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Investments

Why choose investments bonds over GIA's

Comments

  • eskbanker
    eskbanker Posts: 35,345 Forumite
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    Because they may be a better fit for some people's requirements!  What are yours?
  • dunstonh
    dunstonh Posts: 118,602 Forumite
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    You would choose an onshore or offshore investment bond over a GIA when its more suitable. 

    For most of the last 15 years, you would have chosen a GIA in the majority of cases (mainly trusts being the exception).   However, now that CGT and dividend tax allowances have been reduced significantly, investment bonds (both types) are coming back into play again.  

    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • artyboy
    artyboy Posts: 1,382 Forumite
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    edited 16 April 2024 pm30 1:42PM
    Piggybacking this as I'm still curious about onshore IBs attractiveness, even with reduced CGT thresholds. Given the 5% annual withdrawal limit to stay free of income tax - unless you're investing a large 6 figure sum (or more), wouldn't you be able to take a similar level of income out of a normal GIA based investment with very little risk of exceeding your annual £3k CGT allowance?

    A (significantly older) acquaintance of mine has been recommended one of these by their IFA (yes, definitely IFA!), single life, not written into trust, and whilst I'm not going to second guess anything, I'm just interested to know why it might be better than investing in a simpler and cheaper multi-asset fund (HSBC IB mix is 55% eq, 15% bonds, 30% cash) and taking an income from that. Apart of course from a preference to go advised rather than DIY?

    Also... is 2.4% a reasonable initial charge for a lower 6 figure sum...?
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