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By Faith Glasgow
difference to its value, particularly if youre a are also useful if you are unable A 15,000 ISA holding individual
higher rate (40%) taxpayer and are investing in the to commit your money for the shares in a few companies is a
stock market. minimum five years or so needed pretty risky proposition, because if
for market investments, or if you one business hits the skids, it will
For example, if you had built up 100,000 of cannot stomach any thought of impact on your portfolio in a big
investments in a stocks and shares ISA growing at losing money. way. For most smaller investors,
7% a year (which included 3% income), as a higher
rate taxpayer you could be saving over 10,000 of
tax compared with an unwrapped investment.
First port of call for anyone (after
clearing debts, usually) should be
Its not difficult to set up either kind of ISA but are
you really making the most of your tax-sheltered cash holdings to cover short- or
money? To be sure youre getting the maximum medium-term requirements and
benefit, read our 10 ISA tips.
unforeseen emergencies.
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MarketViews | 10 TOP ISA TIPS FOR 2015
3 CHOOSE YOUR
CHARGES CAREFULLY
investing through. Some charge
a flat fee that may be pricey if you
only have a small holding, while
its expensive, which can mean you
end up with more shares for the
same amount of money invested.
invested, and partly because the
end of tax-year scramble tends to
push prices up.
Over the long term, its astonishing others work on a percentage basis
how much high charges can that can become much more Fidelity did some research which
eat into your total returns. For
example a 10,000 investment
growing at 6% for 30 years would
expensive as your investment
grows. And you also need to
consider the cost of actually buying
5 MIX AND MATCH WITH
YOUR PENSION
found that 10,000 invested in
January 2000 would have grown
to over 35,000 after 15 years;
be worth almost 53,000 in a and selling, so its not simple. For most people the best the same sum invested just three
approach to long-term investing months later was worth only
Look at fund The Lang Cats chatty guide to
finding the right platform is a useful
is to use a combination of
pensions and ISAs, and in fact
25,000.
consistently less risky option. whenever you want. performed poorly and shrunk in
proportion. Otherwise, over time
delivering better By drip-feeding money in each you might find you have a portfolio
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MarketViews | 10 TOP ISA TIPS FOR 2015
8 SHELTER EXISTING
INVESTMENTS FROM
FUTURE TAX
2015/16), providing their gains did
not exceed their combined CGT
allowance limit.
test, those with taxable income
of 100,000 or more have their
personal allowance of 10,000 Contributor
reduced by 1 for every 2 of
Investors used to be able to bed income they earn over 100,000; the FAITH GLASGOW
and breakfast an investment
by selling it and then buying it
back the following day to rebase
9 USE A JUNIOR ISA TO
AVOID THE PARENTAL
SETTLEMENT RULE
personal allowance has completely
dIsappeared by the time their
income reaches 120,000.
spent 15 years as a freelance
journalist, writing on personal
finance for the Financial
its value and avoid building up Times Weekend Money pages,
capital gains tax. Thats no longer If you give money to your children This is an effective tax rate of Investors Chronicle and Money
allowed, but you can bed and ISA and invest it on their behalf, you 60%, says Cox. Thats because an Observer among other titles,
existing holdings, as Danny Cox of will pay tax on any investment extra 12,000 of tax is payable and winning a number of
Hargreaves Lansdown explains. income over the first 100 a on the additional 20,000 of awards over that time. She also
year. However, if you set up or income. However, he adds: ISA covered residential property.
Bed and ISA is where a fund or contribute to a Junior ISA (or use income does not count towards She is currently managing
shares are sold to the value of an existing Child Trust Fund), you this test, so you can use your ISA editor of Money Observer
11,000 the capital gains tax can invest up to 4,000 this tax year investments to boost your total magazine.
exemption then re-purchased (4,080 from April 2015) for them income without jeopardising your
within an ISA, so that future growth with no tax issues. personal allowance.
Disclaimer
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publication can be accepted by the publisher, sponsor or author. The author may have a position in any or all of the specific investments
or investment categories mentioned in this publication. Some of the companies or investments mentioned may be clients of dianomi ltd.
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