When considering an EIS investment, several key factors should be taken into account:

Consult a Financial Adviser

Investors should seek advice from a financial adviser who understands their unique circumstances, risk tolerance, and long-term goals. A professional can help tailor the right EIS investment to meet individual needs.

Assess the risks

Investing in EIS-qualifying companies involves higher risks. These companies are often unlisted and may fluctuate in value, potentially falling to nil. Shares in unlisted businesses are generally harder to sell, and liquidity can be a concern. Additionally, if a company loses its EIS-qualifying status, tax reliefs will need to be repaid. Changes in tax rules can also affect future reliefs.

Choose the right investment manager

It's essential to evaluate the experience and track record of the EIS manager. A strong history of selecting smaller companies and successfully facilitating exits can be an indicator of reliability. However, past performance does not guarantee future success. Keep in mind that selling shares can take years, so an exit plan is important.

Review fees

Carefully compare the fees of various EIS portfolio services. These costs can vary, and it’s essential to understand how they impact overall returns.