Learn About Investing

Learn About Investing

Learn about

Funds – ease of access

This article is about restrictions associated with certain accounts or funds and relates to investing in general, not Orbis Access in particular.

Fund investing

What about getting it back out?

Some investments come with restrictions on or when you can put money in, or take it out – or on how much you can put in or take out.

If you’re looking to invest in a fund, for example, a couple of points to consider are:

  • lock-in period
  • minimum investment amount

It’s important to make sure any restrictions don’t conflict with your investment goals. Knowing roughly how much you want to invest, and for how long, obviously helps here.

Lock-in periods

A minority of funds feature lock-in periods.  These require you to invest for a set period of time, in much the same way that fixed-term saving accounts can keep your money tied up for a year or three.

If you want to access your investment before the lock-in period is up, you may either not be able to do so, or you may be charged an ‘early exit’ fee.

Minimums and maximums

Most funds have a minimum initial investment. This is often £500 to £1000, but can vary depending on the size and style of the fund. In some cases it may be as little as £1.

Rather than lump sums, many funds allow for regular investment plans. This means investing a certain amount on a monthly basis, with the minimum typically set at £50 or less

You might also encounter an ‘account minimum’, whereby a fund requires that you have a certain amount invested at any one time.

On the other end of the spectrum, one can also run into maximums. A common example is when investing in funds via a Stocks & Shares ISA. These accounts have a limit to the amount of money that can be added during a given tax year.

Age, tax and more

Restrictions aren’t limited to investments themselves. Certain accounts – inside which investments sit – can also be subject to rules about what you can and can’t do. For instance:

  • Money in a Junior ISA can’t be accessed until the child turns 18.
  • Pension savings in a SIPP (Self-Invested Personal Pension) can’t usually be accessed before retirement age, at 55.
  • With ISAs, when money is withdrawn, you lose the tax benefits of holding it within the account.

The upshot

There can be rules related to investments that restrict your freedom to put money in, or take it out.  It’s an important aspect of investing. Clearly, it’s best to find out beforehand rather than after the event.

Also be aware that that being allowed to access your money immediately is different from actually being able to do so in practice. There a couple of reasons for this:

  • Some assets – notably property – are not ‘liquid’. This means that it can take months to turn your investment into cash (unless you’re willing to sell at a steep discount).
  • Some assets – like shares – can be volatile. This mean their  price can swing about significantly, both up and down. You want to avoid selling shares immediately after a sharp downturn. But waiting for prices to recover could take months, even years, or may not happen at all.

In short, keep an eye out for how easy it is, or not, to get your money in and out of an investment.