Personal Investment in the UK Is It Science or Matter of Good Fortune - Essay Example

Contents Contents Introduction 2 Purpose of the Paper 2 Concept of Personal Investment in United Kingdom 2 Different Types of Investment in UnitedKingdom 2 Types of Personal Investment in United Kingdom and Popularity of Use 3 Theories on Personal Investment and Relation to Science or Good Fortune 4 Regulatory Significance to Personal Investment and Relation to Science or Good Fortune 6 Conclusion 7 Personal Development 7 References 9 Introduction Purpose of the Paper The main purpose of the paper is to focus on the practices of personal saving or investment by the people in United Kingdom. To that the paper would tend to discuss the different tools of investment available in the region and whether benefits related to it are a matter of scientific planning or just of good fortune. Concept of Personal Investment in United Kingdom The practice and understanding of personal investment in the context of United Kingdom is found to be largely interrelated to the demographic patterns of the society and also to the consumption patterns of the people. More evidently the increase in the number of retirement people in the region has led to the fall in the demand for saving and investment in the region. Again the level of investment practices carried out by the people gains a larger relation to the insurance and pension related schemes where the people invest out of a precautionary motive. Different economic changes like crash in the housing market also tends to lower the practice of personal investment in the region (Banks and Tanner, 1999, p.6-9). Different Types of Investment in United Kingdom In United Kingdom people tend to invest or conduct their personal savings through the use of different tools like investing in mortgage funds, investing on pension or other insurance related funds, depositing money in banks or in securities issued by different financial institutions. Further people also tend to invest their money in many asset related or commercial funds apart from investing in agricultural and national savings deposits. The major part of the personal savings owes to funds related to pension and insurance other than mortgage or housing properties (Banks and Blundell, 1994, p.67). Types of Personal Investment in United Kingdom and Popularity of Use In United Kingdom the aspect of personal savings and investment gains attention in regards to categories like pension funds and other insurance related sectors. However other than the pension and insurance related funds the personal investment activities of the people also centre on deposits made in banks. Investment is again made by the people in funds created for the housing societies. Moreover other than the listed areas the people also tend to invest largely in sectors such as shares and dividend mainly equity based issued by registered companies operating in United Kingdom. In other types of personal investment practices the people also tend to invest largely in different types of asset funds bearing interest gains and in other savings fund issued by the national government. The six different areas into which the people residing in United Kingdom tend to invest their personal finances also contain of security deposits and other unit trust schemes (Banks and Blundell, 1994, p.69). Out of the six listed avenues available to the people in United Kingdom to conduct their personal savings it is found that the sector of pension funds and insurance schemes gains the highest amount of attraction. The main reason inferred for the growing attention of the people to invest along the pension and insurance related funds is to gain a large amount of tax benefits. The people avail the exemption advantages from tax charges in regards to their investment in pension and insurance funds. Moreover in regards to the insurance sector the people also avail benefits linked to the market where the insurance schemes chosen for investing by the people stand to be market linked. Thus the people through the stated link can gain on dividends from the market linked schemes. Again the insurance schemes in United Kingdom are also linked to mortgage and housing properties for which the people consider investing in insurance related schemes far more attractive than other avenues. Apart from the insurance schemes the people also largely invest in regards to pension funds for firstly it helps them to ease their tension of availing funds at the time of retirement but also acts as leverage in gaining tax incentives. In United Kingdom any investment made in regards to pension funds is totally considered free of tax charges. The government of United Kingdom has rightly identified that the people of United Kingdom tend to invest more in such areas from where they can avail large amount of tax benefits. Thus the government of the region has focused on being about different savings and equity related schemes in relation to banks and other financial corporation investment in which would be subjected to tax exemptions. This policy of the government is held to create a larger area where the people can readily focus on investing and thereby gain the benefits of tax emption (Banks and Tanner, 1999, p.75-98; House of Lords, 2000). Theories on Personal Investment and Relation to Science or Good Fortune The practices of investment in key assets and policies by the individuals residing in United Kingdom herein would be studied based on different theories that tend to understand the motives working in the person making him or her to invest. Observation shows that there are around nine different motives that govern an individual’s attitude to invest in the different sectors. Firstly the investment pattern of the individual in regards to policies concerning pensions and insurance schemes mainly concern the precautionary approach of the people. Herein the people tend to focus on creating funds that would help them in situation of contingencies. The saving by the people in time based on proper planning would certainly act as matters of good fortune to them in situation of contingencies. Secondly the investment activities are also carried out by individuals with a life-cycle motive. In that the person tends to invest in an anticipated manner in such policies that would help in meetings the income needs of the person at some future point of time. Thirdly the people are also observed to conduct investments on interest bearing assets and funds from where the people can go on accruing interest and appreciations. Fourthly the people can also go for investing in growth funds such that they would tend to gain a larger pie on their future investment activities. Fifthly in relation to the demographic parameters pertaining to age the younger individuals tend to invest in any type of asset or funds without making any further analysis on the benefits that would accrue later on. Sixthly quite in contrast to the above independent nature of youths some people tend to invest in shares that are equity based after having speculated on the future market conditions. Seventhly the people also tend to invest in properties that would in future help them to gain a huge fortune. In the eighth case people tend to view the investments made to properties and assets as would help them gain windfall gains and thus free them of their current miserable conditions. Finally in the ninth case people invest in properties or schemes through which they can gain hold of assets like cars and houses. More specifically the investment activities of persons evaluated on the basis of the life cycle approach reflects that people tend to consume the level of resources available at one’s end over a prolonged time period and not in an instant fashion. However in that the resources that are available at one’s end to optimally utilise or consume fail to be rendered at a constant rate for which the people have to rely on savings activities to help derive the benefit of such accumulated funds at a later stage. The life cycle approach of savings suffers from seeming uncertainties where people pertaining to different age groups reflect different degrees of saving and where the increase in the level of interest fails enhances both the saving and consumption activities. Thus owing to the above reasons the people would rather depend on speculation activities and would endeavour to invest in funds providing cushion in regards to future uncertainty (Banks and Tanner, 1999, p.2-3, 20-22). Henceforth without relying on some future fortune the people must scientifically try to save their financial and other resources in order to rightly derive future benefits. Regulatory Significance to Personal Investment and Relation to Science or Good Fortune In United Kingdom the investments made by the individuals to the stocks, shares, properties, assets and other ventures are managed by the regulatory body known as the Financial Conduct Authority. This body is administered by the government in conducting a market analysis of the different investment proposals and sectors and thereby rendering effective advice to the individuals going for investment activities. The body also presents to the individuals a host of investment options from where the individuals can derive benefit from (Financial Services Authority, 2011, p.15-17; OECD, 2002, p.83). Similarly the authority for Personal Investments in United Kingdom and ‘Investment Management Regulatory Organisation’ also act in rendering protection to the investors by providing them adequate information based on which they can invest (Carmichael et al, 2004, p.36; Campbell, 2008, p.400). Thus these regulatory bodies create scientific guidelines for the investors protecting them from emerging contingencies and thereby deter them to rely on the uncertain effects of a future fortune (Masciandaro, 2005, p.117). Conclusion Personal Investment activities are conducted by the people residing in United Kingdom mainly in regards to the sector of insurance and pension related funds. The above practice when analysed reflects that the people tend to prioritise the event of uncertainty to a greater extent for which they tend to invest in such sectors that would help them safeguard future problems. Moreover the people tend to invest in such sectors for it helps them gain the benefits of taxes such that the tax cuts are minimized in such investments. The government of the day introduces other savings and dividend schemes which also have similar tax exemption benefits. The investments made by the people to cover up future contingencies signify that the people need to anticipate the occurrence of future events and thereby take actions accordingly. Evaluation of the needs by the individuals before making the specific investments counts on the scientific motive behind conducting the investment activities and thus is not taken as matters of personal fortune. Personal Development While acting in a group to prepare the discussion for the given topic I was having a feeling of conducting a large amount of research based on secondary sources to help draw useful inferences to the stated topic. Working in a group framework I came to understand the feelings of teamwork in accomplishment of the stated objective. I learnt from this event the pattern in which one should effectively work in a group for the accomplishment of projects in due time. Further I also came to learn the manner in which sources are sought from the internet to help retrieve the needed content for formulation of the discussion paper. However the above project suffered from some shortcomings for there was absence of current quantitative and qualitative data pertaining to the project. In addition to the work performed on the topic I could have worked to reflect comparisons in the attitude of the people pertaining to the different economies with that of United Kingdom in regards to the investment activities. Such comparison would have helped in enhancing the effectiveness of the understanding of choosing and conducting the investment activities. In case, I would be employed in another group with same or like project I would definitely endeavour to lead the group with the level of understanding gained in conducting a project activity. I would rightly divide the task between different members such that further emphasis can be laid down to conduct more effective research on the particular topic. I would have also taken the task of making the people first understand the project objective and then allocate the specific tasks to help them conduct the same more effectively and productively. Working on projects of the given type would certainly help improve my cognitive and analytical skills. Again acting in a group framework would also help improve the communication and team performance aspects. Thus both the given skills being enhanced would thereby enhance the chances of me getting properly employed in a productive sector. References Banks, J., and Blundell, R., 1994. Taxation and Personal Saving Incentives in the United Kingdom. Public Policies and Household Savings. [Pdf]. Available At: http://www.nber.org/chapters/c8860.pdf. [Accessed April 2, 2012]. Banks, J., and Tanner, S., 1999. Household Saving In the UK. The Institute of Fiscal Studies [Pdf]. Available at: http://discovery.ucl.ac.uk/14176/1/14176.pdf. [Accessed April 2, 2012]. Campbell, E., 2008. International Securities Law and Regulation [2008]. Lulu.com. Carmichael, J., et al, 2004. Aligning financial supervisory structures with country needs. World Bank Publications. Financial Services Authority, 2011. The Financial Conduct Authority: Approach to Regulation [Pdf]. Available At: http://www.fsa.gov.uk/pubs/events/fca_approach.pdf. [Accessed April 2, 2012]. House of Lords, 2000. Judgments - Equitable Life Assurance Society v. Hyman [online]. Available At: http://www.publications.parliament.uk/pa/ld199900/ldjudgmt/jd000720/equite-1.htm. [Accessed April 2, 2012]. Masciandaro, D., 2005. Handbook of central banking and financial authorities in Europe: new architectures in the supervision of financial markets. Edward Elgar Publishing. OECD, 2002. United Kingdom 2001-2002, Issue 1. OECD Publishing. Read More