You're money and how you invest it

Best thing to do is find an IFA and they will guide/advise you and talk over the options, ATR is the most important thing to get correct and understand as well as your position on ESG, and more than likely make you money. While investing/pension planning is important dont forget to look at life/CIC/Income (on both illness and death). Ohh and dont get hung up on ISA’s too much as they are simply a wrapper that the investment is placed into/under for the tax benefits/perks available.

 

You are 100% in everything you say.

An ISA is just a tax wrapper, regardless of what you hold in it. You can hold a cash fund in a stocks and shares ISA if you like, or investment option from the lowest risk to the highest.

Retail platforms usually offer a risk based questionnaire that asks a bunch of questions around risk appetite. They give you a score and point you towards a basket of assets that match your risk level. So low risk may be 20% stocks/80% bonds and cash. Higher risk would be 100% in global equities. In my lifetime the biggest value fall in global equities was around 60% in 2009, so even then it's not 100% loss we are talking about

 

My old man said his pals used to give him a bit of grief about the amount he put into his pension but it's served him well. He's retired about 17 year now after taking a voluntary redundancy. Defo not a bad idea.

 

Bit of a change on topic but I feel like taxed on anything above £1k is a bit *. Having 20 odd grand in savings doesn't make you wealthy, for many it won't even make a 10% deposit on a house. It could put people off saving, and I get they want you to spend now to get the vat but it seems very shortsighted.

 

If you speak to anyone who works in the industry you will find they all aspire to maximise what they place into their pension funds - so either they are morons or your dads mates are the morons. I’ll let you decide who is/was better qualified to pass judgement on the course of action yer dad followed.

@buchanbhoy not sure if you aware, i would think so but just in case you not, you can access your pension now, subject to any penalties that may be applied for doing that - if there are penalties they will tell you what they are. As a general rule the NRA of the scheme will be penalty free.

 

What's a saving ?

 

For higher tax rate payers especially, pensions are an absolute no brainer while current rules are in place. It's really the only 'good deal' left in an environment where the government is looking to tax almost everything higher earners touch. I'd be surprised if such generous terms stay in place over the next decade.

The only downside, but it's a big one, is that you need to trust governments from now until your minimum retirement age that they won't change change the rules to fleece you. Feels likely changes will be made for the worst at some point but definately still worth doing.

 

I enquired about nutmeg through chase but decided to take another ISA with trading 212 which also has unlimited access which I hope won't be necessary.

Seemed a much safer bet for a novice like myself.

 

What sort of money would you say was a small amount ? as I still have a bit to play with but obviously don't want to use it all.

As has been mentioned I keep a good amount for living and holidays and the likes.

 

I kinda get it in the way that this is when they were younger, they'd be saying you could save loads and die before you get a chance to spend it/retire but by da said aye maybe, but I'll be more annoyed if I don't and still knocking my pan in well into my 60s and 70s.

 

To be fair mate, the annual limit on ISAs is £20k, so you could put all that in one of those and not pay a penny of tax.

 

Yeah so I used Nutmeg because they had no fees for a year and I felt it was easy to set up an S&S ISA and split it into different ‘pots’ so I could put money aside for kids etc.

But actually when they start charging fees I’ll probably try and partially migrate to something like trading 212. My understanding is the S&S ISA there has no fees, but I’d need to look into it get some advice from someone how to do the correct investments in indexes. Right now, I’m comfortable with how Nutmeg has it set up.

I guess it varies from person to person, but if there’s an amount you have that you know you wouldn’t need for a long time (even in a relative emergency) then it would make sense to me to have that in stocks.

That’s more or less what I’ve done, and I contribute spare cash into that whenever I can. If that market goes down it’s no big deal because I won’t need it and I can ride out the downturn, and over time the gains will hopefully be better than just letting a bank provide interest.

I’m not sure what the recommended time for stocks is. It’s been brilliant last two years but it could in theory be bad for the next 3, so I guess it’s about having time to ride it out.

 

I invested in tobacco, recreational drugs and alcohol.

Broke now.

 

Thought it was your taxed on interest above £1k. Or above 500 if your a high earner. Did it change?

 

Yeah, allowed 1k of interest before tax. So 25k of savings at 4% for example before you eat up your allowance.

Given you also have 20k ISA allowance, you can invest 20k in ISA then hold c.25k at 4% outside the ISA and that's all tax free growth.

I don't know the particular deal you have but there won't be an ISA charge as such. There will be a platform fee (that allows you to use the platform and open ISAs/pension wrapper/general trading account) and then there's the fund fee you pay to invest in a particular fund. Index/tracker funds are usually around 0.12%, so annual cost of £24 for 10k investment.

If you Google search platform fee comparison, you will get a quick idea of what platform works out cheapest for you depending on how much you invest, how often, and what you invest in.

 

I was also looking at 'Vanguard' which I think is similar to 'Nutmeg' ...the concept of bonds ect I find a bit daunting...(Me being a cautious numpty no doubt).

 

Yeah that’s right mate, platform fee is what I meant. Nutmeg will give you no fees for the first 12 months (I think it was if you signed up through MoneySavingExpert link or something)

I’ll need to look into it in detail again. It’s one of those things I was content I had the right understanding at the time but I can’t say I fully get it all now.

 

I’ve seen people talking about Vanguard I think in the context of being a platform without fees, but could be wrong.

I need to look into platforms again to see why one to go for.

 

I went trading 212 through MSE , 5.12 and no fee ,unlimited access.

The app is great as you watch your interest go on daily.

 

I do a bit through trading 212, it's doing ok. May as well make some money off of AI while it makes us completely obsolete I suppose.