Retirement planning is main use of VCTs, 56% of users

bostonerimus

Venture capital and small companies is a risky combination, hence the tax incentives. I would only invest money in them that I could afford to lose, not money I hope to grow to finance retirement.

Alexland

bostonerimus said:

Venture capital and small companies is a risky combination, hence the tax incentives. I would only invest money in them that I could afford to lose, not money I hope to grow to finance retirement.

Well I am doing it with some of the money that would be used to retire before pension access age and the diversification within a large generalist VCT helps reduce single company risk. I could afford to lose this money as it's not necessary to retire in my early 50s and anything else I invested it in would also carry some risk.

I'm about 6 months in with the £23k into BVT and should have around £10k back from the tax relief and 3 divis before the end of this tax year so if the VCT can keep on producing around £2k pa dividends then I should have all my money back within the next 7 years.

I thought the below graph from the latest BVT interim report was useful for showing how cash has historically been returned back to shareholders so for example someone investing in 1998 would have almost double the cash back and still own the shares and that's without considering the returns from reinvesting the tax relief and dividends into new shares to generate more tax relief and dividends.
Similarly someone investing around 8 years ago would have had their cash returned by now.