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## Article in Telegraph on ISA Millionaires

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Lootman
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### Re: Article in Telegraph on ISA Millionaires

tjh290633 wrote:This is my record of PEP, Single Company PEP and ISA allowances since inception in 1987:

`Yr to 5 Apr   PEP         SCPEP       ISA          Total            1988    2,400.00                              2,400.00       1989    3,000.00                              3,000.00       1990    6,000.00                              6,000.00       1991    6,000.00                              6,000.00       1992    6,000.00                              6,000.00       1993    6,000.00    3,000.00                  9,000.00       1994    6,000.00    3,000.00                  9,000.00       1995    6,000.00    3,000.00                  9,000.00       1996    6,000.00    3,000.00                  9,000.00       1997    6,000.00    3,000.00                  9,000.00       1998    6,000.00    3,000.00                  9,000.00       1999    6,000.00    3,000.00                  9,000.00       2000                             7,000.00     7,000.00       2001                             7,000.00     7,000.00       2002                             7,000.00     7,000.00       2003                             7,000.00     7,000.00       2004                             7,000.00     7,000.00       2005                             7,000.00     7,000.00       2006                             7,000.00     7,000.00       2007                             7,000.00     7,000.00       2008                             7,000.00     7,000.00       2009                             7,000.00     7,000.00       2010                            10,200.00    10,200.00       2011                            10,200.00    10,200.00       2012                            10,680.00    10,680.00       2013                            11,280.00    11,280.00       2014                            11,520.00    11,520.00       2015                            15,000.00    15,000.00       2016                            15,240.00    15,240.00       2017                            15,240.00    15,240.00       2018                            20,000.00    20,000.00       2019                            20,000.00    20,000.00                                                                                                                          Totals        65,400.00   21,000.00   209,360.00   295,760.00`

Note that the Single Company PEP figures are my recollection, and may be a year adrift.

Making the current value of maximum contributions £1 million gives an XIRR of just over 8%. My actual IRR is 9.8%, which would give a current value of about £1.4 million.

That assumes no withdrawals, of course.

Interesting. I recall starting in 1987 so that was probably the first tax year in your list, ending in April 1988.

For a while there were lower limits for PEPs invested in funds rather than individual companies. Your number is the limit for investing in shares. That distinction was abolished at some point.

As best I recall I have always contributed the maximum, with the exception of single company PEPs, which I also had but then sold to fund a property venture. So by your figures I have contributed 274,760.00 - a little more than my earlier 250K guess. No rolled over TESSAs either.

I had earlier PEPs from Lloyds, Alliance and Personal Assets, but have since rolled them all over into a single ISA with TD/ii. It's value is about 800K at the minute, so an adequate but hardly sparking performance.

My wife maxxes out her ISA as well, although she started later than me. Hers is about 600K at this point. So as a couple we are ISA millionaires, but not individually.

Pastcaring
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### Re: Article in Telegraph on ISA Millionaires

All it proves is confirmation bias( people see what they want to see ).That is all it will ever prove.

Checking the WAL mart site ( WMT ) it will tell you a purchase of 100 shares at a cost of US\$ 1650 on IPO is now worth around US\$20 million ,due to share splits.Ownership is now 204,000 shares at around US\$ 100 each.Why does that not prove that diversification is useless?

There is no right plan,follow the crowd and you end up in the same place as the crowd.

A well diversified portfolio will produce an average of that index,minus costs.Spend a lot of money for not a lot of return

Picking your own companies and leaving them to compound can produce great returns.

The number of millionaires in any country is small,people would rather dream .

As I said I like MQG ( ASX) .From the day I bought it it has been volatile.1000 shares at \$60 each in 2006.Do nothing at all except use the DRP.

Shareholding has doubled now 2000 shares at \$126 each,numbers are rounded.I really like having to do nothing at all.

All it proves is confirmation bias.I think in 30 years from that date it is quite plausible to have anywhere between\$2 and \$4 million.

If I am right I am right, if I am wrong I am wrong.

To qoute Aristotle " If the facts don' t fit in with want they want to see ,then the facts are wrong.There is no other possible reason."

The human brain will still be exactly the same in 2036.People will never admit they are wrong.

Should I be proved right they will all tell themselves the facts are wrong

The well diversified portfolio will produce average returns minus costs.

Gengulphus
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### Re: Article in Telegraph on ISA Millionaires

tjh290633 wrote:This is my record of PEP, Single Company PEP and ISA allowances since inception in 1987:

`Yr to 5 Apr   PEP         SCPEP       ISA          Total            1988    2,400.00                              2,400.00       1989    3,000.00                              3,000.00       1990    6,000.00                              6,000.00       1991    6,000.00                              6,000.00       1992    6,000.00                              6,000.00       1993    6,000.00    3,000.00                  9,000.00       1994    6,000.00    3,000.00                  9,000.00       1995    6,000.00    3,000.00                  9,000.00       1996    6,000.00    3,000.00                  9,000.00       1997    6,000.00    3,000.00                  9,000.00       1998    6,000.00    3,000.00                  9,000.00       1999    6,000.00    3,000.00                  9,000.00       2000                             7,000.00     7,000.00       2001                             7,000.00     7,000.00       2002                             7,000.00     7,000.00       2003                             7,000.00     7,000.00       2004                             7,000.00     7,000.00       2005                             7,000.00     7,000.00       2006                             7,000.00     7,000.00       2007                             7,000.00     7,000.00       2008                             7,000.00     7,000.00       2009                             7,000.00     7,000.00       2010                            10,200.00    10,200.00       2011                            10,200.00    10,200.00       2012                            10,680.00    10,680.00       2013                            11,280.00    11,280.00       2014                            11,520.00    11,520.00       2015                            15,000.00    15,000.00       2016                            15,240.00    15,240.00       2017                            15,240.00    15,240.00       2018                            20,000.00    20,000.00       2019                            20,000.00    20,000.00`

Comparing your figures with those in the TMF article I linked to before (and have done again here), the discrepancies are:

PEPs: The TMF article has £2,400 and £3,000 as allowances for the calendar years 1987 and 1988, rather than the 1987/88 and 1988/89 tax years as you have got them. Then it has the allowance for the 1989/90 tax year as £4,800 rather than your £6,000 (and that by omission implies that there was no allowance for the period 1 January 1989 to 5 April 1989). It has the single-company PEPs starting in the 1991/92 tax year rather than your 1-year-later start in the 1992/3 tax year. I'm not able to say from my own experience whether the article or you are correct - I hardly got into PEPs at all, and only right at the end of their life. However, a considerable amount of time wasted / spent (delete as you prefer!) poking through the Personal Equity Plan Regulations makes me think that the TMF article is essentially correct about these points. (Though there are subtleties - e.g. the regulation amendments that enabled single-company PEPs came into effect on 1 January 1992, so quite late in the 1991/2 tax year.)

ISAs: The allowance for the 2008/09 tax year was definitely the TMF article's £7,200 rather than £7,000 as you have it - I've checked my ISA provider's statement about it. And in the 2009/10 tax year, the difference between my earlier post's figure of £7,200 and your £10,200 is just that my post assumed age under 50 (since it was at the very beginning of my post's hypothetical investor's ISA career) while you (and indeed I myself) were over 50 at the time. In that one tax year, it made a difference to one's ISA allowance (why? I can only guess that the Chancellor of the time felt ISAs were insufficiently complicated...). A footnote in the TMF article does describe this difference.

tjh290633 wrote:Making the current value of maximum contributions £1 million gives an XIRR of just over 8%.

Not certain why there's that difference from my figure of just over 7.5%, but it might conceivably just be that my XIRR() calculation was assuming subscriptions made right at the start of the tax year, which will make the required rate of return as low as possible, since it has as long as possible to grow the money. If your calculation assumed later subscription dates - e.g. right at the end of the tax year - then that and the slight differences in some of the amounts subscribed would probably push the required rate of return a bit higher.

Gengulphus

Gengulphus
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### Re: Article in Telegraph on ISA Millionaires

Pastcaring wrote:All it proves is confirmation bias( people see what they want to see ).That is all it will ever prove.

No - the facts gathered about the numbers of brokers' clients who are 'ISA millionaires' are not altered by what you or I believe. They prove that those numbers are rising.

As for the explanations of the rise we've given, I don't think anyone has claimed to have proved them. If you think they're wrong, by all means explain why you think they're wrong. But if it's simply a matter of you wanting to believe they're wrong, I think there's a term to describe that...

Pastcaring wrote:Checking the WAL mart site ( WMT ) it will tell you a purchase of 100 shares at a cost of US\$ 1650 on IPO is now worth around US\$20 million ,due to share splits.Ownership is now 204,000 shares at around US\$ 100 each.Why does that not prove that diversification is useless?

Because one can just as validly imagine a purchase of US\$20m worth of Carillion shares at various times before last year and see that they are now worth less than US\$1650... (There is of course the difference that you'll have trouble finding a Carillion site proudly proclaiming that fact, but that's another type of bias.)

What it does prove is that diversification is useless provided one picks the right share - those extra words are crucial!

Gengulphus

PinkDalek
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### Re: Article in Telegraph on ISA Millionaires

Gengulphus wrote:
What it does prove is that diversification is useless provided one picks the right share - those extra words are crucial!

Particularly as the referenced Walmart IPO was I believe in 1970, nearly two decades before the introduction of PEPs.

tjh290633
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### Re: Article in Telegraph on ISA Millionaires

Re viewtopic.php?p=207774#p207774 my XIRR does indeed work on the last day of each tax year, so is a little optimistic, I guess.

Regarding the data discrepancies, TMF are definitely wrong. I subscribed the full amount in the Pep times, not always in my to be HYP, as I was moving unit trusts into PEPs as the allowances permitted.

ISAs were more complicated because of the limit covering both cash and share ISAs. You also mentioned Gordon Brown's other fiddling. I would have to refresh my memory from Budget Statements, but life is too short.

TJH

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### Re: Article in Telegraph on ISA Millionaires

Personal circumstance, in particular age, has had a major effect in achieving such yardsticks.

The key to all this was to be able to subscribe fully or near fully throughout the period, and to re invest all divis,which luckily we were able to do this, since PEPs and ISA coincided with the children having long gone and built their careers, the grandchildren having nearly all arrived but being young enough to be financially in no need of support at that stage, and our own careers financially peaking. We have only recently been using a small proportion of one of the ISAs income to assist somebody in a Nursing Home.

In term of method, in those particular PEP/ISA portfolios, my wife invests essentially in ITs and I essentially go for individual Cos, investing across the market cap. But we both seek HY without overdoing it. It took me 27 years to 'go round the clock' for the first time, it took her one year longer. But she in fact got to the half way point earlier, and of course in the financial crisis did better, in particular for her income stream, mine dipping over 18%, hers barely at all.

The various figures above look ok to me, apart from the max contribution for 2008-09.

I make it that, fully contributing and re investing(which of course many would not have been lucky or old enough to do) around 5% total return, one would now be around the £600k mark, the 'clock would have gone through for the first time' around now at about 8% return, with 10% one would be around £1.5m, and the 'crafty sods' achieving 13% would preside over £2.7m, and of course Lord Lee's ISA, well reported on elsewhere, must by now be in the stratosphere. These figures are in line with our own results and a few other ISA portfolios I have online access to, since 21 other investors, 6 friends having contributed near fully to PEPs and ISAs, use my software and have given me access so that I can assist with a little maintenance and we can cross-advise each other.

Our returns in the first 15 odd years were markedly better that in the second half. Going forward I sadly don't see this changing much.

The key points made in the article I find about right. I myself would say, UNITISE, contribute as much as poss., re invest all divis, don't just put it all in UK(we did not), invest across the market cap(we both did), keep a sensibly HY without too much chasing, re balance. Stay essentially invested, go in heavier if able when Armageddon threatens. One way to see if you are chasing yield too much is to, over a sensibly longish rolling period, see if your income unit growth is persistently lagging your divi per unit growth. If it is lower your yield by gradually altering your portfolio growth/income mix. We keep an eye on such things and measure all performamnce net of RPI.

One last point, Corbyn et alia, given half a chance, would take a scythe on all this, thus destroying the prospects of all these very youngsters he shamelessly tries to snare in his twisted (IMHO) agenda. I do hope my grandchildren will be allowed to build their ISAs as we have been doing, we are dismantling our taxed portfolios gradually to help them build these.

Ozyu

tjh290633
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### Re: Article in Telegraph on ISA Millionaires

OZYU wrote:One way to see if you are chasing yield too much is to, over a sensibly longish rolling period, see if your income unit growth is persistently lagging your divi per unit growth. If it is lower your yield by gradually altering your portfolio growth/income mix. We keep an eye on such things and measure all performamnce net of RPI.

I haven't looked at it over a rolling period, just annually. The annual changes are:

`Year to      Unit Value   Div/Unit21-Apr-87                         05-Apr-88        -8.40%           05-Apr-89        29.84%     -4.29%05-Apr-90         4.00%     57.74%05-Apr-91        14.51%     32.69%05-Apr-92        -2.44%     38.62%05-Apr-93        15.75%     -8.07%05-Apr-94        12.89%     -9.32%05-Apr-95        -2.83%     19.28%05-Apr-96        17.75%     -1.44%05-Apr-97        10.86%     13.92%05-Apr-98        51.99%     18.24%05-Apr-99         4.05%    -15.38%05-Apr-00        -3.13%     34.32%05-Apr-01        -0.81%      9.92%05-Apr-02         2.66%      5.07%05-Apr-03       -31.37%     -6.24%05-Apr-04        28.07%     10.91%05-Apr-05        18.37%     -2.44%05-Apr-06        24.24%     33.40%05-Apr-07        14.12%     11.43%05-Apr-08       -15.79%     25.24%05-Apr-09       -44.75%    -12.77%05-Apr-10        60.82%    -47.69%05-Apr-11        16.90%     40.36%05-Apr-12         2.77%     14.23%05-Apr-13        11.28%     19.98%05-Apr-14         6.40%      5.61%05-Apr-15        10.64%      8.43%05-Apr-16        -4.54%     -9.22%05-Apr-17        11.72%     10.06%05-Apr-18        -7.56%     26.61%15-Mar-19         2.14%     -4.86%`

I will have a look later at the changes over, say 5 or 10 year periods, to see if a a pattern emerges. You will note, of course, that unit value often lags dividend/unit, especially in the 2007-15 period. During that period I was obliged to make adjustments to the portfolio after the event, which was to comparatively lower yield shares from what had previously been higher yield shares, but which failed to live up to their name.

TJH

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### Re: Article in Telegraph on ISA Millionaires

tjh290633 wrote:Regarding the data discrepancies, TMF are definitely wrong. I subscribed the full amount in the Pep times, not always in my to be HYP, as I was moving unit trusts into PEPs as the allowances permitted.

Sorry, but as I indicated, I based my view on the Personal Equity Plan Regulations. That link is on the government legislation website, so I'm saying that not just TMF, but also official records disagree with you, not necessarily about all of the discrepancies but certainly about some of them. The clearest-cut of them is that the 1989/90 tax year PEP allowance was £4,800: the Personal Equity Plan Regulations 1989 (which are available from the second page of the previous link) state:

Citation and commencement

1. These Regulations may be cited as the Personal Equity Plan Regulations 1989 and shall come into force on 6th April 1989.
...
General conditions for plans and subscriptions to plans

4.—(1) A plan is a scheme of investment ...
...
(4) The subscription limit for the purposes of these Regulations is £4,800.

They were next amended by the Personal Equity Plan (Amendment) Regulations 1990, which state:

Citation and commencement

1. These Regulations may be cited as the Personal Equity Plan (Amendment) Regulations 1990 and shall come into force on 6th April 1990.

Interpretation

2. In these Regulations “the Principal Regulations” means the Personal Equity Plan Regulations 1989(3) and “regulation” means a regulation of those Regulations.

Amendments to the Principal Regulations
...
5.—(1) In regulation 4(1) ...
...
(4) In regulation 4(4) for “£4,800” there shall be substituted “£6,000”.

So the PEP subscription limit became £4,800 on 06/04/89 and became £6,000 on 06/04/90, and so was £4,800 for the entirety of the 1989/90 tax year. I don't know how you've managed to get the impression that it was £6,000 in that tax year, but that impression is contradicted by officially-recorded documents.

Some of the other discrepancies I had more trouble with, which is why I said my poking into the regulations "makes me think that the TMF article is essentially correct about these points" and not that I was certain about them. In particular, I decided it would take a lot more study of the regulations for the 1987/88 and 1988/89 tax years to understand exactly what they said about the subscription periods that the £2,400 and £3,000 allowances applied to - there's a reason why the Personal Equity Plan Regulations 1989 are done in full and not as amendments to the earlier 1986 version, and that's that the 1986 version was distinctly complicated! (Indeed, I remember looking at PEPs when they first came out and basically thinking "What??? Looks complex - but I don't need to understand this, so I won't bother until and unless I do need to". That was influenced by the fact that I had very little spare money to invest then - it was around the time I bought my first house, and the idea of needing to shelter anything more than TESSA subscriptions (let alone £6k more than them) from tax wasn't really on my horizon. I then didn't look at them again until 1998, when I started getting some of the fruits of the tech boom, not so much by considered thought about whether I did now have a use for PEPs as by not even bothering to consider the question... I count that indolence as one of my biggest investment mistakes!

Gengulphus

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### Re: Article in Telegraph on ISA Millionaires

Gengulphus wrote:So the PEP subscription limit became £4,800 on 06/04/89 and became £6,000 on 06/04/90, and so was £4,800 for the entirety of the 1989/90 tax year. I don't know how you've managed to get the impression that it was £6,000 in that tax year, but that impression is contradicted by officially-recorded documents.

I can tell you quite easily how I got my figures. I invested the following amounts on these dates:

`Date        Amount  Tax Year21 Apr 1987 £2,400  87-8815 Nov 1988 £3,000  88-8913 Sep 1989 £3,000  89-9012 Mar 1990 £3,000  89-90 (same tax year)28 Aug 1990 £6,000  90-9123 Feb 1993 £6,000  92-9307 Sep 1993 £6,000  93-9428 Jun 1994 £6,000  94-9511 Mar 1996 £4,500  95-96 (allowance only partly used)14 Feb 1997 £3,000  96-97 (Single Company PEP)23 Jun 1997 £2,000  97-98 (allowance only partly used)23 Jul 1998 £6,000   98-99`

Those are the amounts I actually subscribed, and they complied with the regulations at the time. I can only assume that the documents which you found were superseded, possibly in a second Budget, or possibly during the passing of the relevant Finance Bill, but my subscriptions were definitely legal and made to a very reputable PEP manager.

TJH

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### Re: Article in Telegraph on ISA Millionaires

Gengulphus wrote:
Pastcaring wrote:All it proves is confirmation bias( people see what they want to see ).That is all it will ever prove.

No - the facts gathered about the numbers of brokers' clients who are 'ISA millionaires' are not altered by what you or I believe. They prove that those numbers are rising.

Whilst it seems likely that that is the case, do they not actually suggest that the number of ISA accounts containing £1m+ has increased, not that the number of 'ISA millionaires' has increased, based on what we know about some brokers' clients?

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### Re: Article in Telegraph on ISA Millionaires

tjh290633 wrote:Those are the amounts I actually subscribed, and they complied with the regulations at the time. I can only assume that the documents which you found were superseded, possibly in a second Budget, or possibly during the passing of the relevant Finance Bill, but my subscriptions were definitely legal and made to a very reputable PEP manager.

The answer re calendar 1989 and tax year 1989-90 may be here https://www.isaco.co.uk/isa-history which includes:

April 6, 1989 - General PEP allowance moves from calendar year to tax year and allowance increased to £4,800. Investors enjoy both the 1989 £3,000 calendar year allowance and the new £4,800 tax year allowance.

If that's correct your £3,000 in September 1989 and £3,000 in March 1990 were, as you indicate, compliant. It might be you were able subscribe a further £1,800 in 1989-90 (I haven't checked to see if there were other restrictions) but decided not so to do.

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### Re: Article in Telegraph on ISA Millionaires

Thanks, PD. That could be the answer. I must confess that I did not recall PEPs being on a calendar year basis. At least they were separate from TESSAs.

TJH

Gengulphus
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### Re: Article in Telegraph on ISA Millionaires

That does seem consistent with all three of the TMF article, TJH's experiences, and what I found in the regulations (though I would doubtless have to poke a lot deeper into them to understand exactly what was possible - might do that someday if I'm in the mood, but I'll give it a miss for the time being!). So thanks from me as well, PD.

Gengulphus

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### Re: Article in Telegraph on ISA Millionaires

Gengulphus wrote:That does seem consistent with all three of the TMF article, TJH's experiences, and what I found in the regulations

Initially anyway PEPs failed to capture the public imagination. There was a perception that what you gained in "tax free", you lost in charges. Privatisations were still competing for the investment pound.

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### Re: Article in Telegraph on ISA Millionaires

Alaric wrote:
Gengulphus wrote:That does seem consistent with all three of the TMF article, TJH's experiences, and what I found in the regulations

Initially anyway PEPs failed to capture the public imagination. There was a perception that what you gained in "tax free", you lost in charges. Privatisations were still competing for the investment pound.

At the outset you could only put 25% of your subscriptions into funds, the rest had to go into quoted equities. Then the rules changed to allow 100% in funds and I started moving mine into PEPs. I had put the allowed amount into the funds which my PEP manager allowed, but sold them after a few years in favour of more equities. I think that privatisation had just about finished when PEPs were introduced. I certainly moved such shares into my PEP as time allowed

I think it was when ISAs came in when you could have cash, equity or insurance ISAs, but the latter didn't last long. When we used to get Life Assurance Premium Relief, unit linked life policies were the flavour of the month, as the tax relief meant that you invested more than your subscriptions. Once LAPR was killed off, unit linked policies lost their attraction.

TJH

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### Re: Article in Telegraph on ISA Millionaires

tjh290633 wrote:I think that privatisation had just about finished when PEPs were introduced.

Not quite. The ill-fated BP privatisation was in 1987 which was the first year that PEPs were available, I believe.

Rolls Royce, BA and BAA were also in 1987.

British Steel and National Express were in 1988.

The water companies were in 1989.

The electricity companies and National Grid was 1990, followed by Scottish Power, Scottish Hydro, National Power and Powergen. GiroBank was also 1990.

British Coal and the railways were in the 1990s although they weren't done by share offer.

There were also various building society demutualisations happening around that time that competed for the money of small investors.

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### Re: Article in Telegraph on ISA Millionaires

I see that I took up the first sale of HMG shares in BP. on 09-Nov-79, the first call being 150p, the second call on 03-Feb-80 being for 213p, 363p altogether.

The next was BT.A, the first call on 28-Nov-84 for 50p, the second call on 24-Jun-85 for 40p. The third call was on 09-Apr-86, for another 40p, making 130p total.

TSB followed, the first call on 29-Sep-86 for 50p, the second on 08-Sep-87 for a further 50p.

Then it was Sid's turn with BG., first call on 08-Dec-86 for 50p, second on 09-Jun-87 for 45p and the third call on 19-Apr-88 for 40p, 135p total.

That was the last that I took up. As I recall, the sale of the final tranche of HMG shares in BP. flopped because the share price fell below the offer price, so the underwriters felt the pinch

Looking back 32 years, you do tend to forget the chronology. I think that Amersham started the ball rolling.

TJH

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### Re: Article in Telegraph on ISA Millionaires

Lootman wrote:The electricity companies and National Grid was 1990, followed by Scottish Power, Scottish Hydro, National Power and Powergen. GiroBank was also 1990.

Although presumably unintended, the sandwiching of Scottish Power, etc, between companies privatisatised in 1990 could be read as suggesting that all of them were also in 1990, just later in the year. So to clarify, Scottish Power and Scottish Hydro-Electric were in fact in mid 1991. I know this because as it happens, I've been sorting/clearing out some piles of old financial paperwork recently and came across the 'Mini Prospectus' for those two privatisations, and so can specifically state that it is dated 30 May 1991, and the application deadline it gives is 12 June 1991.

National Power and Powergen were a few months earlier - I haven't (yet!) encountered a similar document for them, but I do have a letter stating that the application deadline was 6 March 1991.

Gengulphus

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### Re: Article in Telegraph on ISA Millionaires

tjh290633 wrote:I see that I took up the first sale of HMG shares in BP. on 09-Nov-79, the first call being 150p, the second call on 03-Feb-80 being for 213p, 363p altogether.

There was also Dennis Healey's share sale of BP, being the shares acquired as part of the rescue of Burmah Oil.

Although the Heath government had sold Thomas Cook and the Carlisle breweries in the early 1970s, they were private sales and it was Healey's BP sale that was the privatisation prototype with full page ads in newspapers etc.

https://api.parliament.uk/historic-hans ... -bp-shares