House ownership - Selling yourself into a lifetime of servitude

chucknorris

Thrugelmir wrote: »

A notional gross. Which isn't a rationale for investing in my book.

On that basis for example. Vodaphone shares currently yield a gross 8.18% within an ISA. While VOD 5.625% 2025 yields a gross 8.13%, and is trading at £6.94p over par £100 nominal value.

So the shares have a better a marginally better yield with prospects of increased payouts.

But my alternative when the ftse gets high would be to cash in my stocks and shares Isa so the notional gross comparison is valid for me.

When the ftse gets high I don't want to hold shares any longer.

chucknorris

dtsazza wrote: »

Thrugelmir's right, there's almost never any point in comparing gross yields of anything, if the net yields are known. Especially in this situation where most comparable instruments could also be held in a tax-free form.

.

There is when MY alternative would be to cash my stocks and shares Isa in and lose th tax free status. The whole point is when the ftse gets high I no longer want to stay in shares but obviously I am talking about quite a few years in the future.

chucknorris

would_be_FTB wrote: »

I know what you mean I too am thinking of developing a strategy for my stock and shares isa rather than being passive and losing gains when the market crashes. A coroporate bond isa would be a reasonable alternative to just selling up losing the isa status.

That's it exactly. I am happy selling my shares within my stocks and shares isa when the ftse gets higher (obviously some time away) but would like to keep the isa status. I don't like the look of bond funds, I think I would prefer an individual corporate bond. But I'm only musing it over I have not decided yet.

But something like 5% net would compare very well to taxable alternatives. Additionally of course after a few years if the ftse crashed I would be happy to move back into shares.

PasturesNew

You can see why people buy houses as 'investments' - all that shares stuff's right over the heads of ordinary people.

At least people think they understand houses.

lisyloo

You can see why people buy houses as 'investments'

I actually quite like living in mine :-)

I can certainly see why people buy classic cars/motorbike or art as investments if you actually get some enjoyment from it like you do with a house.

Cash-Cow_3

If you want to live in a bigger and better house every few years: RENT
If you want to stay in the same house for life: BUY.

IveSeenTheLight

Cash-Cow wrote: »

If you want to live in a bigger and better house every few years: RENT
If you want to stay in the same house for life: BUY.

If I hadn't bought my 2 bed flat, I wouldn't have been able to upsize to my 4 bed house.

It's very unlikely you can move straight into your family home for life and therefore need to start a bit lower.

IveSeenTheLight

Thrugelmir wrote: »

A notional gross. Which isn't a rationale for investing in my book.

On that basis for example. Vodaphone shares currently yield a gross 8.18% within an ISA. While VOD 5.625% 2025 yields a gross 8.13%, and is trading at £6.94p over par £100 nominal value.

So the shares have a better a marginally better yield with prospects of increased payouts.

Shares can be volitile and can never recover.
A much higher risk than an ISA.

I have shares in one company that are down over 90% since I bought them.
I doubt I'll ever recover my investment there.

lisyloo

Shares can be volitile and can never recover.

Yes, certain individual shares can.
But what most if not all advisors would advise you to do would be to have a diversified portfolio.
If you take the idea of a "fund" then the idea is that if one or two shares do badly (as inevitaby some businesses will), the other 98 do ok or well, so OVERALL you do alright.
If you want to invest in individual shares rather than funds then you can still diversify.

Investing in a single share has always been very risky, but most people would not do that.
It's a risk/return trade-off.

chucknorris

debtistheft wrote: »

Goodness me, talk about digging your own grave. When that 5% gain goes into an ISA it is worth 5%.

I made it quite clear that I was comparing the net to the gross, which is why outside of an Isa I would have no interest in a corporate bond. It is merely somewhere that I would transfer my existing stocks and shares Isa's to rather than cash them in when the Ftse starts looking toppy, hence the comparison from net to gross because if the alternative is to cash then in then that net to gross comparison is relevant.

If it goes into a standard share dealing account AND you have breached your Capital Gains allowance for the year (over £10k, so quite generous) THEN you would pay income tax.

This is NOT correct for everyone, it is not a general rule, it would only apply if you are a basic rate taxpayer (and didn't then exceed the top of this tax band). Higher tax rate payers would pay the GCT at 28%, not at their higher rate of income tax.

But this is easily avoided by bedding and spreading your investment before your profits exceed the annual CGT alowance