Where to start ? Stocks and Shares ISA

Simple_Si_2

Hello over the last 5 years I have always used the full cash isa allowance. I have money spare to use and would like to consider investing the rest of my tax free allowance into stocks and shares before the end of the current tax year. Having no experience in this side of investing, I am looking for any help/suggestions to get me started.


Moneysaving newbie

bluebell321

I am in exactly the same position as you and will watch this thread with interest.
These are just thoughts at present but I did wonder about a multi manager fund where although paying for the privilege, the task of asset allocation is given to someone else with a view of leaving it for the long term and then seriously research cheaper options for next year's allowance.
What do people think?
http://www.hl.co.uk/funds/multi-manager-funds

kidmugsy

Multi-manager funds tend to charge a lot. For your first venture into S&S ISAs I'd consider Investment Trusts, some of which offer their own ISAs which can be good value. Scroll down to p47
http://www.theaic.co.uk/sites/default/files/statistics/attachment/AICStats30Nov2013.pdf

RIT Capital Partners might appeal to me; investing with the Rothschilds, eh?

Standard Life Savings looks to be a "zero charge" ISA: you'd need to look through the rest of the PDF to see which Investment Trusts can be held in their ISA, and judge whether they attract you.

kidmugsy

bluebell321 wrote: »

I couldn't get that page to open.

Google "The Association of Investment Companies", click open their website, then scroll down to the box headed "Statistics" and click on "AIC stats".

Archi_Bald

I would never start with picking a fund or share of whatever kind, whoever recommends them. And would most definitely not start with HL recommendations (even though I do hold both an ISA and a SIPP at HL myself - but that is because I like their platform, not their investment recommendations).

S&S ISAs are about investments. So first thing is to understand what investments are. You don't find that out by picking one of the tens of thousands of available options and throwing your money at it. You need to start by reading up about investments and portfolio construction and management.

There's a whole host of really good books and internet sites that help you with this. MSE isn't one of of the sites where you can learn a lot about investments because the entire site is mainly about saving. Though some people who understand investments do mingle on parts of the forums. One of the things they usefully pulled together is a list of recommended reading which I suggest should be your starting point: https://forums.moneysavingexpert.com/discussion/4752194

Simple_Si_2

Thank-you all for your help and advice, I have found it all very useful and have taken my first step by purchasing Tim Hales 'Smarter Investing'

Simple_Si_2

So, since Dec2013, I have read through the book Smarter Investing, about 6 times, and have found it extremely useful in gaining an insight into how best to plan my portfolio. I enjoyed understanding the passive approach and suitable building blocks as which to use. Now its time to find these suitable funds and a platform to use. I'm planning for the long term roughly 25 years plus and have £15000 available funds to invest. I would like to use up my remaining isa allowance this tax year but am unsure which platform would be most suitable for me. Any advise is welcome

innovate

Check out monevator.com.

Also search the forum for snowman's spreadsheet which can help finding the cheapest broker.

reeac

Simple_Si wrote: »

Hello over the last 5 years I have always used the full cash isa allowance. I have money spare to use and would like to consider investing the rest of my tax free allowance into stocks and shares before the end of the current tax year. Having no experience in this side of investing, I am looking for any help/suggestions to get me started.


Moneysaving newbie

One point about S&S ISAs is that the dividends are taxable at the usual 10% rate unlike cash ISAs where the interest is tax free. This isn't too clearly spelled out. Of course any capital gains on S&S ISAs are free of tax but then the annual CGT exemption is pretty generous anyway. Overall I feel that S&S ISAs aren't that good a deal but then cash ISAs are a poor buy with current interest rates. All very difficult.

Archi_Bald

reeac wrote: »

Overall I feel that S&S ISAs aren't that good a deal

This may be true for you but just alone the facts that you don't have to keep meticulous records for tax purposes, and also don't need to ever(*) declare your S&S ISA investments are huge benefits IMO.

Add to this that from April 6 you will be able to transfer from S&S ISAs to cash ISAs, so you will be able to keep your cash completely tax free when you start spending it in later life. So there is no danger that you have to pay any tax on your S&S ISA investments, or cash realised from it, even if it did bust the CGT limits(*). This can again be a massive benefit for people.

(*) until some mad chancellor changes the rules, of course....but we have to be optimistic.

marathonic

reeac wrote: »

Of course any capital gains on S&S ISAs are free of tax but then the annual CGT exemption is pretty generous anyway.

But what if a future budget reduces the annual CGT exemption by 75%+? You'd be left with a load of investments outside an ISA wrapper with little option but to pay CGT on sale.

In Ireland, the annual allowance is just €1,270 (about £1,058).