Investment in knowledge, always pays the best interest..
Client reviews invariably focus on investment performance, and tax-efficiency, just not in that order
Successful clients put their money to work with minimum effort and maximum exposure to a wide range of world markets and asset classes
For Jim, the holy grail’s creating a permanent portfolio where, over time, winning investments add more to the portfolio than the losers take away
To explain his philosophy, Jim asked “If you lose 50% on an investment, how much would it then have to rise to get back to where it started?”
Sounded like a question to me, but Jim likes the sound of his own voice, so continued, “Most people tell you the answer’s 50%. That sounds logical. If something falls by 50%, then surely it must have to rise by 50% to break even, just to get back to where you started?”
Jim was building up to the punchline, and nothing was going to stand in the way of him delivering it:
“It needs to rise by 100%!”
Jim’s right, of course. Here’s why: You invest £100 in XCo. The value of XCo falls by 50%, and your XCo investment is now worth £50
If XCo rises in value by 50%, your shares will be worth just £75. To get back to being worth £100, shares in XCo will have to rise by 100%
Stick with the same principle, and apply it to your Individual Savings Account (ISA)
When you die, HMRC WILL confiscate 40% of its value in Inheritance Tax (IHT). That’s equivalent to a fall in value of 40%
Your remaining ISA fund will have to grow by 66.67% just to get back to where it was the day you died..!
Our team of Chartered Tax Advisors can suggest ISA alternatives. Book a FREE Power Hour Discussion here
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