Legal & General Share Discussion Threads

[zac0_4] 03/2/2024 18:00

MC1 - I have a SIPP in drawdown. In addition I always add the £2,880 into a separate SIPP and invest it. I have done for years. At some point I'll crystalise it and at that point, after tax, it will be worth 6.25% more than had I simply put it into my ISA.

I view it as free money.

[mcunliffe1] 03/2/2024 17:35

zac0_4:
I agree that you place £2,880 into your SIPP and it becomes, as if by magic, £3,600 with the £720 tax that is added.

However, were you to draw that out again £900 would be tax free (one quarter) and the remaining £2,700 would be taxable. Let's assume at the basic 20% rate. You'd pay £540 tax.

So, £720 - £540 leaves £180 profit. For the year. £15 a month. Hardly worth it.

My aim is to extract as much money as possible out of my SIPP without incurring too much of a tax bill. Apart from the full state pension my only other income these days is the random winnings from Prem. Bonds and interest from non ISA'd savings. But with the frozen personal allowance at £12,570 and the state pension paying £10,595 there's little room left for other tax-free income.


And this under a Tory government. Shameful.

[lippy4] 03/2/2024 17:23

wells

if the profit its in an isa you can reinvest the money in the isa,thats the point of them no tax..

[che7win] 03/2/2024 17:18

You can buy and sell as much as you wish inside the ISA tax wrapper.

[wells777] 03/2/2024 17:12

Question on ISAs. If I invest £20k and make £2k profit in 6 months can I reinvest this in the next 6 months or have I already spent my £20k limit for the year?

[waldron] 03/2/2024 15:12

Iain Gilbert
Sharecast News
08 Jan, 2024 17:14 08 Jan, 2024 17:14
Broker tips:


Berenberg upgraded its rating for insurance and investment group Legal & General from 'hold' to 'buy' on Monday, saying that the macro environment should support the shares heading into 2024.


"At the start of 2023, the macroeconomic environment was not supportive for Legal & General shares," said analyst Thomas Bateman, who also raised his target price on the stock from 258.0p to 289.0p.

Investor concerns about credit risk and property valuations have hampered the stock since January 2022, said Berenberg, but it thinks the tide was set to turn going into 2024, driven by a greater certainty about the interest-rate outlook.

Looking ahead, Bateman said: "Fears of credit risk and real estate valuations are subsiding, but the benefits of higher interest rates for L&G, such as strong annuity volumes, are here to stay, and we expect strong annuity volumes to drive a step-up in capital generation."

Meanwhile, he said that L&G offers one of the best dividend prospects for income investors, being the seventh-highest yielding stock on the FTSE 100, trading at an 8.5% 12-month forward dividend yield. A predicted "step-up" in capital generation growth could also drive higher dividends, Bateman said.

[apparition1] 03/2/2024 13:57

marktime. Be careful the £10k max is only on earned income and doesn't cover pension income or interest and dividends. Unfortunately I pay enough tax but as it's on pensions (old defined benefit) I am limited to the £2,880 in. Which I still do as SIPPs remain one of the inheritance tax reductions at the moment.
Re spend it - I'm trying hard at skiing (spending the kids inheritance) but the likes of LGen, AV., PHNX & MNG make it hard with all those lovely dividends.

[zac0_4] 03/2/2024 13:32

I think you need to relook at your maths. By my way of thinking for every £2,880 I put into my SIPP, I'll get back £3,060 when I put the SIPP into drawdown. And that's after tax! That's a 6.25% return for nothing!!

[woodhawk] 03/2/2024 13:04

MCunliffe1,

I'm of your way of thinking - that's why I've stopped contributing to my SIPP. Happy to forgo the 'temporary' tax uplift in favour of the completely zero tax nature of shares ISAs in drawdown (or whatever I decide to do). In view the frozen tax bands until 2028, I'm now even more glad I've taken this route. I figure I currently save about an extra £10K a year taking the shares ISA option instead of the pension.

[mcunliffe1] 03/2/2024 11:51

markt: sound advice again. I really should put the £2,880 in first in March upon my return and then again, as you say, in April.

Then I started to work out some figures on paper.

My main aim is to draw-down from my pension but pay the smalles amount of tax possible.

It transpires that the £720 'free' tax bonus is only any use if you are prepared to put more money into your pension than you take out. Such could be funded by using money from other than the SIPP draw-down to provide the £2,880.

However, I have more than I need in the SIPP so my aim is to take out. The tax paid on the increased draw-down is negated by the £720 I gain by putting £2,880 of that very draw-down back into the SIPP. But at 20% tax paid on three-quarters of the draw-down and 20% gained back on the input it's pointless.

So, draw-down, holidays, blow-it and let's the kids whinge :-)

[marktime1231] 03/2/2024 11:13

Chortle. You old codgers still in the counting house counting out your money. Spend some for goodness sake, the economy needs you. I know at our age it is difficult to find ways to spend it all, forcing myself to find projects and good causes. No cost-of-living crisis here.

Yes MC the £2,880 roundtrip £720 for nothing is a no-brainer, get it done this year. Have the dosh lined up local to your SIPP - provider so you can do an immediate transfer in at 00:01 on 6 April and be in the earliest possible window to claim that free cash.

NB you can MPAA up to a gross £10K these days. The £3.6K remains the no-questions-asked level in case you are a non-taxpayer for example the rule is "A person cannot usually receive tax relief on pension contributions worth more than 100% of their annual earnings". So you can max this up to a net £8K for a £2k cash windfall if you are still earning £10K+ a year or (my assumption) paying basic rate tax on the equivalent of that level of annual earnings. The point of the £2,880 round-trip is that no-one will even begin to ask questions, so it does not draw the attention of HMRC at all.

[zac0_4] 03/2/2024 10:48

If you do see Terry tell him to get back to work . . . he looks after around 25% of my portfolio!!

Enjoy Mauritius.

[mcunliffe1] 03/2/2024 10:01

Smart fellows. Thanks for the info.
I've not restarted the £2,880 aspect since the move to ii SIPP. I must address that shortly.

I went down the Prem Bonds route some years back - it's the only gambling I undertake. Lately, I appear to be on a run of small success. Wife not so.

If I happen to see Terry Smith whilst I'm in Mauritius I'll seek his advice (and let you know). Cheers.

[zac0_4] 02/2/2024 21:36

I have a very similar set of circumstances to Woodhawk. Still work to do to fully ISA all my investments. Although I drawdown a workplace pension I still top up my SIPP by the allowed £2,880 per annum as it's the most efficient investment available . . . and that would include a similar amount being invested into a stocks & shares ISA!

[woodhawk] 02/2/2024 18:42

Although I'm over State retirement age, I have a full new State pension and and a work pension, so I have not yet drawn on my SIPP. I have stopped contributing to it and intend to move it to Vanguard when I do start to draw down. In the meantime I still fully fund my Shares ISAs every year. 95% of my investments are now fully ISAd so I pay almost no tax on quite a substantial annual income which is, currently, still 100 per cent reinvested.

[mcunliffe1] 02/2/2024 17:08

Thankyou both (Woodhawk and zac0_4) for your detailed responses.

I've made a note of the L&G, Fidelity and Vanguard funds zac - I'll look at those over the weekend.

I'm 50:50 invested cash in my ii SIPP. Although the interest on the cash side with ii is quite decent that's likely to change soon.

I'll post back on here in March if/when I've invested further.

Again, thanks guys and have a great weekend.

[zac0_4] 02/2/2024 16:14

MC1 - my main tracker fund is Legal & General International Index Trust Acc. I've held it for years. It outperforms all my dividend paying holdings.

I still have a substantial holding outside of both my ISA and SIPP. To ensure I utilise my CGT allowance each year I sometimes switch across to Fidelity Index World. It's pretty much identical in make up and performance.

I also hold Vanguard FTSE Global All Cap Index.

To compliment the above I hold some 'factor' based ETFs - RSGL top 1,000 US Growth companies and IUQF which tracks an index of 125 US based quality factor businesses.

Dividend paying holdings account for around 25% of my portfolio value. I also hold a number of additional funds.

Strategy for this year is to reduce my exposure to dividend payers to below 20% and to reduce the number of funds held by further consolidation into tracker funds and funds that have demonstrated their ability to deliver returns in excess of returns from a simple equity tracker.

[woodhawk] 02/2/2024 14:12

I have dividend payments incoming on average in 10 out of any 12 months (in the current year I will have 41 payments in total). I reinvest where I think the money can be best deployed, usually at the time I am in receipt of the cash. Therefore, the dividends may - or may not - be reinvested in the same company (or fund) that generated them. Sometimes, I might use a dividend to kick off an investment in a 'new' company.

[mcunliffe1] 02/2/2024 13:42

I'm not supporting either style (Zac / Wood) but I am genuinely curious to look in more detail.

Zac - Hi. Have you moved your investment in the Global Equity Tracker from one such investment to another and if so, how many times/how often?

If you've been with the same tracker for a number of years are you able/willing to disclose the name.

Woodhawk - also, hello: Have you always re-invested the dividends from LGEN back INTO LGEN or have you elected to hold onto the div, perhaps re-investing at a later date into LGEN or even, as some folk have suggested, invested the expected dividend prior to actually receiving it?


Appreciate you responses. Thanks

[woodhawk] 02/2/2024 12:38

I wasn't talking specifically about LGEN returns - I hold circa 20 different stocks/funds at any one time - nor was I restricting to 10 years.

[tornado12] 02/2/2024 12:37

Zac, we all have different approach to investing and that is personal preference. In my case, I am focused on dividend return in stocks with stable/robust outlook. When your investment pot arrives to very high numbers (6 figures) the advantages of compounding and tax free income are very appealing. I plan not to add more capital to my investments, but compounding the dividend will give me a 50% increase in 5 yrs, compared to the value today based on annual 6% divi pot increase YoY....... I dont have to worry too much about the short term trends in the market and my income will continue regardless (ok with risk on divi cut or freeze). Each of us have our own approach and I wish you best of fortunes in yours.. GLA

[zac0_4] 02/2/2024 12:18

" . . . real investors will keep on compounding excellent dividends for massive returns over time . . ."

Really? The average annualised return over the last 10 years has been 6.6% pa. I wouldn't call that massive. Would you? Please enlighten me if you know different.

The same investment in a global equity tracker fund has produced average annualised returns of 12.4% pa over the same time period. Not massive but a lot better than LGEN returns.

I hold both.

[woodhawk] 02/2/2024 11:30

"But history shows us it doesn't produce anything special in terms of returns!"

Absolute rubbish. But never mind, you might win the lottery one day. In the meantime, real investors will keep on compounding excellent dividends for massive returns over time.

[zac0_4] 02/2/2024 11:26

" . . . So what is wrong with reinvesting well-above average dividends at well-below average share prices? . . ."

Nothing. But history shows us it doesn't produce anything special in terms of returns!