Tradefair & Financials
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I don't really have the time or inclination to search out the next hot investment - so am considering investing my full isa allocation every year into Hendersons multi-manager fund , is this short sighted and foolhardy or am i bound to beat the current cash isa rates with a good fund like this ?
Sensible answers most welcome
Sensible answers most welcome
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Replies: 13
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Always a good idea to take up your full ISA allowance if you can, although stocks and shares ISAs are generally less advantageous tax-wise depending on your situation.
Don't know anything about the fund you are planning on investing in, but unless it is fixed interest there is absolutely no guarantee your returns will be positive. I would say if you are investing now into equities you have missed the boat a bit, they are unlikely to go up at the rate they have done in the last year or so. Having said that if you are willing to accept your investment can go down and your time-scale is at least a few years, it sounds like a reasonable place to put your money. I still have ISAs invested in funds as well as self-select type products. It's only my opinion, I'm sure others will disagree. |
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Yes, I disagree, EQUITY ISAs* have no point for an ordinary taxpayer (Daily Telegraph Financial pages werre making the point only last Saturday), the only people to benefit from them are the people who sell and manage them. Any investment will - ceteris paribus - do better outside an ISA....as you are not paying charges.
Only possible benefit is exemption from CGT, but you get 10.8K of that anyway....and extremely unlikely you are going to make more than 10.8k capital gain in 365 days on a 5.1K investment. *Cash ISA's and higher rate taxpayers different arguments apply. I hold Cash Isa's....though am having my doubts about holding cash in a currency (£) that is likely to be devalued by 1) inflation and 2) be devalued against othe currencies eg. c40% devaluation against the Euro in the last 18 months. The answer ? Many would say buy gold (see other threads). |
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What about income producing ISAs, such as equities which pay dividends. Bank current account rates are pitiful. You might be paying up to 60% marginal rates of income tax on savings income. Must be worth using the ISA allowance if you can fit this into your general investment portfolio and don't mind a bit of risk
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You should always put as much as you can into your ISA every year.
As to not needing to use the CGT limit of £10k - it depends on the size of your ISA pot - putting £10,200 in every year for 20 years will get over £200k before growth - and £10k CGT allowance is only 5%. For the record, I put all of my higher risk/return shares into my ISA (only mugs use funds) and the steadier shares are held outside, and I trade these to realise my CGT when required. |
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With the withdrawal of higher rate tax relief on pensions for incomes over £150K, ISAs now seeming a better option to me. Next year could be basic rate tax relief only. With an ISA I can invest in funds, stocks, ETFs and ETCs, get discounts on the initial fee through an online broker. Personal pensions looking increasingly poor value with their charges, bid-offer spreads, and you get taxed on the way out and have to buy an annuity.
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If you buy a fund you pay commission.
You can invest your Equity ISA in a single company with a yield that is superior to the current interest rate-BP or Vodafone for eg-may give a capital gain as well and will be better protected against inflation than a cash ISA. |
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Agree with the previous comment, you could do worse than buy BP, Shell or Voda. 5% dividend yield (don't know exact figure) and possible capital growth, even at the bottom of the market BP held up reasonably well.
I have plenty of BP and Voda in my ISAs, you can just leave your money invested for several years. International exposure means they should hold value even if pound shortens. |
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Surely a good Income fund has the same benefit with the added benefit of diversification.
discount fund platforms only charge 0.5% and cover most of the market, however there is the Annual Management charge to consider. |
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If inflation is greater than the interest on your ISA (which I believe it will be over the coming years) ISA's a are waste of time. They will lose you money.
All you are investing in is paper. |
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but if you don't use your ISA allowance in a tax year you lose it. so worth topping up if you have the spare cash.
sticking money under the bed is also affected by inflation. |
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Shab 11 Apr 19:27
(only mugs use funds) What about ETFs? They carry the lowest charges e.g. For the FTSE 100 tracker XUKX http://www.halifaxmarketwatch.co.uk/security?ticker=LSE:XUKX A typical spread is 598.81 - 599.31 and £12 buying & selling with Halifax & no stamp duty to pay. (you may be able to deal cheaper and that was a real spread from 7 April) |
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I would advise you read Common Sense on Mutual Funds by John Bogle.
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Billy Hill point is there are other options besides ISAs and sticking money under your bed.
Best thing anyone can do to preserve their savings is get out of pounds and into tangible assets such as commodities or at least currencies that aren't being systematically devalued (i.e. Brazilian Real, South Korean Wan, Indian Rupees, Mexican Peso etc.). |