Examples of smart retail investments

masonic

caldi9 said:

Malthusian said:

caldi9 said:

 I’m not talking about single company ideas (too risky), but rather ideas like buying low coupon gilts. Decent post tax yield and low downside of held until maturity. 

Good news: If your definition of a good investment is one that returns less than retail cash accounts, it's really easy to have good investment ideas.

Important detail: post-tax.

If you'd put £160k into HSBC American Index 20 years ago, you'd have over a million today. A sum of £20k per tax year could have been moved into an ISA over 7-8 years, whereupon the full balance would be tax free for the remaining 12 years. Due to sequence of returns in the 2000s, simply drip feeding £20k per tax year into the fund over 8 years would have achieved a very similar result. The only tax payable would have been on the dividends over those first few years, which were historically quite insignificant compared with capital growth in the latter years. I don't think there were any good choices of global trackers in those days, but today something like HSBC FTSE All-world Index or Vanguard Global All-cap Index would be a more diversified option.

Low coupon gilts aren't going to come close to competing with the returns from equities over the long term. If your aim is to get to a million quickly from a modest amount of initial capital, then these would would be quite a drag. I doubt there are many 20 year periods where a portfolio containing a significant allocation to bonds would have outperformed 100% equities.

caldi9

masonic said:

caldi9 said:

Malthusian said:

caldi9 said:

 I’m not talking about single company ideas (too risky), but rather ideas like buying low coupon gilts. Decent post tax yield and low downside of held until maturity. 

Good news: If your definition of a good investment is one that returns less than retail cash accounts, it's really easy to have good investment ideas.

Important detail: post-tax.

If you'd put £160k into HSBC American Index 20 years ago, you'd have over a million today. A sum of £20k per tax year could have been moved into an ISA over 7-8 years, whereupon the full balance would be tax free for the remaining 12 years. Due to sequence of returns in the 2000s, simply drip feeding £20k per tax year into the fund over 8 years would have achieved a very similar result. The only tax payable would have been on the dividends over those first few years, which were historically quite insignificant compared with capital growth in the latter years. I don't think there were any good choices of global trackers in those days, but today something like HSBC FTSE All-world Index or Vanguard Global All-cap Index would be a more diversified option.

Low coupon gilts aren't going to come close to competing with the returns from equities over the long term. If your aim is to get to a million quickly from a modest amount of initial capital, then these would would be quite a drag. I doubt there are many 20 year periods where a portfolio containing a significant allocation to bonds would have outperformed 100% equities.

Comparing apples with oranges. Low coupon gilts guarantee a high post tax return with a year. I was referring to them as a smart retail trade for a shorter time horizon and guaranteed return.

subjecttocontract

In the early 1990's Next shares were £1 each, today they are around £70 a share.

Sg28

The total you could have paid into an ISA since they were introduced in 1999 is £266,560.

So you would still need some decent growth other the years to hit the £1m 

subjecttocontract

£20,000 worth of next shares in the early 1990's would be worth around £1.4million now.

subjecttocontract

Sg28 said:

The total you could have paid into an ISA since they were introduced in 1999 is £266,560.

So you would still need some decent growth other the years to hit the £1m 

Some of us had tax free PEP's & TESSA's well before 1999.

Albermarle

subjecttocontract said:

Sg28 said:

The total you could have paid into an ISA since they were introduced in 1999 is £266,560.

So you would still need some decent growth other the years to hit the £1m 

Some of us had tax free PEP's & TESSA's well before 1999.

Which you were allowed to roll into/transfer into the new fangled ISA, IIRC.

subjecttocontract

Yes that's correct.
PEP's introduced 1986
TESSA's introduced 1990

masonic

caldi9 said:

masonic said:

caldi9 said:

Malthusian said:

caldi9 said:

 I’m not talking about single company ideas (too risky), but rather ideas like buying low coupon gilts. Decent post tax yield and low downside of held until maturity. 

Good news: If your definition of a good investment is one that returns less than retail cash accounts, it's really easy to have good investment ideas.

Important detail: post-tax.

If you'd put £160k into HSBC American Index 20 years ago, you'd have over a million today. A sum of £20k per tax year could have been moved into an ISA over 7-8 years, whereupon the full balance would be tax free for the remaining 12 years. Due to sequence of returns in the 2000s, simply drip feeding £20k per tax year into the fund over 8 years would have achieved a very similar result. The only tax payable would have been on the dividends over those first few years, which were historically quite insignificant compared with capital growth in the latter years. I don't think there were any good choices of global trackers in those days, but today something like HSBC FTSE All-world Index or Vanguard Global All-cap Index would be a more diversified option.

Low coupon gilts aren't going to come close to competing with the returns from equities over the long term. If your aim is to get to a million quickly from a modest amount of initial capital, then these would would be quite a drag. I doubt there are many 20 year periods where a portfolio containing a significant allocation to bonds would have outperformed 100% equities.

Comparing apples with oranges. Low coupon gilts guarantee a high post tax return with a year. I was referring to them as a smart retail trade for a shorter time horizon and guaranteed return.

It's not at all clear from your opening post that you only wished to consider short term risk free options (guaranteed returns). In that case, anything that could be described as a "smart retail trade" is off the table, and the only options that could be considered are low coupon gilts and cash ISAs. Neither of these are going to generate high returns, and no ISA millionaire will have achieved this feat through the use of such options.

On the bright side, there are several collections of such ideas:

https://moneyfactscompare.co.uk/isa/fixed-rate-isas/

https://www.moneysavingexpert.com/savings/best-cash-isa/

https://www.yieldgimp.com/

To become a millionaire within a year from these options, you should be prepared to invest about £930.4k.