19 Nov 2023 21:18
Investment is about the LONG term so it is important to distinguish what that means for you. The bulk of my assets and those for my wife (35 years married) are in ISA wrapper. We have also a joint dealing account (the consequence of an inheritance) which will take another 8 years to shelter at current ISA rules. We started contributing to SIPP's but these are ONLY for succession planning for IHT.
We began planning for IHT in 2015 prior to receiving any inheritance as we had (through house price inflation and good investment decisions) triggered the limit for tax free succession. Aside from creating new Wills we put the foundation in place for a discretionary trust and a Family Investment Company (FIC). The former comes up for the 10 year tax charge and the FIC has not yet been seeded with capital but the structure is in place.
Understand WHY you are investing and what you want to achieve. We draw a small amount each month from our ISA from dividends thrown off. The capital uplift each year from our investments these days is more than double our aggregate salary, but until we are ready to retire, we are building our portfolio. For us to fully retire and meet our day to day living expenses the capital in our portfolio will determine the timing. The broad rule of thumb is the 3% rule. And for us it means £1.8m invested and another 2 years of OUR average growth (13.5%) before we can contemplate this.
Our portfolio is constructed for capital growth not for income. Dividends are NOT assured and by targeting growth it is somewhat easier to get the mood for holding to fulfil ambition . We therefore will continue to target capital growth investing any dividends that are thrown off along the way.