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Julian Gibbs

Ron Sandler quite rightly pointed out that life insurance investment bonds are attractive to higher-rate taxpayers but it is questionable whether the Chancellor will withdraw their benefits and, even if he does, he is most unlikely to do it retrospectively. It is wise, therefore, for IFAs to advise higher-rate taxpaying clients to use investment bonds as part of their portfolio, especially if they are likely to need the 5 per cent tax-free income concession.

Even if more conservative clients do not wish to take risks, they can use an investment bond linked to a fund investing in UK gilts. However, at current levels, I believe that equity funds will give by far the best returns, especially as most of the major markets are around 40 per cent or more off their highs.

Provided that stockmarkets recover over the next year or so, which I expect them to do, with-profits bonds are the lower-risk answer for the more cautious but do make sure you choose funds that are well backed or have a strong parent company. Those companies with most of their assets invested in equities or commercial property should outperform those invested mainly in fixed-interest investments.

It is worth remembering also that one of the biggest benefits of investment bonds is that they are the only asset which it is possible to give away without triggering a tax liability.

Investment bonds are particularly useful for those who are higher-rate taxpayers now and are likely to become basic-rate taxpayers when they retire and, effectively, can enjoy a 5 per cent tax-free income, equivalent to 8.33 per cent growth, for ever.

I believes that much more use should be made of investment bonds while these benefits are still available.


Sweet Charity

Welcome to my first column as I take over from my old friend Brian Lawless. Brian will certainly be a hard act to follow but I would like to start with a topic frequently raised by financial advisers – suitable investments for charities.Most charities are constituted as trusts. The last few years have certainly been […]

Fidelity&#39s Bolton to step down from Euro fund

Fidelity star fund manager Anthony Bolton is to step down from managing the £2bn European fund amid speculation that he is winding down his responsibilities ahead of retiring within the next three years.The move will leave him to concentrate on his UK responsibilities, where he still manages the special situations fund and the special values […]

AIG Life – Premier Trustee Investment Bond

Friday, 26 July 2002 Type: Trustee investment bond Minimum premium: Lump sum £250,000, $375,000, euro 375,000 Minimum-maximum ages: From birth-no maximum Fund links: 68 funds from AIG Life, 61 external funds from Aberdeen, ABN AMRO, Deutsche, Exeter, Fidelity, Gartmore, Invesco Perpetual, M&G, Newton, Threadneedle, and Cazenove Charges: Annual 0.25-0.5% Allocation rates: 100% Minimum term: No […]

Must try harder

At this time of year, many parents will be anxiously awaiting end-of-term reports for their offspring. Given the time and effort put into rearing the Sandler and Pickering reviews, I can only assume that the Government is similarly nervous.Master Pickering has proved to be a serious underachiever as his work to date has been both […]


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