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50:50 Cash & Stocks, or...
langtoft_lad
Posts: 59 Forumite
For the last couple of years I've been 'investing' £100/mth in a FTSE All Share Tracker fund.
For the past few years I've 'saved' my maximum cash ISA allowance - however in February I used this to buy a new car, yet have now replenished this back to £3,600 for the current tax year.
I have recently increased my monthly investment into the ISA tracker to £425 which should maximise my allowance in a full tax year (£5100)
My cash ISA is for short term saving - my Stocks & Shares ISA is for the longer term.
Tonight it occurred to me that perhaps I should forget about a Cash ISA, instead save short term cash into the high rate schemes such as the Buckinghamshire BS 6.25% and concentrate my full ISA Allowance (£10200) into Stocks & Shares. Investing up to £850/mth.
Leaving aside (for the moment) my choice of fund - would this be a more sensible use of my money? I anticipate being able to leave these funds invested for a minimum of five years but hopefully longer.
Thoughts & Advice greatly appreciated.
For the past few years I've 'saved' my maximum cash ISA allowance - however in February I used this to buy a new car, yet have now replenished this back to £3,600 for the current tax year.
I have recently increased my monthly investment into the ISA tracker to £425 which should maximise my allowance in a full tax year (£5100)
My cash ISA is for short term saving - my Stocks & Shares ISA is for the longer term.
Tonight it occurred to me that perhaps I should forget about a Cash ISA, instead save short term cash into the high rate schemes such as the Buckinghamshire BS 6.25% and concentrate my full ISA Allowance (£10200) into Stocks & Shares. Investing up to £850/mth.
Leaving aside (for the moment) my choice of fund - would this be a more sensible use of my money? I anticipate being able to leave these funds invested for a minimum of five years but hopefully longer.
Thoughts & Advice greatly appreciated.
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Comments
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As long as you have a reasonable amount in accessible cash for emergency's (a few months income) and you are not likely to need what you are investing in the short term then I don't see why not. If you are unsure you should get advice from an IFA. Are you paying any money into a pension?
Tax treatment of cash deposits and investments are different. All tax payers benefit from not paying tax on interest in a cash ISA. But they normally have lower interest rates than non ISA accounts
Shares (and share funds) invested in an S&S ISA are exempt from capital gains tax (currently 18% of capital gains over £10,100) and higher rate tax on dividends, but standard rate tax on dividends cannot be reclaimed. Fixed interest funds (gilts, corporate bonds) are exempt from tax on interest and capital gains when held in a S&S ISA. 0 -
Bucks BS do 6.25% account?
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Fair cop guv :cool:, I hadn't realised that particular account had been closed recently. But the principle still applies - short term savings into the best paying account in order to max out the ISA allowance in S&S?
Yes to pension - I also have a thread on that forum, musing about taking that money early (but I'm going off that idea... maybe)
I have about the equivalent of four months net salary squirreled away in various instant access accounts. Tick.
Will I need the money in the short term, who knows. I'm not anticipating to.
This won't be a lump sum investment but a regular monthly contribution - so I presume if my circumstances change, I'll simply (temporarily) reduce/suspend payments?
In 2011, the first of two endowments pay out so I'll have a lump sum to play with then
Perhaps I should mention that I'm mortgage & other debt free.
And I'm beginning the consultation process with an IFA
If I pursue this course of action... I'm planning to transfer the existing ISA holding to Hargreaves Lansdown, and then transfer from my existing tracker fund to probably the M&G one to benefit from the lower charges.
Anyone against that idea or have a better one?
Correct me if I'm wrong but my understanding of the HL ISA wrapper is that I can invest in more than one fund in any one tax year - so my £850/mth could be spread over 2,3 or even 4 funds ???
I presume it's beyond the scope of the forum to allow specific fund recommendations?
Perhaps comment is permitted on the following:
£425 (50%) to continue to be put into a FTSE All Share tracker.
£350 towards an actively managed reliable fund (Invesco Perpetual Income seems popular)
£75 into some high risk/speculative, as a bit of a fun punt, in perhaps a recovery or emerging market fund.0 -
langtoft_lad wrote: »Fair cop guv :cool:, I hadn't realised that particular account had been closed recently. But the principle still applies - short term savings into the best paying account in order to max out the ISA allowance in S&S?
Yep thats fine, if you are saving for the longterm. My priority is the other way around, max out cash ISA, anymore goes in S&S as my savings goal is very much short term. Its all dependant on the individual.langtoft_lad wrote: »I have about the equivalent of four months net salary squirreled away in various instant access accounts. Tick.
Will I need the money in the short term, who knows. I'm not anticipating to.
This won't be a lump sum investment but a regular monthly contribution - so I presume if my circumstances change, I'll simply (temporarily) reduce/suspend payments?
In 2011, the first of two endowments pay out so I'll have a lump sum to play with then
Well if you max out S&S and have left over money to play with why not add some more to savings, its all to do with how much you reckon you'd ever need. Maybe you want to go travelling for 6 months at some point, so save for that. A new car? Save for that. Those sorts of things.langtoft_lad wrote: »Perhaps I should mention that I'm mortgage & other debt free.
And I'm beginning the consultation process with an IFA
What for? For investments? If so, any reason why you are going to put money into funds yourself rather than through IFA?
If I pursue this course of action... I'm planning to transfer the existing ISA holding to Hargreaves Lansdown, and then transfer from my existing tracker fund to probably the M&G one to benefit from the lower charges.
Anyone against that idea or have a better one?langtoft_lad wrote: »Correct me if I'm wrong but my understanding of the HL ISA wrapper is that I can invest in more than one fund in any one tax year - so my £850/mth could be spread over 2,3 or even 4 funds ???
HL is a minimum of £50 per fund. So with £850 you can have a maximum of 17 funds....langtoft_lad wrote: »I presume it's beyond the scope of the forum to allow specific fund recommendations?
Perhaps comment is permitted on the following:
£425 (50%) to continue to be put into a FTSE All Share tracker.
£350 towards an actively managed reliable fund (Invesco Perpetual Income seems popular)
£75 into some high risk/speculative, as a bit of a fun punt, in perhaps a recovery or emerging market fund.
I'm not going to comment on these, just because I'm not good at that.
As long as you know the risk factors with each fund and are happy with it, then go for it.0 -
The process of getting IFA was infact for pension purposes not investment, although that would be a byproduct.
The IFA as well as being a 'pension expert' is uniquely qualified to comment/advise on my particular final salary scheme.0 -
Originally Posted by langtoft_lad
I presume it's beyond the scope of the forum to allow specific fund recommendations?
Perhaps comment is permitted on the following:
£425 (50%) to continue to be put into a FTSE All Share tracker.
£350 towards an actively managed reliable fund (Invesco Perpetual Income seems popular)
£75 into some high risk/speculative, as a bit of a fun punt, in perhaps a recovery or emerging market fund.
I started something very similar to this last year - 50% of the monthly investment into a low cost all-share tracker and the other 50% divided amongst actively-managed UK equity funds (well, one was an absolute return fund).
1 year later - all gained, but the all-share much better (25%) than the active-managed (12% & 17%). I am thinking of putting a bit less into the active funds every month and trying something more risky like emerging markets as you are proposing ...0 -
If you are holding funds in your ISA or SIPP have you considered Alliance Trust Savings as the manager?
Only mention it as they rebate all trailing comission for funds held in both ISAs and SIPPS. Only drawback is that the list of funds they currently offer is not as extensive as HL.
http://www.alliancetrust.co.uk/alliancetrustsavings/fundsupermarket.htm0 -
I use Alliance Trust too as well as Chartwell Direct.
There is another drawback though with AT, they have a fixed dealing charge of £12.50 per transaction. So as far as I know, there isn't a cost effective way of drip feeding £50 per month. Good value for one-off purchases and you can buy individual sh\res as well as funds.
Chartwell has a similar structure to Hargreaves Lansdown, recently they cut the standard commission to 30% rather than 50% but many fund shave zero initial charge.0
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