We really don’t help ourselves with our jargon, do we? Most investors will know CGT, capital gains tax and perhaps be paying it for the first time. The allowance has fallen from £12,300 to just £3,000 in just a couple of years and that’s made moving money from taxable accounts to ISAs or pensions more difficult, especially in good years when you’ve made a profit. MPS, model portfolios, are where your money may be invested on our recommendation. You’ll have a mix of funds run by a portfolio manager whose job is to buy, sell and rebalance to make sure the risk level doesn’t get out of line if shares go up by up more than other investments. That may now give you a tax bill to pay. Nice problem to have, we might say, but you probably won’t when you have to pay it. A rethink is needed; and there are no particularly easy answers.
Should we be rethinking ‘low risk’ investment portfolios?
When we talk about risk, more generally means more shares, less more bonds. The rationale being that, when shares are sold, the money generally goes to lower risk investments.
