Tired of the same old stocks? It's time to think outside the box
From wind farms to art, Kate Hughes shows different ways to liven up your portfolio
Saturday 08 March 2008
Reeling from the effects of the turbulent markets, many investors have decided it is time to spring clean their portfolios. But if you've reviewed your investments recently and found them uninspiring, perhaps you need to inject some life into your holdings.
Putting cash into a few offbeat stocks could be just what the doctor ordered. With significant tax relief available on a whole host of quirky choices, the well informed may even see returns that give more familiar stocks and funds a run for their money. The path to great returns could be rocky, but you may begin to enjoy investing again.
If you are after a hands-on approach to ethical investing, why not put your money directly into a wind farm? Your initial investment could pay for part of an established wind farm, or the land or turbines to set up new farms. In return, you receive a share of the profits from the energy production, as well as a cleaner environment.
Energy 4 All ( www.energy4all.co.uk) is a not-for-profit co-operative with a number of projects around the country. Plans are underway for new wind farm projects in Scotland this summer, and investment starts at £250. "We have investors from all over the country as well as communities in the farms' local areas," says spokeswoman Helen Jackson. "Investors in these projects could see dividends of up to 9 per cent, particularly for our more established farms. And the projects usually qualify investors for Enterprise Investment Schemes (EIS)."
EIS relief applies to a number of alternative investments. They apply to shares in unquoted companies of under £400,000, (as of 6 April this year), and usually means income, inheritance and capital gains tax relief for investors. HM Revenue & Customs can give you more information on this and other types of tax relief on investments at www.hmrc.gov.uk/eis.
Alternatively, on a larger, commercial scale, organisations such as Triodos Bank (www.triodos.co.uk) have renewable energy investment portfolios which own or part-own wind farms, turbines, and hydro electric projects. They also invest in a number of alternative energy companies.
If the closest you get to the countryside is the grass in the middle of a roundabout, fear not – investing in livestock does not mean that you have to get your feet dirty. One of the latest additions to this market is Capital Breeding ( www.breedingcapital.com), which has recently launched two new public limited companies offering investors shares in bloodstock assets – horses with good racing pedigree to you and me – for a minimum investment of £10,000. The capital raised from such shares is spent on breeding-age mares, whose foals are sold on to produce income for the company.
Investments in Breeding Capital are eligible for EIS relief, and because horses mostly eat grass, the increasing cost of feed that has hit other livestock enterprises doesn't apply.
Buy-to-let hotel rooms have become enormously popular since they were first offered in around 2003, and the theory is certainly attractive. Investors get a share of the profits and someone else does the cleaning, maintenance, paperwork and advertising.
Prices for rooms under the Guestinvest umbrella ( www.guestinvest.com), for example, start at around £317,000, depending on the standard of hotel and location. In return, you will get a 999-year lease, plus 50 per cent of the income earned on the room, and 52 nights' free accommodation in the hotel each year.
If you are after a cheaper option, Owner Hotels ( www.ownerhotel.com), offers more affordable accommodation. You can get involved for a minimum of around £50,000 and room prices here start at around £50 per night. They suggest that if the room is occupied for 90 per cent of the year, investors could see returns of up to 15 per cent.
If you invest in buy-to-let hotel rooms through a Self Invested Personal Pension (Sipp), you can claim tax relief on the investment of either 22 or 40 per cent, depending on your tax band. The only restriction is that you will have to pay the commercial rate for staying in the room rather than claiming your free nights.
This is an investment choice with an unproven track record and investors are often urged to go for rooms that offer extra value – a known brand name, great views or top-of-the range spa and fitness facilities, for example, if they want to see the most reliable returns.
Doing your bit for the environment and for your wallet is what truly green investment is all about. And by putting your money straight into woodland, whether you buy a wood yourself or invest in funds, you may also be able to take advantage of significant tax relief.
With Forestry Investment Management, ( www.fimltd.co.uk), which is recommended by the Forestry Commission, investors can buy a wood from around £100,000. Their Forestry Funds offer opportunities for investors from around £50,000.
There could be money to be made in this area. The key to generating the highest returns, it states is investing in well-managed forests close to established timber markets, and by watching timber prices. Timber prices have risen by almost 37 per cent over the last year, FIM claims, and there is also the value of the land to consider.
Plus, while increases in the value of the land after inflation may be taxable, the value of the timber itself is free from income, capital gains and, after two years, inheritance tax. So the commercial value of the wood could be far greater than the taxable value of the wood. HM Revenue & Customs has more information on woodland relief at www.hmrc.gov.uk/cto/customerguide/page18.htm.
But bear in mind these are long-term investments, from three years up to around 35 years, and liquidating any assets without taking a hit could be a drawn-out process. Because of this, investors often use the proceeds for predictable events such as paying for school fees.
Old paintings suddenly become more interesting when attic clutter turns out to be worth a fortune. But investing in individual items, particularly art, is fraught with challenges, says James Mitchell of John Mitchell Fine Art ( www.johnmitchell.net). "In the past, people bought pictures purely for enjoyment and the satisfaction of building up a collection," he says. "Since art dealers are generally unable to spot the 'next big thing', it is even less likely that the enthusiastic amateur will be able to."
But that doesn't mean art funds are the way to go either. "I admire and pity the foolhardy investors in the so-called 'art funds' now being set up by fund managers and former saleroom 'experts'," Mitchell adds.
"For those prepared to sit tight for 15 years or more, and have some proper art on the wall at the same time, then I still recommend Old Master paintings as the best vehicle to keep money safe."
"Buying up collectables in the hope of a profit can result in a minefield of potential problems," Tim Collyer, of IFA the Falcon Group, warns. "Investors have to be realistic about the costs involved in appropriate storage, cleaning, maintenance and particularly the insurance involved. They could easily wipe any increase in the value of whatever you have bought."
While it is true that these and other housekeeping problems are removed if you put your money into funds, the hands-on element of direct investment could also be lost, Collyer admits. And funds dealing in specific collectables such as comics or more traditional art tend to struggle. They are usually considered very risky, and don't offer direct investment advantages such as being able to hang the "asset" on your wall.
Specific art investment consultancies include The Fine Art Fund ( www.thefineartfund.com), which boasts a host of art and investment specialists, including former Minister for the Arts, Lord Gowrie.
If your particular interest lies in wine, companies like fine wine investment house Premier Cru ( www.premiercru.com) offer investors ownership of the actual bottles of wine rather than a share in the company. Investors can buy plans from £1,500 for a three-year plan and a panel of specialists will recommend wines for that portfolio. But crucially, it is the company's responsibility to transport, store and maintain the bottles in the best conditions. And investors can withdraw bottles at any time to sell privately or at auction, or, of course, to drink.
The reel deal: investing in films
If you've always fancied yourself as the next Steven Spielberg, investing in films may grab you. And thanks in part to a revamp of the tax breaks for film production, the UK now has one of the fastest growing film industries in the world.
But this is a highly complex industry, says Martin Churchill of The Tax Efficient Review. "Making money supporting British independent film-makers through EIS is laudable but dangerous," he says. "At a minimum, investors should support a producer with a track record and insist on getting the producer's tax credit, worth around 20 per cent of the budget."
Churchill recommends Peter Fudakowski's UK Television and Film Production Company EIS, which produced Tsotsi. Bear in mind that investments, which must be made through a financial adviser, tend to be for a minimum of four years and start at around £50,000. Others, such as Visible films ( www.visiblefilms.com), whose three subsidiary production companies produced Becoming Jane and Stormbreaker, offer investment packages from £10,000.
But information about film EIS projects is difficult to come by, and even if the movie itself is successful, investors may not get their money back, as investments are in the company not in individual films, so if the production company makes a blockbuster, if their other projects fail, investors may still lose money.
Potential investors in any film production company should keep up to date with tax-relief regimes surrounding film production as the details change frequently. Visit www.taxefficientreview.com for more information.
Money roundup video: It's getting harder to sort out a mortgage
Women born in 1950s facing severe financial hardship over pensions could have fates changed by Ros Altmann - should she choose to help
Is it really that bad in the bond market?
Five Questions On: GB Energy's new tariff
Simon Read: You're guilty until proven innocent when HMRC sends in the tax credit detectives
- 1 School kitchen manager 'fired from Colorado school for giving hungry students free lunches'
- 2 California man brutally beat 82-year-old Sikh grandfather he mistook for 'one of those people'
- 5 Charles Kennedy 'had better judgement drunk than many sober politicians' says Ian Hislop
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination
Migrants in Kos: Photos show real tragedy after Brits abroad complain of 'awkward' holidays
British tourists complain that impoverished boat migrants are making holidays 'awkward' in Kos
Michael Gove determined to scrap the Human Rights Act – even if Scotland retains it
Threat to scrap Human Rights Act could see UK follow Nazi example, warns UN official
Church of England 'one generation away from extinction' after dramatic loss of followers
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...
£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...
£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...
£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...
Day In a Page
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
This four-bedroom home offers a vaulted ceiling in a breakfast room that's ideal for summer entertaining with doors that open to the patio and garden.
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool