The Lemon Fool

PinkDalek wrote:

Adamski wrote:... Total return 10.3% (profits 8% + 2.3% tax relief in SIPP). ...

Well done but I'm surprised you include the tax relief as part of Total return.

It's because I plan, if rules don't change, just take out personal allowance plus tax free 25% from 55, so not pay tax on withdrawals. Although right could have left that out.

Adamski wrote:

PinkDalek wrote:Well done but I'm surprised you include the tax relief as part of Total return.

It's because I plan, if rules don't change, just take out personal allowance plus tax free 25% from 55, so not pay tax on withdrawals. Although right could have left that out.

I completely agree with Adamski that one should include tax issues when calculating Total Return, in fact I am surprised that more investors don't do so. For example, I have been investing in VCTs for many years. In terms of capital growth, don't expect any, and the dividends are pretty good in many cases, but the tax relief makes them very good investments indeed for anybody who can hold them for five years.

In my opinion, one should definitely include tax considerations when calculating ones investment success or failure.

Gostevie

Adamski wrote:It's because I plan, if rules don't change, just take out personal allowance plus tax free 25% from 55, so not pay tax on withdrawals.

Understood, thanks, and the withdrawal aspect had also crossed my mind.

Gostevie wrote:I completely agree with Adamski ... In my opinion, one should definitely include tax considerations when calculating ones investment success or failure.

That part goes without saying but you seem to have missed Adamski's Although right could have left that out despite quoting it.

My point is that the 2.3% (or whatever percentage would be applicable) is available even if no investments were made whatsoever, which I'm sure Adamski understood. In fact the relevant % would be much larger if there were no investment activity! Maybe 20% on the grossed up amount, excluding fees, for basic rate taxpayers. Would you call that a Total return of 20%? What if higher rate relief was also included?

Your VCT position, assuming one hasn't lost the lot (which, thankfully, I don't think you do from posts of yours I've seen, maybe at Stocko), is an interesting observation though. Can you run me through how you'd do the TR calculations, perhaps in a separate topic?