ISA, stocks and shares, and phasing

theGrinch

Can anyone enlighten me to a way to do the following.

I want to use my £7,200 (or as much of it as possible) for the purchase of stocks and shares in the 2008/09 tax year.

However, I dont really want to purchase all the stocks and shares in one go. I have been told phasing was possible.

Is this possible with an ISA or are there limitations?

Biggles

With only 18 working days left in which to set up your ISA, fund your account and purchase the shares, 'phasing' (by which I guess you might mean pound cost averaging) isn't really practical, is it?

stephenni1971

The £7200 limit is the total you can put in a Stock & Shares ISA in a single tax year, but as to how that is made up, 1 large deposit or 12 smaller ones, is up to you.

For a sum such as this, you probably wont be investing direct in actual shares, and it would be more common and more financially sounds to do it through Unit Trusts. These are set up and buy a selection of shares, and you then buy units of that trust, it allows you to spread your investment over many different shares in a very simple way.

You may have heard of a term called 'pound cost averaging', this is a method where, rather than invest a lump sum in one go, you can spread your purchases over a longer time, this works well in a fluctuating market, as the lower prices go, the more units your regular purchases will buy, and the greater the potential gain when the market rises.

While this is a sensible attitude to take, markets are at present very low, and while by no means am I suggesting they have bottomed out, it is worth considering making a lump sum investment now. This depends on your attitude to risk.

Be aware that the current year will soon be over, so an option could be to make a lump sum investment in the current year, and then set up a regular payment into the ISA for the 09/10 year.

adambro

You can, or at least you can with HSBC, subscribe cash into your S&S ISA allowance without having to decide which shares to invest it. You get a low rate of taxed interest on funds whilst you consider what to do. Keeping the cash in your S&S ISA then drip feeding it into investments is described as phasing.

whiteflag_3

theGrinch wrote: »

Can anyone enlighten me to a way to do the following.

I went to use my £7,200 (or as much of it as possible) for the purchase of stocks and shares in the 2008/09 tax year.

However, I dont really want to purchase all the stocks and shares in one go. I have been told phasing was possible.

Is this possible with an ISA or are there limitations?

easy to set up on line with fundsnetwork- They have a "cash park " where you can put your £7200 in "cash" until your ready invests in funds. They also have a phasing facility as well.

http://www.fidelity.co.uk/direct/research/fundsupermarket/fundsnetwork/isa-cash-park.html

So everything you want to do is entirely do able in the timeframe available.

No offence Biggles but I think a little knowledge is dangerous, probably best not to post unless you know 100% what you are talking about.

dunstonh

You can still phase. Fidelity and Cofunds all have cash accounts if you are using an IFA (there are others as well). DIY options have cash accounts as well.

Biggles

I originally read your OP as saying you wanted to make your purchases within the 08/09 tax year, but I suspect you're mainly interested in subscribing this year (which would enable you to subscribe the full £7,200 again next year if wished) and then averaging the purchases over a few months.

All major brokers will allow you to subscribe to a SS ISA within the tax year and then purchase shares as and when you wish, though the interest paid is typically very low.

purch

ISA, stocks and shares, and phasing

Sounds like a good idea.

In your shoes I would invest £ 0.00 now, and hold on for about 10 years, and then start 'phasing' !!!!

adambro

purch wrote: »

Sounds like a good idea.

In your shoes I would invest £ 0.00 now, and hold on for about 10 years, and then start 'phasing' !!!!

You don't think it is a good idea to invest when share prices are low?

purch

You don't think it is a good idea to invest when share prices are low?

It's only a good idea to invest, if they are going to go higher.

Equity prices are not currently low, just lower than the hugely over-inflated prices they were 18 months ago.

theGrinch

whiteflag wrote: »

easy to set up on line with fundsnetwork- They have a "cash park " where you can put your £7200 in "cash" until your ready invests in funds. They also have a phasing facility as well.

http://www.fidelity.co.uk/direct/research/fundsupermarket/fundsnetwork/isa-cash-park.html

So everything you want to do is entirely do able in the timeframe available.

Ah yes, that sounds like it. Admittedly, I read about it in the Sunday Times and as I was meaning to buy some shares, so this sounded an interesting way.

They mentioned something about parked funds (earning low interest - which as taxable) but I could then phase it in shares. I wasnt sure if:

a) there was a time limit to actually buying i.e if it had to be done by a certain date

b) I had to give predetermined dates when purchases had to occur.

The other way the article seemed to suggest was to take a cash ISA in 2008/09 and then transfer it into a stocks and shares ISA. Will read more around the subject especially on costs. Any tips here will help me and others Im sure.

Any ideas how the performance of those that offer the "parked" funds facility have performed over the last 12-months, 3 years, 5 years?