Calculation of Deferred State Pension

kidmugsy

What's best for you must depend on your financial position and on your temperament. If I were in search of income I suspect that I'd devote my S&S ISAs to bonds (perhaps developing a "ladder" of five to ten year gilts "rolling down" to two years, or perhaps just buying bond "funds") and buy equities outside the ISAs: I am a fan of Personal Assets Trust, who run a cheap Investment Scheme: scroll down to p46
http://www.theaic.co.uk/sites/default/files/statistics/attachment/AICStats30Nov2013.pdf

You'll see, when you check their website, that they reinvest your dividends but let you specify a quarterly withdrawal from the scheme, which they realise by selling some of your shares. The idea is that you treat that withdrawal as income. You hope over time that the capital gains and dividend outweigh the withdrawals and so your wealth increases, or at least decreases at a modest rate that you are happy with.

If you've got back-up of cash in ISAs and in interest-bearing accounts, you are probably in a good position. If I had access to a bank safety deposit I'd also buy some gold sovereigns and store them there, but this is a minority taste. They'd provide no income, of course. If you really get the investing bug, you might also want to diversify with some property (for income) and some commodities (for capital gains), but I'm not sure I would. Over the years you'd aim to get all of your capital into ISAs. You might, for instance, begin by not withdrawing cash from your ISAs but letting it accumulate by reinvestment, while you spend from your capital outside ISAs.

Personally I'd run a mile from your IFA's proposal but, on the other hand, he does know more about your position than I do.

kidmugsy

Bazzh wrote: »

. Sorry for my ignorance but what are EFT's/IT's?

An "IT" is an Investment Trust, such as the aforementioned Personal Assets Trust. It's a company that makes its living by investing in financial assets. In the case of P.A.T. it invests in "blue chip" shares, bonds, gold and cash. This is a "defensive" style of investing. ("Blue chip" means big, well-known companies that it believes will thrive in future. In its case, its favoured companies are in the UK, US, Canada, Switzerland and Australia).
I suggest that you go to the PAT website and read through its quarterly reports. You'll get a good idea of how it runs its business, and a pretty good, free financial education.

An "ETF" is an Exchange Traded Fund; I'll let someone else describe how they work.

kidmugsy

kidmugsy wrote: »

a quarterly withdrawal from the scheme, which they realise by selling some of your shares. The idea is that you treat that withdrawal as income.

Just for clarity: you might view that withdrawal as income, and treat it as if it were income, but HMRC doesn't. The most they'd want to know about is your dividends. If you are a 20% tax payer, there's no more tax to pay on dividends than the company has already paid before they distributed them to you. Hurray!


HMRC would also be interested in your capital gains, but the allowance is reasonably generous (£11000 p.a.) and anyway, it's only capital GAINS it applies to, not capital realisations. So if you owned, say, £50k in shares, and they went up in value to £60k, and you sold half of them, your gain is only £5k, not £30k.