Yes .
Hi, Everyone; Howās it going?
I have overly optimistic questions about TAX.
If my profits from selling stock were say, Ā£125,000 would that push my income tax bracket up for the following year; or are the income tax brackets kept separate from Capital Gains? (aside from the calculation of CGT).
Likewise, as a sole trader, would the amount I have to prepay toward my āPayments on accountā go up as a result of the profits from the stocks?
As I said, Iām just curious to know how trading stocks affect income tax. The likelihood of me ever making enough profit to push me into another tax bracket is non-existant.
Thanks a bundle.
Profit from selling stocks is a capital gain and is taxed separate from income. It is not used to calculate payments on account.
@DavidM Short, sweet and easy to understand.
Thanks a bundle
Now I just need to figure out a magical way to make that amount of money.
Hi All!
Totally new to all this and may well be asking some possibly daft questionsā¦
First one - can I start with a small amount of money, say Ā£50, and learn my way around nice and slowly?
Thanks!
Hi @SB426
Absolutely!! You should defiantly start with a little a build over time as you feel more comfortable.
I would start looking at companies you know and might uses, many have threads here and people post stories and articles that you might like to read.
Apple, Google, Greggs just for starters.
Freetrade have some reading designed precisely for new investors here How to invest in stocks - A beginnerās guide | Freetrade or videos on the this YouTube is good FREETRADE FOR BEGINNERS - How To Open An Account And Buy Your First Shares // Step-By-Step Guide - YouTube
Neil!
Thank you, that made me feel better. Iāll keep reading, keep asking, and when Iām ready Iāll dive in.
Actually, Greggs was on my list of companies to look at, but I suspect Apple and Google are way out of my reach just yet
You can also easily invest in Apple or Google. Just specify how much you want to invest and it will buy a fraction of the share. No need to buy a full one.
Fab, thanks for the info. Iāve learned something already!
Make sure you dive in sooner rather than later if you havenāt already joined the app. Thereās a comp running to get a chance to win higher prizes for new customers.
Edit: also, when you do register, it would be great to hear what your user number is in app in the āhow many usersā thread.
Save a small amount regularly if you can, regular saving is more important than what you put it into at first IMO as gains are likely to be limited the first few years.
You can buy fractional shares so you donāt have to buy a full share of apple say, but also do consider ETFs (collections of shares), particularly VWRL, which is much safer than any particular share or even market.
I agree with the savings part - I plan to be saving alongside this as well.
Another, possibly obvious, question - You hear all the horror stories of people who lost everything on the stock market. My question: Is there a situation where I could have a company come after me for more money that I initially invested? So, if I am super careful and ONLY invest the bits of disposable income that I can easily spare, then my only risk is losing that amount?
So, to keep things easy to understand, if I invest my initial Ā£50, that is the maximum I can lose? Which means, if I understand it correctly, the horror stories are people who invested every penny they had (potentially unwisely?)
Or am I being far too simplistic?
Simple answer is no You can only lose what you put in on FT in worst case scenario.
When you invest in a stock what youāre doing is buying a tiny piece of that company. The worst that could happen is that company could declare bankruptcy and as part owner of the business your stake is then worth Ā£0.
Youāre not being to simplistic, people who loose all their money typically over stretch and invest everything they have, often their pension. Theyāll typically not have a very wide range of holdings which means theyāre risking everything on 1 or 2 companies.
Stick to investing money you donāt need to live on / cover an emergency with, and aim to hold them for a minimum of 3-5 years. Then youāre on the wealth train calling at financial independence junction & smug faced parkway. All aboard Choo Choo!
That is exactly what I am thinking! Is this spare money for a cinema trip, or day out, or is it for car repair. The former - then I can choose to invest instead. The latter - then it stays in my hands.
Definitely looking to be on the Hogwarts Express to Gringotts!
Whatās ETF - I get itās a collection of shares, but what does ETF stand for?
And whatās VWRL?
This zooms out to more of a personal finance topic. Good advice is to have an emergency fund so that should something terrible happen, like loosing your job or illness, you can cover your bills for X months without worrying.
Fun fact: I was once sacked with a 2 month old baby at home! I had an emergency fund and while I didnāt really want to spend it my mortgage and bills were covered until I started a new job.
How much should you have? Common advice is for 3-6 months. Hold this somewhere unsexy and accessible maybe premiums bonds as it only takes a few days to get it or a savings account.
Once you have this then money could can invest becomes easier to separate from, it gets very nervy if youāve got money for nee tyres in the stock market and itās not doing well.
Exchange traded fund - Exchange-traded funds - Invest in ETFs | Freetrade
VWRL - Is a very popular fund. Itās run by Vanguard who are known for their low management fees. This one is made up of over 6000 (I think) companies so is an easy way of spreading your risk out.
I have just over 2 months salary stashed in a cash isa, and look to be maintaining around 3 months in there as a minimum.
And yeah, unexpected new tyres happened yesterdayā¦
https://www.reddit.com/r/UKPersonalFinance is a good resource for general PF questions / advice.