Taking income from an ISA

puffster
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Taking income from an ISA

Postby puffster » December 29th, 2016, 12:06 pm

Does anyone have experience of taking an income from an ISA based upon just the dividends received ? The online help for some brokers on this subject in general seems very poor. Is there a summary/survey anywhere of the different options ?

My current favoured brokers are AJ Bell Youinvest, XO, Hargreaves Lansdown and Halifax Sharedealing.

It seems that some offer to pay out dividends when received into the ISA, others offer to pay out monthly/quarterly or annually. For the regular option it seems that some will pay out a fixed amount you specify in advance and presumably others will pay out what is in the account (I think) at the time of payment. What happens if specify a fixed amount but you don't have that amount if accumulated dividends.

Regards Puffster

Dod1010
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Re: Taking income from an ISA

Postby Dod1010 » December 29th, 2016, 12:17 pm

Alliance Trust Savings will accumulate dividends in an Income account and transfer the balance to a nominated bank account for free monthly, quarterly or I expect annually. It has worked very well for me for a long time.

TDINvesting are a bit of a pain as I need to go into the account and request them to do the transfer for me to my nominated account. They do not charge at the moment (but bear in mind that they are in the process of being sold)

Dod

swill453
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Re: Taking income from an ISA

Postby swill453 » December 29th, 2016, 12:18 pm

AJ Bell Youinvest let you set up a regular withdrawal from the ISA, of all accumulated dividends or a fixed amount. This can be monthly, quarterly, half yearly or annually.

However I don't bother with this. When I get a secure message saying I've received a dividend, it's 2 minutes work to log in and withdraw it. Better in my hands than theirs.

This might be 2 or 3 times a month, but still minimal effort (for me).

Scott.

mc2fool
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Re: Taking income from an ISA

Postby mc2fool » December 29th, 2016, 12:22 pm

There were (at least) a couple of discussions about this on TMF. I've archived them into the Wayback Machine so they'll be forever accessible.

From the old HYP Practical board: http://web.archive.org/web/201612291217 ... sort=whole

From the old Brokers and Share Dealing board: http://web.archive.org/web/201612291220 ... sort=whole

1nv35t
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Re: Taking income from an ISA

Postby 1nv35t » December 29th, 2016, 12:53 pm

Dod1010 wrote:TDINvesting are a bit of a pain as I need to go into the account and request them to do the transfer for me to my nominated account. They do not charge at the moment (but bear in mind that they are in the process of being sold)

Dividends stay in the TDInvesting ISA account as cash. You could just accumulate those and then when cost effective to do so use the accumulated dividends to buy more of whatever you held outside of ISA, and sell the same amount of that asset outside of ISA to release/spend the proceeds (cash). That way more is migrated from outside to inside ISA quicker (in addition to topping up the ISA each year).

Dod1010
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Re: Taking income from an ISA

Postby Dod1010 » December 29th, 2016, 1:12 pm

Indeed. That is in fact what I have been doing this year in order to protect more of my dividend income from the new tax. It does not need the TDInvesting arrangements to do that though and I am sure with any platform you could do the same. Anyway not sure what that has to do with the Op's query.

tjh290633
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Re: Taking income from an ISA

Postby tjh290633 » December 29th, 2016, 6:43 pm

What I do is to withdraw what I need, when I need it. If I know that will be the case I leave off reinvesting dividends in advance, and then transfer the cash to my account by the method which my ISA provider has available.

I only wish to withdraw some of the accumulating dividends, so a total payout is not much use to me. The amounts vary widely as the following will show:

Month         1993     2003     2013     2016
January 4.05% 4.53% 7.02% 3.84%
February 12.35% 10.93% 15.61% 6.70%
March 6.19% 4.35% 6.85% 7.19%
April 6.88% 3.22% 3.86% 2.35%
May 20.00% 14.73% 12.70% 17.65%
June 0.18% 5.34% 4.48% 11.71%
July 8.74% 3.74% 9.76% 10.21%
August 6.06% 16.65% 11.10% 7.62%
September 5.01% 4.57% 12.91% 16.31%
October 15.72% 11.06% 5.45% 4.96%
November 11.26% 1.64% 4.48% 6.72%
December 3.56% 19.25% 5.77% 4.73%


It varies according to what is in your portfolio at the time and how they are doing.

TJH

swill453
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Re: Taking income from an ISA

Postby swill453 » December 29th, 2016, 7:07 pm

tjh290633 wrote:It varies according to what is in your portfolio at the time and how they are doing.

But what doesn't vary is the OP's apparent requirement to withdraw all the dividends, as soon as possible.

Someone still in an investment phase will have different needs.

Scott.

hiriskpaul
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Re: Taking income from an ISA

Postby hiriskpaul » December 30th, 2016, 4:38 pm

puffster wrote:Does anyone have experience of taking an income from an ISA based upon just the dividends received ? The online help for some brokers on this subject in general seems very poor. Is there a summary/survey anywhere of the different options ?

My current favoured brokers are AJ Bell Youinvest, XO, Hargreaves Lansdown and Halifax Sharedealing.

It seems that some offer to pay out dividends when received into the ISA, others offer to pay out monthly/quarterly or annually. For the regular option it seems that some will pay out a fixed amount you specify in advance and presumably others will pay out what is in the account (I think) at the time of payment. What happens if specify a fixed amount but you don't have that amount if accumulated dividends.

Regards Puffster


iWeb share dealing (run by Halifax) have an option to pay out dividends on receipt. I use this for my unsheltered dealing account with them, but not with the ISA. I suspect that Halifax has the same facility.

Youinvest have an option to pay all dividends received on a regular basis, as frequently as monthly, but not on receipt of dividends. To request this you need to fill in a paper form:

https://www.youinvest.co.uk/sites/defau ... l_form.pdf

I could be wrong on this, but I don't think HL support automated cash payments from their ISA.

hiriskpaul
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Re: Taking income from an ISA

Postby hiriskpaul » December 30th, 2016, 4:46 pm

p.s. I just checked and iWeb also support an option to pay out accumulated dividends every 6 months, but that is it. i.e. options available for dividends are:

Automatic Dividend Reinvestment
Hold In Account
Pay Away Immediately
Pay Away 6-Monthly

Biggles
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Re: Taking income from an ISA

Postby Biggles » December 30th, 2016, 5:55 pm

hiriskpaul wrote:p.s. I just checked and iWeb also support an option to pay out accumulated dividends every 6 months, but that is it. i.e. options available for dividends are:

Automatic Dividend Reinvestment
Hold In Account
Pay Away Immediately
Pay Away 6-Monthly

That's about every possible option you could need, then, isn't it?

hiriskpaul
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Re: Taking income from an ISA

Postby hiriskpaul » December 30th, 2016, 6:02 pm

Biggles wrote:
hiriskpaul wrote:p.s. I just checked and iWeb also support an option to pay out accumulated dividends every 6 months, but that is it. i.e. options available for dividends are:

Automatic Dividend Reinvestment
Hold In Account
Pay Away Immediately
Pay Away 6-Monthly

That's about every possible option you could need, then, isn't it?


Pay immediately or hold on account would be all I would want, but I suspect some people might like monthly, or monthly fixed.

Biggles
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Re: Taking income from an ISA

Postby Biggles » December 31st, 2016, 8:59 am

hiriskpaul wrote:Pay immediately or hold on account would be all I would want, but I suspect some people might like monthly, or monthly fixed.

That's the norm. But anyone who needs to can log on and draw out as much as they want whenever they want. Though it does defeat the object of an ISA to a certain extent.

swill453
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Re: Taking income from an ISA

Postby swill453 » December 31st, 2016, 9:50 am

Biggles wrote:Though it does defeat the object of an ISA to a certain extent.

Why so? To me there's no point saving, in an ISA or anywhere else, unless there's going to come a point where you start spending it.

Scott.

Biggles
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Re: Taking income from an ISA

Postby Biggles » December 31st, 2016, 12:07 pm

swill453 wrote:Why so? To me there's no point saving, in an ISA or anywhere else, unless there's going to come a point where you start spending it.

Oh yes, fair do's if it's the only source of income. But I treat drawing from my ISas as a last resort.

swill453
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Re: Taking income from an ISA

Postby swill453 » December 31st, 2016, 12:54 pm

Biggles wrote:Oh yes, fair do's if it's the only source of income. But I treat drawing from my ISas as a last resort.


It's a bit of a mental hurdle to get over, but when everything you've got is tax-sheltered anyway, and you've no other income, then (to me) it makes sense to treat ISAs as just another savings account or spending pot, and withdraw as necessary.

Scott.

puffster
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Re: Taking income from an ISA

Postby puffster » January 2nd, 2017, 12:39 pm

Just to say thanks to everyone who replied, in particular the links to old Motley Fool discussions were very useful.

My intention is to take automatically an income (dividends received) from an ISA shortly so I was trying to understand all the options which might be available. There are many and I will need to think which will work best for me now I am wiser.

I have eliminated X-O as they only seem to offer manual dividend income withdrawal which for me is no use. The most flexible from my original list seems to be AJ Bell Youinvest.

Regards Puffster

Julian
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Re: Taking income from an ISA

Postby Julian » January 3rd, 2017, 3:16 pm

hiriskpaul wrote:
Biggles wrote:
hiriskpaul wrote:p.s. I just checked and iWeb also support an option to pay out accumulated dividends every 6 months, but that is it. i.e. options available for dividends are:

Automatic Dividend Reinvestment
Hold In Account
Pay Away Immediately
Pay Away 6-Monthly

That's about every possible option you could need, then, isn't it?


Pay immediately or hold on account would be all I would want, but I suspect some people might like monthly, or monthly fixed.


For the record TD Direct (TDD) allows monthly fixed withdrawals. The standard facility to withdraw funds has options that allow the withdrawal type to be set to one-time-only or to recurring day/week/fortnight/month/quarter withdrawals so to extract £500 a month (for instance) one logs on to make a £500 withdrawal and sets the type to recurring-monthly. Note however that TDD are about to be taken over by Interactive Investor so whether this feature of the TDD platform will survive the transition is unknown.

- Julian

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Re: Taking income from an ISA

Postby Julian » January 3rd, 2017, 3:36 pm

swill453 wrote:
Biggles wrote:But anyone who needs to can log on and draw out as much as they want whenever they want. Though it does defeat the object of an ISA to a certain extent.

Why so? To me there's no point saving, in an ISA or anywhere else, unless there's going to come a point where you start spending it.

Scott.


swill453 wrote:
Biggles wrote:Oh yes, fair do's if it's the only source of income. But I treat drawing from my ISas as a last resort.


It's a bit of a mental hurdle to get over, but when everything you've got is tax-sheltered anyway, and you've no other income, then (to me) it makes sense to treat ISAs as just another savings account or spending pot, and withdraw as necessary.

Scott.


The above pretty much sums up my relationship with my ISA to date. I'm where Biggles is at at the moment where I view my ISA income as an emergency backstop but I'm slowly coming round to Scott's "there's no point saving, in an ISA or anywhere else, unless there's going to come a point where you start spending it" view.

Deep down I know that for my current circumstances I could afford to take some of my ISA income rather than deny myself a few extra luxuries and leave all the income accumulating to end up in my estate when I die. I am however still having some difficulty clearing that mental hurdle that Scott mentions and actually setting up a regular monthly withdrawal. I keep telling myself "maybe next year" but next year comes and I don't do it. If anyone has been in a similar situation and has any advice about mind games that they played with themselves to help get over that hurdle then I would be interested to hear them.

[ Disclamer - Scott's first reply to Biggles did not actually quote the bit of Biggle's previous post that I underlined above but I added it in for clarity in my own post here. ]

- Julian

GeoffF100
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Re: Taking income from an ISA

Postby GeoffF100 » January 3rd, 2017, 5:00 pm

As far as mind games are concerned I can sympathise with you Julian. I spend very little, but have built up large assets and a large income. What was the purpose of that? Why do I still scrimp and save? Do I still feel immortal, despite my advancing age, albeit with excellent health? There often are no wholly rational answers. We have to do what we feel is right, and I would not be happy wasting money.


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