LC Gilts + Futures / Spread Bets - Any thoughts or experiences to share?
So I’m getting to the stage now where I need to deploy to GIA having maxed other more efficient ways to deploy cash without paying tax.
8 years from FatFIRE target and accumulating decently. Doing some maths and backtesting, I decided like the idea of 120% target exposure in my GIA to a portfolio of diversified global etfs (slightly overweight EM and dare I say it, UK vs FTSE AW). Risk of a forced deleverage is close to zero if you are disciplined. However, I then realised that the cost of borrowing the 20% (from IBKR at Sonia + 1.5%) above what I’ve funded is not deductible from the taxable gain. Which is both bad but got me thinking:
is anyone else playing with (gentle) structural term leverage. Idea here is to provide a bit of juice (like 0.5%-1% pa across the cycle), not get rich quick. I figure that in the long run the equity risk premium should see you good so long as you never have to sell in a downturn.
isn’t a better way to do this actually holding low coupon gilts and overlaying rolling futures for the equity exposure? Or is it? No etf running fees, no dividends/eri to get taxed punitively on but set off against roll and execution costs and crystallising gains for cgt at each roll. Has anyone got any experience here or done the maths on this?
actually taking it to an extreme, the optimum would be to do the above but replace futures with index spread bets as no tax ever. I have precisely zero knowledge of this market and what trading costs look like, but agin interested in the experience of others.
any thoughts on family investment companies or other corporate structures for shielding gains until drawn?
I quite like the idea of doing something optimised after making the big decisions around asset allocations, even if it becomes a part time job (at least to begin with whilst I work out what I’m doing and build the tooling to automate). I absolutely do not want to end up on the bad side of hmrc, mind.
Thanks in advance!