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Answers to YOUR Questions

See what's bugging others. 

And what our experts say.

Stocks and Shares ISA

I have cash saved in ISAs and savings accounts - probably a 30% deposit on a property - first time buyer. I currently only have a temporary job after returning from a career break to travel, so can't get a mortgage yet. I am also at least 12 months away from getting a permanent job (and getting through any probationary period), so at least 12 months away from buying a property. In the meantime we will have Brexit (maybe?!), which is likely to affect property and investment returns at least in the short term. If you were me, what would you do with the cash in the meantime, before buying a property? Best just to leave it in cash for now, or invest a portion in stocks and shares ISAs, and keep the rest in cash?

Malti, London

25 July 2018

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Holly Mackay

If you are thinking about a 12 month period I wouldn’t go near the stock market.

A stock market crash in the next year could see your money fall in value by 20% - you’d be devastated. If you were saving for 10 years these ups and downs are largely irrelevant because time means you can ignore them. But your timeframe means you can't. 

So stay with cash.

I would say as a first-time buyer you can increase your savings a bit with the Lifetime ISA. You can stick in £4,000 this tax year and get a £1,000 freebie top-up from the Government.

If you stick with cash (which given your timeframes you should) then a Cash LISA is your choice. The interest rate is a rubbish 0.5%* but you’ll get that 25% Government top-up which is better than a kick in the teeth!​

(Since this answer was first published there are now two new Cash LISAs on the market. Meaning that as of November 2018, you can now choose a Cash LISA from either Skipton, Nottingham or Newcastle Building Societies).

Have a read on their sites and make sure you’re OK with the ts and cs of a Lifetime ISA.

With the rest of the cash, make sure it’s earning as much as possible. With a 12 month window think about a fixed term deposit.

Good luck!

 

*Since writing this, the Bank Of England raised rates and the Skipton LISA now pays a slightly less rubbish 1%!

 

 

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 | 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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