Seven investment ideas for 2018
Archived article: please remember tax and investment rules and circumstances can change over time. This article reflects our views at the time of publication.
It’s the issue many investors ponder during the festive break: what investments to make in the new year?
You might be perfectly happy with your portfolio. But how about something a bit different?
Below you'll find our picks for VCT, EIS, SEIS and IHT investments. We have also highlighted a bond paying up to 5.9% AER and a commercial property deal aiming to pay 7.5% a year plus a share in any upside.
Considerable tax relief
Many of the investments featured offer considerable tax advantages. This could be income tax relief of up to 50%, capital gains relief and deferral, IHT relief and loss relief (see table below). But you shouldn't invest for the tax relief alone, there is much more.
VCT, EIS and SEIS tax relief at a glance
|Income tax relief||30%||30%||50%|
|CGT relief / deferral||no||deferral||50% relief|
|IHT relief||no||after two years||after two years|
Tax benefits depend on circumstances and tax rules can change. The above table is a brief outline only: there are more detailed conditions and rules which you should consider carefully before investing.
Three reasons to invest beyond tax relief
Firstly, returns have in many cases been excellent. For instance, the generalist VCT sector has delivered a total share price return of 93.2% over the last ten years. That compares very favourably to returns from the main stock market. Remember, though, past performance is not a guide to the future.
Secondly, many of the investments might be quite different from the rest of your portfolio and provide diversification. The performance of the Goldfinch SEIS, for instance should be largely unaffected by the wider economy.
Likewise, returns from forestry have not only been some of the best from any asset class over the last 20 years, they have also been uncorrelated to the stock market.
Thirdly, these investments are in smaller businesses, the lifeblood of the economy. Taking into account all investment, around 9,400 companies were backed by venture capital in the UK. Overall, it’s estimated the sector contributes more than £20 billion to GDP, and supports 326,000 jobs.
Seven investment ideas for 2018
Long-established VCTs with a history of growth and healthy dividends. Read more »
Co-invest with the manager in an exciting portfolio of high-growth companies. Read more »
The most popular SEIS amongst our clients. Read more »
The largest ready-made AIM IHT portfolio that could make your ISA IHT free. Read more »
Prime office building with existing tenants – 7.5% income (not guaranteed) plus capital growth. Read more »
Fixed-term, fixed-interest, secured bonds – up to 5.9% AER plus 0.5% bonus p.a. Read more »
Income-producing investment which could also be IHT free – for experienced investors only. Read more »
Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.