Money: We are all suckers for the hard sell

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The Independent Online
So farewell then, PEPs and Tessas. You've got until tomorrow night to buy a PEP if that's what you really want (see back page). And apparently thousands of us do suddenly want one, having forgotten about it for the past 12 months.

Up to pounds 6bn is thought to have gone into PEPs over the last month. That's about 11 per cent of the total amount invested in PEPs over the past 12 years. Some of the big fund managers are reporting increases of "many hundreds of per cent" in the numbers of PEP applications they are processing, compared with previous years.

The blanket PEP advertising and general hysteria of the past few weeks reminds me of far-off Christmases when we all used to go crazy with desire for Ker-plunk, Mousetrap or (in my case) a fully poseable Lone Ranger doll. We only wanted this stuff once we'd seen it advertised on TV. And apparently plenty of us still respond in the same way to heavy advertising campaigns at "high-volume" times of the year.

Just to recap: a PEP is a tax-free stock-market investment. Contrary to the implications of some of the recent PEP advertising, you can still make tax-free, stock-market investments next week. And any other week. They'll be called stocks and shares ISAs - individual savings accounts.

The new rules on putting shares into ISAs are much more relaxed than PEP rules and allow you to put up to pounds 7,000 next year (pounds 5,000 after that) into a global spread of investments, rather than just European shares.

So have you missed the bargains if you buy a PEP this weekend? Yes. Last October the FT-SE All-Share index was 25 per cent lower than it is now. So unless you picked a really useless fund manager, you would have made some gains already.

But buying when the market is very high, as it is now, need not matter if you leave your PEP money invested for a long time. This means many years, not just until you need a deposit for your next house. You also need to exercise some judgement. Some commentators are convinced Wall Street can't keep up its phenomenal bull run, and the UK markets would certainly tumble in the aftershock of a quake on Wall Street. That would make shares cheaper.

If you don't think that will happen, or don't think you can make that call, then hop on board the Easter bandwagon. Over a five-year period, you would be unlucky to make less from an investment in shares than you'd get from a building society account in these times of low interest rates.

And if you are facing a miserable weekend surrounded by boring relatives, then a bank holiday trip to Chelmsford to hand in a PEP form suddenly sounds like a worthwhile diversion. Game of Ker-plunk, anyone?

t i.berwick@independent.co.uk

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