Good reads from around the Web.
There is a blue ceiling above London this morning. After 100 days of rain, it’s hard not to be sure that it’s the sky, as opposed to an incoming deluge.
I’m going to chance it and head Outside.
So let’s get straight into this week’s links!
From the blogs
Making good use of the things that we find…
Passive investing
- A periodic review of asset allocation – Canadian Couch Potato
- Why correlation doesn’t matter much – Rick Ferri
- How often do you calculate your portfolio’s rate of return? – Oblivious Investor
Active investing
- Be careful with Capita’s dividend review – Value Perspective
- 3 components of multi-bagger success – Clear Eyes Investing
- Deep Value Investing [book review] – iii blog
- The outlook for emerging markets in 2014 – Under the Money Tree
- Why I’d buy Standard Chartered shares here – UK Value Investor
- Turbulence or a nosedive? – Investing Caffeine
Other articles
- Life is not a contest – Mr Money Mustache
Product of the week: Aldermore Bank has introduced a sliding widget that lets small businesses tweak the interest rate on their savings accounts by altering how long they’ll lock away their money for. ThisIsMoney says the bank is exploring a retail option.
Mainstream media money
Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber of that site.1
Passive investing
- Lessons from 2013 – Vanguard blog
Active investing
- How to invest like the gurus – Telegraph
- Not the time to be underweight emerging markets – Fundweb
- An unhappy case study of the risks of borrowing to invest – Telegraph
Mainstream media does DIY fees
The chance to write “price war” seems to have encouraged the newspapers to start covering online platforms instead of just showboating fund managers and eye-catching daily falls in the FTSE 100. (Defensive? Moi?)
- DIY Pensions: The cheapest SIPP fund shops – The Telegraph
- Your guide to the platform galaxy [Search result] – FT
Other stuff worth reading
- For the love of money – The New York Times
- Inside London’s rotting mansions – Guardian
- 50 reasons for Americans [and us, mostly] to celebrate – Motley Fool
- Capitalism versus democracy – The New York Times
- Real wages have been falling for the longest period in 50 years – Guardian
Book of the week: If you liked the sound of Deep Value Investing
Like these links? Subscribe to get them every week!
- Reader Ken notes that: “FT articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”.” [↩]
hello accumulator
I own shares out side of my ss isa wrapper . I have the dividends reinvested. if my income was to drop way below the personal allowance say £10,000 pa would I pay tax on the divided income if I then started to draw it as opposed to having it reinvested?
dawn
@dawn.
A few points:
1. Before anyone sees them, dividends already have 10% tax applied (even in an ISA).
2. There is no further tax to pay unless you are a _higher_ rate taxpayer.
3. Dividends which are in accumulation units are still tax liable if you are a higher tax rate payer. (http://monevator.com/income-tax-on-accumulation-unit/)
Therefore, your question doesn’t really make sense, as unless your current income is >~£40k there is no further tax to pay. (If it is, then I suspect you’ve unwittingly been evading tax on them.)
Note that if you are in a position where you might be paying CGT, do make sure you don’t over-pay!
Hi there, my sipp is largely in Vanguard Lifestrategy 80/20 with Hargreaves Lansdown. I thought this was a cheap and sensible option. Now, not so cheap. I wonder if anyone in a similat position had decided what to do, if anything? I know Mr Monevator was considering an article on all in one find options. Now might be an ideal time!? Thank you.
thankyou greg
no, im not a higher rate tax payer
so dividends on shares get 10 % tax either in a ss isa or out of an ss isa?
i just wondered when i eventually stopped working if i could draw the divs
tax free but from what your saying no chance 10% tax no matter what unless one earns more than 40k which is not me!!
thankyou
I liked the Canadian CP’s post, so I clicked through to his model portfolios. I was briefly puzzled by his lack of precious metals, until I realised that anyone with a chunk of Canadian equities has a chunk of precious metal miners.
@dawn
I’m saying it makes no difference what you do with them; reinvest or withdraw, inside or outside a tax sheltered account. You’ll only be paying the hidden 10% and nothing more.
If there is a large sum and you’ve made more than £10k profit, be careful when selling otherwise you may fall foul of CGT. If you’ve made a lot more than £10k profit, you should work out a way to sell £10k’s worth of profit each year and recycle into different funds to use up each year’s allowance. (AFAIK, you can’t just change one FTSE tracker for another.)
@dawn @greg I say ignore the 10% notional tax completely, it’s irrelevant except for a tiny number of people grossing up investment incomes.
It’s really time people stopped talking about it as all if does is confuse people and for 99.9% of practical purposes it doesn’t exist.
“AFAIK, you can’t just change one FTSE tracker for another.” I imagine you can. I used to have a scheme that I’d swap around amongst the big generalist Investment Trusts if ever the matter arose, but PEPs and then ISAs meant that it never did. Pity: the swap between the old Alliance Trust and Second Alliance Trust would have been peculiarly low risk.
would i be right in concluding that the only benefit of holding individual shares in a ss isa is to protect against capital gains tax if the captial has earned more than the cgt allowance. you pay tax on divs regardless where the shares are.
I think Greg is right about the CGT rules barring you from swapping from one tracker into another for CGT purposes, or at least that was the case as of last April. See comments after this article from Ivanopinion:
http://monevator.com/switch-to-cheaper-index-funds/
That’s said, apparently new clarifications were coming – I don’t know whether they did or what they were! 🙂 But swapping from one attracted to another is clearly against the spirit of the law, at the least. Not sure how it would actually be policed though.
Personally, my various active share trades always tend to produce at least some offsetting losses — a perk of not being Warren Buffett! 🙂
Dawn, as I said above forget about that 10% tax. It’s completely irrelevant and you are just the latest example of someone being confused by it. 🙂
Otherwise yes, you are right from a tax benefit perspective if you’re a basic rate tax payer.
However there are other advantages to ISAs.
In fact, the only DISadvantage of investing via ISAs is you can only put in up to £11,520 into shares in an ISA a year. Otherwise if you pick properly they are really no more expensive than normal share dealing accounts / fund investing options, with plenty of advantages even for basic rate tax payers.
Read these three articles:
http://monevator.com/dont-wait-to-open-your-stocks-and-shares-isa/
http://monevator.com/how-uk-dividends-are-taxed/
http://monevator.com/get-an-isa-life/
for the love of money(newyorktimes)
I found it hard to sympathize,bonuses so immense,they have lost the true value of money compared to most.
I stand corrected about ETFs and CGT. On a related note, how are the TIPS interest payments taxed, if at all, if I held them in an Irish ETF such as
http://www.hl.co.uk/shares/shares-search-results/i/ishares-ii-plc-barclays-capital-usd-tips#full_aim
within an ISA?
to robin
ive been doing some reasearch and The Share Centre is fixed fee for ss isa £4 plus vat a month total £57.60 a year .
dawn
Last year, Halifax reduced their annual stocks & shares ISA fee to £12.50 per year. I believe they are holding the fee at that level.
Their user interface is good too, much better than TD Direct or A J Bell.
Great resource of financial wisdom, advice, and commentary around the web!