Stock market dealing

[Justin Passing]

I don't find a consensus on exactly what all the rising bond yield effects will be, say in Emerging Markets and so on.
The basics are simple enough, but the nuances are important and I find them hard to follow.

The stocks/funds prices are just about all going lower at the moment. I AM selling some, even though that may be the "amateur" behaviour, of selling at the bottom. Always people say "oh but this time it's different" and it usually isn't, things come back up. So I'm holding on. Most have been going up for a long time so the "loss" is relative. I am believing this time it might be different, recession looming.

Fixed Interest and Low Risk cayegories are outrunning inflation at the moment, so for me that'll do. I can leave 100k or so to play with for day trading, and if that proves difficult, never mind. For the moment, Swing Trading works, and doesn't need daily attendance.

A case in point is TN28 which will become a better investment as/when bond yields rise. As it's tax free, that gives a vehicle running to Jan 28 at a rate which would need near 7% in a taxable fund. There are unsecured tax free bonds from the likes of Tesco, too, which probably won't default!

 

[Mottie]

4.82% interest in a 1 year fixed ISA at Shawbrook. Guaranteed with no risk of losing your money.

5.05% Interest in an 18 month fixed ISA with West Brom building society. Guaranteed with no risk of losing your money.

 

[Wayners]

Would those here worried about stocks, would you buy gold or silver?
I bought £80 in iShares physical silver online in my stocks ISA ( they hold actual silver) and it's a tad low ATM with great demand with Industrial use.
Up 2.8% so far this week.
Gold has doubled in price in last 2 years. Im watching as i would like to hold some gold even if it's just £10 just for the hell of it.

 

[Justin Passing]

Isas are only for limited amounts of money.
Also, if the Bldg soc gets into trouble your money over the limit is at risk.. OK unlkely, but Govt bonds' is even less.

Because ISA growth is tax free, that's where you'd put your faster-growing money, hence stocks. EG Artemis Smartgarp Global is up 4.8% in this last choppy month. That's a whole year's worth in a BS. 1 year return is 40+%. It seems nuts to ignore it, for some of your dosh.
Bear in mind that if there were a stock market collapse, it could go down sharply, but 20% say, would be only about 4 months growth. If you use an ETF version you can place stop-losses, but they're a mixed blessing. History shows it comes back up - if you have time to simply leave it.

I've bought Isas since the Tessa days, + my wife's so with growth they've become significant, but obvs I can only increase the wrapper by 20k a year.
TESSA and ISA amounts since inception add up to um, £312000, each, without any growth. They transfer to spouse "intact".

Reminder, most corporate bond capital gains are are tax free, as are govt gilts/treasury bonds. You pay tax (income) on the "coupon", so you can go for a govt bond with a low coupon and higher capital gain. They're safer than Bldg socs, no £130k limit.
You usually hold them til maturity.
Eg TN28 matures 1/1/28, 4.5% (approx) p.a. tax free. You can sell earlier but the value depends on interest rates. Buy on Freetrade.
Outside of an ISA you'd be paying your marginal tax rate on the interest. If that's 40%, your 5.05% is down to 3.03% so the gilt pays 50% more. (4.5 approx compared with 3.03)

This is how it works: (clipped from AJBell, Investing, Gilts and Bonds) working the 4.5 out exactlier

So you get 0.125% per annum as income which is taxed.
When the thing matures, the price is 100.
You pay 94.52 now so you get 100/94.52 = 1.058, so 5.8% at maturity.
At 1.33 years away, that's a capital gain of 4.36%, plus the 0.125 on 94.52 =0.132%
If you're on upper rate tax you're hit with 0 on the Capgain, and the 0.132% becomes 0.079% at 40% tax
so you get 4.44% net.

If you'd been using a bld soc account you'd pay 40% tax, so you would have had to have a rate of 4.44/0.6 = 7.4%


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In an ISA, you can still use corporate bonds. They can come from Tescos, BT, all sorts. Here's one, unusual numbers but will do for illustration:

So you get 12% pa, but you have to pay the premium price.
12% on the 100 is 11.51% on your 104.225
You pay 104.225 so lose 4.225 at maturity, 12/2027 so you get back 96% which is -3.38 p.a.

So you get 11.51-3.38 = 8.13%
If you trust the company, cos it's unsecured. Tescos should be OK!

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Gold & silver - Unreliable! Silver particularly rises well then drops like a rock.

If you wanna play, use 3GDX which is a 3x leveraged gold miners etf , or 5GLD which is 5x leveraged gold which can do very well.
Or very very badly. Only use within a day and use a limit order cos the spread is crap.
On CFD or spread betting platforms the leverage is 20:1
One year ago I was in hospital watching them all the time, and made 20k or so. Gets boring but there's nowt else to do.
Do not hold overnight, or even moreso, over a weekend.

Last year there WAS a trend in gold, AND I could watch all night. The nurses asked how I was doing and it pi55ed them proper.

 

[Mottie]

5.05% Interest in an 18 month fixed ISA with West Brom building society. Guaranteed with no risk of losing your money.

Oversubscribed and now been pulled.