Unit 34 Investment Opportunities and Financial Planning Assignment Brief 2026

Unit 34: Investment Opportunities and Financial Planning Assignment Brief

Unit in Brief

Learners will study the four main asset classes of investment and understand how they can be integrated into a range of investment products.

Unit Introduction

The financial services industry contributes over £150 billion to the UK economy each year and provides job opportunities to over two million people. Money can be invested in several ways. It can be deposited in a bank to earn interest, invested in the stock market or used to purchase assets, for example property. Without investment, businesses cannot grow, houses cannot be built and the UK economy would cease to exist.

In this unit, you will learn about the four main asset classes and how they can be used to create investment portfolios suitable for individuals’ circumstances in line with their attitude to risk. You will learn about collective investments such as unit trusts and bonds, and will gain an understanding of the different types of pension plans available.

You will develop sound knowledge of investment opportunities to help you to progress to the study of financial services at a higher level, for example professional qualifications and degree-related programmes. This unit will also help you to progress to employment in the financial services industry in a customer-facing or call-centre environment. The unit can also help you to progress to a more technical role, working, for example, in a paraplanning, report-writing role, or providing research support to fund managers.

Learning Aims

In this unit, you will:

A. Investigate the four main asset classes of investment

B. Explore the construction and uses of collective investment products

C. Develop appropriate retirement plans to suit different situations.

Summary of Unit

Content

Learning aim A: Investigate the four main asset classes of investment

Learners will understand the investment terminology and how the value of investments may change over time, the benefits and risks of cash deposits, fixed interest bonds, equities and investment in property, and their use as part of a diversified investment portfolio.

A1 Cash

Learners will understand cash deposits and the risks associated with interest payments, and how capital can be eroded if interest rates do not exceed inflation rates.

• Interest earning instant access accounts:
  • bank and building society savings accounts.
• Interest earning restricted access:
  • bank and building society savings accounts with higher interest rates but with limitations on withdrawals.
• Fixed term:
  • bank and building society savings accounts with higher interest rates but with loss of interest penalties for withdrawal before the end of the fixed term.
• Cash funds within investment management portfolios:
  • low-risk investment fund options, often used to hold money to pay for charges and regular withdrawals
  • money market instruments, including call or notice deposits, use of foreign currency exchange.

A2 Bonds

Learners will understand how fixed-rate interest bonds can be bought and sold on stock exchanges and how the price can go up and down depending on other market factors, including prevailing interest rates.

• Gilt-edged securities: o loans to the UK government, regarded as safe investments o examples of gilts, e.g. 5% treasury 2033 o regular receipt of interest, payable half-yearly at fixed rate o types of gilts (index-linked bonds fixed-rate bonds).
• Corporate bonds:
  • loans to companies
  • generally higher risk than gilt-edged securities o examples of corporate bonds, e.g. 6% ABC plc 2025 o regular receipt of interest, payable half-yearly at fixed rate
  • types of corporate bonds (including fixed-rate bonds, floating rate notes and convertible bonds).
• Secured and unsecured:
  • use of credit rating agencies.
• Trading fixed interest bonds:
  • gilts and corporate bonds can be traded on stock exchanges o prices change according to prevailing interest rates.
• Calculating running yields:
  • Annual income on investment _{× 100}

Current market value

A3 Equities

Learners will understand how shares can be bought and sold on stock exchanges, and how gains and losses can be made depending on the performance of the company, market sentiment and other external factors.

• Ordinary shares:
  • share issues to raise capital o voting and dividend rights of ordinary shareholders o secondary share trading through stock markets o share price movements o use of share price charts and stochastic analysis tools o risk to investment capital.
• Preference shares: o dividend rights of preference shareholders.
• Corporate actions: o rights issue o bonus shares.
• Calculating dividend yield:
  • Annual dividend  × 100 Current stock price
• Choosing shares to invest in: o types of shares available o relative risks of different types of shares o diversification of a portfolio o role of stockbrokers o stock market indices (UK and global).

A4 Property

Learners will gain an understanding of investment in residential and commercial property and the benefits and drawbacks of each. This investment can be for personal use or as an investment vehicle to generate an income.

• Direct investment in residential property: o use as own residence but investment through increase in equity o investment in buy-to-let properties o direct investment in commercial property o large variety and value of commercial properties.
• Indirect investment through property funds:
  • investment in insurer or fund manager property funds o managers can impose limited withdrawals owing to illiquidity of property.
• Illiquidity of property:
  • property cannot usually be part bought or part sold and can take considerable time to liquidise.

Learning aim B: Explore the construction and uses of collective  investment products

B1 Unit trusts and Open-ended Investment Contracts (OEICs)

Learners will understand how unit trusts and OEICs are structured, the investment choices they offer and how they can be used by individual investors to gain much wider diversification of their portfolio than could be achieved through direct investment.

• Direct or indirect investments (discretionary and non-discretionary).
• Investment strategies (active, passive funds or core satellite).
• Structure of a unit trust:
  • set up as a trust o interests of investors protected by trustees o role of fund manager o unit trust is open-ended.
• Structure of an Open-ended Investment Contract (OEIC): o set up as a company o interests of investors protected by depository o fund managed by Authorised Corporate Director (ACD) o OEIC is open-ended.
• Charging structures:
  • initial charges o annual management charges
  • dual price bid offer spread for unit trusts o single pricing for OEICs and some unit trusts.
• Diversification of investment:
  • types of funds offered o fund manager/ACD selects investment within limits of fund strategy o investors able to choose from funds according to attitude to risk.

B2 Investment trusts

Learners will understand the structure of an investment trust, particularly its similarities and differences when compared to open-ended collective investments, and how investment trusts can be used by investors to achieve a much greater level of portfolio diversification than could be achieved through direct investment.

• Structure of an investment trust: o investment trust is set up as a company o investors become shareholders o investment trust is closed ended o real estate investment trusts (REITs) o calculating net asset values (NAVs)
  • Annual current value of fund’s assets dividend

Total number of shares outstanding o trading at a premium or discount on net asset values (NAVs).

• Gearing:
  • borrowing to invest using existing investments as security o the ability of investment trusts to borrow o increased risks associated with gearing:
    • fall in the value of investments may occur, however the loan balance remains
    • interest costs may outweigh investment returns, thereby impacting cash flow.

B3 Investment bonds

Learners will understand the structure and uses of investment bonds as single premium contracts offered by life insurance companies, with a choice of investment funds, the tax advantages they can offer to certain individuals and the calculation of top slicing.

• Structure of an investment bond: o single premium investment bonds with no fixed term o offered by insurers and include a life insurance – usually 101% of investment o classified as non-qualifying life policy o choice of funds available to match attitude to risk.
• Tax deferral using an investment bond:
  • a percentage of original investment can be taken each year without the need to pay tax
  • uses spreading mechanism for taxable gains o basic rate taxpayers have no tax to pay
  • most suitable for individuals who are higher rate tax payers but moving to be basic rate tax payers in the future.
• Top slicing relief:
  • reduces the liability arising in respect of the gain on the disposal of a life assurance policy that takes an individual into a higher or additional rate tax bracket
  • calculated when a chargeable event occurs to include withdrawals and death.
• Calculating top slicing:
  • Gain x

Number of years invested

B4 Exchange-traded funds (ETF)

• Marketable security that tracks an index.
• A commodity, bonds, or a basket of assets like an index fund.
• Passive fund.

B5 Tax-efficient collective investments

Learners will understand how governments encourage savings and investment through offering tax advantages to certain financial services products.

• Stocks and shares ISAs:
  • investment in unit trust, OEIC or investment trust can be placed in ISA wrapper o maximum amount that can be invested is set for each year o growth is tax free.
• Enterprise Investment Schemes (EIS): o investment in shares of small, unlisted company o proportion of fund tax free sum.
• Seed Enterprise Investment Schemes (SEIS):
  • investment in small companies, unlisted and under two years old.
• Real estate investment trusts (REITs):
  • buying shares in a company that owns property o shares can be held in an ISA o real estate investment trusts (REITs) benefit from tax advantages in the fund growth.

Learning aim C: Develop appropriate retirement plans to suit different situations

Learners will understand pensions and their suitability at different stages in the financial life cycle.

C1 The stages in an individual’s financial life cycle

• Stages:
  • childhood o adolescence o young adult o middle age o old age.

C2 State pension benefits

• Funding state pensions: o National Insurance Contributions (NICs) o need to contribute a minimum number of years to receive state benefits.
• Changing demographics and state retirement age: o ageing population linked to greater longevity o expectations of higher living standards in retirement o equalisation of pension ages for men and women.
• Calculation of new state pension benefits:
  • new, flat-rate state pension from April 2016 o calculations based on number of years of National Insurance Contributions (NICs).

C3 Defined benefit (final salary) pension schemes

Learners will understand the structure of a defined benefit pension scheme provided by an employer, how benefits are based on salary and years of service with the employer, and the impacts of the current market on these schemes.

• Structure of defined benefit (final salary) pension schemes:
  • benefits linked to salary and years’ service, not to contribution levels.
• Closure of defined benefit (final salary schemes): o ageing population linked to greater longevity o schemes struggling to obtain growth on investment due to low fixed interest rates o well-publicised collapse of schemes o schemes closing to new and existing members o schemes folding and transferring to Pension Protection Fund.
• Calculation of final salary benefits:
  • calculations using examples of final salaries and membership of 1/60th or

1/80th pension schemes

• death in service and spouse’s benefits.

C4 Defined contribution pension schemes

Learners will gain an understanding of the wide range of defined contribution pension schemes available through employers, for the individual employed and for the self-employed and the options available to the scheme member in retirement.

• Structure of defined benefit pension schemes: o offered as employer-managed or insurance-company managed pension scheme o final benefits dependent on size of pension fund and age at retirement o proportion of fund can be taken as tax-free lump sum
  • proportion of fund can be taken as taxable lump sum, left invested in pension or used to purchase annuity.
• Personal pension plans:
  • individual or group pension plans o wide choice of investment funds to suit attitude to risk and life stage o contribution levels up to 100% of salary, some of which is tax free o set lifetime allowance in pension fund.
• Stakeholder pension plans:
  • simplified form of personal pension o created to encourage greater number of individuals to save for retirement o maximum annual management charge of 1.5% for first 10 years and 1% thereafter o no penalties on ceasing contributions or transfer o low minimum contribution levels.
• Self-Invested Personal Pension (SIPPS):
  • personal pension plan with wider range of investment choices o can include unlisted shares and unauthorised investment funds o can hold commercial property in the pension.

C5 Auto-enrolment

Learners will gain an understanding of why the government introduced the concept of all employees being auto-enrolled on to an appropriate pension scheme with mandatory contribution levels for employee and employer unless the employee chooses to opt out of the pension scheme.

• Reasons for introduction of auto-enrolment:
  • low uptake of pension savings plans, even after introduction of stakeholder pensions o increasing age of population and associated longevity o increasing reliance on state benefits.
• Rules for auto-enrolment:
  • all employers must offer an appropriate pension scheme o definition of qualifying employees o employer and employee minimum contribution levels.
• National Employment Savings Trust (NEST): o pension scheme set up by government o independent of the government
  • used for auto-enrolment by employers who do not have an appropriate pension scheme o offers choice of funds with lifestyle-matching options.

Assessment Criteria

Essential information for assignments

The recommended structure of assessment is shown in the unit summary along with suitable forms of evidence. Section 6 gives information on setting assignments and there is further information on our website.

There is a maximum number of three summative assignments for this unit. The relationship of the learning aims and criteria is:

Learning aim: A (A.P1, A.P2, A.M1, A.D1)

Learning aim: B (B.P3, B.P4, B.M2, B.D2)

Learning aim: C (C.P5, C.P6, C.M3, C.D3)

Further information for teachers and assessors

Resource requirements

There are no specific resource requirements for this unit but learners must have access to information on a range of local, national and international businesses.

Essential information for assessment decisions

Learning aim A

For distinction standard, learners will produce a comprehensive document, aimed at investors, to aid investment decisions. The document will clearly evaluate the features, risks and benefits of the four main asset classes of investment. Learners will demonstrate their knowledge and understanding by incorporating the use of relevant calculations to show how investments can change over time in terms of loss and profit. They will use appropriate terminology consistently and accurately throughout.

For merit standard, learners will produce a detailed document aimed at investors to aid investment decisions. The document will assess the features, risks and benefits of the four main asset classes of investment. Learners will demonstrate their knowledge and understanding by showing how investments can change over time in terms of loss and profit. They will use appropriate terminology accurately.

For pass standard, learners will produce a document aimed at investors to aid investment decisions. The document will explain the main features, risks and benefits of the four main asset classes of investment. Learners will demonstrate their knowledge and understanding by explaining how investments can change over time in terms of loss and profit owing to changes in the economy, and they will use appropriate terminology.

Learning aim B

For distinction standard, learners will carry out extensive research into a wide range of collective investment products offered by investment companies. The research will include information on unit trusts, OEICs, investment trusts and investment bonds. Learners will evaluate the main features of each type of investment opportunity and weigh up the opportunities for income, growth and tax savings that each one offers.

For merit standard, learners will carry out detailed research into a range of collective investment products offered by investment companies. The research will include information on unit trusts, OEICs, investment trusts and investment bonds. Learners will then analyse the main features of each type of investment provides.

For pass standard, learners will carry out research into collective investment products offered by investment companies. The research will include information on unit trusts, OEICs, investment trusts and investment bonds. Learners will then explain the main features of each type of investment opportunity and identify some of the opportunities for income, growth and tax savings that each one provides.

Learning aim C

For distinction standard, learners will thoroughly consider different types of retirement plans available, including different types of pensions and investment opportunities. Learners will evaluate the information and clearly link the evaluation to the needs and situations of individuals.

For merit standard, learners will consider different types of retirement plans available, including different types of pensions and investment opportunities. Learners will assess the information and clearly link the assessment to the needs and situations of individuals.

For pass standard, learners will identify different types of retirement plans available, including different types of pensions and investment opportunities. Learners will explain how the information links to the needs and situations of individuals.

Links to other Units

This unit links to:

• Unit 3: Personal and Business Finance
• Unit 30: Legal Principles and Professional Ethics
• Unit 36: Global Financial Services.

Employer Involvement

Centres can involve employers in the delivery of this unit if there are local opportunities to do so.

There is no specific guidance related to this unit.

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