The difference between investing in a fund and an investment trust are often well explained in the financial literature. But what is the difference between investing in a company and an investment trust that both invest in similar opportunities? Are there any additional risks associated with investing in non-investment trusts due to their company structure?
Like many people I was sold an endowment in the 1990s and it’s due to mature in three years’ time. I’ve had ‘green’ letters for the last decade, having increased contributions early on. But I’m now wondering, if there is a shortfall because of the market crash and upcoming recession, what rights do I have? My bank will want the mortgage to be paid off, but if the endowment isn’t adequate despite all the green letters, I hardly think that’s my fault!
Ed Bowden, Herts
When my father died recently, I was due to inherit some of his estate. However, my brother and I, as joint executors, have agreed to enact deeds of variation so that investment holdings can be passed directly to our children.
I recently came across the ‘small pot lump sums’ benefit whereby up to three separate small pots each worth up to £10,000 can be cashed in. Withdrawal doesn’t jeopardise ongoing pension contributions or lifetime allowance limits.
I have several friends who have NHS pensions but are seeking saving accounts for capital growth. Would it be possible for them to open up to three Sipps, pay in spare cash, benefit from the 20% tax rebate each year plus investment growth, and cash in the Sipp as the £10,000 limit is approached?
For tax purposes, I am resident in Australia, where I have been living since 1974. I have some M&G investment funds that I have held in one form or another since 1983. If I were to sell these shares, would I be subject to CGT and/or withholding tax, and how much would I have to pay? Would M&G act on behalf of HMRC and retain the tax payable, or would it deposit the gross proceeds from this sale in my UK bank account?
Joseph Zekan, by email
We often read that it makes good sense to maintain a diverse portfolio. Indeed, it does, but I am guilty of not falling in line on this.
Now that I am in my 80s, my main interest is to create income rather than growth. Hence, I hold 10 of the 12 renewable energy investment trusts listed in Money Observer, which form about 65% of my total portfolio.
They are all paying dividends in excess of 5%, and only one of them, US Solar Fund, is showing a capital loss at the moment. My initial investment in Bluefield Solar is now up by 37%.
I read with interest the Essential Guide to Inheritance Tax by Ceri Jones, as I have been looking into IHT planning. A point that was not mentioned was the 14-year rule, which I stumbled across in my research and might have been worth mentioning in the section about setting up a trust.
Barrie Culley, by email
I am nearly 74 years old. On retirement, I adopted the traditional advice to reduce equity investments in favour of (‘more secure’) fixed interest, having fewer years to make up any major stock market losses. However, this advice is now resulting in the erosion of my capital rather than its preservation, due to the extraordinary policies prevailing, with no end in sight. I am therefore forced to go back into the stock market and indeed still have significant cash awaiting investment, but I am unsure how to reduce my risk.