• Investment Guide

  • New to investments? We have some useful information to help you understand risks and opportunities.

    Remember that the value of investments and the income from them can go down as well as up and cannot be guaranteed. Consequently, on selling investors may not get back the amount they originally invested.

Things to consider when investing
  • Before you start investing, you should ask yourself a few questions – these are also the kind of subjects that our advisers will typically cover before recommending any investment solutions.

    What is your current financial situation?

    • You may already have some investments – these need to be considered before you add to or change your personal investment portfolio.
    • If you have savings, you should think about how much you want to invest, bearing in mind you will want to retain money for quick access and emergencies.

    How long should I invest for?

    • An advisor will want to know over what timescales you wish to invest before building your personal investment portfolio.
    • These timescales will be determined by your own life-plan, but will also be significantly influenced by your current financial situation, your appetite for risk and market conditions.

    When should I invest?

    • It is always important to remember that it is very difficult to predict the market's performance. For the majority of investors, it is the time spent in the market that is critical, rather than market timing.

    What about protection?

    • Protection is commonly overlooked but needs to be an integral part of your financial plans. You need to plan for the unexpected and ensure you and your dependants have a secure financial future.

    Where you plan to be in the next 5 years?

    • When building an investment portfolio that meets your needs and concerns, it is important to consider where you will be geographically in the near future.
    • Our advisers are experts at providing international global strategies, and will ensure that the investment portfolio that we build for you will meet your lifestyle – wherever you are.

    What is your attitude to risk?

    • Are you prepared to accept a fall in the value of your investments and income taken from them in the short term if this improves your chances of generating better returns in the long term?
    • If your answer is No, you should invest in savings accounts where your capital is safer and any added value comes through interest only.
    • If your answer is Yes, there are many other options open to you, but it's important that you understand the nature and extent of the risks involved before making any decisions.
What can I invest in?
  • Understanding your options is the first step towards making the most of your investments

    There are four main asset types, each with their own advantages and risks. If you're not sure where to start, we can help explain the pros and cons of each.

    Asset type Benefits Risks
    CASH
    Cash investments may increase in value by earning interest at a fixed or variable rate. Cash can be invested in accounts (e.g. from a bank or building society), or in cash investment funds, where your capital is pooled with money from other investors to get the best interest rates.
    Minimal risks to your capital
    Easy access to your money (although it may be held in a fixed term).
    A clear, interest rate based return.
    If your interest rate is lower than the rate of inflation, the buying power of your money will go down.
    BONDS
    When you buy a bond you're lending money to the company (or the government) who issued it and they pay you a regular interest in return for the loan. When the term ends, you receive the original amount of the loan.
    A regular income, potentially higher than that from a bank or building society account. A skilful fund manager can achieve a higher rate of growth than the average bond, or reduce the impact of a falling market by buying or selling at the right time. If you have invested in a corporate bond and the company is wound up, it must repay its bondholders before its shareholders. Credit Risk
    The risk to your money depends on the credit worthiness of the issuer. If a company is stable and financially secure, it's more likely to be able to repay your loan, meaning less risk and a lower interest rate. Interest Risk
    When interest rates go up, your bonds will generally reduce in value.
    PROPERTY
    You could buy a property to rent out or land to develop. Or you can pool your money with other investors in a property fund which then invests in rentals, development, land, commercial property (such as shops and offices) or a mixture of them all.
    A direct property investment gives you:
    • an asset that you can use and which could increase in value – but not always
    • the reassurance of a physical investment
    • security — property is traditionally regarded as less risky than investing in equities
    • income potential through rental payments
    A property fund offers you:
    • the chance to invest across a variety of properties
    • the experience of a fund manager
    • reduced risk – by investing in a large number of properties, the impact of a single property (for example an empty rental property) could be less significant.
     
    A downturn in the property market could bring a shortage of buyers or mean the property is worth less than what you paid for it originally.
    Exchange rates can also affect the value of overseas properties and any decline in the rental market can lead to a lack of suitable tenants to cover mortgage repayments.
    Investing in property directly has potential problems, including:
    a costly initial outlay — including stamp duty, legal costs, rates, surveyor fees and any renovations
    high ongoing maintenance costs
    Property fund investments also have unique risks:
    property can take years to sell delaying the return on your investment
    some funds are unregulated, which means investors have less protection
    EQUITIES
    Also known as shares, stocks or securities, you can buy these individually or by investing in a fund. This is less risky than buying shares in individual companies as funds invest in a much wider range of companies. Your return comes partly from changes to the share price (hopefully an increase!) and partly from dividends – a distribution of profits amongst shareholders.
    • Part—ownership of a company, without the need to get involved in the business.
    • The value of your investment may increase if the company is successful.
    • An annual income if the company decides to pay dividends.
    • Compared to cash, bonds or property this is a long-term, high-performance investment with a higher degree of risk.
     
    • The size of dividends is variable and payment is not guaranteed.
    • Poor company performance, interest rates and a negative economic outlook can reduce share value.
    • If a company goes out of business, shareholders are the last to be paid and may get nothing back.
    There is the added risk with equity funds that the return depends on the fund manager making the right decisions

    Remember that the value of investments and income taken from them can go down and is affected by currency fluctuations, so you may get back less than you invest.

What are the various risks?
  • Our financial managers will always be transparent with you about the risks your investments are exposed to but in the meantime you can familiarise yourself with some of the key risks below.
    Inflation Risk The risk that inflation reduces the purchasing power of your capital and/or income. If the return on your investment is less than the inflation rate over the term of your investment, the value of your investment will have fallen in real terms.
    Interest Rate Risk Most relevant to cash deposits and bonds, this is the risk that your investment will lose money because interest rates move up or down. For example, if your cash deposit is earning a fixed 1% interest over five years, but the market interest rate moves up to 2.5% during this period you would lose potential earnings. You could also lose out if your investment isn't earning a fixed rate of interest and interest rates fall.
    Market Risk The risk of investing in specific markets, such as the property market or stock market. Events that often cannot be predicted can cause prices to fall suddenly in a particular market and significantly affect the value of your investment.
    Diversification Risk Most investors are aware of the phrase 'don't put all your eggs in one basket'. You can reduce this risk by spreading your investments widely across a variety of asset types. The downside to this is that above average performance in one asset can be diluted by poorer performance in another.
    Institutional Risk The risk that the bank or building society which holds your capital fails.
    Counterparty Risk The risk that the other party in an agreement will default, for example, the provider of an investment product.
    Default Risk Usually associated with fixed interest investments, such as Government and Corporate Bonds, This is the risk that the issuer fails to keep up interest payments to investors or fails to repay the capital at the end of the term.
    Credit Risk Closely linked to default risk, where an issuer may not default but there is speculation or a perception that they might. This can lead to a fall in the value of the investments.
    Currency Risk Investments in overseas assets can be affected by movements in exchange rates. Even if an asset performs well, investors could see the value of their investment fall when it is converted back into their home currency.
    Liquidity Risk The risk of not being able to cash in your investment as quickly as you would like or at the price you might expect.
What are the risk categories?
  • Risk Category 0

    A safe option. These investments ensure that the money you put in, is accessible and your capital will not decrease.

    Risk category 0 investments include some or all of the following features:

    • They are usually cash based.The return you get is normally paid in interest and likely to be quite small.
    • The 'purchasing power' of your money may be affected by inflation. (For example, if you have an interest rate of 0.5% and the annual rate of inflation is 2%, your savings will lose value by just under 1.5% each year.) You have access to your money, and you can use the investment as an ongoing savings account, giving you access to extra cash when you need it.

    Examples of risk category 0 investments

    • Instant access accounts
    • Bank/Building society accounts
    • Premium Bonds
     
    Risk Category 1

    A lower risk option. These investments may carry a small risk to your capital and/or subsequent income and may be readily accessible, or accessible with penalties.

    Risk category 1 investments include some or all of the following features:

    • They are usually cash based.The return you get is normally paid in interest and likely to be quite small.
    • The 'purchasing power' of your money may be affected by inflation. (For example, if you have an interest rate of 0.5% and the annual rate of inflation is 2%, your savings will lose value by just under 1.5% each year.) The capital may be readily accessible or penalties may apply where the funds are accessed before the end of the term, or without giving the appropriate notice. You can use the investment as an ongoing savings account, or for planned spending in the short to medium term (up to 5 years).

    Examples of risk category 1 investments:

    • Fixed term deposits
    • Notice accounts
    • Money market funds
     
    Risk Category 2

    A modest risk option. There may be some fluctuation in capital value and/or return. You should be willing to invest for the medium to long term (5-10 years).

    Risk category 2 investments include some or all of the following features:

    • There are no guarantees, which means the capital value can fluctuate. Values and income may fall as well as rise and the investor may not receive back the amount invested. By spreading your investment in a variety of different asset types, you can reduce the overall level of risk.

    Examples of risk category 2 investments:

    • Gilt funds, High yield and Corporate bond funds
    • Mixed asset funds with a balance between equities and lower risk assets such as corporate and/or Government bonds
     
    Risk Category 3

    An increased risk that the value of your investment will go down in the short term, although the potential for capital growth over the medium to long term (5-10 years) is higher than that of a cash deposit.

    Risk category 3 investments include some or all of the following features:

    • There are no guarantees, which means the capital value can fluctuate. Values and income may fall as well as rise and the investor may not receive back the amount invested. They contain a large amount of UK and International equity or equity-related investments.
    • Fixed interest securities, such as bonds, help to spread investments across a wide range of assets.

    Examples of risk category 3 investments:

    • Mixed asset funds weighted towards equities
    • General managed funds
     
    Risk Category 4

    There is a higher risk of capital loss, but greater potential for capital growth over the medium to long term (5-10 years).

    Risk category 4 investments include some or all of the following features:

    • There are no guarantees and the capital value can fluctuate enormously. Values and income may fall as well as rise and the investor may not receive back the amount invested. Other risks not directly related to the investment can affect its value, such as currency fluctuations in overseas markets. All or most of the funds will be in equity or equity–related investments.

    Examples of risk category 4 investments:

    • Mixed asset funds weighted towards international equities
     
    Risk Category 5

    These markets are very specialised with a very high risk of capital loss. You must be prepared to lose your entire investment, but have the potential of higher returns over the long term.

    Risk Category 5 investments include some or all of the following features:

    • They are very volatile which puts the entire capital value at risk. You could actually lose more than the amount you originally invested.
    • You may need to take a long–term outlook to reap the benefits.

    Examples of risk category 5 investments:

    • Options & Derivatives
    • Enterprise investment schemes & Venture capital trusts
    • Forestry
    • High volatility fund of hedge funds
    • Fine wines
     
  • Help with investments

  •  

    Getting advice

    Our qualified advisors will take the time to understand your aspirations and recommend solutions to help you get there.

    Find out more (Getting advice)

  •  

    Contact Us

    From the UK, call:

    0800 055 6358

    Outside the UK, call:

    +44 (0) 1624 641 825

    Mon-Fri 8am-6pm and Saturday 9.30am-1.30pm UK time.
    Calls may be monitored/recorded.

Our International services are offered by Lloyds Bank International Limited, Lloyds Bank (Gibraltar) Limited & Lloyds Investment Fund Managers Limited. See company Information. Whilst our services will be available to many customers, there are countries where, due to legal or regulatory restraints, we cannot provide them.

Rules and regulations made under the UK Financial Services and Markets Act 2000 for the protection of depositors and investors, including the Financial Services Compensation Scheme, do not apply to the financial services business of companies within the Lloyds Banking Group carried out from offices outside of the United Kingdom.

Lloyds Bank International Limited. Registered office and principal place of business: P.O. Box 160, 25 New Street, St. Helier, Jersey JE4 8RG. Lloyds Bank International Limited is incorporated in Jersey, No. 4029 and is regulated by the Jersey Financial Services Commission to carry on deposit-taking business under the Banking Business (Jersey) Law 1991 and investment and general insurance mediation business under the Financial Services (Jersey) Law 1998. Lloyds Bank International Limited subscribes to the Jersey Code of Practice for Consumer Lending and has also notified the Jersey Financial Services Commission that it carries on money service business.

The paid up capital and reserves of Lloyds Bank International Limited was £923m as at 31st December 2016.

Lloyds Bank International Limited is a participant in the Jersey Bank Depositors Compensation Scheme. The Scheme offers protection for eligible deposits of up to £50,000. Eligible deposits are deposits held by private individuals and charities. Depositor protection does not extend to corporations, small to medium sized enterprises, partnerships and trusts. The maximum total amount of compensation is capped at £100,000,000 in any 5 year period. Full details of the Scheme and banking groups covered are available on the States of Jersey website www.gov.je/dcs or on request.

The Guernsey branch of Lloyds Bank International Limited, principal place of business PO Box 136, Sarnia House, Le Truchot, St Peter Port, Guernsey, GY1 4EN, is licensed by the Guernsey Financial Services Commission to take deposits and to carry on controlled investment business and insurance intermediary business under The Banking Supervision (Bailiwick of Guernsey) Law, 1994, The Protection of Investors (Bailiwick of Guernsey) Law, 1987 (as amended) and The Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law, 2002 (as amended), respectively, and is also registered with the Guernsey Financial Services Commission as a money service provider.

Lloyds Bank International Limited is a participant in the Guernsey Banking Deposit Compensation Scheme. The Scheme offers protection for 'qualifying deposits' up to £ 50,000, subject to certain limitations. The maximum total amount of compensation is capped at £ 100,000,000 in any 5 year period. Full details are available on the Scheme’s website: www.dcs.gg or on request from Telephone: +44 (0) 1481 706359 or Post: P.O. Box 53, 1 Smith Street, St Peter Port, GY1 4BD.

The Isle of Man branch of Lloyds Bank International Limited of PO Box 111, Peveril Buildings, Peveril Square, Douglas, Isle of Man IM99 1JJ is licensed by the Isle of Man Financial Services Authority to conduct deposit-taking and investment business and is also registered as an insurance intermediary in respect of general business.

Lloyds Bank International Limited is a participant in the Isle of Man Depositors’ Compensation Scheme as set out in the Depositors’ Compensation Scheme Regulations 2010.

Lloyds Bank (Gibraltar) Limited. Registered office and principal place of business: Royal Ocean Plaza, Ocean Village, Gibraltar, GX11 1AA. Registered in Gibraltar, no 99982. Regulated and authorised by the Gibraltar Financial Services Commission for the conduct of banking, investment and insurance mediation business. Lloyds Bank (Gibraltar) Limited is a participant in the Gibraltar Deposit Guarantee Scheme and a participant in the Gibraltar Investor Compensation Scheme. Details of the schemes are available on request.

Please note that, in relation to banking services which we provide, you might not be eligible for compensation under a deposit protection guarantee scheme available in your country of residence. If in doubt, contact your local banking regulator, visit their website or seek independent advice.

Lloyds Bank International Limited and Lloyds Bank (Gibraltar) Limited are wholly owned subsidiaries of Lloyds Bank plc. Lloyds Bank plc is incorporated in the United Kingdom, is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under number 119278, and is part of the Lloyds Banking Group. Lloyds Bank International Limited and Lloyds Bank (Gibraltar) Limited place funds with Lloyds Bank plc and thus their financial standing is linked to that of the group. Depositors may wish to form their own view on the financial standing of Lloyds Bank International Limited and Lloyds Bank (Gibraltar) Limited and their parent based upon publicly available information. Download Lloyds Bank International Limited’s latest annual financial statements. Lloyds Bank (Gibraltar) Limited’s latest annual financial statements are available through Companies’ House in Gibraltar at www.companieshouse.gi.

Lloyds Investment Fund Managers Limited. Registered office: PO Box 160, 25 New Street, St Helier, Jersey JE4 8RG. Authorised by the Jersey Financial Services Commission under the Collective Investment Funds (Jersey) Law 1988.

View our our information on how to complain.

Legislation or regulations in your home jurisdiction may prohibit you from entering into such a transaction with us. We reserve the right to make final determination on whether you are eligible for any products or services. Residents or Nationals of certain jurisdictions may be subject to exchange controls and should seek independent advice before entering into any transactions with us.

Please note that, in relation to banking services which we provide, you might not be eligible for compensation under a deposit protection guarantee scheme available in your country of residence. If in doubt, contact your local banking regulator, visit their website or seek independent advice.