Advice on certain saving/investment methods

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Dowsett
Dowsett Posts: 176 Forumite
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in Savings & investments
Hi all.

I'm currently looking at saving up for something an seeking some advice on a few questions regarding savings.

Now I do have an ISA account and am fairly confident about what I'm doing with that.

My first question is about tax free investments in stocks/shares. I've read the article on this site but still abit confused as it didnt mention anything about tax free. Do my profits get put into a tax free account separate to my ISA account (£5200?) and do I have to hire a broker to do all my trades?

Is it worth looking into more for me? Since I'm a newbie then I wouldn't be prepared to put up that much money that I could lose. So say around £100 max Inc all charges and fees etc. Is it possible to see a good return on an amount such as £100?

And finally if everyone doesn't mind sharing your experience with the process on a whole, Inc your first experience with everything.

Thanks

Comments

  • Lokolo
    Lokolo Posts: 20,861 Forumite
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    The gains are tax free. You open a broker account, such as with Halifax, iii, HL or any other stockbroker. You deposit money into this account and trade within it.

    Any gains and losses stay within the account.

    The ISA part means you are never taxed on any gains from selling at a higher price, outside of an ISA you have a Capital Gains Limit, of £10,300 per year. This is the amount of profit you can earn before paying tax (18%), inside an ISA, there is no limit.

    £100 is a very feeble amount. Trading costs around £10 per trade, so thats £10 to buy, £10 to sell, meaning you have £80 left of shares (there is another cost of 0.5% but its little in these amounts). The shares would need to grow 25% for you to get your money back.... not including any profit!

    Now think of £1,000. Means you get £980 shares. Which means your shares only need to go up 2% before profit, but obviously a higher risk as you are putting more money in.

    I wouldn't bother trading with real money just yet, set up a fantasy portfolio and give it a go with that, then once you start enjoying it, then put some real money on it.

    http://www.halifax.co.uk/sharedealing/products/Fantasy-Trader-Account.asp
    http://www.bullbearings.co.uk/
  • Dowsett
    Dowsett Posts: 176 Forumite
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    Thanks for the info. Is the tax free account that simple? Can you open with a pound like other accounts?

    Have you had any experience in stocks an shares yourself?

    I signed up to bullbearings last night after reading a post on here.

    Obviously stock Market has only just opened so I will have to wait an see what happens.

    Any other info or start up advice that any1 else may like too add would be appreciated

    Thanks
  • Hen_Step
    Hen_Step Posts: 35 Forumite
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    Biggest advice I can give you, is do not believe what people say about shares on forums, a lot of them (me included), do not know what they are talking about. You will not make much money with a small amount of funds buying FTSE shares, as they do not usually rocket, and most of your potential profit could go in costs.
    Do not invest what you cannot afford to lose (Northern Rock was my biggest loser).
  • ermine
    ermine Posts: 757 Forumite
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    You also still pay tax on dividends in an ISA, the old Gordon Brown 10% dividend tax (more for higher rate taxpayers)
  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
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    I trust your cash ISA is earning at least 3%; if not then transfer it somewhere better
    the current cash ISA limit for this year is 5,340 (5,100 last tax year)


    S&S ISA are tax free in the sense that they are free of capital gains tax and there is no further tax on dividends (although you can't reclaim the notional 10% dividend tax)
    however, there are normally annual charges for S&S ISAs

    in any event, just play with a fantasy portfolio for 6 months or so to learn about shares
  • ermine
    ermine Posts: 757 Forumite
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    Blimey, you don't have to tolerate annual charges on a self-select S&S ISA - that is just taking the p%!s ;)
  • dunstonh
    dunstonh Posts: 116,371 Forumite
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    Blimey, you don't have to tolerate annual charges on a self-select S&S ISA - that is just taking the p%!s

    Why should a platform provider give you all their facilities and deal with the administration if you are not going to pay them?

    If you do work, don't you expect to be paid?
    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.
  • cashbackproblems
    cashbackproblems Posts: 1,826 Forumite
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    Cos they can bring in custom and make money in other ways e.g. buying/selling costs, increased volume of trades, economies of scale etc!

    There are no annual charges with iii or HL for just holding shares.
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