INDIVIDUAL SAVINGS ACCOUNTS (ISAs)

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1 INDIVIDUAL SAVINGS ACCOUNTS (ISAs)

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3 About Us Logic Investments is an independent advisor providing stockbroking and investment management services to private investors, pension trusts and corporations. Our approach is client focused: we aim to provide tailored and objective investment advice and investment management services to help our clients achieve their investment goals. We strive to provide our clients with a high level of service that is built on trust and fairness. Contents Individual Savings Accounts (ISAs) Our ISA Advisory Service ISA Portfolio Models Speculative Portfolio Model Adventurous Portfolio Model Balanced Portfolio Model Cautious Portfolio Model Our Adventurous and Speculative ISA Portfolio Models should only be used as part of a balanced portfolio. Therefore you must seek advice from a qualified adviser who will advise whether this service is suitable and appropriate for you. 03

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5 Individual Savings Accounts (ISAs) What is an ISA? Individual Savings Accounts (ISAs) were introduced in April 1999 to replace old-style tax free savings. There are two most commonly used types of ISAs: Those that you save cash into known as cash ISAs Those that you keep investments in known as stocks and shares ISAs Logic Investments offers an online ISA facility giving you full control at the touch of a button. Our ISA can be used for both advisory and execution-only services. The advantages of ISAs What sets ISAs apart from other savings and investment accounts is that they come with significant tax benefits. The interest you make on cash savings or the gains from investments are tax-free up to the annual limit. Because of their tax benefits, ISAs could help your savings and investments grow faster over time. Stocks and shares ISAs have the added advantage of helping safeguard you from a potential Capital Gains Tax (CGT) bill in the future. CGT is a tax on the gain you make when you sell or dispose of assets such as investments. Can anyone have an ISA? You need to be 16 or over to open a cash ISA and 18 or over to open a stocks and shares ISA and you must be ordinarily resident in the UK. Junior ISAs are available if you would like to invest on behalf of a child. How much can I save into an ISA? For the 2016/2017 tax year the ISA allowance is 15,240. The Junior ISA allowance is 4,080. You can invest your ISA allowance fully as stocks and shares, cash, or any combination of the two. Why choose a stocks and shares (Investment) ISA? People often choose stocks and shares ISAs because they are looking for a better return from their savings than cash can provide. In a cash ISA the pace your cash grows at will depend on the amount of interest you get and this of course is the big challenge for cash savers at the moment because interest rates are still very low. Inflation can also erode the spending power of cash if prices rise faster than your savings grow. Stocks and shares ISAs are designed to hold investments rather than cash and, over the longer term, investments do have the potential to deliver much higher returns than cash although returns from investments are a lot less predictable and therefore there may be losses and capital is at risk. What to consider Are you willing to take any risks with your money? With a cash ISA, the money you pay into the account is protected by the Financial Services Compensation Scheme (FSCS). When investing you need to be willing to take some risks with your money because investments can go down in value as well as up. This means you could end up with less money in your stocks and shares ISA than you first paid into it. But, as we ve already said, with investing there is also the potential to make far greater returns than cash. How long are you planning to keep your money tied up for? It s generally understood that it s not wise to invest for the short term so if you think you ll need quick access to your money, a cash ISA is probably a better option. With a stocks and shares ISA, you should be prepared to leave your money invested for at least three years and ideally around five years. 05

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7 Our ISA Advisory Service Whether you are an experienced investor or new to the stock market, our tailored ISA Advisory Service could play a key part in the development of your portfolio. Our ISA Advisory Service allows you to take advantage of our knowledge and expertise but reserves the final decision for you, keeping you in control. Our advice is as individual as each client. That is why when you decide to use our ISA Advisory Service we will provide you with a Personal Investment Advisor. Your Personal Investment Advisor will assess your investment objectives, risk profile and also take into consideration any particular interest, ethical position or goal you may have; to ensure that the investment advice provided is bespoke and suitable for you. You will be advised not only on single transactions, but on your portfolio as a whole. This includes looking at the wider issues that may affect your portfolio such as asset allocation, diversification and risk exposure. Your advisor will also keep you informed of any economic factors that may affect your investments and will advise you accordingly. Benefits Of Logic Investments ISA Advisory Service Logic s comprehensive ISA Advisory Stockbroking service includes the following benefits: Bespoke trading ideas and strategies Advice on when to place a trade and when to avoid one Dedicated Personal Investment Advisor. Investment advice tailored to your investment objectives and risk profile Ongoing advice, based on your portfolio as a whole Ability to view and monitor your portfolio on-line, in real-time Competitive commission rates Free Regular Research Reports We believe that this service offers the best of both worlds to clients who want a hands on approach to running their portfolio but who would like access to strategic asset allocation models, in-house Independent research capability and deeper investment expertise. Crucially, we can offer perspective on the wider issues that affect a portfolio, utilising the views of experts. We are finding that demand for this type of service is high as this approach is well suited to the current financial environment - one where markets can be volatile and prone to shocks. The dual attraction is that the client is in control of investment decisions yet still has all the benefits of having a professional Investment Advisor involved. 07

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9 ISA Portfolio Models Giving You More Control The asset allocation within a portfolio matters as different type of assets perform differently in different market and economic conditions. In very general terms, riskier investments, such as equities, should provide the best returns over the long term, but they can also be the most volatile. Combining different types of investment via asset allocation in a portfolio can help to even out these swings in value, especially if they are non-correlated (i.e. their prices move independently). This is why it usually makes sense even for adventurous investors to have some exposure to bonds, even though the long term potential is less than that of equities to help reduce the market risk. The Asset Allocation of a portfolio is reckoned to account for over 90% of the returns and has a direct impact on the level of risk. If you have an investment time-scale of 3 years you should take much less risk than if you have over 20 years to make regular savings. We use a range of portfolio models to help guide our clients towards achieving their objectives based on their personal circumstances. Our valuations then show if there are any variances with the model. Asset Allocation and Market Timing Market timing usually plays a minor role in investment performance compared to Asset Allocation and we recommend investors avoid the temptation to try and second guess the markets. Contrary to popular opinion, even professional investors cannot predict short term market movements with any consistency and successful investing is not based on timing decisions. However, if you are committing a large sum, it does make sense to spread out the timing of the initial investment. Fixed income portfolio models For investors who prefer a fixed income rather than a variable growth portfolio model, we provide fixed income portfolio models to suit. These fixed income model portfolios allocate a combination of high and medium risk bonds to suit investors with a medium and high risk attitude to risk who s financial circumstances allow their funds to be tied up for at least three years. The choice of portfolio model depends on your attitude to risk, goals and investment horizon. Our Adventurous and Speculative ISA Portfolio Models should only be used as part of a balanced portfolio for those with a high risk attitude to risk. 09

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11 Speculative Portfolio Model (High Risk) 25% Global Equities 25% Medium Risk Bonds High Risk Bonds 50% Total targeted return*: 7-9% P.A. (*Before charges see your rate card for details) Note: The composite of the portfolio is an example and may be subject to change. This portfolio should only be used as part of a complete portfolio. Investment Objective This high risk model portfolio aims to provide an even split between high income and capital growth by advising on a combination of high and medium risk fixed income bonds and global equities. This model is most suited to investors who s attitude to risk is high. Global Equities The Global Equities segment comprises a combination of: 1. Growth Stocks Global larger capitalised stocks which offer above average capital growth potential. These companies would have a perceived intrinsic value above their current market price, determined by extensive fundamental research. 2. Special Situations Focused on taking advantage of longer term share trading opportunities that have been identified as offering growth potential. This can be based on company results, technical analysis, macro-economics, geopolitical pressures, sentiment, and fundamental data. Medium Risk Bonds The medium risk bonds are investment grade bonds. Investment grade refers to the quality of a company s credit according to a regulated international credit ratings agency. Usually there is a lesser risk of default for the medium risk bonds compared to the high risk bonds. Therefore the recommend allocation for the medium risk bonds is larger compared to the high risk ones to help control the total risk within the portfolio as a whole. High Risk Bonds High risk bonds are non-investment grade bonds and therefore the probability that the company will repay its issued debt is deemed to be speculative. Therefore the recommended allocation for the high risk bonds is smaller compared to the medium risk ones to help control the total risk within the portfolio as a whole. High risk bonds usually pay a larger rate of return compared to the medium risk bonds to attract speculative investors. 11

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13 Adventurous Portfolio Model (Medium High Risk) 45% Global Equities Medium Risk Bonds 20% High Risk Bonds 35% Total targeted return*: 6-7% P.A. (*Before charges see your rate card for details) Note: The composite of the portfolio is an example and may be subject to change. This portfolio should only be used as part of a complete portfolio. Investment Objective This medium-high risk model portfolio aims to provide a high income and some growth by advising on a combination of high and medium risk fixed income bonds and an allocation in global equities. This model is most suited to investors who s attitude to risk is mediumhigh. Global Equities The Global Equities segment comprises a combination of: 1. Growth Stocks Global larger capitalised stocks which offer above average capital growth potential. These companies would have a perceived intrinsic value above their current market price, determined by extensive fundamental research. 2. Special Situations Focused on taking advantage of longer term share trading opportunities that have been identified as offering growth potential. This can be based on company results, technical analysis, macro-economics, geopolitical pressures, sentiment, and fundamental data. Medium Risk Bonds The medium risk bonds are investment grade bonds. Investment grade refers to the quality of a company s credit according to a regulated international credit ratings agency. Usually there is a lesser risk of default for the medium risk bonds compared to the high risk bonds. Therefore the recommend allocation for the medium risk bonds is larger compared to the high risk ones to help control the total risk within the portfolio as a whole. High Risk Bonds High risk bonds are non-investment grade bonds and therefore the probability that the company will repay its issued debt is deemed to be speculative. Therefore the recommended allocation for the high risk bonds is smaller compared to the medium risk ones to help control the total risk within the portfolio as a whole. High risk bonds usually pay a larger rate of return compared to the medium risk bonds to attract speculative investors. 13

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15 Balanced Portfolio Model (Medium Risk) 55% Global Equities Medium Risk Bonds High Risk Bonds 15% 30% Total targeted return*: 5-6% P.A. (*Before charges see your rate card for details) Note: The composite of the portfolio is an example and may be subject to change. This portfolio should only be used as part of a complete portfolio. Investment Objective This medium risk model portfolio aims to provide a medium-high level of income and some capital growth by advising on a combination of high and medium risk fixed income bonds and an allocation in global equities. This model is most suited to investors who s attitude to risk is medium. Global Equities The Global Equities segment comprises a combination of: 1. Growth Stocks Global larger capitalised stocks which offer above average capital growth potential. These companies would have a perceived intrinsic value above their current market price, determined by extensive fundamental research. 2. Special Situations Focused on taking advantage of longer term share trading opportunities that have been identified as offering growth potential. This can be based on company results, technical analysis, macro-economics, geopolitical pressures, sentiment, and fundamental data. Medium Risk Bonds The medium risk bonds are investment grade bonds. Investment grade refers to the quality of a company s credit according to a regulated international credit ratings agency. Usually there is a lesser risk of default for the medium risk bonds compared to the high risk bonds. Therefore the recommend allocation for the medium risk bonds is larger compared to the high risk ones to help control the total risk within the portfolio as a whole. High Risk Bonds High risk bonds are non-investment grade bonds and therefore the probability that the company will repay its issued debt is deemed to be speculative. Therefore the recommended allocation for the high risk bonds is smaller compared to the medium risk ones to help control the total risk within the portfolio as a whole. High risk bonds usually pay a larger rate of return compared to the medium risk bonds to attract speculative investors. 15

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17 Cautious Portfolio Model (Medium-Low Risk) 50% Global Equities 25% Medium Risk Bonds Low Risk Bonds 25% Total targeted return*: 3-4% P.A. (*Before charges see your rate card for details) Note: The composite of the portfolio is an example and may be subject to change. This portfolio should only be used as part of a complete portfolio. Investment Objective This medium-low model portfolio aims to provide a medium level of income and some capital growth by advising on a combination of low risk income and medium-low risk fixed income bonds and an allocation in global equities. This model is most suited to investors who s attitude to risk is medium-low. Global Equities The Global Equities segment comprises a combination of: 1. Growth Stocks Global larger capitalised stocks which offer above average capital growth potential. These companies would have a perceived intrinsic value above their current market price, determined by extensive fundamental research. 2. Special Situations Focused on taking advantage of shorter term share trading opportunities that have been identified as offering growth potential. This can be based on company results, technical analysis, macro-economics, geopolitical pressures, sentiment, and fundamental data. Medium Risk Bonds The medium risk bonds are investment grade bonds. Investment grade refers to the quality of a company s credit according to a regulated international credit ratings agency. Usually there is a lesser risk of default for the medium risk bonds compared to the high risk bonds. Therefore the recommend allocation for the medium risk bonds is larger compared to the high risk ones to help control the total risk within the portfolio as a whole. Low Risk Bonds Low risk bonds are bonds that are have been given the highest credit rating of AAA. AAA bonds are those considered the safest by the international bond ratings agencies. The rating agencies provide these evaluations of a bond issuer s financial strength, or its ability to pay a bond s principal and interest in a timely fashion. Low risk bonds pay a smaller rate of return compared to medium or high risk bonds. 17

18 The investments mentioned in this report may not be suitable for all recipients or be appropriate to their personal circumstances and before acting on any advice or recommendations in this report, clients should consider whether it is suitable for their particular circumstances and if necessary seek professional advice. The past performance of any investment is not necessarily a guide to future performance. The value of shares may rise as well as fall due to, and not just including, the volatility of world markets, interest rates, economic conditions/data and/or changes in the rate of exchange in the currency in which the investments are denominated. As stocks and shares are valued from second to second, their bid and offer value fluctuates sometimes widely. You may not necessarily get back the amount you invested as your capital is at risk if you invest. Bonds Bonds are issued by companies, public institutions and/or governments. The value of a bond will fall in the event of the default or reduced credit rating of the issuer. Similarly, an increase in credit rating (or narrowing of credit spreads) can lead to capital appreciation. Bonds are, inter alia, subject to the following risks: Counterparty risk: If the issuer of bonds is partially, or in total, unable or fails to honour its obligations, the investment may suffer a corresponding loss. As secured financial instruments, covered bonds, address this risk. Inflation risk: If inflation and/or inflation expectations increase, then the value of the investment may decrease and the investor may ultimately suffer a loss. Risk of changing interest rates: The market interest rate is material for the value of a bond, because bonds might become less economically attractive in times of increasing interest rates and, thus, decrease in value. If sold before maturity, the owner may suffer a loss. The risks factors stated above do not cover all the risks of investing in bonds. Exchange Traded Funds (ETFs) Exchange Traded Funds (ETFs) are investment funds, similar to unit trusts and OEICs but they are traded like shares. ETFs closely track the performance of an index and as such their value can go down as well as up and you may get back less than you invested. Also, past performance is not a reliable indicator to future performance. The value of an ETF may be affected by market values, interest rates, exchange rates, volatility, dividend yields and issuer credit ratings. These factors are interrelated in complex ways, and as a result, the effect of any one factor may be offset or magnified by the effect of another factor. You should ensure that the ETF meets your own objectives and circumstances, and consider the possible risks and benefits of purchasing the ETF Alternative Investment Market (AIM) General Risk Warning This is a market designed primarily for emerging or smaller companies. The rules of this market are less demanding than those of the official List of the London Stock Exchange and therefore carry a greater risk than a company with a full listing. With AIM shares there is often a big difference between the buying price and the selling price. If they have to be sold immediately, you may get back much less than you paid for them, and you may have difficulty in selling them at a reasonable price and in some circumstances it may be difficult to sell at any price. The price may change quickly and it may go down as well as up. Contact Us London Office Logic Investments Ltd Portman Square London W1H 6HN United Kingdom Tel: +44 (0) Logic Investments Ltd is Authorised & Regulated by the Financial Conduct Authority (516459)