Investing: ETF Statistics from LSE

ETF statistics from the LSE

Further to my recent post “What are ETFs” it is perhaps worth outlining the size and growing popularity of ETFs. The LSE (London Stock Exchange) publishes monthly data about various investments that it provides a trading function for.

The latest data (in the July 2015 LSE report) to the end of May 2015 shows that the UK is now the largest market for ETFs in Europe, with 32.7% market share. This beats the Germany (25.5%), France (13.4%), Italy (11.4%), Switzerland (8.5%) and Holland at 4.9% with the other European markets making up the rest. £22billion of trades were placed in June, representing around 302,000 individual trades (buy/sell). These sums are not insignificant and increasing each year, increasing 61% over the last 12 months.

We can explain the pro’s and con’s of ETFs for your portfolio and arrange your investments to suit your requirements and ability to cope with investment risk

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Investing: ETF Statistics from LSE2023-12-01T12:40:17+00:00

What’s the row over pension charges now?

Solomons-financial-advisor-wimbledon-top-banner

What’s the row over pension charges now?

You may have been listening to Radio 4 or perhaps seen the TV news, Steve Webb the pensions Minister is doing the media rounds having announced that charges on pensions should be capped at 0.75% which he announced yesterday and has been plugging his cause since. There is no doubt that there are many very expensive pensions and I would go as far to say that there have been lots of “rip off” pensions. There are too many vested interests, this has broken out in a row over pension charges.

Is there any such thing as a free lunch?theawfultruth

We now have various think tanks and Providers all taking the opportunity to price to the bottom and distance themselves from “rip off pensions” as quickly as possible. An assortment of spurious views about the impact on the final value of a pension fund is now doing the rounds. The vast majority of this is utter drivel. We are all to blame for this (advisers, providers, investors, regulators and Governments) why? Well because over the years we have colluded in the deceit that anything to do with financial services is free. It isn’t. I had hoped that this delusion would have been put to bed by the introduction of RDR, yet AE (auto enrolment) exposes the deep resistance to a shift in mindset.

Can a pension have low charges?

It is perfectly possible to use a pension that has low investment charges and by low I mean less than 0.30%. However this is merely one element of the piece. The administration costs are high due to well intentioned regulation. The “sales costs” are high due to well intended regulation. The regulation is designed to protect the investor and the wider market.

Why does AE have unique charging problems?

The unique problem that AE brings is that there are some very tiny premiums. Suppose you earn £10,000 a year and in several years time you will have contributions of 8% a year (£800) a cap of 0.75% on this would be £6… ok its based on the value of your fund, but given that most will not be more than £4,000 that’s £30 to cover the investment and administration for the year (and by the way you can opt in and out, switch funds, vary the payments creating more administration). It’s a nightmare for pension providers. Some have come up with some low cost solutions (hardly any investment choice) and some have a fixed monthly fee. Well even at £1.50 a month (£18 a year) that’s a higher proportional charge on a small fund of £1,000 (1.80% to be precise). The Government backed (taxpayer funded) NEST is loss making and will be for many years. This is typical of Whitehall delusion that they then expect commercial enterprise to replicate. We all know Governments are not good at maths… don’t we?

The solution is right under their noses

Stakeholder pensions (with low charges) failed because there were other better alternatives at a lesser or more competitive price. The Government (this one and the previous one) believe compulsory membership isn’t quite ok, so we have a “difficult not to join” approach. However, I would argue that today employers and employees already have a proper pension system. It’s called National Insurance and the State pension. We know it’s not good enough, so why not simply make it better for everyone? It has no investment risk and is already set up. For those that want (and need) more than the State pension (most of us) then there are plenty of very good pensions around, any decent adviser can structure a sensible plan – but it is not free… neither should it be. If we want to create a society of that is independent of the State, we all need to face some adult truths.

Dominic Thomas: Solomons IFA

What’s the row over pension charges now?2023-12-01T12:38:33+00:00

Those shares you have…

Tax may be due on those shares that you have

As you know, shares are an asset (well they should be) and many provide income in the form of a dividend. This is taxable. Dividends are generally taxed at source at 10% but sadly the tax does not stop there. You have to declare the income so that any additional tax, based upon your other UK income is paid across to HMRC which could be 32.5% or 42.5% depending whether you are a higher rate taxpayer or additional rate (50%) taxpayer. You submit this information via your self assessment return. Anyhow, you may have a few shares that you bought or were “given” many years ago. It is entirely possible that the share is in a company that no longer has the same name. You may have found some old certificates in a dusty old box and assumed that they were worthless.

Checking if “old shares” still exist

It is entirely possible that they are worthless. However it is definitely worth checking first. Despite the advent of technology, tracing shares is a little tricky. Shares listed on the London Stock Exchange are invariably held by one of three registrars. These are Equiniti, Capita and Computershare. If you click on their name it will take you to their website. You can then find out if they look after the company you hold shares in. Alternatively do a search for the original company or check with the LSE, who may be able to provide some assistance (depending on the age of the shares).

Think carefully – CGT may apply

If you decide that the few shares you hold are more hassle than they are worth, please remember that as an asset, they are subject to capital gains tax. In essence you need to know the price you paid for them and the price you sell them for, the difference (the gain or loss) may be taxable. You have a personal capital gains allowance (CGT) which in 2012/13 is £10,600 and would need to be used by 5th April 2013.  This allowance means that you can realise gains of £10,600 and pay no tax. The vast majority of people in Britain rarely use their CGT allowance, yet it is highly valuable. The maths is complicated if you have used dividend income to buy more shares automatically, as you will have a series of purchase prices and different “chunks” of shares. You are now in Accountancy dreamland.

There are other options for your shares besides simply selling them, but you should seek personal advice about this as it will depend on the sums involved, your appetite for risk and your requirements for income and capital.

Those shares you have…2023-12-01T12:23:27+00:00
Go to Top