On Tuesday evening, we tackled the big money questions everyone is asking about - from cash to pensions - and discussed how you can make the most of your money in a world of financial uncertainty.
Our founder and CEO Holly Mackay was joined by industry expert Clare Francis, Director of Savings and Investments at Barclays. They chatted about everything from cash savings rates to capital gains tax, sharing some of the opportunities available to you each tax year to help your money go further and boost the tax-efficiency of your long-term savings.
You can watch the full webinar replay here to some of your questions they answered during the session here.
Discover how to make your money go further
Check out the highlights
We thought your questions were brilliant and you certainly put our experts through their paces! Here’s a recap of some of our favourite bits.
1 – What's going on with interest rates?
Holly and Clare tackle the big question around interest rates and what we might be able to expect in the months ahead, including the impact of the collapse of Silicon Valley Bank and how this has potentially affected the longer-term outlook for rates. Clare also emphasizes the importance of finding the 'right home' for your money to weather any storms as well as make the most of the circumstances in the short term.
2 - How do I pick a good fund?
Clare shares her thoughts on how to pick a good investment, including why multi-asset funds are a great addition to a low-effort, diversified portfolio, and Holly explains some of the key resources available to assess performance. Plus, which metrics should you be looking out for to discern a good fund from a bad one?
3 – The case for pensions
Clare explains the basics of pensions, including the free 20% government top-up and the annual cap on contributions (pre-Spring Budget 2023!), and Holly shares why she thinks pension planning is a 'particularly compelling' planning tool for higher earners looking to protect as much of their assets as possible. And an important note that once your money is in a pension, you can't access it until you're at least 55!
4 – Why ISAs are the ultimate tax shield
With recent changes to Capital Gains Tax (CGT) allowances increasingly eating away at our investment returns, Clare explains what to expect and why the argument for investing with an ISA has never been stronger. Plus, Holly adds how she thinks using your annual ISA allowance effectively is the 'key takeout' from this webinar, especially if you're new to the investing scene.
Your questions answered
Q. Should I invest or pay off my mortgage?
A.
I think this is individual and personal preference really. One of the things with a mortgage is obviously, when you take out your mortgage, presumably you know how long you're taking it out for - it's affordable to you. We've seen mortgage rates go up over the last 12 months or so because of higher interest rates. So the difference between what return you need to get on investments is higher than when mortgage rates were down at 1%. You might think, 'Well actually, I can probably get more than that by investing. So I might keep my mortgage and look to put my money into investments'. Whereas now, if interest rates are going up, maybe you want to bring that mortgage down and bring that debt down. So it really depends on you. It depends on your household finances, your future plans... There's lots to take into consideration and there's no right or wrong.
- Clare Francis, Director of Savings and Investments at Barclays
Q. What is 'Bed and ISA' and how do I do it?
A.
This phrase stems from the olden days where you had share certificates, and you'd have to sell but you wouldn't be able to buy back straightaway because it would take some time for the sale to go through before you could rebuy. So you'd sell it, go to bed, wake up the next morning and do the next part of the transaction. So I think if I'm right, that's where the term 'Bed and ISA' comes from. But the idea with this, if you own shares and they're not in an ISA, what you can do is you give a simple instruction. So if you've got a Smart Investor account and you own some Barclays shares, for example, and you want to put them in an ISA, you'd go online and tell us that you want to do a 'Bed and ISA' and instruct how many shares you want to sell. And then you buy the same back as quickly as possible after the sale has gone through. And so it's a great way of minimizing the time out of the market and therefore the time that the share price might move. So for example, we've got a few weeks left of the tax year, you might not have some money in cash that you can afford to use in this year's ISA allowance, but if you've got some shares sitting there that aren't in your ISA, it can be a good way of utilizing some of this year's allowance because you can do the 'Bed and ISA' and just move them into that ISA wrapper - which then means that going forward, there's no Capital Gains Tax liability on those investments. So it's a strange term but it can actually be quite useful.
- Clare Francis, Director of Savings and Investments at Barclays
Q. Where can I train in investing and trading?
A.
I've tried many apps, and before apps - websites - to try and learn, but I think the best way is just to get started. And you can get started with a relatively simple fund. I think of these as the equivalent of a ready meal, so you don't need to be an expert, you don't need to cherry pick what you think are wonderful investments and spend hours poring over this, and this option that you might like to consider is a 'multi-asset fund'. That's the ready meal. That's where you pay an expert to invest in stocks, shares, cash, property from all around the world, and the single thing you buy has 1000s of investments under the bonnet. So I think it's a really nice way to take that first step. Clare said that on the Barclays platform, you can invest from 50 pounds. Other platforms will range in a very similar sort of area from 50 pounds up to 100 pounds. And I find just by having that investment, by getting started, by monitoring it, by reading... for me, I think was the best way to learn. Obviously, Boring Money and the weekly blog is an invaluable way to learn, and there's lots of info on the Barclays site too. So there's a lot of material out there.
- Holly Mackay, CEO and Founder of Boring Money
Q. What is a Lifetime ISA and what are they used for?
A.
The Lifetime ISA was launched by the government a few years ago and this is available to people under the age of 40. And you can put up to £4,000 into a Lifetime ISA and it forms part of your overall £20,000 annual allowance. And so if you use it, you've then got £16,000 left that you can put in a Stocks & Shares ISA or Cash ISA. But the beauty of this is that the government will give you a 25% bonus, so you can receive up to £1,000 a year from the government for using the Lifetime ISA. The money within the LISA has to be used either to help you buy your first home or for your retirement. So that's where the question is with a LISA - do you use a pension or ISA for retirement purposes? So it's another savings vehicle to be aware of if you're under 40 and you're lucky enough to be able to benefit from it. And the benefit of the LISA is that the money is accessible in case you need it [although you'll be charged a 25% fee if you withdraw for any reason other than buying your first home or for retirement]. So you might prefer that to locking your money away in a pension if you're younger, but if you're 30, it possibly feels perhaps too far to walk away from that into a pension. So you might prefer to use the Lifetime ISA for retirement instead. But it's just something to be aware of because they're valuable savings vehicles.
- Clare Francis, Director of Savings and Investments at Barclays
Q. How do I invest without worrying about Inheritance Tax?
A.
Often, it's worth getting advice. So we've got an Inheritance Tax threshold, which is currently £325,000, and the value of your estate above that is potentially liable to Inheritance Tax of 40%. But there are lots of things that you can do with planning, if you plan ahead, to reduce that tax liability. And I think if you're somebody who potentially will face an Inheritance Tax bill, or your family will on your death, then it's well worth seeking advice from a wealth planner or independent financial adviser to help you because there's lots of options available to help you reduce that liability.
- Clare Francis, Director of Savings and Investments at Barclays
Watch the full replay
Want to see more events like this?
Many thanks to our sponsor Barclays for making this webinar possible, and if you enjoyed it, make sure to check out our upcoming events to see what's up next in the diary!
Do you want down-to-earth investing tips, jargon-free guides, bite-sized courses, and more? Join Boring Money for free to start making better choices with your money today!
