Stocks and Shares or ISA - Which is best?

rozeepozee

I have about £15K in shares which I invested at quite the worst possible time (1999) as my original investment was £30K :doh: As a totally inexperienced investor, I gave the cash to a reputable stock broker and he invested it for me. For the last few years, I found it too depressing to even look at my statements from him, but things seem to be improving now and I wonder if I should cash in some of them and use the money to invest in an ISA so that I receive returns tax free. At the time I invested, I had already used my ISA allowance for the year but in the next tax year, I don't have any excess cash to invest so I'm looking at whether my current investments are working hard enough. I'm also a bit confused about the tax situation. The dividends aren't enough to take me over my CGT allowance and I've simply been letting the stockbroker guy reinvest the small sums I have gained so far. Any advice appreciated. Thanks.

RozeeP

david78

Post more information please. Have you used your ISA allowance for this year?

Assuming not, you can move £7000 into a share based ISA before April 6th and another £7000 after April 6th. You should consider using funds instead of shares.

(If you have a mini cash ISA, then the numbers are £4000 before April 6th and £4000 after.)

jonesMUFCforever

david78 wrote:

Post more information please. Have you used your ISA allowance for this year?

Assuming not, you can move £7000 into a share based ISA before April 6th and another £7000 after April 6th. You should consider using funds instead of shares.

(If you have a mini cash ISA, then the numbers are £4000 before April 6th and £4000 after.)

I think the limits on Mini Cash ISA is £3000 per tax year

HGLTsuperstar

ejones999 wrote:

I think the limits on Mini Cash ISA is £3000 per tax year

Yes they are, but I think the point was it leaves you 4K to put in a S&S Isa p.a.

innovate

With a stocks ISA you take basically the same risks as the OP already has (I know what I am talking about, took one out in 1999, just to see it drop 40% in value within 24 months!!)

Stock market investments must be approached with a long-term view - 7 to 10 years at least. But you always take the risk that you end up with less than your original investment, or even nothing.

After those terrible times between 1999 and 2004, in 2005 the UK stockmarket actually performed rather well - something around 16% growth if I remember correctly. Whilst this isn't enough to compensate for the previous year's losses, it was a very healthy performance and market watchers appear to be confident that the positive trend will continue in 2006.

I am holding out on my 1999 ISA investment for a while longer now - I feel that giving up now would be something I would regret at the end of 2006, or the year after....but of course I will be watching closely how my ISA performs, and if it drops below my original investment again, I'll definitely take out my money (it's now at 104% of original investment).

dunstonh

After those terrible times between 1999 and 2004

2003 and 2004 were pretty good as well. I dont know why people seem to think that the recovery only started this year. Perhaps as the media are focusing on the FTSE100 and not the UK all share index or global markets.

and market watchers appear to be confident that the positive trend will continue in 2006.

Ive seen mixed opinions on the UK although most expect the global trend to continue.

Either way, anyone with a portfolio limited to UK is likely to see less performance than those with mixed region portfolios, if everything turns out as expected.

al_yrpal

Rozee,

See this thread for self help. As you know from your working life - "There's no gain without a bit of pain!" (and effort).

http://forums.moneysavingexpert.com/showthread.html?p=1314879#post1314879

If this sort of thing doesn't grab you consider a decent savings account, or a more competent IFA. (A competent one would have you back at £30grand+ by now)

carnet

2003 and 2004 were pretty good as well. I dont know why people seem to think that the recovery only started this year.

Yes, I try to follow the old adage of only committing substantial new funds to the markets when there's "blood running in the streets".

The time to invest was end of first quarter 2003 and many of my investments have doubled in value since then.

anyone with a portfolio limited to UK is likely to see less performance than those with mixed region portfolios, if everything turns out as expected.

Couldn't agree more about diversifying globally and, at the moment, have only some 18% of my investments in pure UK funds.

However, vividly recalling the "cult of the equity" which existed just before both the 1987 and 2000 sell-offs, am becoming just a little jittery as I'm beginning to see signs of this recurring.

EdInvestor

rozeepozee wrote:

I have about £15K in shares which I invested at quite the worst possible time (1999) as my original investment was £30K :doh: As a totally inexperienced investor, I gave the cash to a reputable stock broker and he invested it for me. For the last few years, I found it too depressing to even look at my statements from him, but things seem to be improving now and I wonder if I should cash in some of them and use the money to invest in an ISA so that I receive returns tax free. At the time I invested, I had already used my ISA allowance for the year but in the next tax year, I don't have any excess cash to invest so I'm looking at whether my current investments are working hard enough. I'm also a bit confused about the tax situation. The dividends aren't enough to take me over my CGT allowance and I've simply been letting the stockbroker guy reinvest the small sums I have gained so far. Any advice appreciated. Thanks.

RozeeP

Hi RozeeP


It's a bit surprising that your shares have not recovered more by now. Was the money all invested in technology shares or something else highly risky? This is not really what most people would think suitable for a retired person.

Re the tax situation, you have made capital losses, so your capital gains tax allowance (8,500 pa) is unused.Dividends come under income tax, not CGT, but they are tax free to people on the basic rate, so an ISA is not really necessary for smaller amounts like 15k.

Big blue chip shares that pay good dividends ( which include many household names on the FTSE100) are often favoured by retired people, as dividend income is also more stable than interest on cash.People who bought this type of share in 1999 have made excellent profits throughout the crash years

rozeepozee

EdInvestor wrote:

Hi RozeeP

It's a bit surprising that your shares have not recovered more by now. Was the money all invested in technology shares or something else highly risky? This is not really what most people would think suitable for a retired person.

I've used up my full ISA allowances each year since they began, (apart from this year) investing with an IFA rather than a stockbroker and they have recovered and a bit more on top. I then invested in more shares because I listened to the advice to spread my investments and I already had the majority of my investment pot in property (I would have been so much better off had I not taken that advice as I would have bought a couple more properties :doh: ) And I think some of the shares have recovered but some (?technologies) fell to nothing and stayed there. To be fair to him, at the time I did tell him to take a punt with a portion of the money. Maybe my signature is a little misleading. I am in my 30s.

Thanks to all for your helpful comments. Anymore welcome. My hangover is too bad to work out what they mean at the moment but later in the week, they might start to make sense to me.

Happy 2006!!!

dunstonh

I would have been so much better off had I not taken that advice as I would have bought a couple more properties

Property is just as prone to price drops as the stockmarket is. If you look back at the average timescales when drops occur, we are due for a property price drop in a couple of years time. They just tend to happen at different times to the stockmarket.