Investment Accounts, UK funds

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Oct 13th 2013, 3:41 am

#46

JAJ

Retired

Joined: Apr 2004

Posts: 34,649

Re: Investment Accounts, UK funds

Quote:

Originally Posted by nun

If H&L will take your ISA you could keep it but simplify it by replacing the 33 stocks with a couple of the US domiciled Vanguard ETFs they sell. You'd avoid PFIC but would have to pay US tax each year. Or you could just go ahead and move the money to the US.

That sounds like a reasonable strategy for someone who either has an intention to return to the U.K. or wants to keep the option open. Especially for someone whose U.S. stay is temporary, loss of cumulative ISA allowances is a concern.

Oct 13th 2013, 3:45 am

#47

JAJ

Retired

Joined: Apr 2004

Posts: 34,649

Re: Investment Accounts, UK funds

Quote:

Originally Posted by freece

Hello JAJ

You have convinced me that I am doing the right thing selling up. It's a particularly unpleasant thought that the CG obligation could persist after the transfer. I've decided to close ISA completely, to ensure minimum ongoing complications! As it will no longer provide a tax shelter it has no benefit over any other share trading account.

My stock market speculation wasn't quite as crazy as it may have sounded. I have a low mortgage payment at the moment as it's fixed very close to the 0.5% base rate. Therefore I could afford to leave it unpaid and grow my ISA instead. Many of the shares were paying good dividends too. Essentially I was following the invest to pay off your mortgage approach recommended by the original Motley Fool UK Investment book. But that's all history now!

A 0.5% tracker is a good mortgage deal, there are not many like that any longer. The other way to look at this, is should someone borrow at even zero percent to invest in the stock market? A lot of the finance textbooks say yes, but it still increases the risk profile in your life. Stock markets can go down, brokers can go bankrupt, etc, so your investment is reduced while the debt is unchanged. All depends on the degree of life risk you want.

If you pay the mortgage off, you can take the funds being used for capital payment and reinvest in the market each month.

Also recommended to consider whether or not you want to keep the U.K. property, or divest of it and take any capital gains before becoming U.S. resident (or the January 1 of the year of becoming U.S. resident, in some cases). Is it your main residence or an investment?

Last edited by JAJ; Oct 13th 2013 at 3:48 am.