-
They just don’t work for me as I actually withdraw the income earned. With accumulation units the income is much more opaque as it is wrapped up with the capital gain. But the real downside is that you have to sell the underlying asset to crystallise the income. Which hurts future capital growth and future income generation too. They’re OK while accumulating wealth but not so great when drawing down the income.
For every fund I have looked at, the notional dividend paid by accumulation units is exactly the same as the actual dividend paid by the income units. If you hold acc units and sell exactly the amount needed to produce that dividend, the capital growth of the remainder will be exactly the same as holding income units.
The tax consequences might be different (none in ISA of course) and I suppose some brokers will charge a fee to enact the sale. With acc units you can of course control the amount you sell to produce the cash you require.
@John yes you’re right that the notional dividend is exactly the same but it’s more difficult to withdraw just the notional dividend as you have to sell physical units which potentially creates capital gains issues.
I also have a general investment account where this has real tax implications.
I like to see the dividend /income earned and actually credited to a cash account. It’s completely separate from any capital gain of the underlying assets.
I’m not saying people shouldn’t invest in accumulation units but I prefer not to. Fortunately we have the choice.
Don’t forget the equalisation.
Was that the one with Liam Neeson or Jason Statham?
Don’t forget the equalisation.
Was that the one with Liam Neeson or Jason Statham?
Edward Woodward if you are my vintage.
I was thinking Denzel Washington, very topical as his character effectively came out of retirement!
- You must be logged in to reply to this topic.
Popular articles this week:
