E-mail is so much better for the waistline...

Thanks to e-mail, I am losing weight. Before its invention, when we had to communicate via snail mail, every letter was increasing my girth. Not only was it necessary to type the letter, print it out and address the envelope, but it also needed a stamp. And, as everyone who works from home knows, there are never any stamps in the stamp drawer. So each letter involved a trip to the village post office where Margaret and Danny sell stamps. However, they also sell millionaire's slices, made locally by Graham. It is impossible for a growing lad to pass these cakes, hence the effect on the Bond waistline.

Thanks to e-mail, I am losing weight. Before its invention, when we had to communicate via snail mail, every letter was increasing my girth. Not only was it necessary to type the letter, print it out and address the envelope, but it also needed a stamp. And, as everyone who works from home knows, there are never any stamps in the stamp drawer. So each letter involved a trip to the village post office where Margaret and Danny sell stamps. However, they also sell millionaire's slices, made locally by Graham. It is impossible for a growing lad to pass these cakes, hence the effect on the Bond waistline.

I must also thank e-mail for its contribution to my networking - another of those gems of jargon that punctuate conversations. However, for the private investor it serves the useful purpose of shrinking down to a single word the phrase "a group of people who exchange information, contacts and experiences for professional and social purposes".

This relatively new form of communication is a vital part of the investor's armoury. Sharing opinions and ideas, plus the ability to discuss specific subjects with people whose expertise is greater than your own, is the foundation on which an investment decision should be made.

There are several ways to establish a network of contacts but face-to-face is best. Most days I will talk, usually on the phone but sometimes over a pint, to those people whose opinions I respect. I'm also a member of three investment clubs, which are fertile grounds for original, interesting and occasionally bizarre thoughts on buying shares.

I find the internet invaluable for information and news but dangerous when it comes to opinion. The bulletin boards allow people to hide behind pseudonyms. The loonies are easy to spot - "I've remortgaged the house and put all the money into daftidea.com because they've promised to clone Michelle Pfeiffer" - but the vested interest people are difficult to identify. I've given up looking at the boards because I am suspicious of everything I read.

However, I love e-mail. It's quick, easy and cheap, and it has enabled me to build a worldwide network of contacts. All those silly formalities such as "Dear So-and-so" and "Yours sincerely" are out of the window. I'm not sure why, but e-mails are usually brief, to the point and uninhibited.

Thanks to this Diary my network of e-mailers has increased prodigiously lately and some of the comments deserve a wider audience. One of the pet subjects of the moment is ISAs (Individual Savings Accounts) and two comments in particular are worth passing on.

John Stokes is incensed about the amount brokers charge for looking after an ISA and its forerunner, the PEP. "I think it would be valuable if you write an article pointing out how non-cost effective it is to hold shares in a PEP or ISA," he writes. "Every quarter I receive a statement from my general PEP manager showing a debit for admin charges of £30 and a credit for tax reclaims totalling about £10. Thus my PEP wrapper costs me about £80 per year net. This for a portfolio value of circa £30,000, containing a dozen or so shares none of which are low or zero dividend newcomers: Safeway, BT, Diageo, Man (ED & F) Group, to name four.

"It seems to me (now!) that there are only two possible benefits to holding shares in a PEP/ISA. One is convenience - I can buy and sell shares on a phone call without worrying about certificates. The other is to avoid capital gains tax should one need to realise a large value of shares in one go."

John's right of course. Charging £120 a year for sending out a computer-generated statement once a quarter is exorbitant. If any broker is reading this and can do the job for significantly less, let me know and I will pass on the information to John and anyone else who is interested.

Raymond Kershaw, is puzzled by an item he read in "this ever-entertaining column" (keep using phrases like that, Raymondo, and you will join my Christmas card list).

"You said you put your long-term shares in PEPs and ISAs and your trading shares outside them," he writes. "But it is with your trading shares that you hope to make a large capital gain, whereas your long-term shares will, I presume, deliver steady but modest growth. So surely your trading shares should be in the PEPs and ISAs so that you do not have to pay CGT if you are successful? Put another way, the complete relief of CGT is more likely to be of use to your trading shares than to your long-term shares."

Raymondo is ostensibly correct. The principle that you should use your ISA as a trading account and fill it with capital growth shares is a good one. Perhaps I gave slightly the wrong impression when I implied that I use the tax-free havens as a repository for dull and ultra-safe shares. On the contrary, I have a wide range of shares in these portfolios and I have picked them for capital growth as well as income. I check them regularly and don't hesitate to sell if I consider it appropriate, but they are long-term investments.

My trading portfolio contains relatively short-term purchases, selected because I believe they are undervalued and because hopefully their worth will be recognised by the market within weeks or months. There are three obvious snags to using an ISA as your trading portfolio. The cost of the transactions will inevitably be higher (though why this should be the case is a mystery), there are restrictions on the kind of shares that can be sheltered in an ISA and the amount of money one can put into an ISA is restricted to £7,000 in this tax year, £5,000 next.

* The system for identifying undervalued growth shares, which I have written about a couple of times recently, produced scores of e-mails including the following from Ralph Donner: "I would like to offer my services as a reliable barometer for share prices - I have a foolproof system for you and your readers. All that is necessary is to monitor closely my investment initiatives, then act in entirely the opposite direction. You cannot go wrong.

"The cause of recent depressions in share values lies clearly at my door. I am to blame, I confess it. No sooner did the world markets learn that I had placed sizeable funds (five hundred quid and sometimes even more) with American, Japanese and Far Eastern funds, then values started to fall.

The technology sector plummeted after my shrewd timing in getting onto that particular bandwagon (March 2000 - Aberdeen Technology). A separate investment in BT (hot tip from a reliable source) at £13.50 was another remarkable feat of timing and ensured a maximum and steady loss in share value. All of which leads me to the inescapable conclusion that I do not have a clue what I am doing and would be well advised to read with care your articles in The Independent."

Thanks for the smile, Ralph. And remember, it's only money.

terry.bond@hemscott.net