£300 a month in stocks/shares

Aegis

gazhawkins wrote: »

Stocks and Shares ISA are no longer the tax efficient vehicles they are portrayed to be.

One G. Brown Esquire removed the dividend tax credit from ISAs several years ago.

Yes, your savings are free of capital gains tax (CGT) but you need to make PROFITS of nearly ten grand a year before you are liable for it. This is unlikely on 300/month.

Charges can also be high with some Share ISA account providers - eating up your savings.


The Share Centre (www.share.com) offer share purchases of 250 pounds or less with commission rate of 2.50, plus HM Govt. stamp duty at 0.5%. Costs 2.94/quarter (inc. VAT) to run the account.


There are any number of blue chip companies offering reasonably safe dividends of 5% or more, eg Shell, Northumbrian Water, Seven Trent...

Of course, the value of shares and dividends can go down as well as up.

NB: I hold none of the shares mentioned, nor do I intend to buy.

It depends largely on what and how much you intend to put into the ISA. A higher rate taxpayer with income-generating assets held in an ISA will get those paid at only basic rate tax, saving them 25% of the received payment for dividends. For interest paid on corporate bonds and gilts, the interest is not taxed at all, which can be beneficial for both basic and higher rate taxpayers.

Once you look at all this, £300 a month only needs to grow by £10k total for CGT to become an issue. Remember that since indexation and taper relief on capital gains are now a thing of the past, there is no allowance for inflation as you hold these assets. If you put in £3600 per year for 5 years and subsequently see that amount double to about £35k total, a fair bit of capital gains tax will be payable. If you can legally get away without paying that, great!

Now down to costs. For small share portfolios the costs are likely to be significant compared with holding the shares in a regular portfolio. However, if you are looking at unit trusts and OEICs, the charges are typically the same whether an ISA wrapper is used or not. As such, for the little extra paperwork that it takes to get the ISA most people investing in these products might as well take the tax-free option.

bendix

dunstonh wrote: »

If you want advice then you need to use an IFA (not an FA/tied agent) if you use funds or a stockbroker if you use shares. Shares are not really ideal for monthly payments as the costs of buying would stack up.

That isnt long term. Thats short term. Long term is 10 years plus. £300pm into equities for just 3 years isnt a sensible option for an inexperienced individual. It just ramps up the risk much higher.

Sometimes I'm staggered at your advice, dunstonh. You always answer the question literally, without trying to reason out what a poster - usually not financially savvy - is really trying to do.

It is palpably obvious from the post that the OP is looking for some kind of managed fund, and yet you reply to say that directly buying shares won't be worth it for £300 a month.

I don't get it.

£300 is a perfectly reasonable sum to start investing in share-based managed funds, but with your advice you seem to be discouraging him from doing that.

I think you get out of the bed the wrong way sometimes, and just can't be bothered to try to understand what the OP is trying to do, and then give a deadpan 'jobsworth' reply back which is usually taken as absolute gospel because people on here know you are an IFA.

Because you choose to publicise your career on here, you have a moral responsibility to be a bit less cavalier with your approach to replying.

bendix

Aegis wrote: »

It depends largely on what and how much you intend to put into the ISA. A higher rate taxpayer with income-generating assets held in an ISA will get those paid at only basic rate tax, saving them 25% of the received payment for dividends. For interest paid on corporate bonds and gilts, the interest is not taxed at all, which can be beneficial for both basic and higher rate taxpayers.

Once you look at all this, £300 a month only needs to grow by £10k total for CGT to become an issue. Remember that since indexation and taper relief on capital gains are now a thing of the past, there is no allowance for inflation as you hold these assets. If you put in £3600 per year for 5 years and subsequently see that amount double to about £35k total, a fair bit of capital gains tax will be payable. If you can legally get away without paying that, great!

Now down to costs. For small share portfolios the costs are likely to be significant compared with holding the shares in a regular portfolio. However, if you are looking at unit trusts and OEICs, the charges are typically the same whether an ISA wrapper is used or not. As such, for the little extra paperwork that it takes to get the ISA most people investing in these products might as well take the tax-free option.

Guys, instead of pontificating and showing off your indepth knowledge of the tax intricacies of managed funds and ISAs, why not think a bit more about what the OP is asking.

Wouldn't it have been simpler to just send him to H-L, and tell him to ferret about a bit.

All this intellectualising has probably just put him off completely.

mr_fishbulb

bendix wrote: »

Guys, instead of pontificating and showing off your indepth knowledge of the tax intricacies of managed funds and ISAs, why not think a bit more about what the OP is asking.

Wouldn't it have been simpler to just send him to H-L, and tell him to ferret about a bit.

All this intellectualising has probably just put him off completely.

Party pooper!

Aegis

bendix wrote: »

Guys, instead of pontificating and showing off your indepth knowledge of the tax intricacies of managed funds and ISAs, why not think a bit more about what the OP is asking.

Wouldn't it have been simpler to just send him to H-L, and tell him to ferret about a bit.

All this intellectualising has probably just put him off completely.

He'd already been sent to h-l by two people and was given a fund selection to go and look at to see if it matched his needs. As such the original issue was already dealt with adequately. My post was a reply to someone claiming that stocks and shares ISAs weren't very tax efficient any more, so it was valid and on topic to "show off my indepth knowledge" of the tax benefits of having one.

I don't know if you had a bad night and woke up in an awful mood or something, but this was not the reaction I would expect when an informative and on-topic post has been made.

dunstonh

It is palpably obvious from the post that the OP is looking for some kind of managed fund, and yet you reply to say that directly buying shares won't be worth it for £300 a month.

It is not clear on the first post what the OP wants. Only mention was Halifax and they offer the share account and their awful unit trust range. THe OP also said he would like to choose the companies. That suggests shares.

Buying shares on a monthly basis is not normally cost effiecient due to the dealing costs. especially when looking at the very short term.

£300 is a perfectly reasonable sum to start investing in share-based managed funds, but with your advice you seem to be discouraging him from doing that.

£300 is fine for funds. Its very good amount for funds. However, the three year term is totally unsuitable. So, its totally correct that he should be discouraged when looking at that period.

I think you get out of the bed the wrong way sometimes, and just can't be bothered to try to understand what the OP is trying to do, and then give a deadpan 'jobsworth' reply back which is usually taken as absolute gospel because people on here know you are an IFA.

Because you choose to publicise your career on here, you have a moral responsibility to be a bit less cavalier with your approach to replying.

You are the one posting in a negative manner. Perhaps its you that has got out of bed the wrong way. In post#14 you say it would be better to just send him to HL and let him work it ouy. That is lazy and not helping the OP at all.

Using a regular contribution investment for 3 years is not a good idea. i make no apologies for pointing that out and the content was perfectly fine.

bendix

dunstonh wrote: »

It is not clear on the first post what the OP wants. Only mention was Halifax and they offer the share account and their awful unit trust range. THe OP also said he would like to choose the companies. That suggests shares.

.

I suggest you read the OP again. He clearly says he "would like the company to choose what they invest in with my money."

And nowhere did he say he would like to choose the companies. Exactly the opposite.

If that doesn't shout out 'managed funds' then I'm a banana.

dunstonh

Sorry, being an old thread I coudlnt remember the specifics and I didnt read that correctly when i looked quickly up the thread. However, it doesnt change anything. The information given was perfectly correct and suitable.

Personally, I think you are just being pedantic and trying to create trouble. You have taken one line in a post that points out that a stockbroker can give advice but shares would not be ideal given the costs (which is correct) and almost doubled the number of posts in the thread on this totally pointless crusade of yours.

bendix

Apologies dunstonh. I forgot that it's a forum rule that you can't be shown to be wrong.

My sincere regrets.

Lokolo

bendix wrote: »

Apologies dunstonh. I forgot that it's a forum rule that you can't be shown to be wrong.

My sincere regrets.

Silly you, you should always remember that Dunstonh is always correct. (yes I am a suckup) :cool: