L
Lyreco
Guest
Due to the high tax costs of ETF's and investment funds I'm considering whether it is a good idea to invest into UK investment trusts.
I'm helping a relative coming up to retirement with a 300k lump sum. A significant portion of the portfolio will be put into state-savings and low-risk property since capital preservation is important. We want to put 20%-30% into equities however to try secure some growth and the intention here is to buy-and-hold over the longer term since there will be adequate savings and assets to call upon if needed in the short-medium.
As a low rate 20% tax payer this seems to be the best route to avoid 41% exit tax. It also allows possibly easier/better diversification than trying to build a portfolio of 15-20 shares which is the other alternative.
One concern is currency risk of holding investments in GBP.
We understand that most of the risk comes from the underlying companies in the portfolio and where they operate etc. so that for example if we were to invest in the F&C Investment Trust which I've seen mentioned on here occasionally that we would be quite exposed to the US market since it is currently 48% US equities.
With the current weakness in the pound compared to several years ago and with our intention to buy-and-hold it would seem that now is a good time to buy into these type of trusts? Presuming the UK doesn't implode completely and the pound regains some of it's strength over the next 10-15 years!
I'm helping a relative coming up to retirement with a 300k lump sum. A significant portion of the portfolio will be put into state-savings and low-risk property since capital preservation is important. We want to put 20%-30% into equities however to try secure some growth and the intention here is to buy-and-hold over the longer term since there will be adequate savings and assets to call upon if needed in the short-medium.
As a low rate 20% tax payer this seems to be the best route to avoid 41% exit tax. It also allows possibly easier/better diversification than trying to build a portfolio of 15-20 shares which is the other alternative.
One concern is currency risk of holding investments in GBP.
We understand that most of the risk comes from the underlying companies in the portfolio and where they operate etc. so that for example if we were to invest in the F&C Investment Trust which I've seen mentioned on here occasionally that we would be quite exposed to the US market since it is currently 48% US equities.
With the current weakness in the pound compared to several years ago and with our intention to buy-and-hold it would seem that now is a good time to buy into these type of trusts? Presuming the UK doesn't implode completely and the pound regains some of it's strength over the next 10-15 years!