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Stocks & shares ISAs: find the cheapest platform - MSE

Investors who place a high priority on maximising their income today can achieve returns of more than 6pc, with the income free of further tax if the investments are held in an Isa. But such high income - 12 times the Bank of England's Bank Rate, which has been at 0.

Stocks and Shares ISA - A tax-efficient and flexible way to invest

Investors have to put their capital at risk by chasing very high yielding assets. Alternatively, they can invest in a growing number of specialist funds where the portfolio managers "sell" savers' rights to future capital growth in return for cash, which is used to boost income. These specialist income maximiser funds, sometimes known as "covered call funds", are explained in more detail below.

Investing ideas every day - or weekly email. They pose their own risks, and so to benefit from their income generating potential in the safest possible way, financial planners recommend that these funds are not held in isolation. Below are three model portfolios, each comprising four readily available funds, where several income maximiser portfolios are brought together, or complemented with other types of investment in order to reduce overall risk.

We have assumed an equal 25pc is invested in each of four funds. Each of the three models produces an average yield of more than 6pc. In the first model portfolio Brian Dennehy, of Fundexpert.

Each fund invests in company shares which pay a healthy stream of dividends, but on top of this the fund managers use "covered calls" to boost income returns. Mr Dennehy's fourth choice is the Kames Property Income fund, which invests in UK commercial property.

It currently yields 4. Fund name Yield Schroder Asian Income Maximiser 7pc Schroder Income Maximiser 6. Tom Becket, who buys funds for Psigma, the fund manager, chose the second model portfolio.

The RWC Enhanced Income 7pcAshmore EM Bond Total Return 7pcMorgan Stanley Global Balanced Income 6pc and Artemis Global Income 4pc are the four funds he would choose to target a 6pc income. Out of the four funds just one makes should i get a stocks and shares isa of "covered calls" - the RWC Enhanced Income portfolio. The others are traditional fund portfolios investing in global bonds and shares. Mr Becket said these three conventional funds, held alongside the RWC fund, will provide some growth potential as well should i get a stocks and shares isa a high income.

Fund name Yield RWC Enhanced Income 7pc Ashmore EM Bond Total Return 7pc Morgan Stanley Global Balanced Income 6pc Artemis Global Income 4pc. Therefore genuinely diversifying your portfolio is vital, which free stock market ebook how to invest in stocks trade why I think these four funds together fit the bill," Mr Becket said.

The third model portfolio also involves owning just one fund that uses derivatives - the Insight Equity Income Boosterwhich yields 8pc. This fund mainly sticks to the big blue-chip firms in the FTSE index, holding Royal Dutch Shell and BP, as its top two holdings. As with the other portfolio, it uses "covered calls" to magnify the income.

Alongside this sit two bond funds - New City High Yield 6. This fund holds 85pc of its money in shares. Fund name Yield Insight Equity Income Booster 8pc New Greek companies on nyse High Yield 6.

The majority of "income maximiser" type funds that invest primarily in shares use derivatives called "covered call options". This involves the fund manager agreeing to share any future capital gains with a third party.

A fee is paid for the agreement which creates immediate, upfront income.

How stocks and shares Isas work | Moneywise

This can be distributed to unitholders moving average trading system forex the fund as a stream of income. The strategy produces income above the dividend income paid out by the underlying shares.

This explains why these funds are able to offer yields of 7pc when the majority of the shares they hold yield closer latest forex custom indicators free download 4pc.

The downside is that, if the fund's holdings rise in value, some of that gain goes to whoever bought the derivative. Hence such funds perform poorly in rising markets. But as the buyer has paid up front, risk is limited.

It does not create additional risk," Mr Dennehy said. Howard Marks, an Oxford University graduate turned drug smuggler, made millions. Now he eagerly awaits royalty cheques. Paul Daniels wasted too much on Ferraris but has made a fortune on his home - despite the flood. Following George Osborne's announcement of the Budget, The Telegraph looks at the numbers on the UK's economy and financial health.

George Osborne should simply abandon changes that will reduce incentives to save and create yet more uncertainty.

A light-hearted quiz about the gaping maw of financial misery that perpetually threatens to devour us all. Accessibility links Skip to article Skip to navigation. Friday 16 June Andrew Oxlade Time to panic? No, follow the investment rulebook. Kyle Caldwell My five investment resolutions for Richard Evans Bank security: James Anderson This is why I'm worried for investors in the FTSE How to get 6. How to get 6pc income Fund name Yield RWC Enhanced Income 7pc Ashmore EM Bond Total Return 7pc Morgan Stanley Global Balanced Income 6pc Artemis Global Income 4pc "Investors also need to be totally aware that many income opportunities have become extremely correlated with each other.

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