The Gazette 1984

GAZETTE

JANUARY/FEBRUARY 1984

overseas interests. Over recent years, shares have not performed particularly well, reflecting the general economic malaise, though some individual shares have done well. Echoing the earlier point about inflation, a successful investment portfolio must substantially out- perform the general stock market trends, which have not generally kept pace with the cost-of-living over recent years. A stockbroker will advise under this heading though, in the author's view, an investor would need to be thinking in terms of investing at least £30,000 to achieve a reasonable spread of investments and risk. The last category, Unit-linked Funds, are a relatively new phenomenon. These Funds are operated through the medium of life insurance companies and there are now some 36 Funds available, spread over nine companies. These Funds are divided into five main categories — property, equity, gilts, cash and managed funds, the last being a mixture of all the others. The expression unit-linked simply means that, for example, if the original fund was launched by selling one million units at £1 each (total fund therefore £1 million), this amount is then invested by the insurance company in property, equities, or whatever. The value of the units rises or falls depending on the subsequent total value of the fund divided by one million. The number of units in a fund is not fixed (neither is the total fund) and can expand or contract, depending on new investors or sales by existing investors. Income tax and capital gains tax are paid within the fund itself, hence any increase in value is tax-free to the individual investor. The primary aim of the funds is capital growth, though most of the funds provide a facility for taking a regular tax-free income through the cashing-in of units at designated intervals. The point to watch here is, again, that it is only the real income, as defined earlier, that should be drawn if possible. Up to £50,000, sometimes more, can generally be invested in individual funds, though of course it would be wise to spread an investment over several funds. Remember there is no guarantee as to values — unit prices can go down as well as up, though the record to date has been generally very good. Some examples of average tax-free growth rates over recent years are set out below. A point worth noting is that some funds offer a geographical spread of investments through investments in the U.K., and the U.S., and elsewhere. Professional advice on selecting suitable funds is important, as there can be a wide range of interpretations that could be placed on likely future performances of individual funds. As legal advisers will be aware, investments for a Ward of Court must be made from the list contained in the Trustee (Authorised Investments) Act 1958 and

amendments, which exclude the investments mentioned above. The authorised list is very restricted indeed, being largely confined to deposits with recognised financial institutions and government stocks, but one investment which is allowed is the Bank of Ireland Gilt Edged Unit Trust, which goes at least some way towards meeting the investment criteria mentioned in this article. As a final and important point, remember that some investments pay commission to the intermediaries involved and, indeed, some such advisers only offer investments where commission can be obtained so that, while not suggesting the investment advice may be suspect, it may not be comprehensive and may not include

all necessary tax advice. • • Partner, Peelo & Perry, Chartered

Accountants.

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TAX-FREE GROWTH RATES

Average Growth Rate Over

1 year

3 years

5 years

7 years

(to 31 December 1982) Irish Life Managed New Ireland Property

+19.1% + 8.5% +15.8% +12.3%

+ 16.2% + 14.9% + 17.3% + 17.9%

+ 13.8% + 15.2%

+ 16.9%

_ _

Insurance Corporation Equity

-

Inflation

+ 15.4%

+ 15.5%

19