By ADRIAN LOWCOCK 08/04/2010
The general election has been confirmed for 6th May 2010. The outcome remains uncertain, but we continue to believe that, regardless of whichever party wins, taxes are set to rise.
As such, arranging your investments in the most tax efficient way possible has become more important. We are now in a new tax year (2010/11) and there is a fresh opportunity for investors to use their tax-free allowances.
Individual Savings Accounts (ISAs)
ISAs remain the first port of call for the majority of investors. All gains are tax-free within an ISA and there is no additional tax to pay on any income. The annual ISA allowance has risen to £10,200 for everyone aged over 18. Whether you are looking for income or growth you can invest now and are able to withdraw the income or capital whenever you need it.
Early Bird investing
Investing in your ISA at the beginning of the tax year enables you to benefit, by protecting your savings and investments from tax for an additional year, rather than waiting until next spring. Taking control of your ISA now means you will not be in a position where the end of tax year deadline determines your investment strategy.
Monthly Savings
Timing is one of the most difficult calls to make in markets, so it is important to remember the saying ‘it is the time in the market and not the timing that counts’.
Investing monthly on a regular basis, means that you’ll avoid the risk of investing at one time, whilst benefiting from ‘pound-cost averaging’ over the long-term. Pound-cost averaging is investing money in equal amounts at regular intervals, which helps limit losses and avoid poor investment decisions people may make when trying to time the market. By setting up a monthly direct debit, you can invest as much as £850 per month (minimum £50).
Already investing monthly?
If you are already saving monthly, make sure that you have amended your monthly contributions to take into account the new allowance. Previously, you could put in a maximum of £600 per calendar month. This has now increased to £850 per calendar month. Call us on 020 7189 9999 to increase your monthly contributions or if you have any queries.