Serious question for you guys who know your onions. Is there any point in investing in the stock market at the moment?
Historically, the stock market has been the place to grow your savings. But is that still true today, particularly given the way the market moves these days?
It's not that many years ago, that a fall of 100 points was the lead item on the News at 10. Nowadays, that sort of fall barely raises a mention as it is no longer a rarity. And it seems to me that the market now looks for any excuse to have a sell-off and so often gains that have been built up over months disappear in a day when a sell-off occurs.
And throw in that the FTSE has hardly moved in 5 years (I know you need a good spread of funds) then I'm seriously wondering that now I can earn over 6% totally risk free with NSI (with fixed rate Cash ISAs not far behind with no tax to pay) why bother with investing in the stock market, particularly given the way that things are at the moment and the possibility that a huge sell off could well be on the way.
So are these fixed rate investments now the best way to grow your savings?
As much as it pains me to say it...... I would have to agree with you (to a point). Currently cash is beating most things (apart from inflation, and that's now falling) and YTD is just ahead of a global equity portfolio (US up 7% so far this year).
However, its almost impossible to time the market and in 6 months time you could find the FTSE is back near its all time high of 8000 and you would have missed out on a 6% rise.
If you can invest in tax efficient products such as ISA's & Pensions then the tax savings/tax relief may well out perform your (taxed) cash deposits.
Serious question for you guys who know your onions. Is there any point in investing in the stock market at the moment?
Historically, the stock market has been the place to grow your savings. But is that still true today, particularly given the way the market moves these days?
It's not that many years ago, that a fall of 100 points was the lead item on the News at 10. Nowadays, that sort of fall barely raises a mention as it is no longer a rarity. And it seems to me that the market now looks for any excuse to have a sell-off and so often gains that have been built up over months disappear in a day when a sell-off occurs.
And throw in that the FTSE has hardly moved in 5 years (I know you need a good spread of funds) then I'm seriously wondering that now I can earn over 6% totally risk free with NSI (with fixed rate Cash ISAs not far behind with no tax to pay) why bother with investing in the stock market, particularly given the way that things are at the moment and the possibility that a huge sell off could well be on the way.
So are these fixed rate investments now the best way to grow your savings?
If you are prepared to invest monthly, over a sustained period (5 years plus) then I still believe the stock market, with the right funds, will out perform cash.
BUT, unless you can do the above for that length of time as a minimum and not need to access said funds I'd stick to cash.
The FTSE may not have moved much in 5 years, but others have, plus investing monthly at the various price points, I'm averaging about 9% a year over that period.
PS like I keep mentioning to @PragueAddick don't forget the dividends!
Serious question for you guys who know your onions. Is there any point in investing in the stock market at the moment?
Historically, the stock market has been the place to grow your savings. But is that still true today, particularly given the way the market moves these days?
It's not that many years ago, that a fall of 100 points was the lead item on the News at 10. Nowadays, that sort of fall barely raises a mention as it is no longer a rarity. And it seems to me that the market now looks for any excuse to have a sell-off and so often gains that have been built up over months disappear in a day when a sell-off occurs.
And throw in that the FTSE has hardly moved in 5 years (I know you need a good spread of funds) then I'm seriously wondering that now I can earn over 6% totally risk free with NSI (with fixed rate Cash ISAs not far behind with no tax to pay) why bother with investing in the stock market, particularly given the way that things are at the moment and the possibility that a huge sell off could well be on the way.
So are these fixed rate investments now the best way to grow your savings?
The fact that the world has had to endure a once in a lifetime pandemic and there is currently an ongoing war on European soil, I think that it's pretty good to have the FTSE where it was 5 years ago.
.that’s probably more telling about where we were 5 years ago when we were in that hangover period of the Brexit vote and realising nobody had thought about the consequences and the ‘instant’ promised benefits like £350 million for the NHS etc and trade deals with the rest of the world were BS. Still, given what’s happening today we must have stopped the rot to have not crashed
Serious question for you guys who know your onions. Is there any point in investing in the stock market at the moment?
Historically, the stock market has been the place to grow your savings. But is that still true today, particularly given the way the market moves these days?
It's not that many years ago, that a fall of 100 points was the lead item on the News at 10. Nowadays, that sort of fall barely raises a mention as it is no longer a rarity. And it seems to me that the market now looks for any excuse to have a sell-off and so often gains that have been built up over months disappear in a day when a sell-off occurs.
And throw in that the FTSE has hardly moved in 5 years (I know you need a good spread of funds) then I'm seriously wondering that now I can earn over 6% totally risk free with NSI (with fixed rate Cash ISAs not far behind with no tax to pay) why bother with investing in the stock market, particularly given the way that things are at the moment and the possibility that a huge sell off could well be on the way.
So are these fixed rate investments now the best way to grow your savings?
If you are prepared to invest monthly, over a sustained period (5 years plus) then I still believe the stock market, with the right funds, will out perform cash.
BUT, unless you can do the above for that length of time as a minimum and not need to access said funds I'd stick to cash.
The FTSE may not have moved much in 5 years, but others have, plus investing monthly at the various price points, I'm averaging about 9% a year over that period.
PS like I keep mentioning to @PragueAddick don't forget the dividends!
I'd agree with this advice, assuming @Fortune 82nd Minute is at least 10 years younger than me (or Bob). But there is also an option for the more cautious investor: Hedge your bets. Whatever your overall pot to invest, split it in half. Follow @Rob7Lee approach to drip-feeding into the equity markets with half of it. Stash the other half at 6% for a year with NSI. Forget about it, don't let FOMO get to you, and review after a year.
I'd also be inclined to look at slightly longer fixed rates as after 12 months the 6.2% will drop away. You can get around 6% on a two year and about 5.75% for five years currently. All depends on your circumstances of course, but I've got some small amounts tied up for those periods and it's nice to know there's a bit of interest accruing for the foreseeable. Consider the timing of interest payments too - if it's all at maturity it may attract more tax than if paid monthly or annually.
I believe a certain someone mentioning this company a few times, well done @PragueAddick
Yes, greatly enjoyed the headlines. Took my holding to +90% over 2 years. But just lucky that locally they came calling for my services in recruitment in 2019. I knew little about them. I sat in reception of their modest offices and stared at a poster informing me that one in ten Czechs will suffer from T2 diabetes, and thought about the benefits to a creaking health system if they have something that keeps these people out of hospitals.
This is your reminder to start buying bitcoin now and you can thank me in 2 years time when you sell.
Why now in particular?
coming to the end of the bear market, the bitcoin halving where bitcoin miners, the largest sellers of bitcoin on the market, have their rewards for mining halved. So the amount they're dumping on the market will halve. Traditionally it's then followed by a bull market. That combined with the fact blackrock etc have applied to the SEC for a bitcoin ETF means there's lots of money ready to come into the btc market. So two bullish events in the next 6-12 months.
If we are throwing out recommendations then how's this for starters......
8%pa guaranteed over 5 years. Fully capital protected (up to the £85k FSCS compo limit @bobmunro). Could mature after 3 or 4 years should certain conditions apply. Would only get your initial capital back (no 40% "interest") should the S&P500 fall by more than 20% during that time.
Obviously this is not a promotion or a recommendation to buy under FCA regs.
Got 5k to invest for my 4 year old. Which type of isa would people recommend, cash or stocks and shares ?
Assume this is until they are 18, therefore over that length I'd say a Junior Stocks and Shares ISA. I'd probably pay the £5k in over some months, maybe £1k a month, just to spread the risk a little.
Got 5k to invest for my 4 year old. Which type of isa would people recommend, cash or stocks and shares ?
Assume this is until they are 18, therefore over that length I'd say a Junior Stocks and Shares ISA. I'd probably pay the £5k in over some months, maybe £1k a month, just to spread the risk a little.
Got 5k to invest for my 4 year old. Which type of isa would people recommend, cash or stocks and shares ?
Assume this is until they are 18, therefore over that length I'd say a Junior Stocks and Shares ISA. I'd probably pay the £5k in over some months, maybe £1k a month, just to spread the risk a little.
Yeah until 18, cheers for the suggestion.
If you can, post the £5k do a regular monthly input, even if just £25 or something, will really rack up over 14 years and you'll soon forget you are paying it.
Got 5k to invest for my 4 year old. Which type of isa would people recommend, cash or stocks and shares ?
Assume this is until they are 18, therefore over that length I'd say a Junior Stocks and Shares ISA. I'd probably pay the £5k in over some months, maybe £1k a month, just to spread the risk a little.
Yeah until 18, cheers for the suggestion.
If you can, post the £5k do a regular monthly input, even if just £25 or something, will really rack up over 14 years and you'll soon forget you are paying it.
Yeah that's the plan, he's got another basic one that we've already been paying into, which his other grand parents set up.
Got 5k to invest for my 4 year old. Which type of isa would people recommend, cash or stocks and shares ?
Assume this is until they are 18, therefore over that length I'd say a Junior Stocks and Shares ISA. I'd probably pay the £5k in over some months, maybe £1k a month, just to spread the risk a little.
Yeah until 18, cheers for the suggestion.
If you can, post the £5k do a regular monthly input, even if just £25 or something, will really rack up over 14 years and you'll soon forget you are paying it.
Yeah that's the plan, he's got another basic one that we've already been paying into, which his other grand parents set up.
I'd probably stick to the Junior ISA assuming they don't already have one, although there are some tax friendly one's that some of the friendly societies do also which may be worth a look.
Just one example, not recommending as such but first one in the google search!
Offloaded my Direct Line shares this morning for £1.72 after a bump up of 15% or so on news of a Canadian business unit disposal (at least, I cant see any other news). They may yet recover but the narrative seems to be that there's a huge rebuilding job to do there so I am clearing out at a loss just to get them off my list. Given my habitually awful timing, now's the time for everyone else to buy. Watch them fly past two quid in a week...
Less a question, more a comment/rant. Paying tax on savings interest is a bit of a pisstake isn't it?
Feels like this is going to become a real issue this year with interest rates on accounts now representing something of note. I'd have thought if you do not have to file a self return tax assessment you would act blissfully unaware and you're unlikely to be chased, but if you do have to file it's quite hard to avoid declaring interest gained on savings.
I have recently parked the bus on a property purchase and am fortunate to have a sum of money invested across some ISAs but also some non tax wrapped products. I'm not entirely comfortable being involved in the stock market on current outlook (my 2 ISAs are stocks) as my time horizon is still fairly short run, but the cash interest rate paid on a Fidelity/Vanguard type ISA is less than I would get on something like a Marcus cash account (non ISA, therefore subject to tax) - I know I can transfer these to a cash ISA product but I now have more to deploy than the ISA annual allowance due to the aforementioned property change of heart. I guess the answer is you just have to pay tax on the interest income....there are far too many taxes on top of money already taxed for my liking!!
I imagine I am a bit younger than some of the posters in here, but have never found Premium Bonds particularly sexy however the tax free nature of them is becoming more appealing. No idea how much you actually yield on an annual basis though. I've seen the claim of 4% ish but is this realistic? I'm sure all generations have a general disdain for tax, but for mine it is pretty annoying that the ability to accumulate any wealth at all seems to be punished at every turn. You're incentivized to save for things like a property purchase on such a small amount of money in some accounts either tax free or at a preferred interest rate that it doesn't even make a dent in the house value at present. Home ownership is a hardship for many to reach and the BTL type model is really now dead in the South at least, wealth via housing is not that viable. I can see why many now take the punt on far riskier investments, crypto, even gambling etc.
Have tax rates/thresholds increased in line with general inflation and cost of living increases across the years? I'm talking decades not recently. For example, stamp duty being paid on far higher house prices today represents a huge amount of money, usually the amount that most people would consider a good saving for a house deposit is swallowed by stamp. You can earn objectively good money nowadays but the thresholds on CGT/interest income are pretty measly if you are then taxed. I was reading if you are lucky enough to fall in the 100-125k salary band then you pay an effective 60% tax as you lose the personal allowance.
As this turns more into a rant I have completely lost the train of thought I was going with when I first started writing, but if anyone would like to debate/discuss some of the themes then please tuck in lol
I think tax on savings is a con. You have already paid tax on your earnings before you then save a portion of it so why should you then have to pay further tax on the interest?
Less a question, more a comment/rant. Paying tax on savings interest is a bit of a pisstake isn't it?
Feels like this is going to become a real issue this year with interest rates on accounts now representing something of note. I'd have thought if you do not have to file a self return tax assessment you would act blissfully unaware and you're unlikely to be chased, but if you do have to file it's quite hard to avoid declaring interest gained on savings.
I have recently parked the bus on a property purchase and am fortunate to have a sum of money invested across some ISAs but also some non tax wrapped products. I'm not entirely comfortable being involved in the stock market on current outlook (my 2 ISAs are stocks) as my time horizon is still fairly short run, but the cash interest rate paid on a Fidelity/Vanguard type ISA is less than I would get on something like a Marcus cash account (non ISA, therefore subject to tax) - I know I can transfer these to a cash ISA product but I now have more to deploy than the ISA annual allowance due to the aforementioned property change of heart. I guess the answer is you just have to pay tax on the interest income....there are far too many taxes on top of money already taxed for my liking!!
I imagine I am a bit younger than some of the posters in here, but have never found Premium Bonds particularly sexy however the tax free nature of them is becoming more appealing. No idea how much you actually yield on an annual basis though. I've seen the claim of 4% ish but is this realistic? I'm sure all generations have a general disdain for tax, but for mine it is pretty annoying that the ability to accumulate any wealth at all seems to be punished at every turn. You're incentivized to save for things like a property purchase on such a small amount of money in some accounts either tax free or at a preferred interest rate that it doesn't even make a dent in the house value at present. Home ownership is a hardship for many to reach and the BTL type model is really now dead in the South at least, wealth via housing is not that viable. I can see why many now take the punt on far riskier investments, crypto, even gambling etc.
Have tax rates/thresholds increased in line with general inflation and cost of living increases across the years? I'm talking decades not recently. For example, stamp duty being paid on far higher house prices today represents a huge amount of money, usually the amount that most people would consider a good saving for a house deposit is swallowed by stamp. You can earn objectively good money nowadays but the thresholds on CGT/interest income are pretty measly if you are then taxed. I was reading if you are lucky enough to fall in the 100-125k salary band then you pay an effective 60% tax as you lose the personal allowance.
As this turns more into a rant I have completely lost the train of thought I was going with when I first started writing, but if anyone would like to debate/discuss some of the themes then please tuck in lol
You seem to be in a similar position to where I was 12 months ago. I sold a property & had c£100k to "park" for a year before buying my next property.
I maxed out my ISA (cash) and put the max (£50k) into Premium Bonds. The remainder was put into a 1 year bond. I've just started to "cash-in" these accounts as I'll be moving into my new property soon & just calculating my "net" gains.
Premium Bonds have done ok. Worked out at 4.3% if taken over a whole year. Thats tax free. The ISA only paid 3.7% tax free and the 1 year bond was 4%. Interestingly the tax on the bond has, as you say, to be paid via Self Assessment so will not be "assesed" for tax until Jan 2025. Weird that you can get the interest in one tax year but not pay it until the next......and in my case over 12 months later.
You are correct that in recent times allowances have not been growing - certainly not in line with RPI & many have been frozen. The CGT Allowance has been cut dramatically and as from next tax year (7 months away) it will be just £3k. It is very hard to find way to mitigate tax......but then why would you want to when everyone complains that the NHS is on its knees, schools are falling down & there are many potholes in the roads. And one of the reasons we are in this position is that in 2019 millions of people didn't vote for Corbyn's spending plans.
As a financial adviser of over 30 years standing it never ceases to amaze me that on one hand people moan about the lack of money being spent by succesive Governments & on the other hand that they are being taxed too much.
But there many are different (legal) ways to avoid pay tax / obtain tax reliefs if you know where to go / who to talk to.
I think tax on savings is a con. You have already paid tax on your earnings before you then save a portion of it so why should you then have to pay further tax on the interest?
I take your point, but reveue has to come from somewhere. Why is it fairer to tax people's effort rather than their passive income? There are fairly straightforward ways to mitigate or avoid tax on a base level of savings via ISAs or pension contributions, and if you'd contributed £20k a year to an ISA for the last fifteen years you'd have £300K (plus growth thereon) generating income entirely free of tax. If you have savings way above that, well done - pay the tax. Why should a nurse or teacher etc be taxed at 33% on earnings when someone with a million quid in savings would pay nothing for sitting on their backside making double their money?
You can argue endlessly about the right levels of thresholds and rates, and we might agree the interest income threshold is far loo low, but the basic principle of taxing income on savings I think is a fair one. I say that as a saver with no earned income.
There are unfairnesses in our overly complex mess of a tax system. For example I thought the removal of indexation on capital gains was a complete swindle, but it generally only affects the better off and I dont remember much of an outcry about it at the time, but paying tax on inflation seems unjust. The whole non-dom thing is a nonsense, as is the offshoring of profits by huge corporations.
Comments
However, its almost impossible to time the market and in 6 months time you could find the FTSE is back near its all time high of 8000 and you would have missed out on a 6% rise.
If you can invest in tax efficient products such as ISA's & Pensions then the tax savings/tax relief may well out perform your (taxed) cash deposits.
As they say.......everything on moderation.
BUT, unless you can do the above for that length of time as a minimum and not need to access said funds I'd stick to cash.
The FTSE may not have moved much in 5 years, but others have, plus investing monthly at the various price points, I'm averaging about 9% a year over that period.
PS like I keep mentioning to @PragueAddick don't forget the dividends!
30 Jun 2018
-
30 Jun 2019
+11.15%
30 Jun 2019
-
30 Jun 2020
+7.71%
30 Jun 2020
-
30 Jun 2021
+24.98%
30 Jun 2021
-
30 Jun 2022
+0.15%
30 Jun 2022
-
30 Jun 2023
+12.09%
On the 4th September 2018 the fund price was £42.94, it's now 5 years later £67.99.
.that’s probably more telling about where we were 5 years ago when we were in that hangover period of the Brexit vote and realising nobody had thought about the consequences and the ‘instant’ promised benefits like £350 million for the NHS etc and trade deals with the rest of the world were BS. Still, given what’s happening today we must have stopped the rot to have not crashed
I believe a certain someone mentioning this company a few times, well done @PragueAddick
Just my lucky day, really.
8%pa guaranteed over 5 years. Fully capital protected (up to the £85k FSCS compo limit @bobmunro). Could mature after 3 or 4 years should certain conditions apply. Would only get your initial capital back (no 40% "interest") should the S&P500 fall by more than 20% during that time.
Obviously this is not a promotion or a recommendation to buy under FCA regs.
Just one example, not recommending as such but first one in the google search!
https://www.forestersfriendlysociety.co.uk/saving-for-children/childrens-tax-exempt-plan/
I did one each for my children (both adults now) with what is now OneFamily, performed reasonably well. Paid out to them at 16 (took out at Birth).
https://www.onefamily.com/junior-bond/
Feels like this is going to become a real issue this year with interest rates on accounts now representing something of note. I'd have thought if you do not have to file a self return tax assessment you would act blissfully unaware and you're unlikely to be chased, but if you do have to file it's quite hard to avoid declaring interest gained on savings.
I have recently parked the bus on a property purchase and am fortunate to have a sum of money invested across some ISAs but also some non tax wrapped products. I'm not entirely comfortable being involved in the stock market on current outlook (my 2 ISAs are stocks) as my time horizon is still fairly short run, but the cash interest rate paid on a Fidelity/Vanguard type ISA is less than I would get on something like a Marcus cash account (non ISA, therefore subject to tax) - I know I can transfer these to a cash ISA product but I now have more to deploy than the ISA annual allowance due to the aforementioned property change of heart. I guess the answer is you just have to pay tax on the interest income....there are far too many taxes on top of money already taxed for my liking!!
I imagine I am a bit younger than some of the posters in here, but have never found Premium Bonds particularly sexy however the tax free nature of them is becoming more appealing. No idea how much you actually yield on an annual basis though. I've seen the claim of 4% ish but is this realistic? I'm sure all generations have a general disdain for tax, but for mine it is pretty annoying that the ability to accumulate any wealth at all seems to be punished at every turn. You're incentivized to save for things like a property purchase on such a small amount of money in some accounts either tax free or at a preferred interest rate that it doesn't even make a dent in the house value at present. Home ownership is a hardship for many to reach and the BTL type model is really now dead in the South at least, wealth via housing is not that viable. I can see why many now take the punt on far riskier investments, crypto, even gambling etc.
Have tax rates/thresholds increased in line with general inflation and cost of living increases across the years? I'm talking decades not recently. For example, stamp duty being paid on far higher house prices today represents a huge amount of money, usually the amount that most people would consider a good saving for a house deposit is swallowed by stamp. You can earn objectively good money nowadays but the thresholds on CGT/interest income are pretty measly if you are then taxed. I was reading if you are lucky enough to fall in the 100-125k salary band then you pay an effective 60% tax as you lose the personal allowance.
As this turns more into a rant I have completely lost the train of thought I was going with when I first started writing, but if anyone would like to debate/discuss some of the themes then please tuck in lol
almost every other taxation aside from income tax is already a tax on income already taxed, savings are no different.
if there was no tax on savings wouldn’t ‘the rich’ simply hold cash rather than other taxable investments.
it shows why making full use of all allowances such as ISA’s is key.
and yes you are correct on the £100-125k ish being 60% tax (it’s actually 62% with NI).
I maxed out my ISA (cash) and put the max (£50k) into Premium Bonds. The remainder was put into a 1 year bond. I've just started to "cash-in" these accounts as I'll be moving into my new property soon & just calculating my "net" gains.
Premium Bonds have done ok. Worked out at 4.3% if taken over a whole year. Thats tax free. The ISA only paid 3.7% tax free and the 1 year bond was 4%. Interestingly the tax on the bond has, as you say, to be paid via Self Assessment so will not be "assesed" for tax until Jan 2025. Weird that you can get the interest in one tax year but not pay it until the next......and in my case over 12 months later.
You are correct that in recent times allowances have not been growing - certainly not in line with RPI & many have been frozen. The CGT Allowance has been cut dramatically and as from next tax year (7 months away) it will be just £3k. It is very hard to find way to mitigate tax......but then why would you want to when everyone complains that the NHS is on its knees, schools are falling down & there are many potholes in the roads. And one of the reasons we are in this position is that in 2019 millions of people didn't vote for Corbyn's spending plans.
As a financial adviser of over 30 years standing it never ceases to amaze me that on one hand people moan about the lack of money being spent by succesive Governments & on the other hand that they are being taxed too much.
But there many are different (legal) ways to avoid pay tax / obtain tax reliefs if you know where to go / who to talk to.