Tax allowances on pensions and savings schemes, such as ISAs, help to improve overall investment returns. However, there are a number of factors people overlook when it comes to investment.
For instance, many people overlook what is effectively a gift from the taxman and fail to maximise allowances. This might involve investing on behalf of family members. Setting aside money for a partner and two adult children, as well as for yourself, provides a massive tax saving and is perfectly legal.
While redirecting capital in this way is a straightforward process with clear benefits, another area that is often not fully appreciated and is trickier to address is the impact of charges on investment returns. Cutting the fees you pay to a fund manager by just a fraction can have a major effect on how money grows over the longer term.
However, it’s not just a case of seeking out the fund with the lowest costs. It’s important to weigh up various factors. For example, a fund manager with particularly high fees may justify the additional cost with exceptional performance. In that case, it’s worth paying the higher amount. By contrast, a manager with exceptionally low charges may do a worse job of managing your money.
While maximising tax benefits is relatively simple, finding the correct fee structure for your circumstances can be trickier. That’s why it’s important to seek independent financial advice before committing any of your money to an investment product. If you’re in the Shropshire area, we at Hartey Wealth Management will be happy to offer that advice.