Where should i invest £300K

Mr_Mumble

EdInvestor wrote:

I had a trawl down the Equity Income fund list, and one that stands out on the income front is Neptune Income A with a yield of 5%. From what is shown, there is no special increase in risk to get this higher yield , the share allocation is basic big blue chip high yield.

Remember that there is no tax to pay on the fund income for a basic rate taxpayer - whereas 5% interest on cash will attract a 20% tax charge.

So you can expect a 5% income payment into your bank account from this fund, while the capital remains invested and keeps growing.

Neptune Income takes its AMCs from the capital not the income. In a neutral market you'd be eroding capital by taking the 5%. This has advantages but the comparison you make with a deposit based account is rather misleading.

dontcare

What percentage of the answers sofar do you think are useful to the OP?:think:

I'm sure the OP will thank you all, but listen to yourselves, most people won't go anywhere near an IFA after reading this lot.

cheerfulcat

dontcare wrote:

I'm sure the OP will thank you all, but listen to yourselves, most people won't go anywhere near an IFA after reading this lot.

Only one of the respondents is an IFA. I thought that most of the answers ( disregarding the smart-a*se ones ) were pretty helpful.

dunstonh

I'm sure the OP will thank you all, but listen to yourselves, most people won't go anywhere near an IFA after reading this lot.

Taxation, benefits, individual investment options, consumer protection, risk profiling, charges, providers havent been covered. Its just been concepts and ideas so far.

EdInvestor

Mr_Mumble wrote:

Neptune Income takes its AMCs from the capital not the income. In a neutral market you'd be eroding capital by taking the 5%. This has advantages but the comparison you make with a deposit based account is rather misleading.

I thought that might be the case.

This is why I personally prefer direct investment in a High Yield Portfolio of shares rather than in funds with 1.5% annual charges.

With the HYP your 5% dividend income is all yours, and will usually remain stable even if the market is falling Taking the income will not affect the value of the capital, in the same way as taking interest income doesn't affect the capital.

Whereas with a fund, 30 per cent of your income goes to the fund manager before you even see it.

That's a very large chunk of change to be throwing down the drain.

The HYP is the DIY equivalent to an equity income fund, and is quite suitable for beginners who've not invested directly in shares before.

Explanation and "how to" guide here

Chrismaths

Although conversely if Robin Geffen can outperform your HYP by more than 1.5% per annum (less if you buy it through someone who rebates commissions), then you should be quids in. Just a bit of balance Ed!

EdInvestor

It's quite an interesting fund - has about 20% in foreign income shares, if you fancy a bit of that. Quite complementary to a classic HYP, as is the Invesco Perpetual fund.No reason why anyone with a decent sized fund shouldn't have all three IMHO.

Chrismaths

It's also worth remembering that in cases where charges are made to income, then if you are a higher rate taxpayer, you are effectively getting 25% tax relief on the charges, as you are are taxed on the net distribution.

dunstonh

Also a consideration for basic rate taxpayers who are near or in the age allowance (over 65s) where income increases their tax above basic rate effectively.