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Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

1. You could lose all the money you invest

• If the business you invest in fails, you are likely to lose 100% of the money you invested. Most start-up businesses fail.

2. You are unlikely to be protected if something goes wrong

• Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker here.

• Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection here.

3. You won’t get your money back quickly

• Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.

• The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.

• If you are investing in a start-up business, you should not expect to get your money back through dividends. Start-up businesses rarely pay these.

4. Don’t put all your eggs in one basket

• Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.

• A good rule of thumb is not to invest more than 10% of your money in high-risk investments.

5. The value of your investment can be reduced

• The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.

• These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

If you are interested in learning more about how to protect yourself, visit the FCA’s website here.

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Free factsheet: Pension Carry Forward

Could you contribute more to your pension than the annual allowance? This might be possible if you have unused annual allowance from the last three tax years, provided you have sufficient earnings. This is known as “carry forward”. You may also be eligible if you’re caught by the annual allowance taper.

What is carry forward? How do I use it, and how much can I carry forward? Download the free factsheet to learn more…

The amount you can contribute to a pension in a year, and receive tax relief on, is capped at £60,000 for most people (the “annual allowance”).

But you might be able to contribute more if you have unused annual allowance from the last three tax years, provided you have sufficient earnings. This is known as “carry forward”.

You may also be eligible if you’re caught by the annual allowance taper.

Whether or not you are able to carry forward – and how much you can contribute any given tax year – will depend on several factors.

Could you contribute more to your pension than the annual allowance?

What is carry forward? (with worked example)
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IMPORTANT: This factsheet, like the service Wealth Club offers, is for experienced investors: it is not advice or a personal recommendation. The factsheet gives a quick summary of a complex subject and does not cover every nuance. If unsure, seek professional advice.

Pensions are long-term investments: you cannot normally access your funds before age 55 (57 from 2028). Before making any contributions you should check you are eligible.

Tax benefits depend on circumstances. Tax rules can change.

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