Glossary T to Z
T
Tax
– you should consider carefully your own tax position whenmaking any investment. A qualified financial adviser or accountant can help you choose the right products to suit your circumstances. There are two types of tax on these investments.Income tax
– this tax is due on all income payments made. The level of tax due, which could be nil, will depend on your overall tax position and where the income comes from (in other words, is it from a life bond or from an offshore dividend). You also have to payincome tax on growth payments from life bonds.Capital gains tax (CGT)
– this tax is paid on the growth part of closed-ended investment companies and bonds. The amount of tax you have to pay is worked out after your yearly ‘tax-free’ allowance or exemption has been taken into account.It is possible to hold structured investments in an Individual Savings Account (ISA) or to transfer money from a Personal Equity Plan (PEP) into the products to make the most of any tax-free benefits.
Term
– this is the effective ‘life’ of the product from when it is launched to when it becomes due for payment. Structured investments usually run for three to six years, so you must consider your ongoing financial needs over the term that your investment will be locked into the product. This is also referred to as the investment period.Some products have unusual investment periods (of say three years and two months rather than simply three years). This ‘extra’ time may be used to maintain the returns and to allow the specific investment company to be wound up so the proceeds can be paid out.
Tranche product
- Most structured products are tranche products, meaning that they are only available for a limited period. This period, which is usually around 4 to 8 weeks and is called the offer period and is the period during which the product is available for investment. In the case of bespoke tranche products, we could develop a specific product for a specific and small number of customers. Product Innovations is the European leader in bespoke tranche products.U
Underlying assets, index or indices
– these form the basis of the structured investment product where the underlying assets’ or index’s movement is tracked and so decides the outcome of the product for the investor. Structured investment products are often linked to an index such as the FTSE100, S&P 500 or EuroStoxx 50.V
Volatility
– see Historic Volatility or Implied Volatility.Z