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Answers to YOUR Questions

See what's bugging others. 

And what our experts say.

ISA | Personal Finance | Junior ISA | JISA

Where can I get a good Junior ISA?

Rebeccah, Greater London

27 March 2019

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Holly Mackay

You need first to decide where to get the Junior ISA (which is the wrapper) and then decide what to put in it – cash, stocks and shares, funds etc.

 

We’re a bit suss on Cash Junior ISAs – if you’re saving for a baby then we think the stock market is likely to do better over the long-term. However there are good rates available for cash Junior ISAs – currently Nationwide and Coventry are offering 3.25% but these do change so please check online for current deals.

 

Many parents choose an investment platform for their stocks and Shares Junior ISA. Have a look at which ones we suggest here: Hargreaves is not the cheapest but they offer decent value and they are big and solid. Cheaper, but still good options, are AJ Bell, Charles Stanley Direct or Fidelity.

 

These platforms all offer a wide choice of investment options to put in a Junior ISA, too wide for many novices. That said, there are plenty of tools to help you find the right option: recommended fund lists and so on. In general, people tend to be over-cautious with their children’s money. You may have 15+ years to invest. That gives you a long time to ride out the ups and downs of a stock market. I know that people don’t like the thought that the capital value could drop, but over the long-term, the stock market generally outperforms cash.

 

For those new to investment, multi-manager funds might be an option. These are like ready-meals versus choosing the ingredients and making the meal. For less confident investors, it takes some of the pain away from choosing individual stocks or funds. Many of the platforms have their own versions – see here from Hargreaves Lansdown, AJ Bell and Charles Stanley Direct.

 

A cheaper option would be the Vanguard LifeStrategy 100% option, available through the Hargreaves platform. This is a passive fund and costs 0.24% instead of the HL Multi-Manager 1.46%. Passive funds are where computers just pick the world’s biggest stocks in proportion to their size. And if oil is out of favour, well you still have the oil shares. And if retail is going gang-busters, well you don’t get any more than the proportionate weighting. You are buying the average.

 

Active managers cost more because they employ expensive people to make a bet on which stocks will do better – if they love M&S, they can buy twice as much of it. If they hate Easy Jet they can sell it all. Passive guys can’t do this. They have to hold what we call the ‘index weighting’ – if HSBC is 5% of the main basket of shares, the FTSE 100, they have to hold 5% in HSBC shares.

 

Finally, in terms of paying into your Junior ISA, it is worth setting up a direct debit every month. That way, you drip feed into these and run less risk of investing when the market is at its highest, through simple bad luck and bad timing.

 

 

Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

Stocks and Shares ISA | ISA | Investments

Hello, I just found your web site (recommended in Andy Bell's book on Do It Yourself investing). Could you say why you do not review Halifax Share Dealing in your list of ISA providers? I know they do not use funds but they do ETF's and investment trusts. I understand they have ISA account at a fixed price at £12.50 a year and each equity ETF/IT for £12.50 to buy and sell. Is there anything wrong with this ISA provider for you not to include it? I note you have however reviewed the IWeb Share Dealing owned by the same Halifax company.

Gerald, UK

11 April 2018

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Richard Bradley

Hi Gerald,

We're sorry you didn't find what you're looking for. There is no specific reason why Halifax Share Dealing is not included. We're always reviewing new providers and will be adding more over the next few months. From the work we've done on Halifax Share Dealing so far - those who use them typically rate it highly for value for money. For an ISA it's only £12.50 per year and then £10.50 for each transaction so it's pretty low cost, particularly for people who don't buy or sell very often. Users tend to find the website a bit basic and not as slick as some of the other ISA providers. For cost alone it's a solid option, but it lacks the pizzazz and user-first experience of others. 

As a more general point: we do research with investors and people looking to invest, and often find that some of the lower-cost stockbrokers (including Halifax Share Dealing and iWeb) can be a bit overwhelming, with thousands of funds and shares from which to choose, with little help on how to build a diversified portfolio.

Best of luck!

Richard

 

 

Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

ISA

What is the Help to Buy ISA and how does it work?

Dylan, Greater London

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Holly Mackay

This is a bit of a no-brainer for first time buyers saving for a house. You can save £1,200 in the first month and £200 a month after that. And when you buy the Government will top up the total with a 25% bonus as long as you have saved at least £1,600. The most you’ll get the bonus in is a savings pot of £12,000 i.e. a £3,000 bung from the Government.

A Help to Buy ISA is basically a variation on a theme that already exists – the ISA – it’s a tax efficient savings account. The H2B ISA is available from most banks and building societies and most of them can be opened online (hurrah!)

Here’s why we like it:

  1. You get free money up to a pretty generous amount
  2. You can carry on doing it for quite a while, although it’s sensible to start saving as much as you can asap (once you’ve built up your emergency savings pot which should be about 3 months’ salary at least).
  3. If you’re saving up for your first home with a partner (smooch smooch) you can BOTH open an ISA and effectively double the government money you get towards a first home. (If they’ve already got on the housing ladder, however, they are barred from opening one so you’re own your own with the H2B game.)
  4. The H2B ISA can be used to get you a house worth under £450,000 in London and £250,000 outside.
  5. You don’t need to get a mortgage in association with the bank/building soc that provided your H2B ISA so you have flexibility still.
  6. You can do the H2B shuffle and move your money into a better-paying H2B account the minute your rate drops. And we recommend you do, because that interest needs to be at the max to help you bump up your savings even more.
  7. You can find some groups such as Nationwide which will let you do a ‘split’ ISA – and have some in a H2B and some in a vanilla cash ISA – all in the same account. This is a bit of a fiddle as you are not supposed to open a cash ISA and a H2B in the same tax year. The only negative in doing this (the split thingy) is you may get lower rates on both your Help to Buy ISA and cash ISA by linking them together.

Convinced? Simply apply for one from one of the many banks and building societies that have jumped on this bandwagon. Halifax, Santander and Nationwide are three of the bigger high-street brands offering decent rates (between 2% and 2.5%) and which let you operate online. You can get a little more with some providers if you live in specific regions and are prepared to deal in branch. Yawn.

Just one more thing; you can’t take the government’s cash early and take off to Koh Samui with it. (Otherwise, wouldn’t everyone be doing it??!!) Once you come to buy your home, your solicitor will actually have to apply for the cash once you’ve notified your bank/building society that the job’s done and you intend to close your account. You can withdraw your cash from the account early but you lose the money the government would have given you – thus defeating the purpose of the exercise! So make sure you have an emergency savings pot you can draw on instead…

 

 

Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

ISA | Investments | Stocks and Shares ISA

How risky is a Stocks and Shares ISA?

Alexandra, Greater London

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Holly Mackay

Let’s face it, people’s biggest fear with the stock market is the risk. No-one likes to think that they could invest all their cash, some banker presses the wrong button, triggers a global financial crisis and they lose the lot.

We would be the first to admit that the stock market bounces around like a 4-year old on a Haribo high, and every now and then it has a big old panic and sells off. However, this can give a misleading impression of the risks involved. Over 10 years, stocks & shares are 91% more likely to do better than cash.* Those odds are not to be sneezed at!

The biggest question to ask yourself is how long you are sticking the money away for. If it’s less than 3 years, it’s a bit hairy to think about shares because they bounce around a lot. In 2008, UK shares went down by about 50%. If you had stuck in £1,000 at the beginning of the year and needed to sell at the end, you’d be sitting on a depressing £700. Nonetheless, in 2009, things rebounded by about 30%. You need to look long-term if you’re going to invest in the stock market.

You can improve your odds by investing monthly. You don’t have to sprint into the market. Say you have £3,000 to invest. You could decide to stick in £500 every month for 6 months. This avoids buying at the wrong time and is the investment equivalent of having a glass of water in between every glass of wine. If you’re going to do this, just check you’re not paying a transaction fee every £500 chunk as this can eat into your savings.

A final thought is this. We all think of shares as risky. But with interest rates at all time lows, leaving your cash in some rubbish account for the next 10 years has the risk of you not making your money work hard enough and you not having enough to do what you need to do. Sometimes, doing nothing can also be risky - food for thought.

Finally, the issue of costs. Paying someone a chunky fee to manage your cash is going to eat into your returns and is usually completely unnecessary for small pots on money to stick into regular savings or an ISA. If you DIY, then a fair value fee is about 1.25%, so £12.50 a year for every £1,000 you save. If you’re paying any more than that, make sure you’re getting something reaaaalllly good.

 

 

Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

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