Stocks & Shares ISAs

Snakey wrote: »

Firstly, I have formed the belief that bonds are a waste of money - I'm not clear whether this is because they are expensive to buy or because they are getting low returns or whether these are two sides of the same coin. Anyhow, based on this I'm thinking that rather than putting 100 into a V80, I might as well put 80 into a V100 and view my Santander 123 cash balance as being, in effect (in the context of balancing my risk a little bit), the remaining 20? I don't want investment advice per se, just a sounding board for whether my thinking is logical or whether I'm misunderstanding.

For consumers with access to high interest current accounts and other niche products, they aren't a very attractive option. If you can save sufficient money in these accounts to reduce your overall risk to an acceptable level, there is no need for bonds. Alternatives such as P2P lending could also be considered as bond-like.

Secondly, should I wait until after the Autumn Statement on Wednesday - or even the Budget next March - before making the leap, on the grounds that if the Chancellor does anything with the pensions tax relief system to make pensions less attractive to the people with the money to invest (or reduce the amount they can put in) then it's likely to affect the stock market?

Generalising, anything like this that is anticipated would already be priced into the market, so the effect is usually less than people think it will be. Even then, most people are only putting the bare minimum into their pensions anyway. Anyone else is likely to invest their money regardless, perhaps outside of the pension.

And thirdly, I'm looking at platforms. <snip>

Unless they've changed recently, x-o runs a sharedealing platform only, so you could only buy Vanguard ETFs, not Vanguard Lifestrategy, which is an open ended fund. Halifax lets you hold both types of investment, and would be among the cheapest. I'm not a customer myself, but know a few and they seem fine as long as you aren't a day trader (getting live quotes can be an issue at times).

Maynardkj wrote: »

I have many company shares that i have purchased over the years in share save schemes.

Your first task is to work out what all these shares cost, and what they are worth now. The difference between the total cost of acquisition and their current value is your potential capital gain.

If you sell these shares and realise a gain greater than £11,100 you will be liable to pay Capital Gains Tax. Bed and ISA, as suggested above also involves a sale and could give rise to a CGT liability, but as you can only add £15,240 worth of shares to this year's ISA you are unlikely to breach the CGT limit unless you've made other gains elsewhere.

Once the shares are in the ISA they are protected from CGT on future gains.

I have many company shares from share save schemes how do I transfer them to a share ISA without it costing too much or should I leave them invested?

The best (and cheapest) way to transfer them to an ISA is to do it within 90 days of exercising your option to buy. Within that timeframe there is no need to Bed & ISA, you can transfer the shares directly. Otherwise look for the best broker for Bed & ISA.

Bed and ISA is a sale of shares outside the ISA followed by a re-purchase of the same shares inside the ISA. The broker will usually waive the fee for the re-purchase and you will not be 'out of the market' for very long.

1 Should I transfer them to Share ISA?

Yes, to avoid income tax on dividends, to avoid CGT on future gains and to avoid having to keep records for HMRC.

2 I like my company shares and get a fairly good return so am happy with them. I really want to stay with those shares and support my company and have a sense of belonging.

Investing in the shares of one single company is very risky. If that company should ever fail you could lose your job, your investment and possibly your pension. No company is too big to fail.

3 If so what is the easiest and cheapest way to do this, as you are charged to sell shares, you could have to pay more for them to get them back though there is always the possibility they could cost less (yea that will happen), and you are charged to buy shares.

Some brokers will also charge you for holding the shares, re-investing dividends and closing your ISA. The link below gives the main charges for many brokers, but not the Bed & ISA charges.

http://monevator.com/compare-uk-cheapest-online-brokers/

Eliminate the brokers who deal in funds only, and those whose charges don't suit your needs, then go to the website of each broker on your shortlist to find the Bed & ISA charges.

PeteinSQ wrote: »

...
Currently we have an offset mortgage so any saving I can do I pay into the linked savings account. However, the interest rate on our mortgage is quite low and I wonder if I might do better with an ISA invested in funds and shares. ...

Do people with ISAs typically pay an amount in per month, or do they make a lump sum payment in at the end of the year? Whenever I've saved in the past I've always tried to make a payment per month (into the offset account).

Our mortgage is pretty small (only 1 x my salary) so not at all burdensome, and I contribute 13% of my salary into my pension. (Just in case that information is useful/relevant to the conversation!).
Thanks for your help!

Hi PeteteinSQ. I'll give a quick opinion which is general, though I suspect you need specific proper advice for your whole situation,
Are you talking about a place to hold the cash you are holding in your cash pot for unexpected expenses which could occur any time?
It is a sign of the times; you are seeing low interest rates on cash savings accounts and think you can take on more risk and (in effect) tie money up longer in order to get a higher return. Cash and stockmarket are chalk and cheese, though, so yes you "can" do better but No you "can" do worse.
Have you allowed in your budget for an increase in rate on your variable mortgage or if you at some stage remortgage?

It is generally a good return on money if you can to pay off some mortgage; have you read the MSE section on this, and checked the penalties.
When other people pay in money to savings is not relevant; choose something good for you. Monthly, or ad hoc any time of the year. Some people might judge the stockmarket and put in a lumpsum when they think the market will rise. Others say I can;t time it, so put it in monthly to average it out. (MSE guide mentions this.)
A single fund Fundsmith has a good record with low charges, and is fairly simple ad hoc or monthly.
I hope this helps you think it out, but I suspect you need to stay in cash savings, and use stockmarket for excess cash you can "afford to lose".