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Answers to YOUR Questions

See what's bugging others. 

And what our experts say.

Investments | Saving | ISAs | Junior ISA

Hi. I’m 36 years old, earn £85k, and have about £40k savings in the bank, mainly in an old ISA that I’ve done nothing with. I am embarrassingly bad when it comes to savings and investments so keen for a steer. I have a five year old daughter and would like to put my savings somewhere clever so they start to do something useful by the time she starts at an independent secondary school and fees go through the roof. Any bright ideas please?

Milly, Berkshire

22 February 2019

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Catherine Morgan

Private school inflation rises are often far greater than your loaf of bread rises. Cash isn’t always best and planning ahead is key, so great timing to be thinking about this.  Fees increased by 3.4% last year and I can guarantee you aren’t getting that kind of return on your old ISA, which means your money is decumulating in buying power.

 

Your ISA options

You could retain the money in your own ISA (which would make sense as a higher rate tax payer as you won’t have any capital gains tax to pay, nor will you have to put it on your tax return). This also gives you control of the money. Other options such as Junior ISAs will only be accessible from age 18.

If your “old ISA” is in cash, consider the merits of transferring this to a stocks and shares ISA. You have more than the recommended minimum time to invest to be able to ride out the volatility of the markets. Over 7 years you could start off more adventurous with the view to reduce the volatility and risk as you come to the time when you may need to take money out to fund her schooling. If you are concerned about risk think about investing in lower risk investments such as government bonds. These are readily available on the market in ready-made portfolios that are easy to set up.

 

Other bits and pieces to be aware of

Some schools will have annual payments, some termly, so be prepared to withdraw the money at a time that suits you. Some private schools offer the option to pay in advance as a lump sum, known as ‘advance funding.’ This could protect you from hefty inflation rises on fees in the future and help you time a withdrawal.

Boring Money have some great resources for you to read to weigh up which investment proposition may be best suited to you. Once you have chosen an investment company, you would need to complete an ISA transfer form with them to transfer from cash to stocks and shares. This won’t affect your allowance for this year so you could continue to add to this investment in a very tax efficient way. (£20,000 for this tax year).

You should also consider making sure that you have a Will as the ISA is in your name but intended for your daughter. That way you have worst case scenario covered.

 

Pros and cons of Cash ISAs versus Stocks and Shares ISAs

Cash ISAs

  • Instant access (or after a fixed period)
  • Receive a variable or fixed interest rate
  • Great for emergency funds or short-term homes for savings
  • Readily available
  • Not great for long term growth potential
  • Poor interest rates

 

Stocks and Shares 

  • Much better opportunity to grow over the longer term
  • 1000’s of investment funds available at low cost
  • Investments ranging from low risk (yes you don’t have to accept high levels of volatility) to more adventurous
  • Access is normally gained within just a few days (gone are the old-style investment days of having no or ltd access!)

Finally, don’t forget to consider scholarships to help you with fees. Around 1/3rd of independent schools have funding for this.

 

 

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.

Investments | ISAs | Personal Finance

Dear Holly, I am post-divorce with a good settlement which I have only partially invested. I completely empathise with the masculine nature of the investment market. I am very new to it and am working hard to understand the jargon and concepts. I am concerned to make sure that I invest the balance with an emphasis on income generation. Are there any courses you can recommend? I have sat in a number of meetings with accountants and financial advisers feeling somewhat patronised! I am sure that there are plenty of women in a similar position to me (aged 55!). Many thanks!

Eavan, Ireland

14 March 2018

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Holly Mackay

Hi Eavan,

Nice to hear from you.

Sorry to hear about your situation – divorce is always more cumbersome than I think anyone anticipates.

Your question is really interesting to me as you are so right – you are not alone. We are weighing up ideas at this end about how to help this very specific need – and audience.  Actually it’s also women in their 60s too which is a fairly recent development.

I do think a financial adviser would help – you can just pay for a block of time and see someone to talk through this stuff. You don’t have to sign up for life!

We consulted our friendly, non-patronising financial adviser Patrick Connolly of Chase de Vere. His view was that you would need to have realistic income targets (sadly, 3-4% is the norm now), and be willing to take a bit of investment risk. He believes the best approach is to use a range of different investment funds in order to spread risks. This is particularly important for income investors if they are relying on the income to maintain their standard of living in retirement

He recommended building a portfolio on three main pillars:

  • The first is an equity income fund, which gives you access to good quality companies that are making regular profits and paying consistent dividends. That said, given that in the UK around 80% of all dividend income is produced by 15 companies and 50% by just 5 companies, it makes sense to also consider equity income funds that invest in some smaller companies. Have a look at some global and international equity income funds, too. Patrick recommends funds such as the Threadneedle UK Equity Income, Rathbone Income, Artemis Global Income and Newton Global Income.
  • Fixed income (bonds) would be the second pillar. This includes government and corporate bonds and should have a place in most investment portfolios. Connolly says fixed interest has historically paid a steady level of income and isn’t usually subject to significant falls in value. However, he adds an important caveat: “The conventional wisdom of fixed interest being low risk doesn’t necessarily work today. Prices on many fixed interest assets, particularly government bonds, are looking pretty expensive, which means their yields are lower and they could potentially be subject to significant falls in the future.” So you have to be careful. He recommends the Henderson Strategic Bond, Jupiter Strategic Bond and the Rathbone Ethical Bond, which will help manage these risks for you.
  • The final pillar would be commercial property, which should provide consistent and attractive levels of income. It also moves differently to stock markets, so can provide some protection during volatile times. That said, it is important to understand where a property fund invests. Some invest mainly in the shares of property related companies and don’t buy many, if any, actual buildings where as others will invest predominantly in real ‘bricks and mortar’ properties. His picks are the Henderson UK Property and M&G Property funds.

You also need to think about how to protect the income your investments earn. Firstly, if you hold funds in an ISA, the income will be tax-free. Consider using your £20,000 allowance each year to shelter as much as you can. Also – and this is a more complicated point – you also have a capital gains allowance every year, so it is worth considering some ‘growth’ investments as well. However, this is very much adviser territory and will depend on your specific circumstances.

In terms of useful tools, read up on ‘Equity Income’ funds. Hargreaves Lansdown has good content. Charles Stanley will also have lists of ‘Equity Income’ funds. Or Fidelity is also quite helpful. Once you have signed up with one of these platforms, you can invest in all the funds above and it’s no trickier than internet banking.

As for courses……………..I don’t know of any which have been recommended. The Pensions Advisory Service is a free Government helpline which takes general questions but won’t tell you where to invest. You will notice that newer schemes such as peer-to-peer lending don’t appear above. Be cautious of these. They promise high returns, but there is no such thing as a free lunch and all that!  And make sure you have enough in a cash buffer to tide you over if markets head south for a bit – you only lose money when you are a forced seller in sliding markets.

I hope that is a temporary partial help and you have inspired me to pick up discussions about running workshops/webinars for the 1000s of women in your situation.

Thanks and I hope it all works out

Holly

 

 

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.

ISAs

Could you be kind enough to let me know what would be the best instant access savings account for me? I would like any interest to be paid to me monthly. Thank you

Roy, Lancashire

17 December 2017

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Cherry Reynard

The rates on savings accounts are not brilliant, but I’m guessing you know that already. It is always worth shopping around as they change frequently. The top rates at the moment can be found at -

www.savingschampion.co.uk/best-buys/personal/monthly-income/#table

The best deals are currently offered by Atom Bank, but you have to tie your money up, which you don’t want to do. As such, the best deal available today is the Post Office, offering a rate of 1.29%.  Check out the small print of these deals as some have restrictions or are only branch-based etc.

 

 

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.

ISAs

Have you a review on Halifax Stocks and Shares ISA?

Moira, London

21 October 2017

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Dr Richard Bradley

Those who use Halifax Share Dealing 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 out there. So, for investors looking at cost alone it’s a solid option, but it lacks some of the pizzazz of others.

 

 

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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