House Price Crash forum > Venture Capital Trusts

House Price Crash forum > Investment > Investment in general

Nijo

Jul 21 2005, 10:19 AM

Those with a chunk of STR cash should at least look at these tax efficient funds - but does anybody actually have experience with them (positive or negative)?

Example VCT Fund

Quick explanation of the tax benefits

QUOTE

If you are a tax payer and you invest between 6th April 2004 and 5th April 2006 you will receive a tax rebate of up to 40%. For example if you invest £20,000 you could either receive a cheque from the taxman for £8,000 or an adjustment in the tax you pay. Although the 40% figure is the same as higher rate tax band, you don't need to be a higher rate taxpayer to reclaim this amount.

Although the 40% looks very nice (wipe out income tax!) you have to hold them for 3 years, plus the average return is decidedly dodgy - investing in unlisted/start-up companies. Then again, it would need to drop 40% before you make a loss, right?

Following an EU directive, VCT funds should be available again in the autumn.

Thoughts?

Financial Planner

Jul 21 2005, 11:30 AM

QUOTE(Nijo @ Jul 21 2005, 10:19 AM)

Those with a chunk of STR cash should at least look at these tax efficient funds - but does anybody actually have experience with them (positive or negative)?

Although the 40% looks very nice (wipe out income tax!) you have to hold them for 3 years, plus the average return is decidedly dodgy - investing in unlisted/start-up companies. Then again, it would need to drop 40% before you make a loss, right?

STR money MUST NOT be used for medium to long term investment if you are considering using it to rebuy.

A VCT is not for Xmas... It is a 7 - 10 yr investment to be used as part of a financial and investment planning strategy.

Like unit trusts, there are 70 or so VCT - only half a dozen are worth investing in. (Re UTs - 2000 or so but only 50-100 worth it.)

3 yrs min yes to obtain tax advantages but it isn't a 3 yr timescale investment. 2nd stage private equity needs longer to mature.
HTH

Nijo

Jul 21 2005, 12:03 PM

QUOTE(Financial Planner @ Jul 21 2005, 11:30 AM)

A VCT is not for Xmas... It is a 7 - 10 yr investment to be used as part of a financial and investment planning strategy.

Yes, my view is that VCTs should be considered once you've got all the other bases covered... although I do admit to being bad at holding out on long term investments.

Hello I'm Nijo and I have day-trader tendencies.

- Day traders annonymous.

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