Investment trusts

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10. Ways of investing in an IT

The two main ways of investing in an IT are:

1. Through a stockbroker in exactly the same way as you would trade shares in any other public company.
   • In most cases you will be buying shares in an IT that already exists
   • You can also subscribe for shares in a new issue of an IT when it launches.
   • Normal brokerage charges will apply on purchases and sales using a stockbroker, and you will have to pay 0.5% stamp duty on purchases.

2. Through a savings scheme or other fund management product.
   • Usually this will be cheaper than using a stockbroker directly.
   • The fund management product could be a regular savings scheme, or a special product like an ISA or a personal pension.

Many ITs operate ISA-based schemes, and if you visit the AITC website you will see a list of them with links to their websites. You can put up to £7,200 into an IT ISA this year and receive income and capital gains tax-free, but ISA schemes are more expensive than savings schemes so only worth doing if the tax breaks work in your personal circumstances.

If you set up a regular savings scheme by direct debit, you can stop and start without any additional charges whenever you like as long as you maintain a minimum amount in your account. This means that if you have particularly heavy outgoings one month, you can decide not to make your IT payment that month, but start again the following month.

Six IT fund management groups now provide personal pensions. Some also offer Free Standing Additional Voluntary Contributions so that you can add lump sums if you already have a personal pension but don't want to open another account.

Note that the different ways of investing have different cost implications. For all these products, you need to contact your independent financial adviser or the IT itself.

1. What are investment trusts? 2. What does an IT do? 3. Difference from unit trusts 4. IT specialisation 5. Tax advantages 6. Discounts: the share price of ITs 7. Gearing 8. Split capital trusts 9. Warrants 10. Ways of investing in an IT 11. Factors to consider when choosing an IT 12. Where to find information about ITs 13. Conclusion