Good reads from around the Web.
I still get comments incorrectly – and often indignantly – claiming there’s a 10% tax paid on dividends that holding shares in an ISA “no longer” protects you from.
I still read media advice saying the same thing.
Not as often as before, admittedly, mainly because the seed of this misconception was abolished over a decade ago and many of those who bore a grudge have literally moved on (/away!)
But the myth lingers, so I was glad to AIC boss Ian Sayers addressing it [1] this week.
Sayers writes:
Trawl the internet and you will come across many statements like:
“Apart from dividend income (paid with 10% tax already deducted which can’t be reclaimed), the rest of the income is tax-free”
“Dividends from equities are paid after a ten per cent tax credit has been deducted and ISA investors cannot reclaim this.”
The problem is that these statements are untrue.
Now, I am not criticising anyone for not getting this quite right. The tax position of dividends is not only complicated but also counter-intuitive. My concern is not simply this is confusing investors, but may be leading some to make the wrong investment decisions, and even pay tax that is not due.
I am also not criticizing anyone who hasn’t read my articles on UK dividends [2] and ISAs [3] for not getting this right.
However if you have read widely and yet you still state the opposite in our comments and wonder why I delete you rather than continue to breath life into this hoary old half-dead Internet-enabled horse, now you know. 🙂
- The AIC has produced a short and clear guide debunking the whole “10% tax” myth, which you can download as a PDF [4].
Something that is affected by the 10% muddle is your income tax liability.
It’s complicated, but the AIC guide makes a good fist of explaining it.
Now for an afternoon of rugby drama!
From the blogs
Making good use of the things that we find…
Passive investing
- Which interest rates affect bond prices? – Oblivious Investor [5]
- Don’t stop investing during recessions – AWOCS [6]
- How competition [eventually!] lowers costs – Abnormal Returns [7]
Active investing
- CAPE and the Ship of Theseus conundrum – Value Perspective [8]
- 10 UK oil stocks affected by the budget – iii Investor [9]
- Time periods and US equity returns – Irrelevant Investor [10]
- The rising risks of a stock market crash – Sigmund Holmes [11]
- Everyone hates commodities – The Short Side Of Long [12]
- Unpicking the “new tech bubble” – Musings on Markets [13]
- A new “total return EPS index” [Technical, nerdy but interesting] – Philosophical Economics [14]
Other articles
- Investing notes to my 21-year old self – DIY Investor (UK) [15]
- The middle-class is deluded – Simple Living in Suffolk [16]
- We all need a mountain to climb – The Escape Artist [17]
- Public sector pension fund fury – Keeper of the Cauldron [18]
- What’s your time worth? [Good US read, ignore Roth bit] – Can I Retire Yet? [19]
Product of the week: Fancy an old-fashioned 110% mortgage? There’s a catch – you have to buy an unwanted house in Spain, reports The Telegraph [20].
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 [21]
Passive investing
- Bogle’s latest attack on ETFs [Search result] – FT [22]
- Malkiel: No free lunch with Smart Beta – ETF.com [23]
- Is dumb money now going into Smart Beta? – Bloomberg [24]
Active investing
- The global flight from coal – Slate [25]
- On emotional intelligence – Institutional Investor [26]
- In praise of short sellers – New Yorker [27]
- Global dividend stocks the top pros are buying – Morningstar [28]
- The dark side of strong bond returns – WSJ [29]
Other stuff worth reading
- Why penny stock gurus are super-rich and I’m not – Bloomberg [30]
- Making the best of the new savings tax breaks – Guardian [31]
- How the “HMO Daddy” gets 35% yields [Video] – Telegraph [32]
- Does your house earn more than you? – ThisIsMoney [33]
- Lifetime allowance a mess in the making [Search result] – FT [34]
- Corporations are becoming intangible and virtual – Bloomberg [35]
- The anti-bucket list – Zen Habits [36]
Book of the week: Michel Lewis reflected on the aftermath of Flash Boys [37]
Like these links? Subscribe [39] to get them every week!
- Note some 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”. [↩ [43]]