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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.

Personal Finance | Budgeting | Saving

How can I pimp my credit score?

Sonia, Greater London

09 August 2018

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Holly - 066.JPG

Holly Mackay

There are many ways to repair your credit score and this article from This is Money is very informative www.thisismoney.co.uk/money/cardsloans/article-1585131/Improve-credit-rating-history-score.html

 

As is the following detail on the Money Advice Service website: www.moneyadviceservice.org.uk/en/articles/how-to-improve-your-credit-rating

 

Good luck.

 

 

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.

Pensions | Budgeting | Saving

What might a savings pot of £100,000 get me as a retirement income?

Aboodi, Greater London

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Holly - 066.JPG

Holly Mackay

Lots of people we speak to don’t know how much their current savings will actually get them as an annual income once they retire. As a very very crude rule of thumb, we divide the total you have by 20 to get an estimation. So if you have £100,000 saved, you might use £5,000 a year of pension income as a guide.

To get a more specific answer tailored to your circumstances, use this tool from the Money Advice Service.

This is based on you buying what we call an ‘annuity’. This is trading in your lump sum for a fixed annual income until you gasp your last. Your other option is what we call ‘draw down’ – to stay invested in the markets, so you still have ‘skin in the game’, and to withdraw money from this pot as it (hopefully) grows cos stock markets go up over time. So the idea is that you might take out £5,000 a year BUT the £100,000 investment pot might go up by about 4-5% a year.

You should also take into account your state pension entitlement. The rules have changed recently and this has a particularly significant impact on women in their early 60s today. This calculator will tell you at what age you will be eligible for the State Pension. Loads of us grew up with the idea stuck in our heads that this was 60. Well that’s not true anymore. For most in their 40s today, it is more likely to be 67.

As a rough guide here, think about how many years you have paid National Insurance for/how long you have worked. Multiply every year by £4.44 and that will give you your weekly State Pension estimate. 20 years all in? That’s about £90 a week. Or another £4,600 a year.

So all in, if you have £100,000 saved and you have worked for 20 years, you can expect an annual retirement income of just under £10,000 a year – rough guide only!

This Retirement Income guide from us will help you walk through your numbers. Good luck!

 

 

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.

Personal Finance | Budgeting | Saving

What is a credit score and why do I need it?

Cameron, Greater London

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Holly - 066.JPG

Holly Mackay

A credit score is a magic number that is used by lenders to assess how reliable you are as a borrower. This number is SUPPOSED to indicate your likelihood of paying back debt on time, which lenders obviously want you to do (otherwise they don’t get back the money they lent you or they have a right hassle trying to get it back.)

It works on the basis (rightly or wrongly) that what has happened in your past is likely to happen in the future – so if you have shown a proven track record of responsible borrowing, lenders will feel you’re a safe pair of hands and are more likely to approve you for credit.

The higher your credit score, the more likely you are to get approved – whether that’s a mortgage, a credit card or a personal loan. Moreover, you’re also likely to get favourable terms for that credit as you’ll have a greater choice of products (which often means lower interest rates on your repayments, making the whole deal far cheaper in the long-term.) The lower the number, the more borrowers will think twice about accepting you for credit.

Unfortunately, it can be damaging to make 'hard' applications for credit only to get rejected. These rejections show up on your credit file and make it even harder to get approved. It’s vital, therefore, that you persuade lenders to do a ‘’soft’’ credit search on your behalf wherever possible as the results will not be passed onto other lenders when they search you.

Each lender will put together its own credit score for you behind closed doors. Each lender will score you differently based broadly on three criteria; past dealings with you (if any), application information AND your credit file. This might all seem very secretive and furtive, but the good news is that you CAN see your credit file by registering with a credit reference service like Experian, Equifax and Noddle.

 

 

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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