View more on these topics

Inside Edge

Dear Mrs Brown, I thought now would be a good time to write to you as we have only a few weeks left of the 2002/03 tax year to decide what to do with your and your husband&#39s £7,000 Isa allowances.

As you know, in previous years, I have consistently recommended that we should always be invested in equities on your behalf, as most of the long-term trend charts that I have shown you indicate that equities outperform cash and bonds over the longer term.

I have to tell you that, following the release of the latest updated charts, the position has changed dramatically. In fact, some of our core beliefs in equities being the best place for your investments over any meaningful period have come under challenge.

Before writing this letter to you, I have researched very widely the view from various industry experts and I have read endless reports and attended several presentations with leading fund managers giving their opinions. In nearly every case, the outlook for the UK stockmarket and economy, in particular, has been cautious, with many commentators predicting anaemic growth and very modest returns from the UK stockmarket.

I was, therefore, enormously encouraged to read your husband&#39s views about the future of the UK economy and hear how optimistic he is. In particular, his view of future growth rates is very encouragingly optimistic, given the more downbeat views of some of the other respectable commentators that I have read.

Clearly, my view of the prospects for the UK are somewhat removed from those people working every day to keep the British economy moving along.

Given your husband&#39s views, his optimism for UK shares leads me to a confident recommendation to you that he should invest his full £7,000 in the UK stockmarket.

As for your own money, I think we need to remind ourselves of why we invested in equities in the first place. We took the view that the money you were saving would not be touched for around 15 years and that we would genuinely be able to take the long-term view.

Looked at a different way, the falls over the last few years have given you an opportunity to commit your annual Isa allowance to the stockmarket at prices we have not seen for a very long time.

Unfortunately, it is always difficult to make financial decisions when there is so much doom and gloom in the newspapers and the possibility of an impending war. I would encourage you to look at some of the charts that I have sent you in order to give you confidence that buying at difficult times often brings good long-term results.

I know that your husband is very comfortably positioned as far as his pension arrangements are concerned. Some would say that he and his colleagues are immune to the suffering that Middle Britain is going through regarding the money they have set aside for their pension and their old age.

As you personally do not have such a generous pension, we need to keep saving to build up the retirement fund we first discussed. I know that you have spoken to me on a number of occasions about the double Isa investment into technology funds that we actioned on your execution-only instruction in the spring of 2000.

My recommendation to you, therefore, is to view your technology money as either very long term indeed or to make a decision now to switch to something less high octane.

With your new money, I suggest that we commit some money to the US stockmarket and put the remainder in a good UK equity income fund.

Ian Chimes is managing director of Credit Suisse Asset Management


&#39Buy-to-let investors should survive slump&#39

Buy-to-let investors should be able to survive a property slump although they may struggle to match the profits achieved in the recent boom years, says analyst Mintel.Its survey of 1,969 adults carried out last month reveals that 46 per cent believe property is a safer investment than stocks and shares.Fifth-one per cent of men think […]

Double blunder over contracting-out rebates

The Inland Revenue is recalculating 800,000 contracting-out payments which were aimed at compensating policyholders for an earlier miscalculation of the contracting-out rebate.The double bungle started when admin delays following the introduction of a new computer system meant that the Contributions Agency, the body which was then responsible for rebates, was late in processing National Insurance […]

IFAs hold on to share of a static life market

Sales of new life and pension business increased by just 1 per cent to £11.1bn from £11bn equivalent premium income in 2001, according to annual figures from the ABI.The figures also reveal that sales of stakeholder plans increased to 1.25 million by the end of last year from 1.1 million at the end of the […]

Major scheme failure &#39only a matter of time&#39

The former head of the Boots pension fund has warned that it is only a matter of time before a major company goes insolvent, leaving tens of thousands of occupational scheme members facing serious shortfalls.Former Boots head of corporate finance John Ralfe says the Government has escaped criticism for allowing underfunded wind-ups because so far […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm