180K Investment

jdw2000

So the point is, if you do "income" rather than "accumulator", then you've got clear records to show the tax man. And you can always reinvest it manually anyway, so it does the same job as an accumulator?

JohnRo

If you're going to switch to the income versions of your ACC funds then ask the platform to do it for you, rather than you yourself doing it via a sale and repurchase.

jdw2000

JohnRo wrote: »

If you're going to switch to the income versions of your ACC funds then ask the platform to do it for you, rather than you yourself doing it via a sale and repurchase.

I just called up TDDI and they said it would involve a sale and repurchase....

bowlhead99

jdw2000 wrote: »

Cheers for that. Yes, my investments are all accumulators. I can change these to income, but this would involve selling and rebuying (which won't cost me anything to do).

This is worth doing then?

Well, personally I would prefer a non-accumulating fund if held outside the ISA because the money flows are visible rather than being internal so they are a good reminder that there's been a distribution event, and I can control what I reinvest into what.

However, the flip side to that is that once I have created a tax recordkeeping headache for myself, I'd prefer to only look at it once a year.

For example, even using Inc versions, if they are funds you have added to over the course of the year then you're still going to need to examine the dividend vouchers to determine how much of the payment is dividend versus equalisation. And if you sell a bunch of Acc funds now to buy Inc equivalents (rather than have the relevant underlying fund manager arrange a conversion), then you are just generating another round of CGT calculations for all those disposals; and you'll still need to check the accumulated distributions, for the periods you held them.

So if you are going to do some disposals near the end of the tax year anyway as part of shifting more assets into ISA or pension, you might as well deal with it then, unless you are desperate to start getting into all this stuff now. If you only have a small number of Inc funds it will not be a big deal. I was just disputing the idea that you 'won't have much to think about', because these things can be complex if you are doing them for the first time. But as you're dealing with a year in which you've held unwrapped Acc funds at some point, you are already going to be dealing with those issues anyway and won't necessarily eliminate that by doing a sell of all your Acc assets.

It just comes down to that old chestnut, 'personal choice' again
:beer:

JohnRo

If they do it for you it is more efficient in terms of the settlement/repurchase delay, that's been my experience as I understood it when CSD did this for me a couple of years ago.

BananaRepublic

MonroeM wrote: »

Yes, she does own her own house in a nice part of London so I suppose that's her property investment.

In fairness, she did tell me that nobody could predict future markets and that I need to do my own research. I was still a bit amused about her being 100% equity especially as she usually plays safe with her cash when shopping or on night's out!

When you buy a drink, or a ticket to a play, that money has gone. Buy a share in a unit trust, and that money should grow in the long term. So in a sense being careful with money, and investing in unit trusts etc are quite compatible.

MonroeM

BananaRepublic wrote: »

When you buy a drink, or a ticket to a play, that money has gone. Buy a share in a unit trust, and that money should grow in the long term. So in a sense being careful with money, and investing in unit trusts etc are quite compatible.

Yes, point taken so it just goes to show that when know a person who is very 'careful' with their money they can indeed be far more adventurous and aggressive in markets in the hope of making more money!

bowlhead99

Fundamentally if you have more money that you don't need to live on, then you can afford to take more risks, and taking risks is one of the things that helps you get money.

It is one of the things that increases wealth inequality in capitalism because if you only have £200 for food budget and emergencies you can't afford to invest it in something that might lose 50% of its value because your emergency and food budget might cost more than £100. Whereas if you have £100k in the bank and only need £200 for food budget and emergencies, you have that capacity for a temporary 50% loss to endure for half a decade or more.

Also people who work in financial services & derivatives such as your friend, are much more likely to be comfortable with working with large numbers and understanding the nature of volatility, risk and reward. This may make them much more amenable to investments with a higher degree of risk even though they might be fiscally (or socially) conservative when it comes to their food budget or preference to go on bungee jumps.

MonroeM

[QUOTE=bowlhead99

Also people who work in financial services & derivatives such as your friend, are much more likely to be comfortable with working with large numbers and understanding the nature of volatility, risk and reward. This may make them much more amenable to investments with a higher degree of risk even though they might be fiscally (or socially) conservative when it comes to their food budget or preference to go on bungee jumps.[/QUOTE]

Yes, that made me laugh, would happily pay money to see her do a bungee jump!

MPN

MonroeM wrote: »

'Asset Allocation'! Yes, I tend to agree with you although its taken me a while to get there and I'm still going to continue with my own research before I make any other decisions with the rebalancing/asset allocation of my remaining ISA funds. They have to be suitable for my risk profile and requirements. I'm not even contemplating touching my pension fund at this stage!

As you may have read I moved my UK/European/Multi-Asset funds into the All-World VWRL tracker, so I now understand that I need to take my time and not rush in head first to ensure I rebalance the remaining funds over my preferred asset allocations. I am now 'looking' at some active single sector funds whose fund managers tend to specialise in various asset classes from property (UK/Global), bonds, small cap etc. etc

If you have the 100% risk profile and can ride out any downturns in the market then the All-World VWRL is fine. However, I'm not sure whether you should compliment this with other passive tracker funds because, as mentioned in previous post's, it has been pointed out that active funds performed better than passive funds over the past 5 years in the European, EM and UK markets. This is not to say that this will continue but to have some overall control it may be best to hedge my bets and diversify between active and passive funds?

There is nothing right or wrong about mixing passive with active funds it's a personal choice.

I am personally swaying towards my equity portfolio in a passive tracker and the balance of my asset allocation in active bonds and then a passive tracker property fund so a real mix?