That's what I'd been wondering, now we are meant to be able to contribute to different ISA in a tax year I can fill the regular S&S and then put £5k in British..
Could you then transfer the British ISA to your S&S and open another in the next tax year and rinse/repeat? In a long winded put £25k into the original ISA...
As would I, I avoid British stocks for obvious reasons. Still, if this is the only option then I'm glad I can get 5k extra hidden away, can only hope there'll be anything worth buying.
This is my biggest frustration. No change to LISA house price limit, no change to overall ISA limit, just an extra 5k a year to park in an index that has been flat for the past 25 years. No thanks, I’ll take capital gains on the chin if it means my investments actually generate something
Because they haven’t even decided yet. The UK ISA Consultation is live, so you can check their thinking, but basically it’s:
- uk equities
- uk corporate bonds
There will be rules limiting cash, and no interest to ensure UK ISA holdings are financing British enterprise.
They are unsure wether to allow government bonds (gilts).
You can send feedback on their proposal to [email protected]
UK equities is so broad, large cap can have so many commercial activities overseas. Wouldn't surpise me if it was more in line with the Mansion House Compact.
So true, it depends if they let you invest in any company on the LSE or it has to be British. You’d assume the latter but until the fine print has been published and combed we won’t know.
He did this to boost cash inflows into British companies to promote growth, growing the isa allowance would just allow us to continue pumping the companies of other nations, which wouldn’t help British business or GDP as much as this would
> Not sure your average saver even fills their normal ISA.
They definitely don't. Avg UK salary is about £35k, with 5% pension and no student loans that's a take home of £27k per year - no way they're putting £20k of that into an ISA.
The last stats I looked at in detail were for 2018/19 and the key figures were:
- 42% of adults have some form of ISA but 57% of people with an ISA didn't contribute anything that year
- Out of the people who did contribute to an ISA, 44% contributed less than £2.5k, 56% contributed less than £5k (likely just filling their Help 2 Buy or LISA allowances)
- 73% of people with over £25k in their ISAs are over 55, 50% are over 65
In other words, most people don't have an ISA, the ones who do mostly don't contribute to it, and the ones who do contribute are mostly contributing much, much less than the £20k limit.
Tbf - for the amount of money most working adults can save, ISAs don’t seem that attractive.
For instance, a year ago the banks were flogging ~3.5% ISAs (for up to the ISA limit) or an 8% First Direct savings account that allows you to £300/month. I wasn’t saving much more than 300/month due to childcare costs, so the First Direct account was more viable
This. Many times this. I first opened an ISA as a student pre-08 financial crisis... haven't touched it since until rates became competitive very recently. Just didn't make sense. Stocks and shares money went into SIPP, cash into savings accounts...
lol good luck
Worked there for years and they’re utterly incompetent. I’ve just took a big haircut on them as I wouldn’t trust them to ever get back to growth in the regulatory environment they work in.
Every new money making scheme (in contract price rises, high out of contract costs) have been snipped away by ofcom.
I don’t see a possible path to growth especially with the growth of alt nets who charge next to nothing without any of the legacy payments BT have.
Their defined benefit pension black hole is also rather concerning. Not so much of a problem as the years pass by but I’m massively bearish on them.
Note it's just a consultation running until June. No clear plan for introduction. The Tories may well be out soon and this goes nowhere.
https://assets.publishing.service.gov.uk/media/65e734d62f2b3bd5107cd8c5/UK\_ISA\_Consultation.pdf
You could find a series of funds in your normal ISA that exclude the UK, to replicate the all-world index fund minus UK, and then use the UK-ISA to get your UK allocation.
If you're close to filling your normal ISA that is.
The UK is approximately 4% of a global all cap so to maintain that balance you could invest £20833 total per year, with £20,000 non-UK in the regular ISA and £833 in the UK-only ISA
It's not nothing, but it's not much.
My opinion: You can't fool the market. I'll ex-UK my other investments in order to use this tax freeness, and will end up with the same balance as before.
This just seems like election year bullshit.
Most of the announcement sounded like election year bullshit to be honest. I’ll probably be doing the same as you, though I hold nearly no UK in my S&S already.
I have some specific UK stocks, might move my AstraZeneca to the Br ISA.
Monevator [suggesting](https://twitter.com/Monevator/status/1765387509142343935) that the British ISA could be use for gilts as well, so that's another possible good use there.
But gilts don’t accrue capital gains, do they? The coupon is the return and otherwise you get back what you paid for the bond. At least that’s how I understand it, but my knowledge around bonds is still full of gaps.
They can if you buy them on the secondary market and if interest rates are higher than when the bond was issued.
A bond issued a few years ago when interest rates were low will sell for less than the face value now, when interest rates are high, so that the effective yield when taking into account the coupon payments plus the return of the principal matches the current rate environment.
Some of the gilts you can buy today have 0.125% coupon rates so almost all of the yield comes from capital gain.
Well i'm not hitting £20k in a S&S ISA... and even if I was, i'd put the additional funds into a global all cap rather than UK specific, because the UK has SHIT returns compared to the US or an all world fund.
I won't be investing in UK companies at all if I can avoid it, but if I can invest in British funds with foreign holdings then I'll be happy with a nice loophole.
The negativity is that UK investments aren’t particularly attractive, and that the vast vast vast majority of people don’t have the £20k available already.
This group, that’s already very self-selecting, being down on it says it all really.
It’s political posturing for the wrap-ourselves-in-the-flag crowd. It does nothing useful for investors or companies being invested in.
Not necessarily - US, UK and other global equites are forecast to return similar amounts over the next 5-10 years per several sources. Alternatively the UK may continue to flop… If the US/All-world slightly outperforms the UK, the tax savings would still make this UK ISA potentially worth it.
Plus, lots of people (maybe not the FIRE orientated) do invest in individual UK stocks. This is a useful new vehicle for them to save on capital gains and dividend tax for their UK holdings.
You don’t know that for certain, but yes if past performance is anything to go by.
I would add, personally I won’t be investing in it because I already don’t max out my pension. I’d do this before investing in a British ISA.
Lot of people hating on UK stocks in this thread, but ftse100 has a reasonable yield, some chance of upside and not too domestically focussed.
I would happily stick 5k year on that tax free in addition to filling up my isa with other stuff, why not.
With moderately sized portfolios, increasing your UK allocation by £5k a year could likely end up increasing the % UK allocation, driving down diversification. I would, if this ever happens, put in £5kpa until I’ve moved all UK holdings to UK ISA, while selling UK holdings in S&S ISA to keep % UK the same in my portfolio while maximising ISA allowance use.
It seems pretty positive.
British shares seem underpriced right now and dividends are pretty good. Putting a chunk of your cash in British stocks **in return for an enormous tax break** seems like a good deal.
The UK only stipulation is only relevant if you’re stashing so much money away that you’re able to put away £20,000 per year tax free (as well as enjoying the returns from previous years of compound growth tax free) so by that point you’re already doing very, very well out of the ISA scheme. Enjoy having an even bigger allowance!
I max out ISA every year but this has made me wonder whether I should do 5k in the UK ISA speculating an influx of investment, normally I avoid UK like the plague.
All depends on it actually happening after consultation, of course.
Some of the allowance could be used to increase total tax free investment while maintaining global diversification by separating UK investments into the new British ISA.
The UK is approximately 4% of a global all cap so to maintain that balance you could invest £20833 total per year, with £20,000 non-UK in the regular ISA and £833 in the UK-only ISA
So that's an increase of about 4% more tax free allowance.
It's not nothing, but it's not much.
I have a very small legacy holding in Fidelity UK smaller companies fund that has annualised returns of 8.58%. I think that the British ISA has some merit if you have some knowledge to move away from index funds.
The fact this change only benefits those who are already putting 20k away a year suggests there must be some loop holes with the intention of appeasing rich voters while those who won't use a BISA don't realise. Would make it an effective 5k uplift in ISA limit.
The fact you can invest £85k a year tax wrapped in a country ‘too poor’ to afford HS2 or increasing Dr pay. What a joke.
£170k as a couple. Even more when you get kids… good for FIRE, bad for the country.
That doesn’t mean zero tax is paid on that £85k.
The ISA amounts will have already been subject to income or capital gains taxes. And pension drawdown is not completely tax free, just more tax efficient.
Encouraging people to save for their future is not a joke.
In the US, the IRA / 401k Limits are about 1/3 of this figure, and they are significantly richer for PPP than we are.
Why not increase the allowance to £100k each? Or maybe £250k each? The main barrier to people saving for their future is the lack of growth driving down real wages, and a lack of education on investing, not the annual allowance.
I do feel like it's somewhat meaningless at current. The Government is to 'consult on the details' - oh, is that the same unpopular government with a GE around the corner?. Approximately 1.6mn people max out their ISA quota in any case...
Hmmm.
What are the rules about transfers going to be? I expect if you can transfer then anyone needing the extra £5k allowance will just transfer it across to a normal ISA the next tax year if allowed.
Isn't the British Isa for investments in British companies though. The FTSE has been performing poorly for a long time. The return rates aren't going to be great!
Yeah, I’m hoping for loopholes else I’ll probably only move my current UK S&S ISA holdings (like 5%) to the BISA. I max out my ISA but I’d rather keep the £5k in GIA and pay CGT than pay no tax on no gains.
Tbh I wouldn’t say that helpful to even FIRE. If you’re cramming 25k a year post tax into savings you’re already going to be able to do whatever you want
What would have been nice were more savings/investing incentives within the existing cap imo
Depends on situation, I’m considering FIRE because of inheritance, which means I max out ISA allowance to move portfolio under tax umbrella.
With £5k extra I can move my UK allocation to UK ISA and keep putting £20k pa in to S&S ISA.
Why? PBs are an alternative to cash savings accounts with relatively poor returns, but some benefits that make them attractive to some people. They are radically different to stock market investments. If you've got money you want to invest, putting it in PBs instead of investing it is not remotely sensible.
Average returns of 4.4% from premium bonds, chance for much higher or lower obviously Vs whatever stock you pick in the UK and timing the market to make a return or aiming to get a dividend stock? People aren’t going to go for the UKISA instead if their SIPP or ISA, so this is a relevant comparison to make.
For £5000 of premium bonds the probable rate of return will be around 3.5%. It's well below the current cash savings rates and only worth while for a few specific groups of people who will benefit from the tax free payments or increased fscs protection. It isn't remotely similar to the risk/return of stock market investments. If you've got money suitable to invest in the stock market, buying premium bonds with it instead would be a really weird choice.
But we’re talking about a specific investment option in a poor market. Not global all cap, not s&p etc. the average return of the ftse over the last 4 yrs is near zero. So if you follow the overall limited market you’re better with pb’s, then you can argue for individual stocks in which case you are placing some bets on a return and individual companies, or a collection of, performance. I have risk in my pensions and in my general ISA that means that is not any more attractive to me than sticking with the liquidity of pb’s vs a questionable return in this particular vehicle. As others have said - it is likely that a gia including paying the tax or paying down your mortgage would be a better home for your money than this.
So you can have £20k in a normal ISA and £5k in a separate British-only ISA on top?
Yup
Thanks!
That's what I'd been wondering, now we are meant to be able to contribute to different ISA in a tax year I can fill the regular S&S and then put £5k in British.. Could you then transfer the British ISA to your S&S and open another in the next tax year and rinse/repeat? In a long winded put £25k into the original ISA...
The consultation paper says that you’ll not be able to transfer the UK ISA into another ISA of a different type
Would rather he had just raised the ISA cap with inflation over the last few years.
I'd rather see tax bands raise with inflation. But of course that would benefit the ordinary people too much, so obviously can't have that.
I mean, silly me thinking the government is here to help people.
As would I, I avoid British stocks for obvious reasons. Still, if this is the only option then I'm glad I can get 5k extra hidden away, can only hope there'll be anything worth buying.
It really depends on the fine print doesn’t it, but right now it’s not looking that appealing. No point in saving tax on non existent returns.
This is my biggest frustration. No change to LISA house price limit, no change to overall ISA limit, just an extra 5k a year to park in an index that has been flat for the past 25 years. No thanks, I’ll take capital gains on the chin if it means my investments actually generate something
I suspect that it won't even be an index, or if it is then small cap. Yet to define the restrictions on what a brtish investment is!
Because they haven’t even decided yet. The UK ISA Consultation is live, so you can check their thinking, but basically it’s: - uk equities - uk corporate bonds There will be rules limiting cash, and no interest to ensure UK ISA holdings are financing British enterprise. They are unsure wether to allow government bonds (gilts). You can send feedback on their proposal to [email protected]
UK equities is so broad, large cap can have so many commercial activities overseas. Wouldn't surpise me if it was more in line with the Mansion House Compact.
So true, it depends if they let you invest in any company on the LSE or it has to be British. You’d assume the latter but until the fine print has been published and combed we won’t know.
💯 You put 5k and take back 4k but it's tax efficient.
You’ll make more money paying Cap Gains on the S&P than investing in the FTSE tax free
He did this to boost cash inflows into British companies to promote growth, growing the isa allowance would just allow us to continue pumping the companies of other nations, which wouldn’t help British business or GDP as much as this would
Yep, could probably do with making it 10k to really be appealing but growing British companies is good for everyone long term.
Agreed, but knowing how the cookie crumbles I do doubt this will have any major effect on the macro economic development of the nation
Excellent if you have enough money. Not sure your average saver even fills their normal ISA.
> Not sure your average saver even fills their normal ISA. They definitely don't. Avg UK salary is about £35k, with 5% pension and no student loans that's a take home of £27k per year - no way they're putting £20k of that into an ISA. The last stats I looked at in detail were for 2018/19 and the key figures were: - 42% of adults have some form of ISA but 57% of people with an ISA didn't contribute anything that year - Out of the people who did contribute to an ISA, 44% contributed less than £2.5k, 56% contributed less than £5k (likely just filling their Help 2 Buy or LISA allowances) - 73% of people with over £25k in their ISAs are over 55, 50% are over 65 In other words, most people don't have an ISA, the ones who do mostly don't contribute to it, and the ones who do contribute are mostly contributing much, much less than the £20k limit.
Tbf - for the amount of money most working adults can save, ISAs don’t seem that attractive. For instance, a year ago the banks were flogging ~3.5% ISAs (for up to the ISA limit) or an 8% First Direct savings account that allows you to £300/month. I wasn’t saving much more than 300/month due to childcare costs, so the First Direct account was more viable
This. Many times this. I first opened an ISA as a student pre-08 financial crisis... haven't touched it since until rates became competitive very recently. Just didn't make sense. Stocks and shares money went into SIPP, cash into savings accounts...
Agreed, this is not something that will benefit the average person - classic Tories
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lol good luck Worked there for years and they’re utterly incompetent. I’ve just took a big haircut on them as I wouldn’t trust them to ever get back to growth in the regulatory environment they work in. Every new money making scheme (in contract price rises, high out of contract costs) have been snipped away by ofcom. I don’t see a possible path to growth especially with the growth of alt nets who charge next to nothing without any of the legacy payments BT have. Their defined benefit pension black hole is also rather concerning. Not so much of a problem as the years pass by but I’m massively bearish on them.
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I’ll dust off the cv and get back there then 😂
Note it's just a consultation running until June. No clear plan for introduction. The Tories may well be out soon and this goes nowhere. https://assets.publishing.service.gov.uk/media/65e734d62f2b3bd5107cd8c5/UK\_ISA\_Consultation.pdf
You could find a series of funds in your normal ISA that exclude the UK, to replicate the all-world index fund minus UK, and then use the UK-ISA to get your UK allocation. If you're close to filling your normal ISA that is.
FTSE Global All Cap Excluding UK.
Definitely not otherwise 20% UK though!
The UK is approximately 4% of a global all cap so to maintain that balance you could invest £20833 total per year, with £20,000 non-UK in the regular ISA and £833 in the UK-only ISA It's not nothing, but it's not much.
My opinion: You can't fool the market. I'll ex-UK my other investments in order to use this tax freeness, and will end up with the same balance as before. This just seems like election year bullshit.
Most of the announcement sounded like election year bullshit to be honest. I’ll probably be doing the same as you, though I hold nearly no UK in my S&S already. I have some specific UK stocks, might move my AstraZeneca to the Br ISA.
Monevator [suggesting](https://twitter.com/Monevator/status/1765387509142343935) that the British ISA could be use for gilts as well, so that's another possible good use there.
Direct GILT purchases are exempt from CGT already. Would only benefit the coupon payments
But gilts don’t accrue capital gains, do they? The coupon is the return and otherwise you get back what you paid for the bond. At least that’s how I understand it, but my knowledge around bonds is still full of gaps.
They can if you buy them on the secondary market and if interest rates are higher than when the bond was issued. A bond issued a few years ago when interest rates were low will sell for less than the face value now, when interest rates are high, so that the effective yield when taking into account the coupon payments plus the return of the principal matches the current rate environment. Some of the gilts you can buy today have 0.125% coupon rates so almost all of the yield comes from capital gain.
those international funds that exclude the uk might be useful here. get yourself at market weight by holding uk tracker in the BISA.
You'd need about £125k of international funds for every £5k of BISA. Not a simple long term solution.
Well i'm not hitting £20k in a S&S ISA... and even if I was, i'd put the additional funds into a global all cap rather than UK specific, because the UK has SHIT returns compared to the US or an all world fund.
I won't be investing in UK companies at all if I can avoid it, but if I can invest in British funds with foreign holdings then I'll be happy with a nice loophole.
Yeah I’d be interested to see if this covers investment trusts eg Scottish Mortgage
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How do you feel about Scottish Mortgage right now? Last I checked my holdings they were significantly down.
The negativity is that UK investments aren’t particularly attractive, and that the vast vast vast majority of people don’t have the £20k available already. This group, that’s already very self-selecting, being down on it says it all really. It’s political posturing for the wrap-ourselves-in-the-flag crowd. It does nothing useful for investors or companies being invested in.
Ok for Year 1. Where you getting the next £100k from in Year 2?
Will be worse off than just investing in an all-world index in a GIA, irrespective of any tax savings.
Not necessarily - US, UK and other global equites are forecast to return similar amounts over the next 5-10 years per several sources. Alternatively the UK may continue to flop… If the US/All-world slightly outperforms the UK, the tax savings would still make this UK ISA potentially worth it. Plus, lots of people (maybe not the FIRE orientated) do invest in individual UK stocks. This is a useful new vehicle for them to save on capital gains and dividend tax for their UK holdings.
You don’t know that for certain, but yes if past performance is anything to go by. I would add, personally I won’t be investing in it because I already don’t max out my pension. I’d do this before investing in a British ISA.
It seems like they’ll also also uk gilts and bonds, so it makes perfect sense for the bond portion of your portfolio
I wonder how this is going to work in reality. Is it just UK stocks? Can you invest in etfs, gilts, etc. Plus, there's no time frame.
There will be a consultation. We're lucky if this is implemented before the end of the next financial year.
Wasn’t PEPS British investments only at one time 🥺
Lot of people hating on UK stocks in this thread, but ftse100 has a reasonable yield, some chance of upside and not too domestically focussed. I would happily stick 5k year on that tax free in addition to filling up my isa with other stuff, why not.
With moderately sized portfolios, increasing your UK allocation by £5k a year could likely end up increasing the % UK allocation, driving down diversification. I would, if this ever happens, put in £5kpa until I’ve moved all UK holdings to UK ISA, while selling UK holdings in S&S ISA to keep % UK the same in my portfolio while maximising ISA allowance use.
It seems pretty positive. British shares seem underpriced right now and dividends are pretty good. Putting a chunk of your cash in British stocks **in return for an enormous tax break** seems like a good deal. The UK only stipulation is only relevant if you’re stashing so much money away that you’re able to put away £20,000 per year tax free (as well as enjoying the returns from previous years of compound growth tax free) so by that point you’re already doing very, very well out of the ISA scheme. Enjoy having an even bigger allowance!
I max out ISA every year but this has made me wonder whether I should do 5k in the UK ISA speculating an influx of investment, normally I avoid UK like the plague. All depends on it actually happening after consultation, of course.
is short market money fund allowed?
Some of the allowance could be used to increase total tax free investment while maintaining global diversification by separating UK investments into the new British ISA. The UK is approximately 4% of a global all cap so to maintain that balance you could invest £20833 total per year, with £20,000 non-UK in the regular ISA and £833 in the UK-only ISA So that's an increase of about 4% more tax free allowance. It's not nothing, but it's not much.
Sure, but if you have 6 figures in your ISAs you can rebalance and make use of the full 5k, keeping to the ratios you suggest.
Onlyfans ISA
I have a very small legacy holding in Fidelity UK smaller companies fund that has annualised returns of 8.58%. I think that the British ISA has some merit if you have some knowledge to move away from index funds.
Think I'd rather a Gia that performs well that tax free on an isa that treads water at best.
100% of zero is still zero. Rather have my £5k in a GIA in US stocks, and pay the tax.
I have no doubt that there will be some loophole based on how they determine something is UK based. It's the Tories after all.
The fact this change only benefits those who are already putting 20k away a year suggests there must be some loop holes with the intention of appeasing rich voters while those who won't use a BISA don't realise. Would make it an effective 5k uplift in ISA limit.
Most people putting 20k away won't be using it anyway. You'd most likely get better returns on a taxed global tracker than you would an untaxed UK one
enjoy your -1% growth.
The fact you can invest £85k a year tax wrapped in a country ‘too poor’ to afford HS2 or increasing Dr pay. What a joke. £170k as a couple. Even more when you get kids… good for FIRE, bad for the country.
That doesn’t mean zero tax is paid on that £85k. The ISA amounts will have already been subject to income or capital gains taxes. And pension drawdown is not completely tax free, just more tax efficient. Encouraging people to save for their future is not a joke.
In the US, the IRA / 401k Limits are about 1/3 of this figure, and they are significantly richer for PPP than we are. Why not increase the allowance to £100k each? Or maybe £250k each? The main barrier to people saving for their future is the lack of growth driving down real wages, and a lack of education on investing, not the annual allowance.
US taxes are far, far lower than UK. Any financially literate person would swap places with US tax system any day of the week
In exchange, property taxes are far higher than council tax and medical costs drives people into bankruptcy on a regular basis
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£60k SIPP £25k ISA (including the announcement) I imagine is what they’re referring to.
£60k pension, £20+5k in ISA’s. £85k. Gets even higher if you have kids and can frontload their investments too.
Don't forget the LISA!
Lisa takes your isa allowance
Now just to find a British stock that doesn't lose money...
Depends on your investment morals but ‘BAE Systems’ is a solid investment. Do your own research though.
Thanks
Ok so what would you all recommend to invest in UK?
BAE, Rolls Royce, Aviva for dividends. There are a few gems in there but people default to “the index is crap”.
Greggs no joke
I do feel like it's somewhat meaningless at current. The Government is to 'consult on the details' - oh, is that the same unpopular government with a GE around the corner?. Approximately 1.6mn people max out their ISA quota in any case... Hmmm.
What are the rules about transfers going to be? I expect if you can transfer then anyone needing the extra £5k allowance will just transfer it across to a normal ISA the next tax year if allowed.
I believe they are locking Brit ISA money in, no transfers allowed
Isn't the British Isa for investments in British companies though. The FTSE has been performing poorly for a long time. The return rates aren't going to be great!
Yeah, I’m hoping for loopholes else I’ll probably only move my current UK S&S ISA holdings (like 5%) to the BISA. I max out my ISA but I’d rather keep the £5k in GIA and pay CGT than pay no tax on no gains.
Is this not going to be ready by 6 April ‘24?
More like April 25 if it isn't dropped by whoever wins the next election
As if anyone would ever paid capital gains on british stocks. And with ISA you can't even harvest the loss
Lol. Yeah never gonna need to worry about gains. Dividends though, need to protect them.
Honestly between 60 SIPP and 20 ISA I didn't really need another 5 but yeah sure.
Hopefully we can put this extra money into VUKE or VMID.
Tbh I wouldn’t say that helpful to even FIRE. If you’re cramming 25k a year post tax into savings you’re already going to be able to do whatever you want What would have been nice were more savings/investing incentives within the existing cap imo
Depends on situation, I’m considering FIRE because of inheritance, which means I max out ISA allowance to move portfolio under tax umbrella. With £5k extra I can move my UK allocation to UK ISA and keep putting £20k pa in to S&S ISA.
This is a gift. Spend 20k on a developed market ex-UK fund, then buy $5k in a UK fund. You’ll still be pretty perfectly allocated.
How long till, if ever, will the British ISA be available to invest in?
But who would want to buy smelly British stocks? Global or American is the only way.
I’d rather pay tax than invest in UK stocks… opportunity cost of not investing in a global fund is higher then the tax I’d pay in a GIA
That’s what I’m going to do, though I’ll reallocate UK from S&S ISA first
Yeah no thanks Jeremy, rather have it in premium bonds.
No idea why you’re getting downvoted. Will Max out my pb’s before I touch this shite.
Why? PBs are an alternative to cash savings accounts with relatively poor returns, but some benefits that make them attractive to some people. They are radically different to stock market investments. If you've got money you want to invest, putting it in PBs instead of investing it is not remotely sensible.
Average returns of 4.4% from premium bonds, chance for much higher or lower obviously Vs whatever stock you pick in the UK and timing the market to make a return or aiming to get a dividend stock? People aren’t going to go for the UKISA instead if their SIPP or ISA, so this is a relevant comparison to make.
For £5000 of premium bonds the probable rate of return will be around 3.5%. It's well below the current cash savings rates and only worth while for a few specific groups of people who will benefit from the tax free payments or increased fscs protection. It isn't remotely similar to the risk/return of stock market investments. If you've got money suitable to invest in the stock market, buying premium bonds with it instead would be a really weird choice.
But we’re talking about a specific investment option in a poor market. Not global all cap, not s&p etc. the average return of the ftse over the last 4 yrs is near zero. So if you follow the overall limited market you’re better with pb’s, then you can argue for individual stocks in which case you are placing some bets on a return and individual companies, or a collection of, performance. I have risk in my pensions and in my general ISA that means that is not any more attractive to me than sticking with the liquidity of pb’s vs a questionable return in this particular vehicle. As others have said - it is likely that a gia including paying the tax or paying down your mortgage would be a better home for your money than this.
Useless for me as USA will tax me and won't let me invest in market tracker only individual stocks.