ftse tracker / savings / isa - advice wanted

fizzydrink

Hi,

I have been putting money away every month - for like the last couple of years - into what I thought was an ISA FTSE Tracker with M&G. I emailled them a couple days ago, and have just received a reply back that it isn't an ISA.

What can I do with that money? It is possible to transfer it into an ISA? It's around £6k today. Or should I leave that, and open a proper FTSE tracker ISA and top that up from other savings I have?

I'm keen on investing the FTSE / FTSE 100 tracker - as its a long term vision.

Aegis

Well, if it's at about £6k then you're not going to be getting the capital gains tax benefits from the ISA, so all you'd be saving would be higher rate tax charges on the dividends. If you do decide you want to go for the ISA (sensible enough in the long run), then you'll just need to bed and ISA your funds. Assuming you maximise your cash ISA, you'd be able to get half of your fund into an ISA now and the rest in April. You can then keep depositing either within the ISA to the limit, or outside the ISA in anticipation of transferring the units into the ISA when your allowance resets the following April.

Is there any reason why you're investing into a single fund tracking one of the worst-performing indices in recent history?

dunstonh

Is there any reason why you're investing into a single fund tracking one of the worst-performing indices in recent history?

15 years of recent history Although ironically it may be the best index to track in the coming years.

all that money in a single fund though tracking such a limited number of stocks doesn't seem like a good idea though.

As aegis says, there is absolutely no advantage to you using the ISA wrapper for a FTSE tracker until you get into capital gains tax territory.

fizzydrink

Aegis wrote: »

Is there any reason why you're investing into a single fund tracking one of the worst-performing indices in recent history?

well its simple to understand and very visible. what would your recommendation be? assume as a 20+ years investment.

dunstonh wrote: »

As aegis says, there is absolutely no advantage to you using the ISA wrapper for a FTSE tracker until you get into capital gains tax territory.

sorry, i'm lacking in investment prowess here. i'm more of a meat and potatoes saver - pay off my credit debt every month, save regularly, think before i buy, etc. what is the capital gains territory?

dunstonh

what is the capital gains territory?

If you sell part/all of the investment and the gain is over your personal CGT allowance, which is nearly £10000 a year, then you have CGT to pay.

You would need your £6000 to be a lot higher for that to be a concern. Closer to £20k. You could stop the monthly and redirect that to an ISA but there is no reason to pay to switch to an ISA with the existing funds.

Aegis

fizzydrink wrote: »

well its simple to understand and very visible. what would your recommendation be? assume as a 20+ years investment.

I can only suggest that you read up a little bit on diversification and come to your own conclusions. Essentially you've picked a very narrow range of companies to invest in, and that can easily lead to unnecessary levels of volatility. If you want some advice, you'd need to go to an adviser, but an IFA almost certainly wouldn't look at £6K for you unless you were looking to top that up by a fairly large amount each month. As such it might be easier to just do a little personal research and pick a few that particularly appeal to you. Even sticking to trackers you've got a lot more indices you could diversify across.