Investment Choices

The N&P Share Dealing Service (provided through Jarvis) is execution only meaning you are in the driving seat!

For a full view of what you should consider when looking to deal in shares, have a look at our guide to Share Dealing but here is a brief overview of your investment choices. Please note we do not provide advice. If you would like advise on share dealing please contact your Financial Adviser.

The graph above shows types of investments according to their rate of return and risk. For example Gilts provide a lower risk option with less return on your investment and UK Listed Warrants provide a greater return but with a higher risk.

* Shares listed on the Alternative Investment Market (AIM) and PLUS market are not eligible investments for an ISA
** provided they are listed on a recognised stock exchange
*** if 5 years or more to maturity when purchased

Shares

You can trade UK listed companies on the London Stock Exchange from a Trading Account, Classic Share Dealing Account, Certificated Account or a Stocks and Shares ISA.

Shares are the most popular type of investment and represent a stake (or equity) in a particular company. The price of shares will fluctuate in response to demand which is based on investor's perceptions of the company's future earnings prospects. 

UK shares come in two forms:

Ordinary Shares - this is the most common form of share where holders may receive dividends in line with the company's profitability and recommendations of its directors.

Preference Shares are normally fixed-income shares whose shareholders have the right to receive dividends before ordinary shareholders. They normally rank above ordinary shareholders for the repayment of their investment in the company.

If you want to diversify your portfolio to hold investments from outside the UK you can also trade international shares through N&P.  You can do this with our Trading Account or Stocks and Shares ISA (provided the shares are listed on a recognised Stock Exchange). Trading international shares are considered a greater risk due to the fact you also have the added risk of currency movements.

May be suitable if you….

• Know which stocks you want to buy into
• Are happy to manage your own portfolio
• Accept the risks of investing in individual company shares

For the A-Z of shares, click here.

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Funds (Unit Trusts & Open Ended Investment Companies (OEICs))

You can trade Funds (by telephone only) from a Trading Account, Classic Share Dealing Account or a Stocks and Shares ISA.

Unit trusts and OEICs are a form of collective investments where investors' (shareholders) money is pooled together and invested on your behalf by professional Fund Managers, who buy a range of Shares, Gilts, Bonds and Cash Deposits.

The size and value of each fund can vary according to supply and demand. They provide the means of investing in a broad selection of shares, which, in turn, reduces the risks of investing in individual shares.

Unit trusts and OEICs can be grouped into three main types: 

• Income funds that generate income in the form of dividends or interest
• Growth funds that can produce capital growth for investors 
• Specialist funds that invest in niche sectors or a particular country/region

When you buy into a Unit Trust, you buy a unit or a proportion of the total fund. OEICs work slightly differently as they issue shares. The fund manager will invest the money on behalf of the unit holders (or shareholders).

Each unit trust and OEIC has its own investment objective and falls into different risk and return categories. These categories are:

• Lower Risk - Cash or Money Market Funds
• Medium Risk - Bond Funds or mix of Equity Income and Bond Funds
• Higher Risk - Equity Funds or mix of Equity Income Funds or mix of Equity Income and Bond Funds

By the very nature of their titles, the overall value of each Fund will vary according to their performance and how the fund manager invests the overall pot of investment.

May be suitable if you …

• Want to spread your risk and have your investments managed by a professional fund manager.
• To allocate a proportion of you portfolio into different risk categories but not sure where to invest

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Exchange Traded Funds (ETFs)

You can trade ETFs from a Trading Account, Classic Share Dealing Account or a Stocks and Shares ISA.

ETFs , like unit trusts, are bundles of individual stocks offering diversification over a whole market or sector. However, they are listed on the London Stock Exchange and don't incur set up fees or stamp duty when bought.

The benefit of bundling the stocks across a market or sector is that the peaks and troughs sometimes experienced in an individual stock are minimized and so your risk can be reduced.

They are easily and continuously traded throughout the day just like ordinary shares and are eligible for ISA so could be tax efficient for you.

May be suitable if you……

• Invest in the stock market over the medium to long-term. 
• Want to gain exposure to different markets or sectors.
• Want to spread costs, risk and minimise charges.

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Investment Trusts

You can trade Investment Trust shares from a Trading Account, Classic Share Dealing Account, a Stocks and Shares ISA and a Certificate Account.

When you buy shares in an Investment Trust you are buying into a listed company on the London Stock Exchange whose business is to invest in other companies, fixed-interest securities, unquoted securities or property. The price of Investment Trusts varies in the same way traditionally listed companies do, determined by the supply and demand for its share on the stock market.

The demand for shares in an Investment Trust is driven by many factors, not least the dividend they pay largely linked to the performance of the shares they invest in.  Essentially you are buying a "share" in all the companies the Investment Trust decides to invest in.

May be suitable if you….

• Invest in the stock market over the medium to long-term. 
• Want to spread their costs, risk and minimise charges. 
• Don't want to spend too much time monitoring your investments.

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Gilts

You can trade Gilts from a Trading Account, Classic Share Dealing Account or a Stocks and Shares ISA.

Gilt Edged Securities or Gilts are bonds issued by HM Treasury. They are designed for people who want a predictable rate of income at very low risk.

Typically, a Gilt can be bought or sold at anytime for the present market price with no penalties. Once maturity is reached, the stock is bought back by the Government at face value. It should be noted that when a Gilt gets closer to redemption, the price of the Gilt moves towards the redemption value. This is known as the 'pull to redemption'

Although Gilts are known for their security and are viewed as the safest of investments, there is still an element of risk and several factors can affect their value such as inflation, interest rates and the time left until maturity.

May be suitable if you….

• Want to build a diversified portfolio
• Are looking to achieve a secure fixed income return at comparatively low risk

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Corporate Bonds

You can trade Corporate Bonds from a Trading Account, Classic Share Dealing Account or a Stocks and Shares ISA.

Corporate bonds are issued by companies and are more risky than government bonds because companies are much more susceptible than governments to economic problems, mismanagement and competition.

Corporate bonds can be the most lucrative fixed-income investment, as you are generally rewarded for the extra risk you are taking. The lower the companies credit quality, the higher the interest you're paid.

May be suitable if you….

• Want to build a diversified portfolio
• Are looking to achieve a higher fixed income return and willing to accept the higher risks

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Permanent Interest Bearing Shares (PIBS)

You can trade PIBS from a Trading Account, Classic Share Dealing Account or a Stocks and Shares ISA.

PIBs are fixed interest securities issued by Building Societies to raise capital.

PIBS can be bought and sold on the London Stock Exchange in round amounts, usually varying from 1,000 shares up to 50,000 shares. No stamp duty is payable on purchases. Unlike Gilts, PIBS cannot be redeemed, so in order to sell there has to be a buying counterparty in the market, therefore you may not be able to sell when you want to.

Like other fixed interest securities if interest rates rise, then the value of a PIBS goes down; conversely, if interest rates fall then a PIBS value rises. There are also variable rate PIBS, where the interest rate changes in line with interest rates generally. Interest is payable annually or every six-months in arrears. Rates are normally higher than the returns for Gilts.

May be suitable if you….

• Want to build a diversified portfolio
• Are looking to achieve a regular fixed income return 
• Willing to hold for the medium to long term and accept the liquidity risks

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Warrants

You can trade warrants from a Trading Account or a Classic Share Dealing Account . However, due to the high risk nature of warrants these may not be suitable for everyone and you will need to sign an additional risk warning before you can trade them.

A warrant is a time-limited right to subscribe for shares, debentures, loan stock or government securities and is exercisable against the original issuer of the underlying securities.

A relatively small movement in the price of the underlying share/security results in a disproportionately large movement, unfavourable or favourable, in the price of the warrant. The prices of warrants can therefore be volatile and it is essential to appreciate the time limit and deadline of when you can exercise your option to purchase. In addition, if the price of the underlying share/security is below the exercise price at the expiry date, the warrant becomes worthless. 

May be suitable if you….

• Want to gain a large exposure to a company without tying up large amounts of capital.
• Are willing to accept the high risk associated with warrants.

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