Forecast F.A.Qs
How are the results calculated?
The results show the likelihood of different investment outcomes based on hundreds of alternative views of future investment scenarios. Investment returns are never certain, markets can go up or down and interest rates and other factors may change.
What does the diagram show?
The results from all the scenarios are then combined and shown in a diagram. The values are shown for
- High return - the level of expected returns in strong investment conditions with a 5% chance that actual results may be better than this.
- Low return - the level of expected returns in weak investment conditions with a 5% chance that actual results may be worse than this.
- Mid return - the result which has a 50/50 chance of the actual outcome being better or worse.
Please note, as the potential best and worst 5% of outcomes are not shown, it is possible that the amount actually received may lie outside this forecast range and the amount received may be less than the original investment.
How are the forecast outcomes generated?
Current conditions for each major economy and assumed long-term capital market conditions are built into the forecast. This information is based on the views of economic specialists and supported by objective data. Additionally, generic investment performance (e.g. UK Equities) are forecast based on the expected performance of market indices and relationships between different investment types. The forecasts do not take into account any investment out-performance or under-performance generated by active management.
Are investment charges taken into account?
The following charges are assumed to be applied
- Initial charge of 3.00% of each premium paid
- Ongoing charge of 1.50% a year of the fund value
Please note the charges are not applied to the Cash Savings Account.
Does the forecast also include tax?
An allowance has also been made for taxation so the forecast reflects the investment return that is likely to be received by a basic rate tax payer. Investment returns within a pension or an ISA is assumed to have no further tax payable. The forecast takes no account of the tax that may be payable on the payment of benefits. This could include:
- Income tax on Investment income for higher rate taxpayers
- Capital gains tax on surrender of an investment
- Chargeable gains tax on surrender of an investment
What is the cash forecast based on?
The gross of tax cash rate is based on the projected Bank of England base rate to represent a standard cash account. The savings account is based on this gross rate taxed at 20%.
How is the effect of inflation taken into account?
The results displayed may be adjusted to show the effect of inflation. Inflation reduces the amount that a given sum of money can purchase in the future. When adjusted, the results will show the impact of the reduced amount that the projected value can purchase. Inflation is based on the Retail Price Index (RPI). The forecasts produced are estimates only and are not designed to replace advice. If you are in any doubt about the suitability of any investment you should speak with an independent financial adviser. You should be aware that the value of your investments may fall as well as rise and you may not get back the amount you invested.