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Accumulation units and income units
Bumbling_Amateur
Posts: 9 Forumite
I'm new to pensions and day by day learning more so hopefully before the end of the year I will have enough information to decide which type of pension to go for.
Some confusion for me today from the HL website where to buy £1000 of the Invesco Global Fund to put in a SIPP there are two prices given: 'accumulation units' for 90p or 'income units' for 60p. Could someone explain to me what's the difference and implications of buying each type.
Also if buying into the fund to the tune of £1000 today and then I decide to move out of that fund in 6 months how much of the annual 1.20% charges are due? Pro rata so I'd pay 50%? Or do they take the lot at the start and it's my tough luck if I get out in less than a year [as I write this sentence I fear I know the answer!]?
Some confusion for me today from the HL website where to buy £1000 of the Invesco Global Fund to put in a SIPP there are two prices given: 'accumulation units' for 90p or 'income units' for 60p. Could someone explain to me what's the difference and implications of buying each type.
Also if buying into the fund to the tune of £1000 today and then I decide to move out of that fund in 6 months how much of the annual 1.20% charges are due? Pro rata so I'd pay 50%? Or do they take the lot at the start and it's my tough luck if I get out in less than a year [as I write this sentence I fear I know the answer!]?
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Comments
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Income - dividends are paid to you, so you can reinvest elsewhere, or to spend
Accumluation - the dividends that would be paid out to you, are put back in the Fund Pot and thus raising the unit price, the fund manager would then invest this money into something else
Other than that theres not much else. If you don't need the income, go for Acc.0 -
Could someone explain to me what's the difference and implications of buying each type.
Income units distribute the income (although in a pension it would either be paid to your cash account or reinvested to buy new units depending on the product or options you choose). Accumulations reinvest the income within the fund and the unit price is increased to reflect that.
There is little difference between the two although some funds could potentially charge with income reinvested.Also if buying into the fund to the tune of £1000 today and then I decide to move out of that fund in 6 months how much of the annual 1.20% charges are due? Pro rata so I'd pay 50%? Or do they take the lot at the start and it's my tough luck if I get out in less than a year [as I write this sentence I fear I know the answer!]?
The charge is daily and reflected in the unit price.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
The difference is how the dividends are 'paid.' The Fool ran an article about this the other day: http://www.fool.co.uk/news/investing/investing-strategy/2009/03/19/how-do-you-like-your-dividends.aspx[...]there are two prices given: 'accumulation units' for 90p or 'income units' for 60p. Could someone explain to me what's the difference and implications of buying each type.Conjugating the verb 'to be":
-o I am humble -o You are attention seeking -o She is Nadine Dorries0
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