How to Stay Secure When Working the Move - Part 2

Having discussed why it is vital that business information is kept safe and the measures that should be used to do so whilst using wireless networks on the move, the second part of this article focuses on the other security tactics that mobile workers can employ.


Portable Storage
Portable devices which are used as storage and for transmitting sensitive information between locations, such as portable hard drives, memory sticks or even CDs and DVDs, should always be encrypted and require a password to un-encrypt. Some of the highest profile data leaks in recent years have occurred when such devices have fallen into the wrong hands and it easy to make a mistake by misplacing a portable device but harder to justify not securing it in the first place.

Laptops
As with portable storage, the first step to staying secure is to ensure access to your laptop is password protected. With modern security you can even use advanced techniques with biometric security measures such as finger print recognition/scanners to ensure that only the specified owner can access the laptop and its contents.

It is also vital that your laptop, as with all PCs, has a firewall in place, to prevent unsolicited access from the outside world, and up to date anti-virus software installed (running regular scans) to prevent and detect any malware trying to access information on your device.

Moreover, it is advisable that printer sharing is disabled, as this can present a vulnerability which hackers can then exploit, whilst local folders on the laptop should only be shared (i.e., have status of shared) if they really need to be (because shared folders will become visible to anyone on the network who can see your PC). As with portable devices, individual partitions, folders or files can be encrypted to provide a final layer of security. Although this can be laborious to set up and use, it is essential if you have sensitive data which could be at risk from prying eyes.

Mobile Phones
More and more business is being conducted on mobile phones than ever before and the widespread adoption and even popularisation of smartphones means that vast numbers of employees now have the capability to work effectively on the move wherever they are. With the array of new smartphone functions and the shear amount of sensitive business and personal communication that is conducted through them, the risk of information leaks has increased however. Again, the first security step, in case the phone is misplaced, is to set up a passcode lock so that the phone locks itself when inactive and then requires a passcode to unlock. As with portable storage devices, mobile phones are perhaps easier to lose than bulkier laptops and tablets, while the fact that they are used more often in all parts of peoples lives, both business and personal, means it is even more advisable that smartphones are not used to store sensitive business information unless absolutely necessary.

It is also worth re-iterating the risk of accessing, intentionally or otherwise, unsecured wireless networks on mobile phones too as they are often not considered to be as vulnerable as a laptop, for example. However, with the proliferation of smartphones, cyber-criminals are becoming more effective at taking advantage of such security lapses to access your device’s data so considering wireless security is a must.

Secure Email & Cloud Storage
Email security has improved significantly in the last couple of years. All the major webmail services such as Hotmail and Gmail now offer the option to encrypt the information the information that you transfer via email. To check whether your email is secure, look for the “https” at the start of the page’s web address, when viewing your emails through an internet browser, which indicates that the information you send is encrypted. Your internet browser will also show you a padlock symbol somewhere alongside the address bar to confirm that the security certificate for the website is active (this verifies that the information is being sent to the appropriate server when you transmit it). You not only need to look for this when logging in but also on every subsequent page if you are transmitting sensitive information via email.

Even when encrypted, email should not be relied upon as being entirely secure because you are always at risk (to some extent) of communications being intercepted and you cannot necessarily guarantee the level of security that is in place when your recipient receives the email.

If you want to use cloud storage to store your files so that they can be accessed anywhere on the move, you will again need to look for the “https” and padlock symbols as indicators that the information you transfer is being encrypted. In addition, each storage provider may offer further levels of security when it comes to how the data is encrypted, where it is stored (private servers) and how much of it is visible to staff at the storage company so it is worth comparing providers across the market.

VPN
The most secure method of interacting and communicating with your work place whilst on the move is by using a Virtual Private Network (VPN) which creates a secure ‘tunnel’ across the internet. These can be used to not only to allow you to store all data securely on shared drives/servers ‘back at the office’ but even to log on to the work place network in its entirety as if you were logging on from your desk.

Data can vulnerable when being accessed, transferred or swapped with those shared servers but that is when a VPN Provider can be used to create a secure tunnel through which the information travels, encrypted and safeguarded against interception.

Businesses will have often have their own VPN implementations for use by roaming employees but there is plenty of free or affordable software on the market which also allows individuals or small businesses to access the technology.

There are plenty of procedural and technological solutions to help keep your work, business details and personal details secure and by taking a few basic steps you should really be able to minimise the chances of becoming a victim to cyber-crime. With technologies such as VPN becoming more affordable, flexible and commonplace it really is a good time to take stock of what you and your business are doing to stay secure.

How to Stay Secure When Working the Move - Part 1

Data is a very valuable commodity in our modern world to both business, driving effective marketing and business strategies, and unfortunately to the criminal world, facilitating crimes such as identity theft and fraud. Keeping your own business data secure and private is therefore a serious concern in business but for many businesses there is the additional responsibility of protecting the data of their clients and customers. However, with many organisations finding efficiencies in allowing employees to work on the move or from home, off-site security has become a vital consideration.

Not only is data security a must for businesses whose competitors would benefit from seeing their sensitive information but it is a legal obligation under the data protection act where businesses are responsible for obtaining and storing third party data, e.g., customer details. The Data Protection Act is designed to keep the personal details you obtain as a business secure. By failing to adhere to it, not only would you be risking the bad will that data leaks may bring to your business and the financial consequences thereof but also regulatory action which will usually result in very hefty corporate fines.

Most businesses have secure networks on site and should certainly have robust procedures in place to ensure that they meet their security obligations but the Achilles heel is often where employees are working off-site on portable devices. Not only are portable devices at risk of falling into the wrong hands but any communication back to the office is vulnerable to being intercepted by prying eyes.

It is therefore always advisable to avoid storing sensitive data on portable devices unless it is absolutely necessary but due to business needs there are occasions when information you wish to keep secure may need to be accessed on the move. Luckily there are however a number of measures that you can take to prevent this information getting into the wrong hands.

Wireless Network Security
Wireless networks are now almost ubiquitous but unfortunately they also offer snoopers their easiest opportunity to intercept any information your transfer across them. The first precaution you should take is to ensure that your devices’ settings are configured to always ask your permission before joining any new networks. You will then be able to vet each one before connecting to it and so you won’t find yourself automatically connected to unsecured, untrusted networks. For extra precaution you could go one step further and actually disable your wireless adapter and then only re-enable it when you are in range of your trusted networks.

When you do choose to join a network, you should only select networks that are trusted and that are secure. The fundamental security of a wireless network takes the form of encryption on the data transferred across the network and the use of key to access the network and that data. The standard protocols that you should look for when joining a network are WPA & WPA2 (Wi-Fi Protected Access) and you should be able to see a padlock (or equivalent symbol) next to the network’s name if it is encrypted, when it appears on your list of available networks. To join secure networks you will still need to have been told its key, although once you have joined for the first time your device will then store the key for you for future occasions.

Known wireless networks can have higher levels of security where they have restricted their access to a specified list of known devices. This is done by creating a list of those devices’ MAC addresses (their unique identifiers) in the settings of the access point/router. You would therefore need to submit your MAC address to the network administrator before joining such networks.

Just because a network is secure however doesn’t mean it is safe; you should only use networks that you trust and where you know and trust the other users. A secured network in a cafe for example where the cafe give the key to all customers is not necessarily trusted.

Part 2 of this article will highlight the other security measures that should be used to keep business information secure, including basic protection for mobile devices and how to use a VPN Provider to improve communications in the workplace.

History of the Japanese Stock Market

As Japan continues it’s slow recovery from the Earthquake and Tsunami that lay waste to so much of the country’s housing and industry just under a year ago, there is still a fierce debate raging as to the long term impact that the disaster (and its aftermath) will have on the Japanese economy. It is therefore, perhaps and interesting point in time to take a look at the broader history of the Japan's economy and its Stock Market.

Japan is one of the world’s largest economies and most important financial hubs. The principal exchange on the Japanese stock market is the Tokyo Stock Exchange (TSE), which is the third largest in the world by market capitalisation (i.e., the value of all outstanding shares of all companies on the exchange) behind only the Americo-European stock exchanges, NYSE Euronext and NASDAQ OMX. It is the largest in Asia and the Pacific region, ahead of both China and Hong Kong. Trading through the TSE is reported by two primary indexes, the Nikkei 225 and the TOPIX. In addition to the TSE there are currently four further stock exchanges operating from other Japanese cities: Osaka, Nagoya, Fukuoka and Sapporo.

Early History
The Tokyo Stock Exchange was founded as the Tokyo Kabushiki Torihikijo on May 15th 1878 by Japan’s Finance (later Prime) Minister Okuma Shigenobu together with the prominent businessman Shibusawa Eiichi, however it didn’t begin trading until 1st June the same year. At the time, many of Japan’s largest cities held their own stock exchanges and it wasn’t until after the Second World War that it became the central market place for the Japanese economy that it is today.

Post WWII
The stock exchange actually merged with those of other Japanese cities in 1943, as part of the war effort, to form the consolidated Japanese Stock Exchange (JSE). However, following the Allied bombing of Nagasaki on August 9th, 1945 the infant stock exchange was shut down for four years. The passing of the Securities Exchange Act reorganised the exchange however, and on May 16th 1949 it was re-opened as the Tokyo Stock Exchange alongside two others in Osaka and Nagoya. That year also saw the founding of five other exchanges across Japan: Kyoto, Kobe, Hiroshima, Fukuoka and Niigata whilst the following year the Sapporo Securities Exchange was created.

Shortly after the TSE’s inception, on September 7th, 1950, the Nikkei 225 index was introduced by the country’s leading Nihon Keizai Shimbun newspaper to index the TSE’s top 225 performing companies, retrospectively providing data from the entire post war history of the exchange.

Boom Years
The end of the 20th Century initially saw the value of the TSE’s companies flourish leading to a rapid rise in the exchange’s market capitalisation. The period between 1983 and 1990, in particular, was one of extensive growth, by the end of which the TSE was by far the largest exchange in the world with 60% of the entire world's stock exchange market capitalisation. The zenith came on December 29, 1989, when the Nikkei hit all time high at an intra-day price of 38,957.44. This growth couldn't be sustained through the economic troubles that were to follow though and during the ‘90s the value of the market fell away. By March 10, 2009 the Nikkei 225 even fell as far as 7,054.98, 81.9% below that high 20 years earlier.

Japan’s Stock Market underwent a considerable re-organisation in the opening year of the 21st Century; on 1st March 2000 the Hiroshima and Niigata exchanges were both merged into the TSE whilst the Kyoto exchange was concurrently merged into the Osaka Securities Exchange to leave the three exchanges that exist today (Kobe had closed in 1967).

Tech
In the final year of the 20th Century, on April 30th, the TSE itself witnessed one of it’s most significant developments as the trading floor closed for the last time. At that moment the switch was made to electronic trading. The TSE Arrows complex was opened shortly afterwards on May 9, 2000 to replace the old trading floor and provide a symbol of the new era whilst being a facility for the exchange of information and face-to-face contact.

The incorporation of technological solutions through the exchange has not gone entirely smoothly, however. On November 1, 2005 bugs hit Fujitsu’s transactional system which was only able to operate for trading for 90 minutes during the entire day. TSE’s systems were also alleged to be partly accountable for allowing mistakes by employees at both UBS Warburg and Mizuho (each selling c600,000 shares at 1yen a piece rather than 1 share at c600,000 yen) resulting in loses running into the hundreds of millions of yen for both companies. In the latter case, the affair even brought about the resignation of the TSE’s CEO and two other executives.

The TSE and therefore the Japanese stock market in general continues to develop and look for new opportunities, especially building alliances with other exchanges throughout the world. The TSE has formed a partnership with the London Stock Exchange (LSE) in the UK to jointly investigate products, services and technologies which may benefit both parties. In particular the LSE has been helping the TSE in the last few years with the establishment of a Japanese equivalent to the LSE’s Alternative Investment Market (AIM). There have also been tentative explorations into emerging exchanges in the East including a 5% share purchase in the Singapore Stock Exchange (SGX).

Earthquake & Tsunami
The long term impact of the recent Earthquake and Tsunami which hit Japan are still to be seen. In the immediate aftermath (on Mar 15th) the Japanese markets closed 10% down (the lowest since April 1st 2009) whilst the Bank of Japan injected a massive 15 trillion yen into money markets in the hope of stabilising them.

Both the physical and economic impact was felt worst in the north of the country whose chiefly manufacturing industries account for 8% of Japan’s GDP. Corporate giants such as Toyota, Nippon and Sony were forced to temporarily suspend production in the wake of the disaster and the subsequent logistical difficulties the country has faced (e.g., power cuts). With the overhanging nuclear threat, some multinationals are even moving their staff abroad.

The total cost of the earthquake is estimated to run into tens of trillion of yen. However, there is still much debate as to whether the disaster will significantly damage the market or even as some have suggested, boost Japan’s economy as businesses across the country get stuck into the rebuilding process. Depending on which point of view you take you may even find that this is the opportune time to consider making an investment in Asian Investment Funds.

A Profile of the Asian Economy

With the world’s two fastest growing economies and 60% of the world’s population, Asia is emerging as arguably the most important market in world trade.

The Asian economy is already the largest continental economy in the world. The biggest players within Asia, according to GDP, are Japan, China, India and South Korea. China has largest economy of those and has emerged as the second largest in the world (when not including the EU) behind the US although it is anticipated that it will soon overtake and claim top spot. Japan, for a long time Asia’s financial superpower is now second whilst India, in terms of purchasing power, can be considered the third largest.

The might of the Asian economies may seem like a fairly modern invention but for much of European antiquity and up until the 19th century countries such as China India were the prominent economic powers in the world. Much of their success then as now depended on their plentiful natural resources, the same resources which tempted European colonisation which in turn stunted Asian economic power until the 20th century.

Asia is a very diverse and disparate continent and as a result the key economic drivers differ substantially across it, to some extent relating to the geography of each locale. The emerging superpowers of China and India are, as are much of central Asia and the subcontinent, largely reliant in the industrial and manufacturing industries fuelled by their large workforces and extensive resources. The rise of both China and India has followed an easing in the socialist governance of the two countries which has unlocked the potential in the massive labour forces and natural resources that each country has.

In Japan and South Korea on the other hand, although industry still plays major role, the economies are more developed and varied and success is also particularly reliant on the financial and service sectors. Both countries experienced post war booms - Japan after the Second World War and South Korea after the Korean War - and are now home to some of the world’s leading multinationals, particularly in the field of consumer electronics and motor vehicles. The success of each economy followed close cooperation between government, banks and business with heavy investment and enthusiastic research into high end technology.

The financial services are also integral to the economies of smaller but prosperous South East Asian states such as Hong Kong and Singapore (together with South Korea and Taiwan known as the Asian Tigers due to their rapid economic development in the second half of the 20th century). The two states are free trade ports which have grown their economies through the adoption of western capitalist principles, international trade and low taxation. They have two of the world’s most important stock exchanges with the Hong Kong stock exchange the world ‘s six largest by market capitalisation.

The wealth of the Middle East states is mostly commodity based with oil in particular being key to their prosperity since the its discovery in Iran in 1908. The region is home to the biggest proportion of the world’s known oil reserves and as a result relatively small Gulf States such as Qatar, United Arab Emirates, Kuwait and Bahrain have been able to rival the larger economies of Turkey and Saudi Arabia and many of those economies now have the some of the highest GDPs per capita in the world (Qatar’s, the highest, stands at 88,232 US$).

One of the biggest challenges facing modern Asian countries is the distribution of their wealth. In middle east despite being oil rich and having some of the highest GDPs per capita in Asia, much of the wealth remains in the hands of a minority in the upper echelons of society. Whereas, in the vast countries of India and China the size of their economies is largely based upon, but very much offset against, the size of their populations sharing as they do 2.5 billion people between them (over a third of the world’s total). As a result their GDP per capita stands at only 3,417 and 7,518 respectively in comparison with the region’s other large economies of Japan (32,817) and South Korea (30,200), whilst the other successful financial and trading nations in the South East are such as those of Hong Kong and Singapore.

Asia has very diverse and complex economy with varying sectors from oil to financial services to consumer electronics. In every one it is a major player and heading into the 21st century increasingly being seen as the major player so there may not be a better time to find out more about investing in Asian Investment Funds.

What Does a Managed Hosting Package Offer - Part 2

The idea of managed hosting is not one that is restricted to a particular hosting platform, rather it is a package of additional support features that you receive with whichever set up you have.

The term managed hosting is not therefore mutually exclusive to other hosting terms which themselves designate the platform that you can purchase. Typically a managed hosting package will include a dedicated server but it can also be combined with any server type whether it be virtual private and shared hosting, colocation or cloud hosting. Each different platform offers a trade off between price and performance, stability, security and flexibility.

Types of Managed Hosting Platform
Dedicated Hosting, the usual set up within a managed hosting service, involves renting an entire physical server from a hosting provider/data center which is solely used to house your site (for example). Consequently your site is protected against the knock on effects of issues and activities on any third party sites hosted by the same provider. It also results in less competition for resource such as disk space and bandwidth (and so allows your site to achieve better performance), and is easily scale-able to meet the needs of the client.

Shared Hosting is when a single server - hardware, operating system and software - is used for more than one client or website. Due to economies of scale it will be cheaper than dedicated hosting but a) far riskier as a failure on another website may have an effect on or take down yours too and b) worse on performance levels (particularly in response to high traffic volumes) as your site will compete for resources such as bandwidth.

Virtual Private Server (VPS) is a type of shared server that is more secure and can be individually configured (to some extent) because it has a separate software partition, with it's own operating system, for each client/web site. It is therefore less susceptible to software issues spreading from one site to another but may still be at risk from resulting hardware failures on the shared server. Sites on VPS will still compete for hardware resource and there may be some limitations preventing full configuration.

Cloud Hosting is also a form of shared hosting but instead of sharing a single server the website is stored across a vast network of servers so that a failure on one server or one part of the network will have little effect on the availability of your site. Cloud Hosting can offer almost instantaneous scaleability and performance improvements as and when needed but some of the security concerns of shared hosting remain.

Colocation involves clients (businesses usually) installing their own server hardware into data center facilities. They can then take advantage of the data center’s infrastructure which offers security and a controlled ambient environment to provide higher levels of availability and reduce the risks of hardware failures. In addition, colocating provides the infrastructure for businesses to improve performance, with for example, the higher bandwidth that many data centers supply as they often sit on the internet backbone. Managed colocation can allow you to retain greater control over the configuration of your installation but still benefit from the above advantages and the support and back up of the service provider.

Managed hosting is not only ideal for any client who does not have their own expertise within their organisation to manage their hosting platform but also in situations where the consequences of downtime can be severe and/or the pressures put on the website and its infrastructure can be significant and fluctuating. The support that such a package offers allows a quick response to performance issues and provides the best advice on how to meet your business objectives and needs.

What Does a Managed Hosting Package Offer - Part 1

For any individual or business looking to set up or move the hosting of their website or IT infrastructure, the number of different options facing them and the jargon used by each hosting provider, can appear bewildering. The idea of managed hosting crops up frequently across the market but unfortunately it has no recognised industry definition. It is therefore worth taking some time to consider what the term has come to represent amongst hosting providers.

In general the label Managed Hosting designates a hosting package where the provider will offer a certain level of assistance with the set up and maintenance of your website’s or business’s server(s). In practice, because there is no industry standard for the term, the level and nature of the support you receive will vary from one provider to another. It is also common for providers to offer differing scales of support within different managed hosting packages.

Managed Hosting Services
However, full managed hosting will benefit you, as the client, with the expertise of the hosting provider to ensure that the set up and configuration of your website best meets your objectives whilst providing optimum performance. The services offered can typically include the installation and maintenance of software and operating systems, antivirus and security monitoring, performance monitoring and improvement (including load balancing) and DNS configuration amongst other things.

Support
Moreover, a managed package will likely include 24/7/365 monitoring and support (usually ‘human’ telephone support) so that, in worst case scenarios, if your site goes off-line you are notified (or equally you can notify them) and there will be a technician working to get it back on line as soon as possible. If there are more subtle performance issues with your site and the hosting platform could benefit from configuration changes, you will also have access to a technician to both advise and make the necessary changes for you.

In fact many hosting providers will offer very high uptime (site availability) guarantees to back up their support claims if you take up their hosting options. You may see guarantees of up to 99.99% or even, in some cases, 100% uptime.

Self Managed
To confuse the picture, however, the term managed hosting can also be employed for hosting packages which in truth are more self managed; where the provider gives you access to an online control panel so that you can fully manage the server configuration yourself.

It is certainly worth checking the details of what each package offers before signing up for it. The devil is often in the detail and as mentioned above, one hosting package is unlikely to be directly comparable to another.

Ultimately, if you want or need to have high levels of expertise available to you around the clock (and receive the guarantees that come with it) you’ll need to be willing to pay out a little bit more. Although if the uptime of your site, an e-commerce site for example, is key to your business’s success, a comprehensive managed hosting package may be worth the investment.

Traditional vs Alternative Investments - Part 2

The term ‘alternative investment’ can be used to apply to a broad spectrum of differing investments including more complex high risk, high return funds that invest in underlying assets such as private equity ventures and property/real estate. These tend to be the domain of professional investors or investment firms although they are available to private investors (you and me) with the help of a financial adviser. However, there are also a variety of other interesting alternative investments which may offer you the opportunity to combine hobbies and passions with the art of making money.

These investments focus on tangible items, property and chattels, which have an intrinsic value and are seen to present less risk than traditional investments - their value to some extent guarded or buffered by the presence of collectors, enthusiasts and fundamental demand in the market. However of course their value can still go up and down in accordance with supply and demand so it is worth familiarising yourself with each market before taking on the risk of large scale investments.

Property
Property had been seen as the quickest way to make a sizeable return on your investment, for a good few years, until the recent credit crunch hit. It can offer two income streams to the investor in the form of one-off sale proceeds and periodic rental income.

The sale returns on property can be high when the market is doing well, especially if you are adding value to your property through development, but recent market trends have limited returns and increased the risk, particularly as the financing of property often includes an incurred debt in the form of a mortgage. Rental income is a slightly more stable income stream because dips in the property market can push more people to rent rather than own, and therefore rental values are prone to fluctuate less (although there is still risk in finding tenants and tenants defaulting on repayments).

Wine
Having become particular popular in the seventies and eighties there is now a well developed market in trading fine and rare wines. The market is driven by both investors and collector-connoisseurs and dabbling in it certainly requires a healthy knowledge of vintages and vineyards.

The wines that will make you a return are those that are produced by a highly regarded vineyard, using good techniques to produce a wine of renowned quality that ages well. However, risk is still encountered with the fact that the investor must wait for a lengthy period for the prospect of the wine increasing in value and all the while they will need to invest in its storage whilst receiving no income on it until its final sale. In addition there is the risk that it may spoil or have been spoiled at some stage of its production.

Art - Paintings/Sculpture
The first type of invest-able chattels that would spring to mind for most people is art. We all know that a single painting or sculpture by a legendary artist can fetch well into the millions but for most budding the investors the returns can be achieved by scouting the 'next big thing'. Buying works by up and coming artists can land you a small fortune but you will have to rely on a good chunk of luck, patience and talent at spotting artistic trends.

Coins/Bank Notes
Perhaps slightly counter intuitively the value of a coin or bank note is not necessarily the same as the value that it has designated for it. If a coin o bank note is no longer legal tender, had a limited release or is made of a precious metal then the value of the coin can actually far exceed its face value. For example, a more collectible bank note such as variations of the now defunct white fiver will be worth far more than £5 and coins made from gold will be worth more than their face value as gold bullion.

Antiques & Other Collectibles
In fact, any item which has a demand can provide an astute investor with a return on their investment. Collectors and investors together drive markets in all sorts of objects from antique furniture and ceramics to memorabilia such as vinyl records and stamps. The collectibles or antiques market can be a tempting place to start dabbling with alternative investments as it can cater for any level of budget and risk starting with dalliances at flea markets and car boot sales and rising to major investments in international auction rooms. The key is building up and maintaining a detailed knowledge of the differing collectible markets and the demands for items within them.

The canny investor can ultimately invest in anything that has a value if that value can change, and the list is almost inexhaustible, from investment trusts to commodity trading to investing into the annuity market. Whatever market you are interested in it is always a good idea to seek professional financial advice and learn as much about the intricacies of the market as possible.

Traditional vs Alternative Investments - Part 1

The financial services and investments world has much been in the news over the last few years as large institutions have made controversial investment decisions, stock markets have been impacted and individuals have suffered through their private investment portfolios and pensions. There is of course still money to be made out there so it is perhaps a good time to take a look at what investment opportunities are available, both obvious and less so.

The following is a sample of traditional investment choices, but it is by no means exhaustive as even these can exist in many guises with differing levels of risk profiles:

Cash
The vast majority of us will have at some stage saved cash on deposit in a bank account and we may not think of it as an ‘investment’ as such however, by choosing a competitive interest rate cash can be a secure way to grow your money. Often the best returns will be available if you are prepared to lock up you money for the length of a fixed term. The capital you save will be protected barring the extremely rare event of your bank suffering financial collapse in which case £85,000 of it (per person per bank) is still protected by the government. The return on the investment takes the form of interest that is accrued on periodic basis.

Equities
Otherwise known as shares or stocks, equities are investments that are traditionally made in public listed companies. By buying a share you are buying a piece of that company and if the company makes a profit you will be paid a slice of that profit in the form of a dividend. The value of the shares fluctuates in line with their supply and demand which in turn is influenced by the performance of the company and the likelihood and size of dividend payments to its shareholders.

Serious investors will tend to manage diverse portfolios of shareholdings to spread the risk. If you invest only in one company and they fail or lose money then you will lose money, but by investing in a broad selection of companies, any losses in one company or across a particular sector of industry are offset by successes and gains in others. Due to the complexities of managing and analysing the companies and their risks, as well as the individual costs of making transactions, private investors often invest into funds where a fund manager in turn manages an underlying portfolio of equities.

Traditional sharedealing portfolios will usually be made up of companies which are publicly listed on a ‘recognised’ stock exchange (recognised by the HMRC in the UK) so that there is an indication as to how robustly and transparently the finances of the company are run. For those willing to take on more risk, there are also exchanges such as London’s Alternative Investment Market which lists up and coming companies where there is a potential for bigger gains, but with it a higher risk of company failures and therefore losses.

Gilts and Bonds
Bonds are in essence an investment vehicle through which you lend a company or organisation a set amount of money for an agreed length of time (term) in exchange for a pre-agreed level of interest and the return of your original money (capital) at the end. Bonds that raise money for companies are known as corporate bonds and bonds relating to governments are called gilt-edged bonds or simply gilts and are seen to have a relatively low risk of not being repaid.

Unit Trusts
A unit trust is a collective investment whereby you put your money into a ‘pot’ with that of other people to collectively invest in a portfolio of investments such as equities. In return for your money you get an allocation of units. Unit Trusts are termed open ended meaning that the size of the pot can grow - when people buy (add their money to the pot) they get a certain number of newly created units depending on how much the existing units are worth and how much they put in. As a consequence nobody needs to sell units for anyone else to buy in and therefore the value of each unit is dictated by how the money invested by the fund manager is performing rather than supply and demand of units. If the value of the investments grow the value of the fund will grow proportionately and your slice of the pie will be worth more.

A unit trust is run by one or more fund managers who will use their expertise in the markets to decide how and where the money will be invested/disinvested. However, each unit trust will have a theme depending on factors such as risk profile, ethical profile, industrial sector and the geographical location of the underlying companies which will dictate which companies the fund manager can invest in. So, if you think the car industry in Japan is set to boom, you can invest in a fund where the fund manager in turn invests in such companies.

Investment Trusts
These are another type of collective investment similar to a unit trust where money is pooled together and invested into other companies. In this case however the fund is actually a standalone company, so although it is run by a fund manager(s) it does not sit within a (financial) business which performs other functions and runs other funds. An investment trust’s sole purpose as a company is to invest into other companies as a single fund.

Investment trusts are listed on stock exchanges as distinct companies and therefore investors buy shares in that company. As with equities they are close ended so that there are only a limited number of shares available to buy. Generally someone needs to sell shares for someone else to buy them - extras share are not just created. Consequently the value of a share is determined by the demand and supply of shares in the market which in turn is driven by the success and of the trust.

OEICs
Open Ended Investment Trusts (OEICs) are a type of investment that is more similar to a unit trust in that they are open ended vehicles where the number of shares/units that make up the fund can change as and when they are sold. Again because they are open ended, the value of the shares does not change with supply and demand. Conversely however, they are also distinct companies in the same fashion as investment trusts.

Due to a number of advantages, OEICs are gradually replacing unit trusts in the UK. They are generally simpler and cheaper than unit trusts to administer and have no bid-offer spread (just a single price). Moreover, they are able to contain separate sub funds with slightly different themes that can suit different investors.

Further Investments
The world of financial investments contains many other types of opportunities not mentioned above, such as direct investments into commodities and currencies, as well as the vehicles that either invest in the above assets in turn, allow you to invest in these assets through them or base their value upon them. Examples of investment vehicles like ISAs and pensions, which offer the chance to invest in the above through them, often then offer other incentives such as access to funds and investment trusts that aren’t directly accessible to private investors, discounts on fund administration charges and tax breaks.

Having highlighted the more traditional financial investment options that exist, the second part of this article looks at other less obvious assets which can be used as investments.

The New Junior ISA vs The Old Child Trust Fund

There is no doubt that the new Junior ISA has been brought in to fill the gap left by the old Child Trust Fund (CTF). They both perform the same function - providing an incentive for parents to save on behalf of their children; to build them a nest egg for their future. But how do the two investment vehicles compare and why has the CTF been replaced by its new-fangled successor? The first part of this article looks at the overlaps between the plans; part two addresses the differences in more detail.

Purpose
The new Junior ISA and the now closed CTF both share a common aim: to encourage parents and guardians to save money for their children so that when they reach adulthood the money awaiting them can be used to kick start the rest of their lives. By providing a tax exempt vehicle where the invested monies belong to the child, the idea is that the funds will be securely ring-fenced whilst given the best chance to grow successively as the child grows.

Term
In both cases, as suggested above, the money put into these plans is locked away until the child turns 18. No-one, neither the parent nor child can access it until that point with the only exceptions being in the event of extreme circumstances such as the death of the child or a terminal illness.

Tax
The Junior ISA and the Child Trust Fund share the same tax breaks in that they are not taxed on any income generated by assets within the plans, whether it be interest payments on cash deposits and bonds, or dividends on stocks and shares. If those assets grow significantly they will also avoid being subject to capital gains tax (CGT) as they would if they were held outside of an equivalent tax exempt savings vehicle.

Junior ISAs and CTFs aside, children are subject to the same income tax thresholds as adults where their income would only become taxed if it exceeded £7,475 in a given tax year. However, it is worth bearing in mind that other child savings accounts, for example, can still be subject to tax on income which exceeds £100 per year for any monies donated by an individual parent or stepparent (to prevent parents using these accounts for personal gain). Neither the CTF nor the Junior ISA have these £100 income caps.

In addition, an important consideration for parents or families on lower incomes is that when the times comes at which the child (then adult) can, if they wish, access the funds from these plans, the new influx of money won’t affect the calculation of any benefits that they may be receiving.

Subscriptions/Contributions
Although the CTF previously had a contribution limit of £1,200 per year it has now been raised to match the subscription limit of Junior ISAs. The increase dating from the point at which the ISAs were launched on 1 November 2011 means that each type of plan will now permit up to £3,600 to be contributed (subscribed) each tax year.

Management
The CTF and the Junior ISA must be run/managed by a single registered contact who will usually need to be either a parent or guardian. This person will then be responsible for making all decisions about how and where the funds in the plans are invested. In the case of the CTF, a voucher which entitles the child to an initial government donation (usually £250) is sent to a parent at the outset and this person is then responsible for setting up the account using the voucher. Similarly the registered contact for a Junior ISA will be the parent/guardian who opens the child’s first ISA. The registered contact in both cases will be responsible for the account until the child turns 16 when for the CTF they will and for the Junior ISA they can, if they wish, take over the running themselves for the remaining two years. The plans and the money therein, however, are always the property of the child even before they turn 16 and cannot be accessed by the registered contact at any stage.

As you can see there are a number of significant similarities behind how the CTF and the new Junior ISA are run and why they exist as savings options for parents and children in the first place. So all this does beg the question as to how the new Junior ISA is different to its predecessor and why the original CTF was scrapped in favour of the new investment vehicle.

Having discussed the features that the old Child Trust Fund (CTF) and the new Junior ISA had in common in the first part of this article the following highlights some of the ways in which they differ an why the Junior ISA has been brought in place of the CTF.

Availability
The most obvious discrepancy between the two plans is that the CTF is now closed to newborns, in fact any child born after 2 January 2011. As discussed in the first part of this article, children born between 1 September 2002 and 2 January 2011 will have been issued with a voucher which will have either been used by parents to open a CTF account or will have expired, in which case the HMRC will have automatically opened an account on the child’s behalf.

The Junior ISA, however, can be opened for any child born either side of the CTF’s active dates above. Thus, children born before the CTF was launched in 2002 can still have a Junior ISA opened for them whilst newborns since January 2011 are also eligible.

State Contributions
The most popular feature of the old CTFs is that, for most children, the government would have issued a voucher worth £250 to get the plan going. This initial kick start varied if the child was in a low income family, in which case they could receive up to £500, or if the child received its first child benefit payment after 3 August 2010 - when they were then only entitled to a donation of £50 as the government began to scale back its contribution. What’s more, the CTF also promised a second state contribution of £250 when the child turned seven, if that event occurred before 1 August 2010.

Unfortunately, the new Junior ISA comes with no such welcome, or the extra boost at the age of seven, which explains why parents have been more lukewarm about their arrival in the place of the more generous CTFs.

Investment Choices
The CTF, broadly speaking, came in three different guises which offered certain investment choices based upon the risk that the parent (registered contact) wanted to take on in search of higher returns on the investment. Essentially, as with most investment, the higher the potential returns, the high the risk encountered.

The default account, that treads the middle ground, is a Stakeholder Account, which was what children ended up with if the voucher expired before the parent managed to open an account for them. These accounts invest the funds into shares and bonds but are required by government rules to spread the risk across multiple companies rather than put proverbial eggs into single baskets. What’s more the providers of such accounts are required to switch the funds to low risk investments once the child turns 13 to safeguard the plan as the child approaches 18.

The most secure CTF option is a Savings Account which simply invests the funds as cash and therefore protects the capital of the investment whilst only providing limited returns in the form of the interest accrued on that capital. The riskiest option with the highest potential returns, is the Share Account which, akin to the Stakeholder Accounts, invest the money into stocks and shares but unlike such accounts, don’t have the government required safeguards. Therefore there is a higher level of risk involved although the length of the terms involved (18 years) should increase the chances of any losses being counterbalanced by gains in the long run.

Junior ISAs on the other hand, can consist of a cash element and/or a stocks and shares element, just as their adult counterparts do. As little or as much of the subscriptions can be put into each as the parent/child wishes. The variety between individual plans will result from the distinct offerings of each ISA provider, such as varying discounts in investment charges and access to different ranges of investments. In principle, the parent/child can manage what their plan invests into although some providers may link their plans to specific funds, like investment trusts, for which the fund manager will decide how the underlying investments are to be managed.

Options at Maturity
The Junior ISA further differs from the CTF in terms of what happens to it when it reaches maturity and the options that are available to parent and child when they turn 16. At age 18, both the Junior ISA and the CTF become available to the ‘child’ to do with as they see fit but if no other action is taken the JISA will automatically turn into an adult ISA whereas the CTF won’t.

At age 16 the Junior ISA gives children the option of taking over the management of the plan themselves however, the CTF requires that the child take over the management. Neither plan of course allows the child (or parent) to access the funds until the child is 18.

Why The Switch?
As implied previously, the main reason for the scrapping of new CTFs was their cost to the government. At a time when the national budget had been squeezed from every angle the coalition government took the decision to save themselves an anticipated £320m-plus a year that CTFs would have continued to cost. In terms of a state contribution to child savings, the government do still however forgo the taxes that would otherwise be raised on the income generated by the investments in the new Junior ISAs.

In summary, both the CTF and the Junior ISA each have their own advantages and disadvantages whilst broadly sharing the same purpose and goals. Ultimately, parents are unable to choose between them and are restricted to one or the other depending on when their child was born, but the new Junior ISA, for what it lacks in state contributions, does offer parents and children increased flexibility and savings potential.

The New Junior ISA vs The Old Child Trust Fund - The Differences

Having discussed the features that the old Child Trust Fund (CTF) and the new Junior ISA had in common in the first part of this article (The New Junior ISA vs The Old Child Trust Fund - Overlap) the following highlights some of the ways in which they differ an why the Junior ISA has been brought in place of the CTF.

Availability
The most obvious discrepancy between the two plans is that the CTF is now closed to newborns, in fact any child born after 2 Jan 2011. As discussed in the first part of this article, children born between 1 September 2002 and 2 January 2011 will have been issued with a voucher which will have either been used by parents to open a CTF account or will have expired, in which case the HMRC will have automatically opened an account on the child’s behalf.

The Junior ISA, however, can be opened for any child born either side of the CTF’s active dates above. Thus, children born before the CTF was launched in 2002 can still have a Junior ISA opened for them whilst newborns since January 2011 are also eligible.

State Contributions
The most popular feature of the old CTFs is that, for most children, the government would have issued a voucher worth £250 to get the plan going. This initial kick start varied if the child was in a low income family, in which case they could receive up to £500, or if the child received its first child benefit payment after 3 August 2010 - when they were then only entitled to a donation of £50 as the government began to scale back its contribution. What’s more, the CTF also promised a second state contribution of £250 when the child turned seven, if that event occurred before 1 August 2010.

Unfortunately, the new Junior ISA comes with no such welcome, or the extra boost at the age of seven, which explains why parents have been more lukewarm about their arrival in the place of the more generous CTFs.

Investment Choices
The CTF, broadly speaking, came in three different guises which offered certain investment choices based upon the risk that the parent (registered contact) wanted to take on in search of higher returns on the investment. Essentially, as with most investment, the higher the potential returns, the high the risk encountered.

The default account, that treads the middle ground, is a Stakeholder Account, which was what children ended up with if the voucher expired before the parent managed to open an account for them. These accounts invest the funds into shares and bonds but are required by government rules to spread the risk across multiple companies rather than put proverbial eggs into single baskets. What’s more the providers of such accounts are required to switch the funds to low risk investments once the child turns 13 to safeguard the plan as the child approaches 18.

The most secure CTF option is a Savings Account which simply invests the funds as cash and therefore protects the capital of the investment whilst only providing limited returns in the form of the interest accrued on that capital. The riskiest option with the highest potential returns, is the Share Account which, akin to the Stakeholder Accounts, invest the money into stocks and shares but unlike such accounts, don’t have the government required safeguards. Therefore there is a higher level of risk involved although the length of the terms involved (18 years) should increase the chances of any losses being counterbalanced by gains in the long run.

Junior ISAs on the other hand, can consist of a cash element and/or a stocks and shares element, just as their adult counterparts do. As little or as much of the subscriptions can be put into each as the parent/child wishes. The variety between individual plans will result from the distinct offerings of each ISA provider, such as varying discounts in investment charges and access to different ranges of investments. In principle, the parent/child can manage what their plan invests into although some providers may link their plans to specific funds, like investment trusts, for which the fund manager will decide how the underlying investments are to be managed.

Options at Maturity
The Junior ISA further differs from the CTF in terms of what happens to it when it reaches maturity and the options that are available to parent and child when they turn 16. At age 18, both the Junior ISA and the CTF become available to the ‘child’ to do with as they see fit but if no other action is taken the JISA will automatically turn into an adult ISA whereas the CTF won’t.

At age 16 the Junior ISA gives children the option of taking over the management of the plan themselves however, the CTF requires that the child take over the management. Neither plan of course allows the child (or parent) to access the funds until the child is 18.

Why The Switch?
As implied previously, the main reason for the scrapping of new CTFs was their cost to the government. At a time when the national budget had been squeezed from every angle the coalition government took the decision to save themselves an anticipated £320m-plus a year that CTFs would have continued to cost. In terms of a state contribution to child savings, the government do still however forgo the taxes that would otherwise be raised on the income generated by the investments in the new Junior ISAs.

In summary, both the CTF and the Junior ISA each have their own advantages and disadvantages whilst broadly sharing the same purpose and goals. Ultimately, parents are unable to choose between them and are restricted to one or the other depending on when their child was born, but the new Junior ISA, for what it lacks in state contributions, does offer parents and children increased flexibility and savings potential.

The New Junior ISA vs The Old Child Trust Fund - Overlap

There is no doubt that the new Junior ISA has been brought in to fill the gap left by the old Child Trust Fund (CTF). They both perform the same function - providing an incentive for parents to save on behalf of their children; to build them a nest egg for their future. But how do the two investment vehicles compare and why has the CTF been replaced by its new-fangled successor? The first part of this article looks at the overlaps between the plans; part two addresses the differences in more detail.

Purpose
The new Junior ISA and the now closed CTF both share a common aim: to encourage parents and guardians to save money for their children so that when they reach adulthood the money awaiting them can be used to kick start the rest of their lives. By providing a tax exempt vehicle where the invested monies belong to the child, the idea is that the funds will be securely ring-fenced whilst given the best chance to grow successively as the child grows.

Term
In both cases, as suggested above, the money put into these plans is locked away until the child turns 18. No-one, neither the parent nor child can access it until that point with the only exceptions being in the event of extreme circumstances such as the death of the child or a terminal illness.

Tax
The Junior ISA and the Child Trust Fund share the same tax breaks in that they are not taxed on any income generated by assets within the plans, whether it be interest payments on cash deposits and bonds, or dividends on stocks and shares. If those assets grow significantly they will also avoid being subject to capital gains tax (CGT) as they would if they were held outside of an equivalent tax exempt savings vehicle.

Junior ISAs and CTFs aside, children are subject to the same income tax thresholds as adults where their income would only become taxed if it exceeded £7,475 in a given tax year. However, it is worth bearing in mind that other child savings accounts, for example, can still be subject to tax on income which exceeds £100 per year for any monies donated by an individual parent or stepparent (to prevent parents using these accounts for personal gain). Neither the CTF nor the Junior ISA have these £100 income caps.

In addition, an important consideration for parents or families on lower incomes is that when the times comes at which the child (then adult) can, if they wish, access the funds from these plans, the new influx of money won’t affect the calculation of any benefits that they may be receiving.

Subscriptions/Contributions
Although the CTF previously had a contribution limit of £1,200 per year it has now been raised to match the subscription limit of Junior ISAs. The increase dating from the point at which the ISAs were launched on 1 November 2011 means that each type of plan will now permit up to £3,600 to be contributed (subscribed) each tax year.


Management
The CTF and the Junior ISA must be run/managed by a single registered contact who will usually need to be either a parent or guardian. This person will then be responsible for making all decisions about how and where the funds in the plans are invested. In the case of the CTF, a voucher which entitles the child to an initial government donation (usually £250) is sent to a parent at the outset and this person is then responsible for setting up the account using the voucher. Similarly the registered contact for a Junior ISA will be the parent/guardian who opens the child’s first ISA. The registered contact in both cases will be responsible for the account until the child turns 16 when for the CTF they will and for the Junior ISA they can, if they wish, take over the running themselves for the remaining two years. The plans and the money therein, however, are always the property of the child even before they turn 16 and cannot be accessed by the registered contact at any stage.

As you can see there are a number of significant similarities behind how the CTF and the new Junior ISA are run and why they exist as savings options for parents and children in the first place. So all this does beg the question as to how the new Junior ISA is different to its predecessor and why the original CTF was scrapped in favour of the new investment vehicle. For more information on this see part two of this article: The New Junior ISA vs The Old Child Trust Fund - The Differences.