Topped up my S&S Isa today

Murphy_The_Cat

Murphy_The_Cat wrote: »

p.s. if anyones interested, I;ll let you know how the ordering/pricing timing worked for me on this one.

I paid 167.55p per unit, which by my reckoning was the price at lunchtime yesterday, rather than Monday when I place my order.

By the look of things, the BRIC countries have shown a rise since I bought my units, so its an immediate profit of my investment** -- which is nice :j



p.s. it was only a modest investment, the profit isn't going to change my life in any way:rotfl:

King_Weasel

Glad to see we've no panic sellers here. But can anyone explain why buying/selling funds has to be such a gamble? With direct shares I may not know what tomorrow's price will be, but at least I know the price that I'm actually buying or selling at.

I would like to be able to specify maximum/minimum prices for buying/selling fund units. Anyone agree? And does anyone know why we can't?

jamesd

King Weasel, first principle is that you can't trade based on future knowledge or you'd be able to make money with no risk at all. That means that you can't trade based on the last valuation point but only on the next one. No instantaneously available price because a fund is a large basket of companies and it takes a while to get the price. You can initiate a trade just before the valuation point and be fairly sure that you've taken into account all factors but the demand for the fund and you can guess at demand.

Next issue is that the fund manager varies the price based on the relative buy and sell demands, even for an OEIC. So the price isn't known until the quantity being bought and sold is known.

Investments trusts do offer the ability to buy at a live trading price.

Primrose

No. I generally max out my S&S ISA at the beginning of each tax year as I hold various unit trusts not protected by the tax-free wrapper and am gradually transferring them over to a tax-protected vehicle. Undoubtedly drip feeding would get me a better pound-cost averaging deal, but it's more convenient to withdraw the total annual allowance and get the transaction over and done with so I don't incur any tax on that particular tranche. Once they're all converted, I'll try and read the stock market a little better and try and take advantage of the "lows". Dunston may not think my policy a wise one though!

jamesd

Primrose, since you're already invested it makes sense to move into a tax wrapper as fast as possible and there's nothing for Dunstonh to criticise. Particularly if you're moving in first those paying income or growing to the point that they are causing significant CGT liability.

Pound cost averaging loses you money in a rising market and saves you money in a falling one. Since we're in an unstable market with significant fall potential it currently makes sense to use Pound cost averaging for those who are putting in new money. But your money isn't new.

King_Weasel

Thanks, jamesd, for your #24 above. So a unit trust transaction is essentially always at a future price and is thus unknowable. Fair enough. But I would still like to protect myself against big day-to-day price fluctuations when actually making a transaction in these volatile times. Is there any reason beyond administrative convenience why you can't specify price limits as I suggested in my #23 above?

The nearest I got to this was when I once persuaded Friends Provident to ring me before selling some Capital Investment Bond units.

dunstonh

Dunston may not think my policy a wise one though!

You cannot time the market. You could pound cost average it and lose out because the market rises and you werent in it. You could move it over and the market goes down making pound cost averaging better.

The last two years had pound cost averaging as the better option but the 4 years before that had single premium investing as the better option.

Unless you have a crystal ball there is no way to tell which option will be best so you may as well go with what is convenient. So, nothing to criticise Primrose.

jamesd

King Weasel, I'm not aware of a standard way using unit trusts, OEICs or SICAVs.

It's easy and standard for investment trusts since those trade just like shares. But there some of the volatility is in the discount or premium to net asset value, so life isn't perfect either.