OT financial investment

[Jonathan]

Isa wrappers can be passed between spouses on death. This was the case for my parents who both died in 2018.

Jonathan

[Tim Lamb]

Admission of ignorance... how is the value of any investment fund determined? And are you allocated *a share*? If not, when you withdraw a sum is it proportionate to your original investment.

Why not invest at what you guess might be the bottom of the trough?

>

[Tim Lamb]

Bev. Usenet perhaps not the place for detail but I have been taking IHT avoidance steps for some years. Outlying land with development potential was transferred to my daughters some years ago. More recently half the proceeds of our farmhouse sale went the same way. One of us now has to live a further 7 years for maximum benefit:-) Tenanted farmland attracts 100% IHT relief on the agricultural valuation so I am negotiating a farm business tenancy on the remaining land here. Some of my remaining buildings are let for light industrial use and I don't see a simple way of avoiding their value adding to the final count.

The current objective is a safe haven for current liquid assets with a provision for geriatric health care draw down if needed.

While I can see the lifetime tax benefits of ISA holdings they seem to add risk on the second death if it occurs at a dip in the stock market. Presumably stock held outside an ISA can be transferred at value and sold later when values have improved.

[Tim Lamb]

In message [e-mail]>, AnthonyL [e-mail] writes

I'm not hugely excited by ISAs! For the relatively risk averse the likely modest saving of income tax is not worth the risk of a probate sale at a time of low value.

Where the cause of the 20% fall is so well understood, I think I'd stick to my guns:-)

Fidelity sounds better than sliced bread so I will take a look. Ta.

[Tim Lamb]

Hmm.. I'm waiting the results of a prostate MRI scan but family histories show one of us should make 90!

I don't think there is any way of getting our eventual estate much below £2m.

[harry]

Property (my house) has done me well. However there are rumours of a housing price crash looming.

[Theo]

Principle 1: things are worth what other people are prepared to pay for them. If other people are buying widgets for 10 pounds each, that's the value. That's called a market.

Principle 2: you can value things based on what they contain. I might not know how much my basket of shopping is worth as a whole, but I can tot up how much each item costs. The value of the basket is the same as the total.

So shares are worth what other people are willing to pay.

Investment funds come in two types:

Open-ended funds (Unit trusts, OEICs) are like baskets. When you buy them, they just use your money to add a few more items to the basket. If you sell, they take a few things out of the basket (and find someone else in the market to sell them to). The value is just the value of the things inside. If you own 1% of the things in the basket, if the value doubles you still own 1% of them, they're just worth double if you decide to sell.

Closed-ended funds (investment trusts) are more like variety packs. In theory the value of a variety pack is the combined value of the contents, but you can't split them or make more of them. So if everyone wants one, the price of the pack goes up even if the price of the contents doesn't. If nobody likes Rice Krispies any more, the price of the pack goes down because nobody wants to buy it.

Because it's highly likely you guess incorrectly. They could halve tomorrow. The old adage is 'time in the market not timing the market'. In other words, in the long run it doesn't matter when you get in, it's better to stay invested for a long period.

Theo

[Tim Lamb]

OK Theo. I'm clearer! Thanks.

Quite. I need one of us to survive 7 years anyway:-)

I guess 1929 might have been a good time to buy?

[Andrew]

Even 'Independent' FA's aren't really independent. For years they were hugely motivated by commission, both up-front plus the semi-secretive ongoing annual 'trail' commission, which was intended to cover annual reviews that few of the money grabbing sharks bothered with.

Since RDR, that has changed, funds have been converted to 'clean' classes and IFAs have to tell you upfront how much their work will cost you. Some people are now eaqually outraged by the amounts involved, because it still seems to be based on a percentage of the value of investment and not the actual work involved.

If you really are clueless and are lucky to find a good IFA who has

*your* interests at heart, then fine, but for too long IFAs have just been excellent at turning large fortunes into small fortunes.

Even AVIVA still charge 5% if you switch any of your pension investments.

In the real world, self-select brokers have been selling funds that are commission free for decades.

[Andrew]

I believe, the current rules are that anyone trying to transfer a final salary pension that is still being 'accrued', to a SIPP must get financial advice, but if you want to transfer an existing post-1988 personal pension to another prover or SIPP, does not need proper advice.

[Andrew]

ROFL. *except* when markets are in free fall when brokers won't answer the phones and online sales won't give you a price at the time you try and sell. Stick to Investment TRUSTS which are bought and sold like shares.

Past performance is no indication to future performance.

Look how many people were sucked into Woodfords 'impressive track record' while at Investco Once he set up his own business he came unstuck, and that's without the current correction. Feck knows how badly all his unlisted 'investments' would be worth now.

[Andrew]

Actually the NFU funds, and their house+ car insurance are quite good.

If you really had no idea what sort of investments to buy, they are a reasonably safe option, and the performace of their funds has actually been quite good, but the up-front commission is still a problem for some people.

If you really want to minimize charges (which can add up to thousands over a 2 or 3 decades, then Vanguard might be solution. They are a massive American outfit that charges really low charges and have just announced their own ultra lowcost SIPP wrapper but you can only buy Vanguard funds within it.

[Dave Liquorice]

Cash ISA? To be honest you're really looking at short/medium term investment so you don't want much exposure to the markets as they are too volatile.

It's generally accepted practice to have things more exposed to the market provided you are prepared to leave the money in for the long term and not panic sell if the market takes a tumble. Like TNP I'm not looking at my portfolio at the moment either.

When you're getting to a few years from the point you might want to start drawing down you shift things into safer, but lower return things like Cash, Gilts and Bonds to "protect" the capital from "dips" in the market.

That seems an obvious a loophole... I *think* stocks and shares have to be sold into the estate.

[Andrew]

Err, stocks and shares ISAs don't 'pay interest'. why do people only think that an ISA means a cash ISA?. These are the WORST places to leave money on deposit now that everyone can earn £1000 per year interest tax free. Now that the FTSE had gone back to 2012 levels, convert it into a stocks and shares ISA and buy bombed out shares of companies that have economic 'moats' and supply stuff that people keep on buying. Unilever for example, or big oil companies caught up in the spat between Russia and Saudi over oil prices. Rentokil who are up against a warming world where fleas and bugs are proliferating.

[Andrew]

Actually this was only changed quite recently. Before that the tax free benefits of the ISA did not pass to the surviving spouse. He/She inherited what was in it (shares + cash) and then had to start all over limited by the annual allowance. :-(

[Robin]

AFAIK shares - both inside and outside an ISA - can still be transferred to "in specie" to the personal representatives and beneficiaries. I see no loophole in that. IHT depends on the value of the chargeable estate. If tax is due HMRC don't care where the money comes from. And for the purposes of capital gains the shares take the value at death so no gain falls down the black hole of administration.

[Tim Lamb]

I have always believed that dying is one of the few ways of avoiding Capital Gains Tax!

[Tim Lamb]

My reading is that ISAs can only be transferred intact if the recipient has an unused allowance.

[John_j]

Depends on whether what you bought survived. Plenty didn't.

[Robin]

Not true if passing to spouse/civil partner. But don't trust me[1] see eg

(It's an easier read than HMRC's manual; and gov.uk is dumbed down to the clarity of mud.)

[1] unless I ask to borrow something from you ;)