My mother, still battling on thank you very much, says I was brought up on a mix of whitebait, tripe and onions, and pork belly. It might explain why my legs are slightly bowed (lack of proper fibre in my formative years) but it is a subject I tend not to broach with mother these days (yes, mother, I will be there in a minute!)
Instead I prefer to think that I was ‘brought up’ (in my 20s, at least) on a veritable feast of Peps and Tessas. Remember those delightful partners? As compatible as double acts Morecambe and Wise and the Winters brothers – Mike and Bernie (compatible on stage if not off).
Peps were launched in early 1987 (thank you Lord Lawson of Blaby), just as I was making a poor excuse for a cub reporter at Financial Adviser’s sister magazine, Money Management. And when I made the jump to the Sunday Telegraph three years later, John Major (now Sir John Major) announced the launch of tax exempt special savings accounts.
Their launch at key moments in my working life probably explains why I have been an avid follower of individual savings accounts ever since – the vehicle that took over from Peps and Tessas (thank you Gordon Brown).
It seems that despite all kinds of obstacles put before Peps, Tessas and Isas, the latter has become the lynchpin of the long-term, tax-friendly savings market.
Indeed I would argue that it has become as important, if not more important, than the tax-relief friendly pension.
Unlike pensions that have progressively been politicised – subject to ever more restrictions such as the impending further clampdowns on both lifetime and annual allowances – Isas have become more investor friendly. Long gone are the days when investment fund holdings were either classed as qualifying or non-qualifying (what in heaven’s name was all that about?). ‘General’ plans, ‘single company’ plans, self-select plans, have all bitten the dust.
Instead you can now invest £11,520 in the current tax year in near enough anything (shares, investment funds, even Aim-listed shares) and sit back and watch your pot grow (you hope) like a magnificent oak tree. From next April, the annual limit will rise to £11,880.
These tax-friendly Isas have been so successful that a number of Isa millionaires have been created, none more so public than Liberal Democrat peer Lord Lee. Amazingly, 10 years ago, he broke through the £1m Isa valuation barrier and to this day he holds some of the shares that helped him along the road to millionaire status – the likes of soap manufacturer PZ Cussons and professional business service provider the Christie Group.
In fact if you are short of ideas for Christmas gifts for your most lovely clients (to my adviser, I already have one) may I suggest you buy a copy of John Lee’s book, How to Make a Million Slowly: My Guiding Principles from a Lifetime of Investing. It is £17.99 hardback, although you can get it for around £12 plus postage if you have a mooch around the internet.