Rebalancing your investments each year helps to reduce undue risk from building up in your portfolio.
Each of your individual shares will perform differently and fluctuate in value relative to each other over time. If one share performs particularly well it will eventually form a greater share of your overall value when compared to other shares in your portfolio.
This places greater emphasis on that one share from affecting the overall performance of your portfolio.
By rebalancing your plan each year we are selling some of your shares that have performed well and buying other shares that have not performed as well. This buy low sell high philosophy sounds very simple, but it will ensure that you hold a relatively equal proportion of each share in the portfolio, thus spreading your risk around a diverse number of companies and industries that make up the FTSE 100.
There are two rebalancing options.
- Automatic Annual Rebalancing
This process takes place 2 weeks prior to your plan anniversary. Some shares will be sold and some will be bought in order to bring your portfolio back to an equal balance between the 20 shares. There will be no need for you to do anything, this will happen automatically unless you opt out.
We also allow you to make the decision to rebalance at any time you like during the plan year. When you set your plan up, the default option is for automatic annual rebalancing.
You can instruct an encashment any time via your online portal or by calling our customer helpline on 0330 088 4210.
We will instigate your sell request at the earliest opportunity, which will be no later than close of business the following working day. We will aim to pay the proceeds of your encashment to your nominated bank account within 5-8 working days of receiving your instruction. There will be a dealing charge of £150.
The minimum partial encashment you can make is £1,000, whilst the maximum partial encashment you can make is 75% of the value of your Plan. When making a partial encashment your remaining Plan value must be at least £5,000 following the partial encashment.
All of our clients’ money is held in a client money bank account with HSBC and protected in accordance with the FCA’s client money rules.
Once your shares have been purchased, they are held by our custodian on your behalf in accordance with the FCA’s client asset rules and you remain the beneficial owner of your investment. Your cash and investments are protected by the Financial Services Compensation Scheme which means that even if we, HSBC or our custodian went into administration you are entitled to protection.
You will receive a welcome pack no later than 5 working days after you apply. This will confirm how much income will be paid to you each month and the date you will receive your first payment. Typically the first payment is sent no later than 1 month after the initial application.
The first year’s income is paid from the 5% of your initial investment that is placed into your income account at the outset of your plan. This is so we can set you up with your portfolio and collect the dividend income over the first year. The amount you receive in year one is based on the actual amount of dividends paid by the selected share portfolio over the previous year.
In year 2, your income is based on the exact amount of dividend income received into your plan over the entirety of year 1. After deducting fees, we distribute the remaining income to you in equal monthly amounts. This will be the exact same process for each of the following years you hold your plan.
The income is fixed at the start of a plan year and will be recalculated in the last month before your plan anniversary. We will contact you before the Plan anniversary to confirm your income for the following year.
Historically the income has increased over time, but this is not guaranteed. Your income may fluctuate from year to year.
