What to do with 5k savings a year

kimwp

Thanks both. Would a general investment account (with just index funds) mean I need to keep a track of things for capital gains?

eskbanker

kimwp said:

Thanks both. Would a general investment account (with just index funds) mean I need to keep a track of things for capital gains?

In a word, yes!

ColdIron

kimwp said:

Thanks both. Would a general investment account (with just index funds) mean I need to keep a track of things for capital gains?

Most definitely. You would also need to record all dividend payments, even if retained within the fund and possibly equalisation payments or excess reportable income

It's not especially hard if you keep accurate records from day one and your future self will thank you for it

Alexland

kimwp said:

Thanks both. Would a general investment account (with just index funds) mean I need to keep a track of things for capital gains?

My GIA comment was just a joke. My serious suggestion was tax free premium bonds. If you think of them as the safe low risk part of your portfolio you could perhaps take more risk in your ISAs such that the overall risk from ISAs and PBs together was acceptable.

eskbanker

Alexland said:

kimwp said:

Thanks both. Would a general investment account (with just index funds) mean I need to keep a track of things for capital gains?

My GIA comment was just a joke. My serious suggestion was tax free premium bonds. If you think of them as the safe low risk part of your portfolio you could perhaps take more risk in your ISAs such that the overall risk from ISAs and PBs together was acceptable.

My GIA comment wasn't a joke, given that OP clarified a desire for maximising (net) return rather than being tax-efficient, in response to my query about what was actually most important between the competing objectives.

But yes, risk should be part of the equation too....

Martico

kimwp said:

Thanks both. Would a general investment account (with just index funds) mean I need to keep a track of things for capital gains?

And go for the income rather than accumulating versions of funds, so that dividends are clear

Bostonerimus1

kimwp said:

Bostonerimus1 said:

Most tax efficient thing to do with the extra is to make extra pension contributions...why don't you want to do that? I assume you have a good cash buffer that easily accessible and don't have any high interest debt because that should be paid off.

My annual spend is £12k pa not including white goods/car replacement/holidays and my pension pot is currently 360k with 18 years to go until I can access it, and I'll be adding to it with AVCs until a pot of 680k is projected with a 3% real return (and then drop down to whatever is matched). So I think if I add more to it, I'll be dying with money in the bank. I'd rather have it now and use it for financial independence.

Only debt is 0% borrowing which is in savings accounts.

Cash buffer of 1-2 years (not actually that much given my low outgoings).

If you have filled your ISA allowance just invest in a general investment account. This will hopefully get you returns above saving accounts and give you flexible spending money for early retirement.

Bostonerimus1

ColdIron said:

kimwp said:

Thanks both. Would a general investment account (with just index funds) mean I need to keep a track of things for capital gains?

Most definitely. You would also need to record all dividend payments, even if retained within the fund and possibly equalisation payments or excess reportable income

It's not especially hard if you keep accurate records from day one and your future self will thank you for it

How much information will your investment platform provide. Ie do they send you info on dividends and capital gains, or do you have to track the average cost and then calculate the capital gains yourself? 

ColdIron

Bostonerimus1 said:

ColdIron said:

kimwp said:

Thanks both. Would a general investment account (with just index funds) mean I need to keep a track of things for capital gains?

Most definitely. You would also need to record all dividend payments, even if retained within the fund and possibly equalisation payments or excess reportable income

It's not especially hard if you keep accurate records from day one and your future self will thank you for it

How much information will your investment platform provide. Ie do they send you info on dividends and capital gains, or do you have to track the average cost and then calculate the capital gains yourself? 

All should provide dividends and equalisation in an annual tax certificate but unlikely ERI for ETFs. A few might have a stab at gains but many (most?) don't, none of the ones I've used ever have and I wouldn't rely on them if they did (transfers, corporate actions etc). You will usually need to resort to contract notes for weighted average cost etc. Not a problem with timely and accurate records in Excel or whatever and the only way to be sure

kimwp

Thank you everyone, lots to think about, I really appreciate your advice.