Dream holiday

Emergency/rainy day fund

New car

Debt repayment

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YOUR SAVINGS GOALS?

MEDIUM TERM

MEDIUM TERM. 5+ years

Deposit for a house

House extension

Trip of a lifetime

Education expenses

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YOUR SAVINGS GOALS?

LONG TERM

LONG TERM. 10+ years

Paying off the mortgage

Income in later life

Second property

Trust funds

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PROTECTION.

Financial protection products help make sure that those who depend on you financially, are protected in the event of death, critical illness or incapacity, depending on the product chosen.

There are different types of protection products, typically:

• Life Cover

• Critical Illness Cover

• Whole of Life Insurance

• Income Protection

• Protection products help provide financial peace of mind to you and your dependents

• They can be viewed as an alternative to having to use your savings and investments should the worst happen

• They can help you or your family continue to pay bills, such as your mortgage or costs of living when a valid claim is made

• If you cancel your policy after the cancellation period, or stop paying premiums at any time, your cover will end 30 days after the first missed premium, and you won’t get any money back

Protection products are not savings or investment products and have no cash value unless a valid claim is made.

PROTECTION

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CHECKLIST.


Your savings goals

That your goals might have different time horizons and this should be considered when planning your finances.

Being able to clarify what your own savings goals are.

The importance of including protection as part of your financial planning.

CHECKLIST

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ASSET CLASSES.

When building your investment portfolio, whether investing as a one off or on a regular basis, it’s important to understand different asset classes and which could be appropriate for you.

An asset class is a grouping of similar investments whose value tend to move in a similar way.

The four main asset classes are:

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CASH

CASH.It may seem odd to consider cash as an investment; however, it can be an important investment in its own right and some funds keep a proportion of money in cash. • Money is usually placed on

deposit with banks and other financial institutions

• It can provide a stable low risk investment and is considered to be the safest asset class

• It might offer lower returns than other asset classes

• Banks and financial institutions may suffer financial difficulty and be unable to pay interest or return the amount invested

• As with all investments, if the rate of return you receive is less than the rate of inflation, the value of your investment will fall in real terms

The chart and table show the percentage change in performance over the last 10 years, including monthly interest and capital combined. It does not include any charges or the effect of any charges. Your financial consultant can discuss charges with you. Past performance is not a guide to future performance.

From 2012 the rates used in the graph include internet accounts and accounts with unconditional bonuses. For more information please visit: www.bankofengland.co.uk/statistics/Documents/ms/articles/art1sep12.pdf. To view previously published quoted deposit rates please visit: www.bsa.org.uk/docs/statisticspdfs/Saving_rates_disc.xls

Time Period

June 2005 - 2006

June 2006 - 2007

June 2007 - 2008

June 2008 - 2009

June 2009 - 2010

June 2010 - 2011

June 2011 - 2012

June 2012 - 2013

June 2013 - 2014

June 2014 - 2015

% Change 2.9% 3.3% 3.8% 1.7% 0.6% 0.9% 0.5% 0.5% 0.5% 0.4%

Contains estimated data where none is available. Source: Bank of England

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16

14

12

10

8

6

4

2

0

% G

row

th

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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SHARES

SHARES.Company shares, also known as equities buy you a small part of a company. They give you a potential share of any profits the company makes. This might occur by a single or regular payment, known as a dividend, which may lead to the share price rising.

Time Period

June 2005 - 2006

June 2006 - 2007

June 2007 - 2008

June 2008 - 2009

June 2009 - 2010

June 2010 - 2011

June 2011 - 2012

June 2012 - 2013

June 2013 - 2014

June 2014 - 2015

% Growth 19.7% 18.4% -13.0% -20.5% 21.1% 25.6% -3.1% 17.9% 13.1% 2.6%

• As the graph demonstrates, over the short term, the value of funds investing in shares can go up and down a lot

• Company share prices can change dramatically in response to activities and financial performance of individual companies, as well as being influenced by general market and economic conditions

• Shares tend to offer the highest potential growth but greatest risk

• A company’s fortune can change quickly and often. So investing in one or just a few companies is high risk. Investment funds spread this risk by investing in numerous companies – however, you could still lose some or all of your investment

Source: Lipper

The chart and table show the return of the FTSE All Share Index, comprising companies trading on the London Stock Exchange, over the past 10 years, with dividends reinvested and no charges taken. The effect of any charges would be to reduce the growth shown. Your financial consultant can discuss the charges relevant to your investment with you. Past performance is not a guide to future performance.

Source: Lipper

120

100

80

60

40

20

0

-20

% G

row

th

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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COMMERCIAL PROPERTY

COMMERCIAL PROPERTY.

Time Period

June 2005 - 2006

June 2006 - 2007

June 2007 - 2008

June 2008 - 2009

June 2009 - 2010

June 2010 - 2011

June 2011 - 2012

June 2012 - 2013

June 2013 - 2014

June 2014 - 2015

% Growth 21.6% 12.4% -14.9% -25.6% 23.9% 9.1% 4.8% 4.1% 17.6% 16.7%

• Property tends to react slightly different to market cycles than shares, which means it usually goes up and down over longer time periods as shown in the graph. Over the longer term, it is generally considered to be lower risk than shares

• Rental income will be impacted if tenants leave or do not pay the rent

• The value of the property is a matter of opinion and subject to change

• It can take time for funds to buy and sell properties, which could lead to delays in getting your money back

An investment in commercial property usually means buying a share in ownership of a number of buildings such as office blocks, shopping units and industrial centres.

Property funds provide growth through rises in the value of the property and through rent paid by tenants of the buildings.

Source: Lipper

The chart and table show the return of the International Property Databank (IPD) UK All Monthly Property index. This is an industry recognised index for measuring the growth of commercial property, covering 10 years with rental income reinvested and no charges taken. This is an independent index compiled by IPD – market leaders in commercial property market data. The effect of any charges would be to reduce the growth. Your financial consultant can discuss charges with you. Past performance is not a guide to future performance.

Source: Lipper

80

70

60

50

40

30

20

10

0

-10

-20

% G

row

th

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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FIXED INTERESTSECURITIES

FIXED INTEREST SECURITIES.Fixed interest securities, also regularly referred to as bonds, are issued by Governments (Gilts) or companies (Bonds) wanting to borrow money. They pay a fixed rate of interest, called the ‘coupon’, and promise to pay back the amount borrowed at the end of the stated loan period. Although the bond issuer pays a fixed coupon, the rate of interest the fund receives on the bonds will vary depending on the price they buy and sell the bonds for. Investors don’t have to keep bonds until the end of the loan period and can buy and sell them with other investors.

Time Period

June 2005 - 2006

June 2006 - 2007

June 2007 - 2008

June 2008 - 2009

June 2009 - 2010

June 2010 - 2011

June 2011 - 2012

June 2012 - 2013

June 2013 - 2014

June 2014 - 2015

% Growth 1.5% -0.2% 0.9% 1.1% 14.1% 4.6% 9.5% 4.2% 5.4% 7.4%

The chart and table show the return of the Markit Iboxx GBP Non-Gilts ex-BBB TR index as the proxy for Fixed Interest, covering 10 years with income reinvested and no charges taken. There are a wide variety of different indices for fixed interest; this index covers corporate bonds, of all duration, and credit ratings of A and above. The effect of any charges would be to reduce the growth. Your financial consultant can discuss charges with you. Past performance is not a guide to future performance.

• The value of fixed interest securities is sensitive to changes in interest rates. Because they pay a fixed rate of interest, they’re less attractive when interest rates are rising. When interest rates fall, they become more attractive

• Returns come from interest the company or government pays and any change in the market value of the fixed interest securities

• Can deliver a regular and reliable income although potential returns are often lower than shares or property and are generally considered lower risk

• If the company or government suffer financial difficulty they may be unable to pay back the interest or original amount invested

• Bonds have credit ratings that help you understand how likely it is that the company will be able to pay back the loan, plus interest

Source: Lipper

Source: Lipper

70

60

50

40

30

20

10

0

-10

% G

row

th

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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ALTERNATIVE INVESTMENTS AND DERIVATIVES

ALTERNATIVE INVESTMENTS.We don’t offer investments that invest solely in alternative investments, although some investment funds may invest some of your money in them.

Alternative investments include derivatives and commodities such as oil, gold and grain.

DERIVATIVES.Some funds may use derivatives for investment purposes. A derivative is a type of contract that a fund takes out with another company. They are specialist contract-based investments that some funds use to help with efficient day-to-day management of the fund or to reduce some of the risks of the market.

For example, a contract could have the option to buy a particular asset class at a particular price in the future. Alternatively, it could enable the fund to benefit from the changes in value of a particular asset class over a period of time (even if the value goes down).

Derivatives are sometimes used to:

• Manage the effect of changes in exchange rates or interest rates

• Invest indirectly in an asset class (without actually buying the asset)

• Invest in an asset class at a lower cost

• Manage cashflow

Derivatives can be more volatile than a direct investment in company shares, bonds or commercial property.

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CHECKLIST.


Asset classes

Different asset classes exist and each works in different ways at different times.

The main asset classes and how they differ from each other.

Alternative investments.

CHECKLIST

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POOLED INVESTMENT FUNDS.

A pooled investment fund allows you to buy a share of a fund along with other investors. Combined buying power means that you can all invest, where you would not have been able to alone.

For example, you are unlikely to be able to buy commercial property on your own. You can also invest in a wider range of asset classes than you would be able to on your own. This helps spread the risk of investing by investing in a broader range of investment types rather than just one.

POOLED INVESTMENT FUND

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TYPES OF POOLED INVESTMENT FUNDS

TYPES OF POOLED INVESTMENT FUNDS.

GENERAL FUNDS

SPECIALIST FUNDS

OVERSEAS FUNDS

Spread risk over one or more asset class(es). They may spread their investments across different industries, such as transport, banking, mining and pharmaceuticals.

Invest in a particular industry, country or region, or in companies from a particular market sector. They aim for higher returns but this means taking a higher level of risk, which may result in bigger fluctuations in the value.

Invest to take advantage of the growth potential of markets outside the UK.

Currency fluctuations can affect the value of overseas investments, and as a result introduce more risk.

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CHECKLIST.


Pooled fundsWhat a pooled investment fund is and the different types of funds.

A brief overview of general funds, specialist funds and overseas funds.CHECKLIST

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TYPES OF FUND MANAGEMENT.

Every fund is designed with a specific aim in mind. For example, to provide growth or an income. Funds can be managed in two ways to achieve their aim, either ‘actively’ or ‘passively’.

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ACTIVE

ACTIVE.

• Can help make the most of the positive market conditions or limit the effects of poor market conditions

• If the stock market is doing well, depending on the fund’s risk profile, the fund manager may move more of the fund’s money into company shares to take advantage of high company dividends and rising share price

• If share prices fall, depending on the fund’s objectives and investment policy, the fund manager may move some of the fund’s money into bonds, commercial property or cash to try and shelter your investment from stock market losses

• If the fund manager makes a poor decision, the fund may perform worse than the market

• Actively managed funds tend to have higher annual management charges than passively managed funds

Active management is when a fund manager is responsible for deciding what to invest in (the stock selection), how much to invest in each stock and when.

It’s the fund manager’s job to use their experience, knowledge and in-depth research of the market to try and maximise performance as market conditions change.

For example, if the aim of the fund is to generate an income the fund manager is more likely to invest in companies that pay higher dividends.

Past performance of a fund is not a guide to the future.

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PASSIVE

PASSIVE.

Passive management aims to track the performance of a particular index as closely as possible, within the fund’s mandate and aim.

Often called index-tracking investments, in a passive fund, the manager will buy all or some of the investments in an index with the aim of mirroring the overall performance of that index. The manager then adjusts the investment mix, within the fund mandate, to reflect changes in the overall index as time goes by.

For example, in an index-tracking fund that aims to reflect the performance of the FTSE 100 Index, if a company drops out of the FTSE 100 Index and another enters, the fund manager might change the investment mix to reflect that change.

• If the index goes up, the fund’s value should go up in line with the market

• Index-tracking investments generally have lower charges than actively managed funds

• If the value of the index falls, it is highly likely so will the fund

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CHECKLIST.


Types of fund management

That investment funds can be managed in different ways.

The differences between active and passive fund management.

The main advantages and disadvantages of each approach. CHECKLIST

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TIME AND INVESTMENT.

Timing is very important in investment as it can have a significant impact on your potential return.

Understanding the market cycleFinancial markets historically work in a cycle. It’s important to be aware of where the market is in its cycle – both when you invest and when you withdraw your money.

There is no ideal time to investIf you were to invest your money in a boom period of the cycle, you would pay a higher price for your investments than they would be worth in the recession that was to follow. This would mean that you may have to wait longer to make a profit than if you had invested earlier in the cycle. This isn’t an exact science, but generally markets tend to follow the cycle shown in the diagram opposite.

STRONG RECOVERY

BOOMSLUMP

RECESSION

UNEVEN RECOVERY

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WHY TIMING IS IMPORTANT.

WHY TIMING IS IMPORTANT

The short-term performance of an investment can be erratic. Its value can go up and down on a daily basis. However, while there are exceptions, in the long term the general trend is normally upwards. Please remember though, past performance is not a guide to future performance.

Exercising patience

Withdrawing your money at the first sign of the market falling isn’t necessarily the best thing to do. Historically, dips are often followed by increases. It can help to be flexible about when you cash in your investment.

Your circumstances at the time of investing and your own needs will vary. But before you make any decisions about timing, it’s important to ask yourself:

• Will my short term savings be enough to meet my needs if I need to delay withdrawing money from my investment?

• Could I wait to cash in my investment?

• What could I do if I need the money invested when it isn’t performing as well as I’d hope?

When the market falls

• There’s no way to predict the future and nobody knows what will happen over the course of the next five or ten years. However, by understanding how the market works, it can help you avoid cashing in at the wrong time

• If you do cash in when the market falls because you’re concerned about how much you could lose, you risk missing out on any recovery. On the other hand, you may be saving yourself further loss

Your financial consultant is there to offer you help and advice at all times so if you are in any doubt about cashing in, you should talk to your consultant.

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CHECKLIST.


Time and investment

How the market typically moves in cycles and the effect this can have on investments.

Why it’s important to consider when you might need the money.CHECKLIST

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DIVERSITY.

Diversity can be the key to long-term returns during changing times. For investors, there is truth to the phrase ‘Don’t put all of your eggs in one basket’. Spreading your money across a range of investments could spread the risk associated with a single investment.

By choosing a combination of investments that work well together, you can create a single portfolio that will offer the best chances of achieving your financial aims. It can also be tailored to your attitude to risk.

EXAMPLE FUND PORTFOLIO PROFILEKey Asset allocation %

UK shares 40

Overseas shares 30

Fixed interest securities 15

Property 10

Cash and other assets 5

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Benefits of diversification

• Allows you to access the potential success of many different companies, markets, sectors, regions or countries

• Broadening opportunity doesn’t mean your investment will perform better, but it may mean it’s more likely to achieve its aims

• Helps reduce the chances that you’ll lose money if one company, market, sector, region or country performs badly

• Can help smooth out the ups and downs of the stock market so the value of your investment is more stable

• Spreading risk can help to reduce the likelihood of losses, but doesn’t mean you can avoid risk altogether

Ways to diversify

Investing in more than one asset type – helps to spread risk.

Investing in more than one investment fund – gives you access to more than one fund aim, investment type, fund provider and management style.

Example of diversity

A fund that invests solely in commercial property will suffer the effects of a property crash in this country more than a fund that invests across all four asset classes.

BENEFITS AND WAYS TO DIVERSIFY.

BENEFITS AND WAYS TO DIVERSIFY

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CHECKLIST.


DiversityUnderstanding diversification.

The benefits of diversification.CHECKLIST

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SHORT TERM

MEDIUM TERM

LONG TERM

YOUR SAVINGS GOALS?

RISK AND REWARD.Almost all investment involves some degree of risk. Your approach to risk is unique to you, there is no right or wrong, the important decision is to match risk and reward at a level you feel comfortable with.

Higher risk means the potential for higher rewards, but it also comes with a greater risk of your money going down in value. A lower risk investment has a smaller chance of loss but lower potential for growth.

There are many different types of risk, the main types of risk being:

• You could get back less than you invest

• Investments generally go up and down in value

The amount you invest

• Your investment may have produced a better return elsewhere

Missing out on other opportunities

• Your investment may not meet your investment goal(s) and you may need to invest more to ensure it’s on target

• Your investment may not give you the income you would like or need, now or in the future

Meeting your investment and income goal(s)

• You may not be able to get your money as quickly as you need and you may have to pay penalties to access it

Accessing your money

• The growth of your investment may not keep up with inflation

• If you have to cash in at a particular time for example at retirement, there is a risk that investment conditions may not be favourable at that time

• On rare occasions the value of one or more asset class may fall dramatically. It is rarely possible to accurately predict a substantial market fall and there may be an anxious period when prices fall dramatically and are depressed for a period of time before any recovery

Inflation

Timing

Abnormal events

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YOUR ASSESSMENT.

RIS

K

POTENTIAL RETURN

A

B

C

D

E

Working out how you feel about risk is important. The scale below and on the following pages aims to establish where you currently stand and what you might be prepared to do. It covers your attitude to financial goals, how much risk you’re willing to accept, how you feel about the ups and downs of investing and how much you can afford to lose.

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SHORT TERM

MEDIUM TERM

LONG TERM

YOUR SAVINGS GOALS?

A

A.

You don’t like to take risks with your money or financial future. You need to know your money is safe and don’t want to worry about losing any of it. You cannot be persuaded to try for better returns if that means you would run the risk of losing some money.

You’re not prepared to accept the risk that the value of your investments could go down.

You can’t afford to lose any of your money, as this would reduce your ability to do what you want or need to financially.

You’re prepared to set your financial goals and change them based on getting interest on a bank or building society account. You hope that the interest you get will offset the effect of inflation.

YOUR ATTITUDE TO RISK

INVESTMENT FLUCTUATIONS

INVESTMENT LOSS

FINANCIAL GOALS

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SHORT TERM

MEDIUM TERM

LONG TERM

YOUR SAVINGS GOALS?

B

B.

You want to achieve returns that are better than you can get from deposit accounts. You’re prepared to accept that the return you get on your money may be lower than you hope.

You’re not prepared to accept the risk that the value of your investments could go down as well as up on a day to day basis. However, you accept that if you need to cash in your investments unexpectedly before the end of a fixed term, or at a time when a guarantee does not apply, you might get less back than you put in.

You can’t afford to lose any of your money, as this would reduce your ability to meet your financial commitments. However, you can afford not to get any income from your investments.

You’re prepared to set and change your financial goals without taking into account any future income or growth because you’re not relying on these factors.



INVESTMENT LOSS

FINANCIAL GOALS

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SHORT TERM

MEDIUM TERM

LONG TERM

YOUR SAVINGS GOALS?

C

C.

You’re not prepared to accept the returns available from deposit accounts and want to invest for the potential of slightly better returns. You’re prepared for the uncertainty of not knowing how much you will get back from your investments. You’re prepared to accept that the capital amount you get back and any return you receive may be less or more than you hope.

You’re prepared for the value of your investments to fluctuate over time. You would not cash in your investments simply because they had gone down in value over the short term. If your profile is towards the middle or upper end of this category, the value of your investments may go up and down by more, more often.

You can afford to lose some of your money, even though this would reduce your ability to do what you want or need to financially. If your profile is towards the middle or upper end of this category, you can afford to lose more of your money.

You’re prepared to set and change your financial goals in the knowledge that you may lose some of your money. You accept that the value of your investments at the end of the period you’re investing for may not be what you hoped. So, you’re prepared to wait longer than you expected to take your money out.



INVESTMENT LOSS

FINANCIAL GOALS

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SHORT TERM

MEDIUM TERM

LONG TERM

YOUR SAVINGS GOALS?

D

D.

You want to give yourself the chance of getting a higher level of return and are prepared to accept an increased level of risk to chase these potential rewards. You know the returns are not certain and you are prepared for not knowing how much you will get back from your investments.

You’re prepared for the value of your investments to fluctuate over time and that sometimes these swings in value might be quite significant and long lasting. You would not cash in your investments simply because they had gone down in value over the short term. If your profile is towards the middle or upper end of this category, the value of your investments may go up and down by more, more often.

You can afford to lose some of your money but you are not risking your ability to meet your essential financial commitments. If your profile is towards the middle or upper end of this category, you can afford to lose more of your money.

You’re prepared to set and change your financial goals in the knowledge that you may lose some of your money. You want to make financial plans based on receiving returns but you accept that you may have to change your plans if these are not achieved.



INVESTMENT LOSS

FINANCIAL GOALS

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SHORT TERM

MEDIUM TERM

LONG TERM

YOUR SAVINGS GOALS?

E

E.

You’re open to all types of investment and agree it’s likely you may lose money from time to time. You expect to get much better returns by speculating across a wide range of investment types. However, while you expect to get a much better return, you accept that you could lose a significant proportion of the money you invest.

You’re prepared that the value of your investments may go up or down over time and that sometimes these changes in value might be significant. You would not cash in your investments simply because they had gone down in value over the short term. Sometimes these changes might be long lasting and may not recover, even over the long term.

You can afford to lose a large proportion of your investments before this would reduce your ability to meet some of your financial commitments. If your profile is towards the upper end of this category, you can afford to lose more of your money.

You’re prepared to set and change your financial goals in the knowledge that you may lose some of your money. You want to make financial plans based on achieving a high level of returns but you accept that you may have to change your plans if these are not achieved.



INVESTMENT LOSS

FINANCIAL GOALS

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CHECKLIST

CHECKLIST.


Your assessment

The approach taken when categorising your approach to risk.

What the key characteristics of your specific category are.

What the risk characteristics of the category above and below the agreed risk category are.

Your agreed attitude to risk category.

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PRODUCTS EXPLAINED

PRODUCTS EXPLAINED.

An investment product is essentially a set of tax rules on money invested in funds.

Different products have different tax rules and choice of product depends on your tax position and investment needs. For example, a pension is designed to help you save for your retirement. You receive tax relief on your investment, when you invest and during the time you are invested.

• You can invest in a range of products depending on your needs, circumstances and tax position

• You can make more than one investment into a single fund through different products

• Products can offer benefits on top of the basic return from the fund

• Not all funds are available through all products

Each of our products has its own rules relating to tax. The tax treatment for each product depends on your circumstances and the tax rules may change at any time.

The value of investments may fall as well as rise, which means you may get back less than the amount invested. Although there is no fixed term you should be prepared to hold investments for five years or longer.

ASSETS

OEICs and UNIT TRUSTS

PENSIONS ISAs

FUNDS

BONDS

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PENSIONS

PENSIONS.

A pension is a long-term savings plan that aims to build a fund for later life. A pension product could be the most tax efficient way for you to save for retirement and later life.

• The government offers tax relief on your pension contributions up to certain limits

• You won’t pay any income tax or capital gains tax on any growth in your pension pot

• Any money invested in a pension plan is normally tied up until retirement benefits are taken, which will generally be from age 55

• Pension benefits may be taken in a number of ways

The value of tax relief depends on your individual circumstances. The law and tax rates may be subject to change in the future.

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ISAs

ISAs.

An ISA is a way of investing in a fund tax-efficiently as you have no personal liability to income or capital gains tax on any income or growth you receive from your ISA investment.There are two types of ISA – a cash ISA and a stocks and shares ISA. We only offer a stocks and shares ISA.

Cash ISAs• Offered by many banks and building societies• Money is held on deposit• The reward you can expect is based on a rate of interest• Your money is only at risk if the bank or building society fails

Stocks and shares ISAs• Invests your money in investment funds• Have greater growth potential than Cash ISAs• However, unlike Cash ISAs, your money is at risk. The value of your

investment could fall as well as rise and you may get back less than you invest

• Although there is no fixed term, you should be prepared to hold your money in a stocks and shares ISA for at least five years

• You can invest in both ISAs in each tax year within Government guidelines and maximum investment limits. (Your financial consultant can give you more information about current limits)

• You can normally take your returns whenever you like

• The tax rules are subject to change

• The benefit of the tax treatment depends on your individual circumstances

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OEICs AND UNIT TRUSTS

OEICs AND UNIT TRUSTS.

OEICs (open ended investment companies) and unit trusts are collective investments that invest in pooled investment funds. They allow you to buy units or shares in a fund.

• There’s usually no limit to how much or how long you can invest for with an OEIC or unit trust. However, they are designed to provide medium to long-term growth so you should be prepared to invest for at least five years, ideally longer

• Investment risk associated with particular funds will depend on what assets they invest in, as well as other factors like industry sector or geographical location. Investment risk, and potential returns, can’t be easily predicted

• The value of the units or shares (your investment) may fall as well as rise depending on the performance of the fund. This means you may get back less than you invest

• You can invest in unit trust and OEIC funds through an ISA. An ISA is a way of investing in a fund tax-efficiently. It allows you to invest in a unit trust or OEIC without any personal liability to income tax or capital gains tax on any income or growth.

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INVESTMENT BONDS

INVESTMENT BONDS.

• Investment bonds are a flexible way of investing for people with a lump sum of £5,000 or more

• They provide the potential for medium to long-term growth, income or a combination of both

• They allow you to put your money into a wide range of funds through one investment, that can suit your investment aims and attitude to risk

• You can access your funds by taking regular withdrawals

• Bonds are taxed differently to OEICs and unit trusts, which can be beneficial to some investors

• Bonds can be combined with a trust – useful if you’re aiming to minimise inheritance tax

• You can switch funds at any time

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CHECKLIST

CHECKLIST.


Products explained

That for all asset types there are a number of different products that they can be invested through and that each have different features, benefits and tax treatment.

Some of the more commonly used products include pensions, ISAs, OEICs, unit trusts and investment bonds.

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Legal & General (Portfolio Management Services) Limited. Registered in England and Wales No 2457525. Registered office: One Coleman Street, London EC2R 5AA. We are authorised and regulated by the Financial Conduct Authority.

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