Investments and Savings plans for Dentists

When deciding whether to invest, it's crucial to ask yourself how comfortable you would be facing a short-term loss in order to have the opportunity to make long-term gains. Risk is a very personal thing – what may be a small amount of risk to one person may be huge to another.   This is why we ask our client to complete a Risk Profile Questionnaire so that we can assess the most appropriate investment for you.

The important thing to remember is that with investments, even if your investment goes down, you will only actually make a loss if you cash it in at that time. When you see your investment value fall, this is known as a paper loss.

If you are going to invest, you need to be prepared to take some risk and to see at least some fall in the value of your investment.

Risk can never be eliminated but it is possible to manage it, by Diversification – spreading your risk. Different investments behave in different ways and are subject to different risks. Putting your money in a range of different investments may help reduce loss, should one or more of them fall.

It is also important to remember that risk and reward generally go hand in hand. The more risk you are prepared to take, the higher the potential reward. If you are not prepared to lose any of your money under any circumstances then you have to accept a lower level of return, and an investment is probably not a product you should be considering.

If you see an investment promising a high return at little or no risk, be very wary. The old saying 'if it looks too good to be true, it probably is' almost always applies to investments.

Savings

Putting a little away regularly may be the best way of saving up for expensive things, like a holiday, furniture, or a special family occasion.  Some clients will use savings to supplement retirement income. 
There are two ways to save – short term and long term. Savings accounts are for times when you may need to get at your money quickly. They’re different from investments, which are really for the longer term.

Individual Savings Accounts

By using an ISA you can invest in cash or longer-term investments such as stocks and shares or insurance and not pay tax on most of the income (this is why it is called a tax wrapper).

The current ISA rules* are:

• The annual investment allowance is currently £7,200. Up to £3,600 of that allowance can be saved in cash with one provider. The rest can be invested in stocks and shares with either the same or a different provider.
• From 6 October 2009 the annual investment for people over 50 will rise to £10,200 (of which £5,100 can be saved in cash).
• From 6 April 2010 the annual investment will rise to £10,200 (of which £5,100 can be saved in cash) for everyone.
• You can invest in two separate ISAs each tax year – a cash ISA or a stocks and shares ISA.
• You can transfer money saved in a cash ISA to a stocks and shares ISA – but you can't transfer money the other way.

If you would like further information about investment plans for dental professionals or would like to arrange a free no obligation meeting, please give us a call on 01489 890111.

 * Source: www.moneymadeclear.fsa.gov.uk/  -  8th June 09

• The financial Services Authority does not regulate taxation and trust advice
• The value of your investment can go down as well as up and you may not get back the full amount invested
• Levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor