Redmayne-Bentley Investment Column: The fool’s waiting game – The new ISA season begins
|
|
LIKE Michael Finnegan we now begin again, with tax allowances, ISA contributions and capital gains all re-set to zero. The new tax year brings new opportunities, not least to make the most of the breaks the government allows you. The question is why wait? In the 2010/11 tax year over 22 per cent of contributions into Redmayne-Bentley’s ISAs came in during March. That is 22 per cent of the funds we took in that missed out on at least eleven months of tax free income and capital gains and potentially languished in a bank being eroded by inflation for all that time. With a yield of five per cent achievable from a portfolio of moderate risk fixed interest investments – some of them index linked – a higher rate taxpayer could save over £210 in tax over the next year if the allowance of £10,680 (2011/12) is contributed in full at the start of the year. In addition, from its low to high in the last twelve months the market has risen 25 per cent, a rate that can soon eat up your capital gains tax allowance if the stock is held outside an ISA. Much as the arrival of children drives parents to exercise more, just so they can keep up with the kids, perhaps the introduction of Junior ISAs will encourage the adults to be more proactive about saving for themselves. The details on Junior ISAs are still being finalised, but they are expected to be introduced in the autumn, probably 1st November. Any child who does not have a Child Trust Fund will be eligible, with contribution limits of £3,000 per annum. When the child reaches 18 it will automatically roll into an adult ISA and give children a fantastic boost for their early adult years. Those holding their breath that interest rates will rise and boost returns on savings are also playing the fool’s waiting game. Last week’s announcement was widely expected to show at least a quarter-point increase in rates in particular as troubles in the Middle East pushed up the price of oil and added to inflationary pressures around the globe. However, concerns over the UK economy and the stability of the Eurozone, exacerbated by Portugal’s request for a bail out and the increase in ECB interest rates have prompted the Monetary Policy Committee to leave rates on hold for the 25th month is a row. Expectations now are for no increase in rates until at least August or possibly the fourth quarter of 2011. This game isn’t limited to individuals. Despite the doom and gloom there are a number of companies out there doing well and throwing off surplus cash that could be invested into the stock market. Unless you have your eye on a prize asset, why wait? For further details on ISAs, individual or company accounts or to be put on a mailing list for details of our Junior ISA when the details are finalised please email g.mitchell@redmayne.co.uk More articles in
Sectors
CommentsIf you'd like to leave a comment, please register now for free or login
|
