Get a share of the action
Should you invest a lump sum or drip cash in, buy direct or buy advice? And what about PEPs? By Tony Bonsignore
Saturday 04 April 1998
All of which is rather unfair. Investment trusts remain an excellent investment choice for many people, with the average, long-term investment trust performance better than an average unit trust's. And investment trust groups have worked hard to entice private investors into buying their shares.
If you have a lump sum to invest, then it is easiest to buy directly. Many trusts, however, have a wide variety of different shares on offer, from ordinary shares to those which will not pay out a dividend but may reward you with more capital growth. Your stockbroker or financial adviser should be able to help you through the maze.
You can consider using your personal equity plan (PEP) allowance to buy into investment trusts. This allows you to invest up to pounds 6,000 before next April, and any gains you make will be free of income and capital gains tax. Investors are allowed one PEP plan each year and a large proportion of investment trusts qualify. To check, contact an individual manager directly or call the Association of Investment Trust Companies (0171-431 5222). The AITC produces a monthly guide, with details of the investment trusts available, as well as a number of factsheets.
Investment trust PEPs are available from as little as pounds 500. You can add more money later, subject to the pounds 6,000 limit and up to a quarter of the total can be put into non-qualifying trusts - those companies which do not invest European stocks. Again, your plan manager will be able to tell you what is on offer.
PEP investors have also been boosted by the news that any investments made before April 1999 will be allowed to continue when PEPs are then replaced by individual savings accounts (ISAs). Investment trust ISAs, meanwhile, should start appearing next spring.
Alternatively, you can invest in a savings and investment scheme from as little as pounds 25 a month. Some groups offer regular-savings plans, some have designed them for PEPs, while a few offer personal pensions.
With these schemes, you decide how much to invest each month and pay this to your plan manager via a standing order or direct debit. Most allow you to increase or decrease your contributions each month without penalty. The majority will also let you invest the occasional lump sum or even stop paying your contributions for a while.
Regular savings plans have a number of benefits. Feeding your money in bit by bit means your cash would be not be hit as hard as it would be if the market crashed immediately after you invested a large lump sum. It also means you buy shares "cheaply" as prices fall, which will be worth a lot more if they rise later on.
A number of other options are available. Some groups offer a share exchange facility, where the company will switch your other investments into investment trust shares. Others allow you to swap at minimal cost between different trusts in the group. Again, the AITC can provide full details.
Investors must also decide how they want to buy their investments. Some choose to buy direct from the investment trust itself. This can the cheapest way, but cost is only part of the story. A saving of, say, 1 per cent is irrelevant if your particular trust is a poor performer. It is worth checking out the manager before you go down this route.
The other option is to seek advice. A good stock broker or independent financial adviser will be able to recommend a suitable trust, as well as helping you with your overall financial planning. Of course, you will have to pay for the advice but it is often worth the investment in later years. IFA Promotion (0117 971 1177) can provide you with a list of independent advisers in your area.
Tony Bonsignore writes for `Financial Adviser'.
Compare with the Independent: See how much you could save by switching credit cards. Compare now
Pensioners to be told how long they have left to live to help them plan their finances
Garden city in Ebbsfleet, Kent not enough to solve housing crisis in UK
Should I delay retiring because of the Budget?
How to start your own internet business
Bargain Hunter: The Easter holidays offer some sweet surprises from Playmobil
- 1 Poveglia: 'World's most haunted island' up for sale...is anyone brave enough to buy it?
- 2 The Hobbit: There and Back Again set for possible title change
- 3 Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'
- 4 24 people applied for the 'world's toughest job', here are their interviews
- 5 Andre Johnson: Wu-Tang Clan-discovered rapper severed his penis and jumped from LA building
The food poverty scandal that shames Britain: Nearly 1m people rely on handouts to eat – and benefit reforms may be to blame
US Navy christens huge $3 billion destroyer ship USS Zumwalt that appears as a fishing boat on enemy radar
Scottish independence: It is the English who should be on their knees, begging the Scots to vote ‘No’
Nigel Farage fatigue? Half of voters ‘immune’ to Ukip’s appeal
Nigel Farage on Have I Got News For You: Ukip leader ridiculed over expenses and party 'fruitcakes'
Nigel Farage: I’m taking on the status quo, and the Establishment’s fighting back
iJobs Money & Business
£150.00 per week: QA Apprenticeships: This company has been providing on site ...
£221.25 per week: QA Apprenticeships: This company is a well established Inter...
£40000 - £50000 per annum: Harrington Starr: Client Relationship Manager - SQL...
£35000 - £50000 per annum: Pro-Recruitment Group: Take your chance to join the...
Day In a Page
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square
A charming four-bedroom house overlooking Burleigh Square Park, close to Thorpe Bay
A three-bedroom farmhouse with a large inglenook fireplace and exposed beams
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds