Best way to optimise yield in ISA

GeoffTF

Prism said:

I don't understand your comments on tax? You don't pay tax on anything in an ISA or SIPP but you do pay tax on on ETFs outside of the ISA/SIPP.  Accumulation funds do not help avoid this.

Yes indeed. You have to pay tax on Excess Reportable Income with accumulating ETFs:

https://monevator.com/excess-reportable-income/

pgalland

Prism said:

I don't understand your comments on tax? You don't pay tax on anything in an ISA or SIPP but you do pay tax on on ETFs outside of the ISA/SIPP.  Accumulation funds do not help avoid this.

I was merely pointing out that the 4% interest on my savings account is currently taxed at my marginal tax rate. Hence my appetite to find an investment with a yield of 4%+ that I can incorporate in my ISA/SIPP

outwestuk

masonic said:

pgalland said:

The problem is so for some reason I cannot explain, I can’t find any mutual funds or government bonds that pay anywhere near what I get on a Zopa checking (3.2%) or 1 year fix term savings (4%) account that also guarantees no reduction in principal capital (up to £75k)…
Dont get how that can be :-(

How about one of these? All have YTM just north of 4% based on Friday's closing price, a significant portion of this return coming from a tax-exempt capital gain at maturity.

Those returns can be beaten by the best fixed rate savings accounts, and if you want a "risk-free" product, then it may well be that savings are the best option. This isn't unusual. However, as pointed out above, the real return is not guaranteed, so if you want to keep up with inflation, then most index linked Gilts currently have a small positive real return (RPI+0.1% to +0.8%) and no consumer savings product currently on sale rivals that.

In reference to mutual funds and other risk assets, if you have a way to determine what forward returns from any of those will be, then please publish your findings and collect your Nobel prize for economics.

Interesting table - can I ask where you got this from?

GeoffTF

He got the table from here:

https://reports.tradeweb.com/account/login/