Investment Trusts - advice appreciated.

whydoi

Hi,

I am looking at investing around £200 a month and was thinking of an investment trust. The aim of this is to try and create the best value I can for this money over about 20 years, to supplement my retirement.

I am willing to take some risk to try and achieve this. I do not have any other ISAs or anything, but am under the impression that returns from an investment trust are likely to be better? I am a high rate tax payer FYI (not sure if that makes any difference to ISAs?).

Can someone just confirm that this sounds like an OK plan and I am not missing anything better that I could be doing? I have a work pension but I do not think it will be enough.

Thank you,

jimjames

I use investment trusts but it sounds like there may be better options. You've not mentioned it being in an ISA which could mean missing out of tax benefits long term

You've also not mentioned which trust, unless you find a good global one you may find it better to just use a cheap multi asset fund like Vanguard LS.

ajdj

It would also be worth considering a SIPP if you are a HRT already benefitting from the maximum employer contributions in the company pension and you have a good emergency fund in place.

le_loup

whydoi wrote: »

I am looking at investing around £200 a month and was thinking of an investment trust. The aim of this is to try and create the best value I can for this money over about 20 years, to supplement my retirement.

Many Investment Trust have savings schemes that allow small amounts to be invested each month with no charges for doing so. They will also reinvest any dividends without charge. Go to http://www.theaic.co.uk/ to find a trust that does this and one that suits your investment criteria.

whydoi

Thank you for your replies and apologies for the delay in mine. I have been reading the literature from bailie Gifford about their investment trusts. However I see that there is an isa investment trust and also 'just' an investment trust. As I mentioned that I do not have an isa at all, is the isa version the better option for me do you think? I am also looking at the other suggestions that have been made above so thank you for those.

jimjames

whydoi wrote: »

Thank you for your replies and apologies for the delay in mine. I have been reading the literature from bailie Gifford about their investment trusts. However I see that there is an isa investment trust and also 'just' an investment trust. As I mentioned that I do not have an isa at all, is the isa version the better option for me do you think? I am also looking at the other suggestions that have been made above so thank you for those.

An ISA is just a tax wrapper that protects the investments inside from tax. So it can grow as much as possible without you being liable to CGT or income tax on the contents. Always worth the ISA wrapper in my view unless the cost is massively different as you never know what might change in your situation even if you're a lower rate taxpayer now.

Glen_Clark

le_loup wrote: »

Many Investment Trust have savings schemes that allow small amounts to be invested each month with no charges for doing so. They will also reinvest any dividends without charge. Go to http://www.theaic.co.uk/ to find a trust that does this and one that suits your investment criteria.

Bear in mind they are subsidising the savings scheme from other investors funds, usually in an effort to reduce the discount which is an embarrasement to the managers because it shows them to be a liability. As competition has intensified from new entrants like Vanguard, they have come under pressure to reduce costs, and so these subsidised savings schemes have been/are being withdrawn.

whydoi

Thanks again, I am going to read up about Vanguard now!

Thrugelmir

whydoi wrote: »

I am willing to take some risk to try and achieve this.

With only investing £200 a month. You are probably better off protecting your capital ( 1st rule of investing) rather than taking speculative punts. Majority of heavy lifting over the years is achieved by reinvesting income received and the compounding there of. Rather than capital gain.

Eco_Miser

whydoi wrote: »

However I see that there is an isa investment trust and also 'just' an investment trust. As I mentioned that I do not have an isa at all, is the isa version the better option for me do you think? I am also looking at the other suggestions that have been made above so thank you for those.

The ISA version will be the ordinary version in a tax wrapper. The wrapper is worth having.

If this is the only investment you make then using Bailie Gifford as as your ISA manager as well as investment manger could work well, but if you intend making further investments, then buying the IT through a platform which provides an ISA wrapper will allow you to make further investments with other companies within that same ISA wrapper. You are only allowed one S&S ISA per year.

Glen_Clark

whydoi wrote: »

Thanks again, I am going to read up about Vanguard now!

From what I remember Vanguard are the world's second biggest fund manager, BlackRock being the biggest. You can buy their ETFs with annual charges as low as 0.07% (S&P500). Most Investment Trusts charge you at least 10 times as much!. But I wouldn't write off Investment Trusts altogether. They give you exposure to markets that Vanguard doesn't. And occasionally you can buy them at a big enough discount for their overpaid underperforming managers to be fully factored into the share price - wheras there are no discounts with Vanguard.