Set out below are some questions we are asked about investing for the long-term...
Are investment returns guaranteed?
In the world of investing there are simply no guarantees, that is why we make it clear that past performance is not an indicator of future returns. The value of your investment and any income from it may fall as well as rise and is not guaranteed. We strongly recommend to keep transaction cost and management fees low and long term investment has the best chance of providing decent return on investment.
What are dividends and how can they affect investments?
A dividend is paid by a company to its shareholders and reflects the company's earnings. They are often paid out quarterly (every three months). Dividends give stockholders a steady return, regardless of what happens to the stock price. They can help reduce or negate the effects of inflation over the long term.
How will inflation affect the return?
Inflation can have a big impact on returns; it is important to reinvest dividends to counteract the effects of inflation.
When is the best time to invest?
Investing earlier and for the long term allows investment to typically increase in a growing stock market. For a junior SIPP investing on or near the child’s birthday will be helpful.
Where have you researched 8% returns for the balanced stock market?
We have used the data source from CRSP (Center for Research in Security Prices), Global Financial Data Inc. and Vanguard Life Strategy funds.
Why choose a Junior SIPP over a Junior ISA?
It is true that a Junior SIPP can only be accessed at age 55 or later, while a Junior ISA (Investment Saving Account) can be accessed at any time. This might seem to be disadvantageous to have a SIPP as you have to wait a long time to access returns - but the investment benefits from the financial powers of long term investing and compounding.
The BIG factor is that a Junior SIPP stops the temptation of account holders to access the fund and deplete the power of growth of the investment.
What amount is the minimum amount I could invest?
Most Junior SIPP accounts allow for a minimum lump sum contribution of £500 or minimum monthly sum contribution of £25 per month. The key to success is to start EARLY as possible with what you can afford.
Why have you chosen 68 as the target year when a SIPP can be accessed at age 55?
We really want to see the investment grow and grow big – allowing it to grow until the age of 68 or later means your child could benefit with substantial returns. 68 years is aligned with 2017 pension legislation as the age when a senior can apply for the state pension.
What happens if the SIPP account holder does not live till 68 years old?
There are laws in place that protects a SIPP account which is passed on to next of kin. But remember the SIPP account holder can access their SIPP at the age of 55 (as at 2017 pension legislation).
What about tax issues?
A SIPP has the benefit of 25% tax free lump sum available for the SIPP account hold to access at or after age 55 (2017 pension legislation) the rest sum amount will be taxable.
We are not tax account specialists – please consult tax specialists about taxation issues.
What is the £1 Million Wealth Plan?
The £1 Million Wealth Plan is an ultra-long-term investment strategy for your family’s financial future.
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* 68 years is based on state pension age set in 2017 Government legislation.
**Commissions and other charges paid on transactions and the annual administration charge, will affect overall performance. Performance based on Vanguard LifeStrategy® 60% Equity Fund: 60% equities/ 40% bonds allocation. Rolling 12-month total returns (1900–2016) return of 8%. Approximated figures as at 2017, please consult your benefit agency for details on child benefit. You cannot restrict what the child does with the funds once they have access to their investments. Please remember: the value of your investment and any income from it may fall as well as rise and is not guaranteed. The value of your investments and income arising from them can fall in value and you may lose some or the entire amount invested. When determining which Index to use and for what period, we selected the Index that we deemed to be a fair representation of the characteristics of the referenced market, given the information currently available.
FINANCIAL NOTICE: The Information on this website is provided for informational purposes only, without any express or implied warranty of any kind, including warranties for any particular purpose. The Information contained in or provided from or through this website is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice. The Information on this website and provided from or through this website is general in nature and is not specific to you the user or anyone else.
Important information: please remember the value of tax savings depends on individual circumstances and tax rules can change over time. Investments can go down in value as well as up, so your child could get back less than invested. A Junior SIPP is a type of pension for people happy to make their own investment decisions, and is not accessible until age 55 which is likely to rise by the time your child reaches retirement. If transferring a pension please ensure you will not lose valuable guarantees or incur excessive exit penalties. If you are unsure if an investment is right for you or your child, please seek financial advice. The results are hypothetical results and are NOT an indicator of future results and do NOT represent returns that any investor actually attained. Indexes are unmanaged, do not reflect management or trading fees.