The mood of the moment

'Tis the season for an adroit investment to take advantage of the tax break. Ken Welsby reports

The postman had a pained expression on his face the other morning as he handed over my mail and that of my neighbour. "It's getting almost as bad as Christmas," he said. "I've never seen anything like it."

The cause of his complaint was easy to see: in addition to the usual crop of bills, credit card statements and even a couple of real letters, we were the grateful recipients of no fewer than a dozen mailings from investment houses. And so, to judge by his bulging mailbag, was just about every other resident in the street.

Just as the stores like to remind us that there are only so many "shopping days" left to Christmas, so the fund managers are reminding us that, as of today, there are only 13 investing days left to go, to the end of the tax year.

Put up to pounds 6,000 into a personal equity plan before 5 April and all the money you make on your investment is entirely tax free. But you must hand over the cheque and complete the paperwork before the deadline.

Many of the leaflets and brochures which the postman delivered made the same point, and it's one that forms a constant refrain from financial advisers: you will make more money investing in shares than leaving your money in a savings account.

The problem is that, unless you want to spend all your spare time number- crunching, you're unlikely to assemble a portfolio of consistent winners.

Unit trusts and investment trusts offer investors a way to reduce the risks. They should outperform other types of investment such as building society accounts - although they will not beat the individual, out-and- out winners in the stock-market stakes.

Over the last five years, for example, pounds 100 a month saved in a building society account would now be worth around pounds 8,000. The same amount in a reasonably performing unit trust would be worth more than pounds 12,000.

Most of the PEPs advertised by the large fund management groups put your money in unit trusts or investment trusts. They range from general funds investing in well-established UK companies, to specialised ones concentrating on high risk/high reward sectors such as health care and high technology - or in particular countries or regions such as North America, the tiger economies of South East Asia or Latin America.

But remember: because of its status as a tax shelter, your PEP must invest most of its funds in what are known as qualifying assets - in simple terms, shares in companies based in the UK or continental Europe.

The problem is timing. Private investors are often tempted to buy units or shares when prices are high, and stay on the sidelines when they are falling. Yet the best way of making money is by buying when prices are low.

With this in mind, you may want to consider tucking away pounds 20 a month or more in a monthly savings plan. Over the long term, your savings should average out the ups and downs of the stock markets. If you had saved pounds 100 every month in a top-performing unit trust over the past 10 years, your investment would now be worth more than pounds 25,000 - far more than any savings account could delivern

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Voices
voices
News
general electionThis quiz matches undecided voters with the best party for them
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
News
Prince William and his wife Catherine, Duchess of Cambridge show their newly-born daughter, their second child, to the media outside the Lindo Wing at St Mary's Hospital in central London, on 2 May 2015.
news
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Trainee Consultant - Surrey/ South West London

    £22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

    Ashdown Group: Trainee Consultant - Surrey / South West London

    £22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

    Recruitment Genius: Claims Administrator

    £16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

    Recruitment Genius: Senior SEO Executive

    £24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

    Day In a Page

    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living
    Increasing numbers of homeless people in America keep their mobile phones on the streets

    Homeless people keep mobile phones

    A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before