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I've got a Cash ISA but want more return that 0.9%. These look like a riskier but higher earning ISA.
Where's a good place to read up on them and basic guides to investments?
thanks
How much have you got to invest as a lump sum (i.e. what's in your ISA currently)?
How much will you putting in in the future (do you put, say £100 a month into it)?
How long are you saving the money for (stocks and shares ISAs are for longer term saving, 5yrs+ minimum)?
What are you saving the money for?
Will you actively monitor and manage it, or will you put the money in and forget about it (be very honest on this one)?
These answers will shape what you should do, especially the last two.
Sunday Times Money supplement is pretty good.
I'm sure Hargreaves Lansdown has some guides on their site (very user friendly platform).
You can do better with a cash isa than 0.9% especially if you are happy to not touch it for a while. Have a look on Money Saving Expert for better rates.
That said, long term, a stocks and shares isa should do way better. Personally I think it is good have a bit in both but more in the stocks and shares unless you are risk averse. Do you want to go buying and selling and playing the markets or just passively invest? I can't really be bothered to keep an eye on the financial pages so I've invested in a couple of funds; Vanguard and Fundsmith. Both have done pretty well (28% in the best year) but the markets have been kind. They've both been very flat for the last 6 months and down recently but you need to think in years with this kind of investment. Just deciding what to do with this years allowance so will follow with interest.
Thanks so far. I'll be a pretty sleepy investor, I don't want to be staring at stocks every day/week. I want a mix of easy access (for a rainy day) and to put some in a longer term pot where I won't touch it for 3-5 years.
I could split my current ISA (£30k) into 2 and also add say £250/month so looking for multiple ways of earning interest
>Thanks so far. I’ll be a pretty sleepy investor, I don’t want to be staring at stocks every day/week.
Exactly how you should invest in Stocks and Shares. Pick a fund / tracker, buy into it and wait for X years....
Pointless trying to match every up and down with individual trades, you just eat up any gains in fees and probably miss-time the trades enough to end up making a loss.
If you're going to stick it in and do nothing, I'd go, in fact have gone, for a low-cost index tracker, like Vanguard as mentioned above. They're the kings of that sort of thing (indeed they invented it, Google Jack Bogle if you're interested).
I've split across the FTSE 100 and FTSE250 with Vanguard
And, again as above, always useful to keep some in cash.
How much capital gains are you expecting to realise each year? If its below the cgt threshold then do you really need an isa or would a bog standard account with HL or whoever do the job?
How much capital gains are you expecting to realise each year? If its below the cgt threshold then do you really need an isa or would a bog standard account with HL or whoever do the job?
Why wouldn't you use an ISA? its not just the CGT advantages but tax free income makes it a win. Fill your ISA allowance (£20k PA) and if you're lucky enough to still have more to invest after that go outside the ISA.
FWIW i'd hold my cash reserves outside an ISA (cos you can earn £500/£1000 interest per year tax free and you need a lot of cash to earn £500 PA interest atm) and make all my equity investments in the ISA.
At what point are Capital Gains applicable?
I naively thought that this is just savings but with higher risk/reward.
>Why wouldn’t you use an ISA? its not just the CGT advantages but tax free income makes it a win. Fill your ISA allowance (£20k PA) and if you’re lucky enough to still have more to invest after that go outside the ISA.
You also have £40k pa for pension, so that's £60k before you have to invest outside a tax shelter...
If it's in an ISA it won't be applicable. That's the point of the ISA, you avoid tax on the growth. Outside an ISA you get £11700 a year allowance so still avoidable unless you need to sell a lot at once.At what point are Capital Gains applicable?
If you buy a fund or tracker then that's about right.I naively thought that this is just savings but with higher risk/reward
Thread resurrection:
I didn't sort this out at that time. Anyone got any current S&S ISA recommendations?
Are you of the appropriate age to get a lifetime ISA? Bit of a no brainer really if you accept that you can't touch the money until retirement. 25% bonus paid more or less straight away on everything you invest to a maximum of 4k per year until you're 50.
Another naïve question (I'm in roughly the same boat as the OP).
How do you deal with the "the value of your investment may fall as well as rise" bit? I'm MASSIVELY risk averse when it comes to money, and there's no way I can countenance anything that I see as "Gambling", but my ISAs are essentially my retirement fund and the cash ones I have are doing SFA. I'm mid 40s, so there's that not that long to go relatively, before I retire, and currently I reckon I have about 6 months worth at current expenditure rates! (I do have a pension as well, but don't expect that to provide much more than bread and water)
I just can't get my head round the idea that there's a possibility of waking up one morning to find that all the hardearned cash I had has just disappeared.
Are you of the appropriate age to get a lifetime ISA? Bit of a no brainer really if you accept that you can’t touch the money until retirement. 25% bonus paid more or less straight away on everything you invest to a maximum of 4k per year until you’re 50.
Is it that simple? I'm not sure I fully understand the LISA. It's a good return, but it sounds like you only get money back on what you put in for any given year. So, for example if you put in an initial lump sum, and no more after that, you'll only gain interest on that first year. In other words you will never get more than 25% of the total funds you invest?
An index tracker on a stocks and shares ISA however, will give you the benefits of compounding interest and potentially net you a much larger return over a period of many years?
That's a genuine question to anybody in the know - I'm no expert on the matter.
Personally, after a little research, I came across a lot of recommendations for Vanguard, who make it almost too easy to give all your money to them, with various available plans which you can choose on the level of risk you're prepared to take. You can even set your target retirement date and they will tailor your investments over the years to suit, starting with high risk, and lowering it as you get closer to retirement.
JonEdwards, it's just a number until you turn it into bicycles or whatever. If you aren't spending it, then it doesn't really matter if it's X or 80% of X. Realistically, you would be very unlikely to lose as much as 20% unless you do something silly. Bear in mind that anyone buying a house has a chance of losing a similar proportion of the house price, which is probably a whole lot more money.
Re the risk thing, certainly Fidelity has an online 'calculator' that will ask you a number of relevant questions to establish how risk averse you are, and then recommend funds based on your results. I imagine other platforms will offer the same.
It's also worth remembering that keeping cash in a pot will devalue it due to inflation.
Butcher,
The 25% is a one off bonus paid by the government on any money you invest. So if you put in the maximum of 4k per annum, you get a bonus that year so it is topped up to 5k.
That is quite separate to the interest you receive. You can have a cash LISA or a stocks/shares one. You'll get paid your tax free interest each year just as normal. That is paid on your full balance (ie your initial investment plus the top up).
How do you deal with the “the value of your investment may fall as well as rise” bit? I’m MASSIVELY risk averse when it comes to money, and there’s no way I can countenance anything that I see as “Gambling”, but my ISAs are essentially my retirement fund and the cash ones I have are doing SFA.
Good question, esp given the recent downturn in the markets (e.g. my pension is down over £100k in the last 2/3 months). Long term, shares generally do best, so you just have to take the rough with the smooth and accept that part of those long term gains will be short term losses. If you spread your money over a wide selection of stocks, you are pretty de-risked from getting wiped out, but will still rise and fall with the ebs and flows of the market.
Stupid Q: can you have a Cash ISA with Bank A and within the same tax year have a S&S ISA with Bank B?
Yes but you cannot invest more than the ISA allowance for that tax year (currently 20k)
Exactly how you should invest in Stocks and Shares. Pick a fund / tracker, buy into it and wait for X years
Did that with mine. It went up loads, then it plummeted as left it too long. It's recovered a bit but the length of time I've had it now I could have made more with targeted cash savings (moving them about for best rates).
I just can’t get my head round the idea that there’s a possibility of waking up one morning to find that all the hardearned cash I had has just disappeared.
Rules out stocks & shares then. There's a risk and if you cannot take that risk, don't do it. Cash savings is safer.
I worry with my pension as it's fund based, though have fund managers who do all the fiddling about. I answer a risk survey and they invest in stocks and/or cash based on the risk. I went middle of the road so it's less likely it will all crash and I lose loads of the pension pot, but it's also growing slowly and not looking like I'll get much of a pension out of it. The higher risk projections show potential for much greater return but also much greater loss.
At this stage I'd also be waiting to see what happens with Brexit. Ideal is to be investing at the low point, but are we at that or will it crash on Brexit day and how long will it take to recover, if it ever does!
Anyone use Cavendish for S&S ISAs (part of Fidelity)?
Thanks for the help.
I ended up choosing Vanguard and selected some lower risk funds. It was very easy.
In case you don't know you can split your annual ISA allowance across Cash ISA, Stocks and Shares ISA, Innovative Finance ISA and a Lifetime ISA (if qualify for one). So you can do 1 per tax-year of each type.
In case you don’t know you can split your annual ISA allowance across Cash ISA, Stocks and Shares ISA, Innovative Finance ISA and a Lifetime ISA (if qualify for one). So you can do 1 per tax-year of each type.
Thanks - I always knew there were rules around this but didn't know the in's and outs of the dfferent types.
I've done some research and hope to also buy into Vanguard once I've completed my Cash ISA warchest. Then I will probably put £500 a month into a Vangaurd S&S ISA.
@plyphon - You can start a Vanguard S&S ISA with about £500. You don't need to chuck all your cash in to start one off