New ISA rules come into force next week. Investors have had plenty of warning but if you have not planned what to do with the extra £3,120 you are allowed from July 1 you should think about it this weekend. Procrastination is the thief of dividends.
The new rules will allow you to put all your ISA into cash whereas previously only half could be left rotting in bank accounts. This is a mixed blessing. While it does mean that a large number of savers will get a modest interest rate instead of a pitiful one in an ordinary savings account, they will be encouraged to push their heads further into the sand.
Cash ISAs are better than nothing – and that’s the only thing you can say in their favour. They are high risk because they mostly involve locking your money up for at least a year, possibly more, while anything could happen to inflation.
“Guidance” on interest rates from Bank of England Governor Mark Carney gets ever more erratic but the latest indication is that base rate will rise from 0.5% to 2.5% over the next three years. What sort of rate will you be getting on your cash ISA in the meantime?
If shares surge in the second half of next week as private investors pile in, it may be worth holding off until they settle. Otherwise you should start thinking of what shares you want to buy. Start now.
Wheels go Round
Two companies in different forms of transport, Stagecoach (SGC) and Northgate (NTG), issued interesting announcements this week, and both companies can claim they would make worthwhile investments.
Bus and trains operator Stagecoach reported a modest increase in revenue and profits, solid progress that is likely to continue. The shares slipped for no good reason immediately after the announcement, presenting a short-lived buying opportunity for those attracted by the prospect of a steadily rising dividend.
Stagecoach is building its rail operations and with no sign that the government has any intention of curbing the fleecing of passengers, or of the taxpayer subsidies it shovels in, this is a great sector to be in. UK bus operations are doing very nicely, too.
Bus operations in the US are always at the mercy of US regulators and of the pound-dollar exchange rate but for now all is well across the Atlantic.
The shares move higher last year but are off their best level reached in March and are little changed from the start of the year. Despite the modest yield of about 2.6%, they are well worth a look for the long term.
Northgate hires out vans in the UK and Spain. Its progress has been much more erratic, with restructuring and a fund raising leading to a loss last year. Now it is bouncing back with debt well down, new sites opening and more vehicles being hired out.
The company depends on continuing recovery in its two markets. The yield is only 2% and although that could well improve the rise in the share price immediately after the announcement looked distinctly overdone. Worth holding if you have stuck with the company through thick and thin but not a buy above 500p.
No Score Draw
Four of the five football teams in the British Isles failed to qualify for the World Cup and with England not bothering to show up in Brazil either it has been a dismal sporting start to the summer. England’s cricket team threw away two winning positions against Sri Lanka and contrived to lose the series. Rarely have hopes rested so heavily on Andy Murray to rescue national spirits.
Luckily for the likes of ITV (ITV) and relevant High Street outlets, people buy TV advertising slots, television sets and team strips well before the event, though even the most optimistic England supporters were surely not counting on their football team getting far this time. The Confederation of British Industry says retail sales ground to a near halt this month as the hoped-for boost failed to materialise.
On balance, the early bath is bad for pubs, bad for shops and bad for ITV, whose shares have been sliding since the beginning of this year. I can’t understand why they took an upward blip this week. ITV will continue to struggle in a highly competitive market.
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