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This makes it difficult for people to make their money work for them. Interest rates are only going in one direction. Cash ISAs could be less than a few per cent in the near future. Regulations put pressure on buy-to-let tenancies. All in all, Stocks and Shares ISAs look better and better in comparison.
Those of us with these accounts have also developed recently. The new budget left ISAs well and truly alone, even outright stating that £20k deposit limits were guaranteed until 2030. Most interestingly, there is not even a rumor going around about ending the tax-free nature of these accounts. I think those in charge have realized that the Stock and Shares ISA is not worth pursuing.
Please note that tax treatment depends on the individual circumstances of each client and may change in the future. The content of this article is provided for informational purposes only. It is not intended to be, and does not constitute, any form of tax advice. Students are responsible for conducting their own due diligence and obtaining professional advice before making any investment decisions.
How much?
A good way to use these accounts is to see what kind of cash back I can get. Say I wanted £300 a month. That’s a nice little goal, even if I don’t give up on it. How much will I need to get it?
A dividend-oriented portfolio targeting 5% annual returns requires a total of £72k. It’s all well and good if I wanted to withdraw, but what if I didn’t? What if I want to increase my return and get the specified 10% every year? Then I need a total of £36k instead.
Of course, one criticism of the 10% figure is that UK stocks have missed that target over the past few years. Even if we expect the underperformance to continue, and long-term data on British stocks and shares suggests it won’t, we have an ace in hand. A Stocks and Shares ISA gives me almost complete freedom geographically.
I could buy shares in a Dutch semiconductor company ASMLthe Danish pharmaceutical giant Novo Nordisk or the titan of Japanese gaming Nintendo all without getting up from the couch. That’s not even the undisputed king of the stock market, at least for this century, just across the pond.
One thing to consider
an apple (NASDAQ: APPL) it’s the only American stock I own. I do not intend to repeat its incredible growth, up to 60 times in the last 20 years. It is the largest company in the world now. Its products are available (even stocked) in all major markets. It also trades at 30 times earnings so it is undeniably valuable.
But as far as mature companies? I think it’s very good. Revenues are still growing, up 8% on average over the past five years. Couple that with great savings, minimal debt and one of the most loyal fan bases in the world and I’m happy about it. Oh, and it has Warren Buffett’s millionaire investor stamp of approval too – it’s the biggest one he owns.
No one has a crystal ball when it comes to investing, but I think Apple is a stock worth further research.
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