Interactive Investor S&S ISA - Dividend Handling question

DS0

Hi all

About to set up a ii S&S ISA for full amount under this years rules

What's the best solution for dividend handling given I will not need the income. Does reinvestment count as additional funding and take me over this years allowance?

Choices are
Dividend reinvestment
Hold in account
Pay away to another account

Please could someone let me know the best course of action in my circumstances?? Thanks

DS0

datostar

Reinvestment does not count as additional funding, and over time usually results in considerably better overall performance.

DS0

Thanks Datostar for you comments

mac2008

I agree that if you want your money to grow, just reinvest and forget about it, or hold in account and once enough has accumulated, buy your choice of funds/shares with it. Don't pay into another account unless you're desperate for the few extra quid in income.

oldfella

suggest you get the "Inc" version, set to reinvest. Then if later you choose to take the dividend you can switch to getting it paid out, without having to repurchase

barak

oldfella wrote: »

suggest you get the "Inc" version, set to reinvest. Then if later you choose to take the dividend you can switch to getting it paid out, without having to repurchase

That's a good point. In the [bad] old days, when people dealt directly with the fund manager, you could generally switch to and from income/accumulation units with no charge. This seems to be no longer possible using supermarkets.

Something I've never quite managed to work out is whether the capital performance is marginally better if you hold accumulation units, as when reinvesting dividends you may lose out slightly on each six-monthly or quarterly reinvestment.

oldfella

Something I've never quite managed to work out is whether the capital performance is marginally better if you hold accumulation units, as when reinvesting dividends you may lose out slightly on each six-monthly or quarterly reinvestment.

---

I have the same doubts, but its prob very marginal and the benefit of flexibility is valuable, you can switch back and forth as you wish just via a call to the supermarket.