ISA

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Drago

Legendary Member
I'm fairly cash liquid at the moment. I'm no Rockefeller by any means, but my spending habits are modest and I end each month with a little more than I started.

I'm thinking of carving off 50 gees or so and doing something more useful than just having it sitting in an account.

With that in mind, can anyone dorect me to a simple, no-nonsense guide to ISA's because I'm damned if I can find one.

Muchos gracias.
 
https://monevator.com/annual-isa-allowance/

Bear in mind the annual limit for contributions is £20k per tax year, which ends every 5 April. So if you want to make the most of this, contribute £20k this month, and another £20k after 5 April. The allowance is per person so if you have a trusted partner you can double all that.
 
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Deleted member 26715

Guest
The allowance is per person so if you have a trusted partner you can double all that.
Just a word of warning on this, my father did this, my mother only worked sporadically throughout her life so her pension wasn't great, so she had virtually all her allowance available to use, he put money in her name, unfortunately she got ill (Dementia) & in the end had to go into a home, that burnt through 40K of 'his' money, had he not put the money in her name the state would have picked up the tab. So it's not all about trust, in @Drago's instance as he's the toyboy of a Sugar Momma, it's not likely to be an issue for him.
 
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Drago

Drago

Legendary Member
My first Wife was a sugar momma. My current missus is a young totty and im her sugar daddy, albeit sadly lacking in sugar!

Thanks for the positive responses folks, much appreciated.
 

vickster

Legendary Member
I've just stuck some in premium bonds as a sort of holding move until I decided what I want to do with it, a few wins would show a better return than nearly every cash ISA.
This ^^ and no risk and no tax on winnings
 

sheddy

Legendary Member
Location
Suffolk
Have a look on the Boring Money website.
 

lejogger

Guru
Location
Wirral
Have you looked through this one?
https://www.moneysavingexpert.com/savings/best-cash-isa/

Due to low interest rates there’s generally not a lot of value in ISAs at the minute (or savings in general), but obviously their value to you (along with everything I type below) is dependant on your general income, any other savings and investment income and your tax rate etc.

Investing £50k in a competitive easy access savings account would earn you roughly £250 interest (0.5%) which, depending on your other savings income, you wouldn’t pay tax on due to the savings allowance of £500-£1k (depending on tax bracket and assuming your allowance is unused).

If you invested in a long term fixed rate bond you may just about earn enough interest to pay a small amount of tax, but you risk having your cash tied up when/if better rates come along.
Based on the interest rate you find, you could save a specific amount here to take you to your allowance limit, then place the rest (up to £20k) in an ISA, knowing internet earned there is tax free.

An ISA would provide tax free saving for your first £20k, but ISA interest rates aren‘t likely to be as competitive, and if you found a better deal and withdrew early you may not earn any interest at all.

Rates are so low the real return is minimal, so if it were me, I’d find the best rate (easy access) FSCS protected product and place it there, hoping for sunnier skies in the future.
At that stage, the ISA may come into play.

Edit: to add that the premium bonds option mentioned above is also feasible, bearing in mind that earnings are simply based on luck therefore not guaranteed. A good summary here: https://www.moneysavingexpert.com/savings/premium-bonds/
 
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Drago

Drago

Legendary Member
What are you looking at - Cash ISA or Stocks & Shares ISA?
Looking about I think stocks and shares, but don't want one that I have to manage myself. However, as LeJoggly points out, Im seeing interest and ratws of return so low that im wondering if its worth the faff at the preesent time.
 
I and my wife are about to put the max each into stocks and shares ISAs in March. The rates on cash ISAs are almost non-existent so I'm prepared to take the gamble that I could lose a chunk of it if the market takes a tumble. I'm looking for an investment that is not high risk so I won't make a fortune, but hopefully won't lose too much.

The main problem with stocks and shares ISAs is that you have to be prepared to look at them as a long term investment and not get worried by market ups and downs, and at my age I should be looking to spend more while we're young enough to enjoy it.
 

vickster

Legendary Member
My Vanguard one which I took out last May is running around 7% growth, although it was over 10% not long ago...the vagaries of the stock markets in the midst of a global pandemic. They have 3 options, different levels of risk. Was recommended to me by a CCer. No faff, just dump money in to and hope :laugh:
 

kynikos

Veteran
Location
Elmet
Take a look at Vanguard for a stocks and shares isa. Very low charges and a not overly complex choice of funds. Which recommended. Appear in most 'best isa' comparisons.
Whilst they have their ups and downs stocks and shares invariably beat cash investments over the medium to long term.
Just looked and last 5 years have averaged me 7% p.a. with a low of 1% and a high of 17% on an 80% stock/20% bonds mix.
 

SpokeyDokey

67, & my GP says I will officially be old at 70!
Moderator
Looking about I think stocks and shares, but don't want one that I have to manage myself. However, as LeJoggly points out, Im seeing interest and ratws of return so low that im wondering if its worth the faff at the preesent time.

Depends where your £50k sits in your hierarchy of 'money'. Ours looks like this:

Very liquid - rapid access.

Some 'proper' paper money (not much - handy for fish and chipe etc!).
Excess income each month in Current a/c - doesn't sit in there for long.
Premium bonds - new to us and just seeing how they perform.

Fairly liquid (subject to 180 day interest penalty hit) - typically 3-5 years for us.

Cash ISA's.

Mildly Illiquid:

Private pension funds - no intention of taking an income from them. They'll be closed and reinvested at some stage. We are both over 55 so we can do this as and when but obviously in a manner that minimises the tax burden. They are performing well at the moment and have done since inception.

Fairly Illiquid:

Stocks & Shares ISA's - again, new (ish) to us. Technically they are pretty liquid but they are in this category as anything other than a long-term perspective will probably cost us money. We have a Vanguard 80/20 ISA on an initial lump sum + monthly drip investment that's doing just fine. New A J Bell ISA is a ready made portfolio that can be amended by Moi. This is not on a monthly drip investment basis but was started with a lump sum and will be topped up by regular lump sums (minimises dealing charges) as and when certain financial indices suppress the underlying fund rates. Investment monies will come from our surplus income - we usually amass a nice chunk every 3 months. Hoping that the underlying indices theory works out - we shall see!

Very illiquid:

Fixed Rate Bonds - typically 5-7 years for us.

***

As things stand it will be unlikely that our income will ever be lower than our expenditure and if an occasional 'overspend' is required then it will be Premium Bonds to the rescue!

***

We do not anticipate ever accessing the rest of our stash - but who knows, we may want to buy a property abroad or a boat etc.

With this in mind, ie unlikely to ever need to touch any of our illiquid funds, we have made the decision to invest in S&S ISA's. We are happy to leave them alone and do their thing ad-infinitum unless there are any genuine poor performers. This has been primarly driven by the poor rates of return on Cash ISA's and FRB's.

So... @Drago - if your £50k sits at the illiquid end of your 'money', ie it's there as a comfort blanket but you probably won't ever touch it, then I'd suggest that S&S ISA's are pretty much the way to go. As ever these are best drip-fed to take advantage of market lows. Global markets are currently suppressed for obvious reasons so I think now is the time for go for it although definitely not in one hit unless you are very brave! Maybe try £5-10k to get a feel for things, give it a year and see if it is working for you - you are plenty young enough to make this approach part of your long term strategy.

In hindsight we probably should've done this a year back but we are a cautious couple on the money front!

The £40-45k residue you can put into PB's in the meantime or try a 2 year FRB at 0.75% pa here:

https://www.blme.com/products-and-services/savings/premier-deposit-account/

We have quite a lot of money in BLME mainly 5 & 7 year FRB's albeit at higher rates than currently advertised.

Hope that this helps.

PS: Vanguard S&S ISA - dead easy to set up and cheap as the proverbial chips. :smile:
 
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