investment bonds

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LMJ is a firm of independent financial advisers specialising in the management of investment portfolios and pensions. We have been helping clients navigate complex financial markets since 2001 and from those very early days, our business has evolved primarily through client recommendations. Read More

Investment Bonds

An investment bond is generally a single premium life insurance policy. They have a small element of life insurance that is paid out after your death. However, it is an investment rather than insurance in the general sense.

An insurance company will take the premium and invest it for income and or capital growth which potentially accrue until a policyholder withdraws money from the policy. Tax is paid within the Onshore Bond by the Life Company (This is different for an Offshore Bond and advise can be given as to whether this would be more beneficial). As a basic rate tax payer there would be no further tax due to the policyholder, this is different to a high rate tax payer where I further tax liability would be due on encashment, again advice can be given in this area. Up to 5% withdrawal can be taken where personal income tax is deferred until certain events occur and the insurance company calculates any gain on a bond. As a result, an investment bond can be a potentially tax-efficient way of holding a range of investment funds in one place.

You can usually buy investment bonds from life insurance companies and they can be a good way of allowing you to invest in a mixture of investment funds that are managed by professional investment managers.

Each bond is usually designed to provide benefits for different types of investors but a common element is that they aim to produce long term capital growth and/or generate a long-term income.

The value of your investment in a bond can fluctuate and you may not get back the full amount of your original investment. Early cash-in charges may apply on some investment bonds.

There are often minimum investment levels that may range from £1,000 upwards and can typically be set at £10,000.

When you invest in a bond you will be allocated a certain number of units in the funds of your choice or those set out by the conditions of the bond.

Each fund will invest in a range of assets and the price of your units will normally rise and fall in line with the value of these assets.

What are the main benefits of an investment bond?

  • Potential for growing your investment over the longer term
  • Regular withdrawals can be taken
  • You can choose to invest in a range of funds, you can choose a portfolio, or you can choose a mixture of both
  • You can usually switch between funds within your bond
  • Tax planning benefits

This is based on our current understanding as at May 2011 of current tax legislation and HM Revenue & Customs practice, both of which may change without notice.

David Simmonds Financial Advisor IFA East Peckham

The value of your investment may go down as well as up and you may get back less than you invested.

CONTACT

LMJ Financial Management Ltd

Upper South Hall
Bullen Farm Business Centre
Bullen Lane

East Peckham
Tonbridge
Kent, TN12 5LX

Tel: 01732 874111
Fax: 01732 874222
Email: lmj@lmjfs.co.uk

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LMJ Financial Management Ltd, Upper South Hall, Bullen Farm Business Centre, Bullen Lane, East Peckham, Tonbridge, Kent, TN12 5LX
Tel: 01732 874111 Fax: 01732 874222 Email: lmj@lmjfs.co.uk

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