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best to buy in or out of ISA during market crash?

Stocks and Shares ISA , Choosing funds for ISA's, risk factors for funds etc
Investment strategy discussions not dealt with elsewhere.
agomez
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best to buy in or out of ISA during market crash?

#298537

Postby agomez » April 7th, 2020, 9:33 am

Hi, like a lot of people I am sitting on a big paper loss, but I also have a new 20k isa allowance. Shares are good value, and I will be slowly buying. My question is: is it best to buy out of the isa now because paper losses will offset future gains...and reserve the isa allowance for later in the year? Any advice on this strategy? thanks

Alaric
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Re: best to buy in or out of ISA during market crash?

#298539

Postby Alaric » April 7th, 2020, 9:42 am

agomez wrote: My question is: is it best to buy out of the isa now because paper losses will offset future gains...and reserve the isa allowance for later in the year?


There's no longer any rule which says you cannot hold cash in an ISA. So you can transfer the £ 20,000 allowance now and only invest it when you fell more confident.

dealtn
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Re: best to buy in or out of ISA during market crash?

#298563

Postby dealtn » April 7th, 2020, 10:21 am

agomez wrote:Hi, like a lot of people I am sitting on a big paper loss, but I also have a new 20k isa allowance. Shares are good value, and I will be slowly buying. My question is: is it best to buy out of the isa now because paper losses will offset future gains...and reserve the isa allowance for later in the year? Any advice on this strategy? thanks


Where are your potential gains located?

agomez
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Joined: December 28th, 2019, 1:46 pm

Re: best to buy in or out of ISA during market crash?

#298655

Postby agomez » April 7th, 2020, 2:20 pm

I should have clarified I intend to buy basically the same shares in vs out of the isa but the isa is automatically tax free whereas the non--isa would effectively also be tax free because losses will offset gains.

kempiejon
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Re: best to buy in or out of ISA during market crash?

#298656

Postby kempiejon » April 7th, 2020, 2:24 pm

agomez wrote:I should have clarified I intend to buy basically the same shares in vs out of the isa but the isa is automatically tax free whereas the non--isa would effectively also be tax free because losses will offset gains.

Do you have dividends, do any unsheltered dividends approach the tax free allowance of £2000? Income tax on dividends as well as CGT might be another factor.

EthicsGradient
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Re: best to buy in or out of ISA during market crash?

#298660

Postby EthicsGradient » April 7th, 2020, 2:42 pm

agomez wrote:Hi, like a lot of people I am sitting on a big paper loss, but I also have a new 20k isa allowance. Shares are good value, and I will be slowly buying. My question is: is it best to buy out of the isa now because paper losses will offset future gains...and reserve the isa allowance for later in the year? Any advice on this strategy? thanks

This implies you will have, over the coming year, more than the £20k allowance that you want to invest (because you could invest outside the ISA now, and still be able to put your £20k contribution in it later). If you think shares are going to go up, then starting off with investment inside the ISA would mean the largest gains are inside the ISA, and then you invest the rest of the money later in the year outside it, with slightly less gain when you eventually sell them.

However, if you have, or expect you will have, substantial gains outside the ISA in the long term, then it's worth seeing if there's a way you can use your yearly Capital Gains allowance - £12,300 this year. How to use that depends on what your losses, or gains, are outside the ISA right now.


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