Page 26 - Phonebox Magazine September 2008

Finance Matters
brought to you by Advison Independent Financial Advisers
How protected is your cash?
The recent problems with Northern Rock have once again brought into focus the ‘real’ level of security of cash deposits. In reality, the likelihood of a UK bank going under is pretty remote and the last time that this happened was in 1991, when BCCI was wound up. This was not due to the sort of problems that the banking industry faces today but more to do with the somewhat dubious operations that it was involved in. The reason for the default was, of course, of little consequence to the thousands of innocent savers who had money deposited with them.
Northern Rock is now backed by the UK government and, as such, could be considered as safe as any bank in the world, bearing in mind the UK government has never defaulted. However, in the event of a UK bank or building society going bust, it is important to consider what level of protection you have.
For each individual saver, the accounts you hold with any one bank are accumulated and overall you have 100% protection on the first £35,000 of savings with any one bank. After this you have no protection, although if surplus funds are available after the bank has been wound up then you may receive more. It is for this
reason that many people do limit the amount they hold with any one bank and the recent problems in the banking sector have certainly led to an increase in the amount of money being moved from one large account to a number of smaller accounts with different banks.
For investments such as Shares, ISAs or Unit Trusts, the limit is 100% of the first £30,000 and 90% of the next £20,000 (i.e. £48,000). One particular area that is well protected is Life Assurance and included within this group are Investment Bonds. If you hold one of these investments, which are issued by Life Companies, they provide 100% protection on the first £2,000 and 90% on the remaining value but, importantly, with no upper limit. Such an investment can either be held onshore or offshore and, due to the extra protection offered, many people have been using these to hold larger amounts of cash. In addition, there can be tax benefits available due to the ability to defer paying tax, as well as selecting the most tax efficient time to take any gains. Whilst these investments are not suitable for everyone, they are certainly worth considering in light of the above. K
Expert independent advice is essential to ensure you make the most of the opportunities available for you and to establish an effective strategy. Unlike many IFAs, Advison not only provides the initial advice you require but also produces regular personalised reviews of your Investments, Pensions and Protection Policies, enabling us to ensure the assets you hold are still relevant to your circumstances. We would be pleased to discuss your specific situation and plan the most appropriate course of action for you. For full details about Advison please see our advertisement below.
advison
Independent Financial Advisers
Advison is a small, friendly and reliable firm specialising in Investments, Retirement Planning and IHT Mitigation.
We offer a return to the traditional values only a smaller company can offer, a service we find
is appreciated by the more discerning client. We are happy to see you in the comfort of your own home or at our peaceful and relaxed country offices, which have plenty of free parking.
All staff at Advison is either AFPC or FPC qualified.
----------------This is your opportunity to speak with the experts----------------
• Planned Savings Magazine – National Estate Planner of the Year
• Regularly quoted in the national press for over 10 years
• Used as financial planning experts on BBC, Sky, CNBC, Bloomberg, Simply Money and the Money Channel • Choice Magazine’s Pensions and Trusts expert
Call Kevin or Andrew for a preliminary chat or to arrange an appointment.
No 7, Water End Barns, Eversholt (Nr Woburn), Beds. MK17 9EA T: 01525 288488 E Mail: ifa@advison.co.uk
advison ltd is an appointed representative of IN Partnership the trading name of The On-Line Partnership Limited which is authorised and regulated by the Financial Services Authority. Registered (England) No. 5009271
26 Phonebox Magazine