Credit deflation and the reflation cycle to come (part 2)

[BWW]

1 hour ago, NogintheNog said:

The government can of course change the rules any time they want. In terms of the tax free part of an ISA, the whole thing is tax free. I assume you mean that if you withdraw from an ISA the government then taxes you at your nominal rate?

Can't see that myself, double taxation! ISA's would become pointless. They could row back on the amount you can put in annually, shrinking the tax avoidance, but leaving the previous years intact. To my mind though ISA's are much less of a hanging fruit than pensions. All of my friends have Pensions, many significant sums. Not all of them have ISA's, and no where the same amounts as pensions. I'm the reverse!

The CG and divis [un]earned within the isa have not yet been taxed though.

If a cap on total value in the ISA was applied making CG and divis above the cap taxable, it would limit but not eliminate their usefulness. For SS ISA the bigger issue with this is how you calculate value, if it's on current market price you have effectively forced a CG event and payment of tax which would be discretionary [advantage to choosing which year you realise a gain] outside the isa.

They may as well entitle this haha gotcha suckers if they do it. But the avg Joe is dumb enough not to understand it, media are shit and it would be completely consistent with how they sucked folk in to pension schemes and then screwed them over once it was as expensive to get out as to stay in.

[The_Doc]

40 minutes ago, DurhamBorn said:

Can you pay the £2880 into the same SIPP you are taking the  UFPLS from?

Yep. When you take the UFPLS, you are essentially crystallising just part of it, leaving the rest as is. This will appears as separate "accounts" in HL or wherever you have it (one drawdown account and one uncrystallised SIPP). You can still add to £2880 each year to the uncrystallised SIPP.

[Wheeler]

57 minutes ago, DurhamBorn said:

Can you pay the £2880 into the same SIPP you are taking the  UFPLS from?

That's what I'm doing. I pay in on the 6th April to get the free £720 as soon as possible, usually by beginning of May if I recall correctly, and take the lump sum out in March to leave it invested as long as possible. Also the SIPP provider takes tax off using some emergency rate that HMRC refunds when I do my self assessment so I like to keep the period that the government temporarily has some tax to as short a time as possible!

[DurhamBorn]

38 minutes ago, Wheeler said:

That's what I'm doing. I pay in on the 6th April to get the free £720 as soon as possible, usually by beginning of May if I recall correctly, and take the lump sum out in March to leave it invested as long as possible. Also the SIPP provider takes tax off using some emergency rate that HMRC refunds when I do my self assessment so I like to keep the period that the government temporarily has some tax to as short a time as possible!

I think there is some form you can fill in as well if not on self ass to get the tax back.Pain in the arse really,but like you say if on self asses if you take the lump out in the March say £16600 then you can claim the tax back in the April so its nice and quick.Thats how i intend to take it out each year between 55 and 67,then the year before state pension go into full drawdown and take the 25% of the whole pot.Reason being from state pension age im only going to be taking just over £3k from my SIPP as i want that and state pension to be in tax allowance area.Il take my extra income from my ISA then that will of just taken a big boost from the 25%.Highly likely between 55 and 67 when im taking those lums from pension all ISA divid etc will be re--invested and nothing taken.

[NogintheNog]

3 hours ago, Democorruptcy said:

Sorry maybe didn't make it clear but I meant pension income also counts towards your personal allowance.

Gotcha. Yeah that is possible, they could go back on the tax free status of ISA's. However that would send out some very dangerous signals and I think there are other much more lucrative revenue streams available. Like inflation.

[NogintheNog]

3 hours ago, BWW said:

The CG and divis [un]earned within the isa have not yet been taxed though.

If a cap on total value in the ISA was applied making CG and divis above the cap taxable, it would limit but not eliminate their usefulness.

This would be quite a complicated revenue stream though for not much return. Do you think they have the HMRC resources to follow something like that through?

[NogintheNog]

2 hours ago, The_Doc said:

3 hours ago, DurhamBorn said:

Can you pay the £2880 into the same SIPP you are taking the  UFPLS from?

Yep. When you take the UFPLS, you are essentially crystallising just part of it, leaving the rest as is. This will appears as separate "accounts" in HL or wherever you have it (one drawdown account and one uncrystallised SIPP). You can still add to £2880 each year to the uncrystallised SIPP.

Looks like you can, and AJ Bell are saying the same.

Although back in 2015 when I took mine it was a small company pension with a travel company I worked for. If I took it I was then entitled to staff concessions for life (meaning a £45 return ticket to Spain for instance on standby!) So I took the whole lot and paid tax on the remaining 75%. However that year I hardly worked, so paid very little tax on it, and it was all re-invested fully into my ISA's.

Sadly the next year the MPAA dropped to £4000. Then the year after the travel company went bust = no concessions any more!

[The_Doc]

3 hours ago, Wheeler said:

That's what I'm doing. I pay in on the 6th April to get the free £720 as soon as possible, usually by beginning of May if I recall correctly, and take the lump sum out in March to leave it invested as long as possible. Also the SIPP provider takes tax off using some emergency rate that HMRC refunds when I do my self assessment so I like to keep the period that the government temporarily has some tax to as short a time as possible!

There is a way around this tax nightmare.

Chris Dando from Burfield Financial Planning says he’s advising his clients to take a small payment first and wait for the tax code to adjust before taking another one.

He told the Telegraph: “We are advising people to take a nominal payment. The first payment is taxed on an emergency basis as if it’s a regular payment. So, if we take an initial £100 or even £1 then HMRC will be aware and change the tax code accordingly.

“This ensures the correct tax code is used from the first proper payment. The only downside is that it slightly delays the process, as it may be another three or four weeks before the correct code is applied to future payments.

“So people who are desperate to get their money might be better off taking the money on an emergency basis and then claiming the rest back later.”

[DoINeedOne]

The only coal-focused exchange-traded fund is closing at 12 years old, another sign of investors’ desire to withdraw from the industry.

The VanEck Vectors Coal ETF, which went public in January 2008 under the ticker KOL, stopped trading this month and will return investors’ money on Dec. 22. It had about $35 million in assets. At its height in 2011, the ETF had $908 million, said Ed Lopez, head of ETF Product at VanEck Associates.

The move comes as other investment companies withdraw from funding coal businesses.
In January, BlackRock said the firm’s actively managed funds would no longer hold shares of companies that derive more than 25% of revenues from thermal coal. It unveiled a major expansion of its sustainable-investing lineup.

This month, New York state’s $226 billion pension fund set itself the goal of reducing net emissions of greenhouse gases from its portfolio to zero by 2040. It said it is divesting from coal and tar sands and will next review fracking companies, major oil companies, fossil-fuel companies and oil-and- gas transportation and pipelines.

A number of big money managers have also set net-zero targets for their portfolios, as the Paris Agreement to curb the rise in global temperatures marks its fifth anniversary. In such an environment, it’s no surprise that coal’s fans are diminishing.

In a statement, VanEck said it “continuously monitors and evaluates its ETF offerings across a number of factors, including performance, liquidity, assets under management and investor interest, among others. The decision was made to liquidate the fund based on an analysis of these factors.”

VanEck has been adding green offerings in recent years, including the $240 million VanEck Vectors Low Carbon Energy ETF (ticker: SMOG) and the $50 million VanEck Vectors Green Bond ETF (GRNB).

[DurhamBorn]

1 hour ago, The_Doc said:

There is a way around this tax nightmare.

Chris Dando from Burfield Financial Planning says he’s advising his clients to take a small payment first and wait for the tax code to adjust before taking another one.

He told the Telegraph: “We are advising people to take a nominal payment. The first payment is taxed on an emergency basis as if it’s a regular payment. So, if we take an initial £100 or even £1 then HMRC will be aware and change the tax code accordingly.

“This ensures the correct tax code is used from the first proper payment. The only downside is that it slightly delays the process, as it may be another three or four weeks before the correct code is applied to future payments.

“So people who are desperate to get their money might be better off taking the money on an emergency basis and then claiming the rest back later.”

I like that £1 option,though i hate sitting around waiting for HMRC and i wonder how would you know they had actually updated the tax code?,.The P55 form can be filled in online on the government gateway and the tax claimed back quite easily and quickly.The whole thing is a complete shambles of course.

[MrXxxx]

For those that are clueless like me about how worldwide  currency fluctuations/central banks work and how they affect the macro picture etc, I am currently reading `The Death of Money` by James Rickards and it seems to be helping me understand it, and gives a historical context. Will post full details and a review in `The Library` thread once I have finished it, but mentioned it just in case Father Christmas brings you book tokens! :-) :-) :-)

[ThoughtCriminal]

3 hours ago, DoINeedOne said:

The only coal-focused exchange-traded fund is closing at 12 years old, another sign of investors’ desire to withdraw from the industry.

The VanEck Vectors Coal ETF, which went public in January 2008 under the ticker KOL, stopped trading this month and will return investors’ money on Dec. 22. It had about $35 million in assets. At its height in 2011, the ETF had $908 million, said Ed Lopez, head of ETF Product at VanEck Associates.

The move comes as other investment companies withdraw from funding coal businesses.
In January, BlackRock said the firm’s actively managed funds would no longer hold shares of companies that derive more than 25% of revenues from thermal coal. It unveiled a major expansion of its sustainable-investing lineup.

This month, New York state’s $226 billion pension fund set itself the goal of reducing net emissions of greenhouse gases from its portfolio to zero by 2040. It said it is divesting from coal and tar sands and will next review fracking companies, major oil companies, fossil-fuel companies and oil-and- gas transportation and pipelines.

A number of big money managers have also set net-zero targets for their portfolios, as the Paris Agreement to curb the rise in global temperatures marks its fifth anniversary. In such an environment, it’s no surprise that coal’s fans are diminishing.

In a statement, VanEck said it “continuously monitors and evaluates its ETF offerings across a number of factors, including performance, liquidity, assets under management and investor interest, among others. The decision was made to liquidate the fund based on an analysis of these factors.”

VanEck has been adding green offerings in recent years, including the $240 million VanEck Vectors Low Carbon Energy ETF (ticker: SMOG) and the $50 million VanEck Vectors Green Bond ETF (GRNB).

Meanwhile in China and the developing world..............

[The_Doc]

2 hours ago, DurhamBorn said:

I like that £1 option,though i hate sitting around waiting for HMRC and i wonder how would you know they had actually updated the tax code?,.The P55 form can be filled in online on the government gateway and the tax claimed back quite easily and quickly.The whole thing is a complete shambles of course.

Your Tax Code is displayed when you logon to the gov gateway. How quickly that gets updated on the website is another matter. Or you could call them to confirm.

[MrXxxx]

Eureka moment...why compulsory workplace pensions?...traditionally financial repression (via -ve real rates) was via capping interest rates and so `stealing` from savers. Savers found ways to avoid this either by investing in hard assets I.e property  advent of online brokers/share buying or buying fewer govt bonds. To counter act this make it compulsory for pension companies to buy them, and so compulsory for the general public to buy them without realising....financial repression by stealth...brilliant idea!

[Harley]

Greetings and thanks to you all.

[DurhamBorn]

Just wanted to wish everyone a happy xmas and for all adding their thoughts and knowledge to the thread this year.I think we can safely say without any doubt the thread has proved itself and a lot of the previous hard work paid off in buckets and hopefully helped a lot of people hold their nerve and enter the right sectors in the falls we were waiting for earlier in the year.

Value/inflation sectors will start to feel the liquidity from M2 later in spring as the lag would suggest it will be entering the real economy.Inflation could be around 3% late summer,and the fact it then slowly creeps higher (outside of a BK) will force a massive movement in assets from disinflation loving assets to inflation ones.

The sterling target of around $1.40 looks in play,then later resource currency like CAD and AUS will start their long 8 year increases.

Remember the market isnt linear.It will continue to try to shake out weak hands from the reflation sectors so hardly anyone captures the long upside.

Most people will end up like this turkey here,stuffed.

 

 

[Sasquatch]

I raise a glass to you!! @DurhamBorn

Happy Christmas!

[Harley]

1 hour ago, MrXxxx said:

Eureka moment...why compulsory workplace pensions?...traditionally financial repression (via -ve real rates) was via capping interest rates and so `stealing` from savers. Savers found ways to avoid this either by investing in hard assets I.e property  advent of online brokers/share buying or buying fewer govt bonds. To counter act this make it compulsory for pension companies to buy them, and so compulsory for the general public to buy them without realising....financial repression by stealth...brilliant idea!

This was always my assumption, but probably "wonderful" green/infrastructure/social bonds which in reality are mostly used for revenue expenditures such as paying public sector wages, graft, etc.  Maybe even a ponzi.  Sunak has already issued/announced such a bond?

[MrXxxx]

4 minutes ago, Harley said:

Sunak has already issued/announced such a bond?

Think it was a thought process offered by Napier in the Moneyweek podcast recently posted above.

[Loki]

Happy Christmas to my cyber friends in the basement

[Harley]

1 hour ago, MrXxxx said:

Think it was a thought process offered by Napier in the Moneyweek podcast recently posted above.

Yes it was but I also thought I heard Sunak say something in his last spending review or whatever it was.  Some sort of bond.

[MrXxxx]

44 minutes ago, Harley said:

Yes it was but I also thought I heard Sunak say something in his last spending review or whatever it was.  Some sort of bond.

Well if that's the case people can't say they weren't warned...be interesting to see what is in the next budget, think I may be doing some workplace pension `restructuring` before then!

[Errol]

Merry Christmas everyone.

May this thread continue to be the best thread on the internet in 2021.

[sancho panza]

11 hours ago, DurhamBorn said:

Just wanted to wish everyone a happy xmas and for all adding their thoughts and knowledge to the thread this year.I think we can safely say without any doubt the thread has proved itself and a lot of the previous hard work paid off in buckets and hopefully helped a lot of people hold their nerve and enter the right sectors in the falls we were waiting for earlier in the year.

Value/inflation sectors will start to feel the liquidity from M2 later in spring as the lag would suggest it will be entering the real economy.Inflation could be around 3% late summer,and the fact it then slowly creeps higher (outside of a BK) will force a massive movement in assets from disinflation loving assets to inflation ones.

The sterling target of around $1.40 looks in play,then later resource currency like CAD and AUS will start their long 8 year increases.

Remember the market isnt linear.It will continue to try to shake out weak hands from the reflation sectors so hardly anyone captures the long upside.

Most people will end up like this turkey here,stuffed.

 

 

Add together the views for the two threads here and the other one on ToS and it's prob 3mn views or so(admitedly prob 400k each from me and @Loki) A testament to it's founder and the many contributors.

It's been an incredible journey thus far and hopefully more to come.

[DurhamBorn]

You know when you can be right by being wrong,and they keep knicking out roaring 20s quote .I think the FTSE will do well over the cycle compared to many.However unlike this article it will actually be the very stocks he says drag the FTSE down that will do the lifting.Another example of why most people will hold the wrong areas for a reflation.

The comment about shrinking tobacco companies is also incredible considering BAT has delivered amazing returns over 30 years.

https://www.telegraph.co.uk/business/2020/12/24/roaring-twenties-should-finally-propel-ailing-ftse-five-digits/