'Acc' funds vs 'Inc funds with dividends reinvested'

Dird

talexuser wrote: »

still waiting for explanation how...

As much as I would like to, posting on a website with 10 million users would just kill it for me & anyone else doing it

bigadaj

Dird wrote: »

As much as I would like to, posting on a website with 10 million users would just kill it for me & anyone else doing it

Relatively small amounts in savings and utilising Halifax rewards presumably.

talexuser

bigadaj wrote: »

Relatively small amounts in savings and utilising Halifax rewards presumably.

... the claim is 9% on cash now, risk free. I'm sure we would all be interested in the unforthcoming magic formula.

bottleandahalf

How is the dividend distributed in acc funds? If somebody buys units the day before the dividend is paid out, do they get it also?

bigadaj

talexuser wrote: »

... the claim is 9% on cash now, risk free. I'm sure we would all be interested in the unforthcoming magic formula.

Yes, the £5 reward on the current account with Halifax can be gained simply by circulating money through and keeping a zero balance in the account.

So the actual return could be getting close to infinite, forgetting about the normal arguments about whether the Halifax reward payment is actually interest or not.

So a permanent £10 in the account would give a 50% interest rate; 9% could be achieved by £100 in a tsb current plus account and near zero in a Halifax reward.

Meets the criterion but not much use for many people.

Pincher

redux wrote: »

Does anyone know if Acc and Inc units are counted as the same or distinct funds for capital gains purposes?

In other words, could someone wanting to realise a gain to use up part of the annual exemption allowance do this by selling one type and switch immediately into the other?

As we now have £5,000 dividend tax free, it is obviously great if we could work it so we get £11,100 as capitals gains, using Accumulation units, and £5,000 as dividend, by using Distribution units.


Somebody will come along and say it's not that simple, when you actually try to do it. Probably something like for currency funds, the 1.25% interest ends up taxed as interest, not CGT, and not dividend.


Some times I get the urge to join ISIS, just so I don't have to work out how to fill in the tax return. :eek:

eskbanker

bigadaj wrote: »

Yes, the £5 reward on the current account with Halifax can be gained simply by circulating money through and keeping a zero balance in the account.

So the actual return could be getting close to infinite, forgetting about the normal arguments about whether the Halifax reward payment is actually interest or not.

So a permanent £10 in the account would give a 50% interest rate; 9% could be achieved by £100 in a tsb current plus account and near zero in a Halifax reward.

Meets the criterion but not much use for many people.

Agreed - it is undoubtedly feasible to achieve a massive interest rate if tiny amounts of capital are involved. However, the poster claiming 9% on cash savings also claims to have ten current accounts in their signature so these would all need to be very lightly funded (and therefore arguably completely redundant) for that equation to apply, so something's not right here....

bigadaj

Pincher wrote: »

As we now have £5,000 dividend tax free, it is obviously great if we could work it so we get £11,100 as capitals gains, using Accumulation units, and £5,000 as dividend, by using Distribution units.


Somebody will come along and say it's not that simple, when you actually try to do it. Probably something like for currency funds, the 1.25% interest ends up taxed as interest, not CGT, and not dividend.


Some times I get the urge to join ISIS, just so I don't have to work out how to fill in the tax return. :eek:

The problem there is that you are taxed on dividends, so whether they are in accumulation or distribution units then it doesn't matter.

So you'd need to use different funds to use up the cgt potentially from that for dividends.

talexuser

bigadaj wrote: »

Meets the criterion but not much use for many people.

if touted as a superior strategy to investing in the stock market.

bigadaj

talexuser wrote: »

if touted as a superior strategy to investing in the stock market.

If you're investing £100 it may well be superior.