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.
These tax-friendly Isas have been so successful that a number of Isa millionaires have been created
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.
I cannot think of a better way of reinforcing that key message to clients that long-term investing can prove utterly rewarding. Certainly, mother is getting a copy.
Enough of book plugging. Although it was good to learn in the wake of last week’s Autumn Statement that the government is now considering peer-to-peer lending as an eligible Isa investment, I think George Osborne actually missed an Isa trick or two.
It would have been lovely to see him take Isas on to the next level by clearing away some of the debris that still surrounds them.
By debris I mean the ridiculous rule that only allows half the annual allowance to be saved in cash Isas, and the other stupid stipulation that prevents transfers from equity Isas to cash Isas. Surely Isas should be no more than a tax-friendly wrapper into which investors can fold an assortment of assets, be they shares, cash or bonds. We need fewer restrictions, more freedom.
And it would also have been brilliant if he had put his faith in Isas by raising the annual allowance substantially – say to £20,000. It is a course of action that some serious City hitters – Katherine Garrett-Cox at Alliance Investment Trust and Tidjane Thiam at Prudential – were advocating in the run up to the Autumn Statement.
And rather eloquently too. ‘One of the key engines of business investment is household savings,’ they said. ‘It is the savings of ordinary families, whether they are held in bank accounts or by fund managers and insurance companies, that provide a significant portion of the finance for long-term business investment.’