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ISAs and LISAs: Are You Missing Out? · A Little Bit Richer

0:01
Kia: Welcome to another episode of A Little Bit Richer. This
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Kia: is Kia, and today we're talking ISAs. We touched on
0:07
Kia: them in a few earlier episodes, but we're diving a
0:09
Kia: little bit deeper. You may notice at this time of
0:12
Kia: the year there's always a bit of a buzz around
0:14
Kia: ISAs because we're approaching the end of the tax year,
0:17
Kia: the last chance to use your annual allowance. And in the
0:20
Kia: recent budget, a new ISA was announced, so we thought
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Kia: it would be great to explain the basics including when an ISA is
0:25
Kia: a good idea and when it probably isn't. A Little
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Kia: Bit Richer is brought to you by Legal & General. So
0:32
Kia: who better to talk about this topic than the ISA
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Kia: product manager at Legal & General, Fahad Ahmed. Welcome, Fahad.
0:38
Fahad Ahmed: Hi, Kia. Thanks for having me.
0:40
Kia: Thank you for coming. So, could you talk us through
0:43
Kia: what ISAs are and the different types and why could an ISA be useful
0:47
Kia: to some of our listeners?
0:48
Fahad Ahmed: Absolutely. So, ISAs, it stands for an individual savings account and it's a
0:52
Fahad Ahmed: tax efficient way for you to either save or invest
0:54
Fahad Ahmed: your money. What that means is you don't have to
0:57
Fahad Ahmed: pay tax on any returns that you get, which is
0:59
Fahad Ahmed: obviously it's a great thing because it means more money
1:01
Fahad Ahmed: in your pocket. There's a few different types of ISAs. So,
1:04
Fahad Ahmed: we've got stocks and shares ISAs, cash ISAs, lifetime ISAs,
1:09
Fahad Ahmed: and there's even junior ISAs, which is for under 18s. We're
1:12
Fahad Ahmed: going to talk more about what each ISA is and when
1:14
Fahad Ahmed: they might be appropriate. But a key thing to bear in mind is that
1:18
Fahad Ahmed: you don't have to pick just one. You can mix
1:19
Fahad Ahmed: and match. Just as long as you don't go over
1:22
Fahad Ahmed: your annual allowance, which is 20K. So, just as an
1:26
Fahad Ahmed: example, you could put 1, 000 pounds into a stocks and
1:29
Fahad Ahmed: shares ISA. You could put 500 pound into a cash
1:31
Fahad Ahmed: ISA, and if you want, you could put 4, 000
1:34
Fahad Ahmed: pounds into a lifetime ISA. At the moment, you're only
1:37
Fahad Ahmed: able to save or invest into one of each type
1:39
Fahad Ahmed: of ISA in a tax year. However, this is going to
1:42
Fahad Ahmed: be changing next month. In the new tax year, you'll
1:45
Fahad Ahmed: be able to save or invest into multiple ISAs of
1:47
Fahad Ahmed: the same type.
1:48
Kia: So, you've explained what they are, which is great, but
1:51
Kia: why could an ISA be useful to some of our listeners?
1:54
Fahad Ahmed: It's a way of investing or saving where you don't
1:56
Fahad Ahmed: have to pay tax. So, that's a wonderful advantage. They're
1:59
Fahad Ahmed: a good way, especially stocks and shares ISAs, you can
2:02
Fahad Ahmed: see really good long- term growth.
2:03
Kia: Amazing. So, let's just say you might have some money
2:08
Kia: and you want to save it, right? But you might
2:12
Kia: need it in the next few years. So, opening a
2:14
Kia: cash ISA might be the option that you go for.
2:17
Kia: Can you give us a bit more detail on these accounts?
2:21
Fahad Ahmed: Yeah, for sure. So, a cash ISA is a type
2:23
Fahad Ahmed: of savings account where you don't have to pay tax
2:26
Fahad Ahmed: on the interest that you earn. It's good for shorter
2:28
Fahad Ahmed: term savings. When we're saying shorter term, we're talking about
2:31
Fahad Ahmed: under five years. There's a few different types of cash
2:34
Fahad Ahmed: ISAs. So, you've got instant access cash ISA, so that
2:37
Fahad Ahmed: you can access your money as and when you like.
2:40
Fahad Ahmed: You've got fixed rate cash ISAs, so this is where
2:43
Fahad Ahmed: you put your money away for a fixed period of
2:45
Fahad Ahmed: time, it is usually between one and five years. Then you've
2:48
Fahad Ahmed: got something called notice cash ISAs. When you want to
2:51
Fahad Ahmed: take money out of this, you've got to give a
2:53
Fahad Ahmed: certain period of notice, usually 30 days, 60 days, or
2:56
Fahad Ahmed: 90 days. And then finally, you have regular cash ISA
3:00
Fahad Ahmed: or regular saver cash ISAs. So, with these you have
3:02
Fahad Ahmed: to commit to putting in a certain amount every month.
3:05
Fahad Ahmed: The thing to bear in mind with these is that there's
3:06
Fahad Ahmed: usually a trade- off between flexibility and the interest rate
3:10
Fahad Ahmed: that you get. So, for example, with the instant access
3:12
Fahad Ahmed: cash ISA, since that one's the most flexible, it's generally
3:16
Fahad Ahmed: going to offer the lowest interest rate. Another thing to
3:19
Fahad Ahmed: bear in mind is that the interest rate that you
3:20
Fahad Ahmed: get, it can vary quite widely depending on which provider
3:24
Fahad Ahmed: you go with. If you've decided you want to go
3:26
Fahad Ahmed: for a cash ISA, you want to do your research
3:28
Fahad Ahmed: and compare different providers and make sure you're getting the
3:31
Fahad Ahmed: best rate out there. The best way to do this is
3:33
Fahad Ahmed: just to jump onto Google, search best cash ISA, and
3:36
Fahad Ahmed: then what you'll get is comparison websites. If you go
3:39
Fahad Ahmed: onto these websites, then in a very simple way, they'll
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Fahad Ahmed: lay out tables and things like this and they'll make it very
3:44
Fahad Ahmed: easy for you to identify which ISA has the best
3:47
Fahad Ahmed: rate for you.
3:47
Kia: I think that's really good, like you said, comparing the
3:49
Kia: different rates and understanding the trade- off between the different
3:53
Kia: types is what you need to factor in depending on
3:55
Kia: what your goal is for your money. A question that
3:57
Kia: I know a lot of people will have is how
3:59
Kia: safe is their money? I think that's all that people
4:01
Kia: think. You're saving big amounts, but is my money safe?
4:04
Kia: So, is your money safe if you're putting it into
4:06
Kia: something like a cash ISA?
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Fahad Ahmed: So, what you need to make sure when you do
4:09
Fahad Ahmed: pick a provider, you need to make sure that it's
4:11
Fahad Ahmed: UK authorized and somewhere on the provider's website there should
4:15
Fahad Ahmed: be mention of something called the FSCS, and this stands
4:18
Fahad Ahmed: for Financial Services Compensation Scheme. This will make sure that
4:21
Fahad Ahmed: your money is safe and secure up to 85,000. Now,
4:24
Fahad Ahmed: obviously, we said the cash ISA limit is 20, 000 a
4:26
Fahad Ahmed: year, but just in case you're somebody who's really fortunate
4:29
Fahad Ahmed: and has that much money, can accumulate that over the
4:31
Fahad Ahmed: years, up to 85, 000 pounds, your money will be safe
4:34
Fahad Ahmed: and secure.
4:35
Kia: So, if someone were to open up a standard savings
4:37
Kia: account, so i. e., not an ISA account, would they
4:40
Kia: still need to pay tax on any interest that they earn?
4:43
Fahad Ahmed: Not necessarily. So, we do also have something called a
4:46
Fahad Ahmed: personal savings allowance. Now, if you are a basic rate
4:49
Fahad Ahmed: taxpayer, that means you're currently paying 20% in income tax,
4:53
Fahad Ahmed: you have a personal savings allowance of 1, 000 pounds. So,
4:56
Fahad Ahmed: what this means is that you can earn up to 1,
4:58
Fahad Ahmed: 000 pounds in interest before you have to worry about
5:01
Fahad Ahmed: paying any tax on that. If you are a higher
5:04
Fahad Ahmed: rate taxpayer, so you're paying 40% in income tax, your
5:07
Fahad Ahmed: personal savings allowance is 500 pounds. And that means you
5:10
Fahad Ahmed: can earn up to 500 pounds in interest without having
5:13
Fahad Ahmed: to pay tax on it. If you earn, let's say for example,
5:15
Fahad Ahmed: 550 pounds, the 500 pounds, tax- free, and that additional
5:19
Fahad Ahmed: 50 pounds you'll have to pay tax on that. So,
5:22
Fahad Ahmed: if you are just saving, let's say, a couple of hundred pounds,
5:25
Fahad Ahmed: or even in the low thousands, it might be the
5:27
Fahad Ahmed: case that a standard savings account is actually better than
5:30
Fahad Ahmed: a cash ISA, because you can find sometimes they have
5:32
Fahad Ahmed: better rates. What I would say, though, is if you
5:35
Fahad Ahmed: do go for a standard savings account, make sure that
5:37
Fahad Ahmed: you're keeping an eye on your balance, especially if you're
5:40
Fahad Ahmed: putting money in on a regular basis every month, because
5:43
Fahad Ahmed: situations can change quite quick. You might think, oh, you're
5:46
Fahad Ahmed: miles away from actually exceeding your personal savings allowance, but
5:49
Fahad Ahmed: let's say you get a salary increase that pushes you
5:51
Fahad Ahmed: to be a higher rate taxpayer, then your personal savings
5:54
Fahad Ahmed: allowance is going to half just like that. So, just
5:56
Fahad Ahmed: keep an eye on it and be prepared that at some
5:58
Fahad Ahmed: point over the coming months or years, just be ready
6:01
Fahad Ahmed: that it might be a good option to transfer your money to a cash ISA.
6:04
Kia: That's really good to highlight. I think a lot of
6:06
Kia: people don't realize that they have a personal savings allowance.
6:07
Fahad Ahmed: Yeah. Yeah. Yeah.
6:08
Kia: So, like you said, it's just keeping in mind how
6:11
Kia: much you earn and how much tax are you paying and what does
6:13
Kia: that mean for your savings? And maybe do you need
6:15
Kia: to switch to an ISA that's going to be better suited for you?
6:17
Kia: But as we always say, personal finance is personal, so
6:20
Kia: make sure you're making decisions that's best for your personal
6:23
Kia: situation. Let's move on to investing. So, if someone is
6:29
Kia: considering investing in the stock market, could a stocks and
6:33
Kia: shares ISA be worth taking a look at?
6:35
Fahad Ahmed: Yeah. So, I'm going to be a little bit biased
6:37
Fahad Ahmed: because of my job, but I absolutely love stocks and
6:39
Fahad Ahmed: shares ISAs. So, first of all, you've got that tax-
6:42
Fahad Ahmed: free element that we spoke about. So, any money that
6:44
Fahad Ahmed: you make through gains in the stock market, you don't
6:46
Fahad Ahmed: have to worry about paying tax on it. The good
6:48
Fahad Ahmed: thing about stocks and shares ISAs is that if you
6:51
Fahad Ahmed: invest for the long term and we're talking about over
6:54
Fahad Ahmed: five years, you can generally expect to see better returns
6:57
Fahad Ahmed: than what you would see if you just left your money
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Fahad Ahmed: in, let's say, your current account or even a cash
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Fahad Ahmed: ISA. So, that's another thing that's really good. I do
7:05
Fahad Ahmed: need to stress though that with stocks and shares ISAs, it's an investment
7:08
Fahad Ahmed: and when we're talking about investing, it's all about the
7:10
Fahad Ahmed: long term. It's all about that minimum five years. That's
7:13
Fahad Ahmed: the key number to remember. But the longer you leave
7:15
Fahad Ahmed: your money invested, the more chance there is that you'll
7:18
Fahad Ahmed: actually see positive returns. As I said, though, it's an
7:21
Fahad Ahmed: investment, so your money, it will go up and down
7:24
Fahad Ahmed: and you could actually get back less than you put in.
7:26
Kia: Investing, it's always that thing, people are thinking about the
7:29
Kia: future, thinking about how they can grow their money and
7:31
Kia: it's a good thing to have a look at. If you do want to start investing, it's a good
7:34
Kia: account to definitely have a look at.
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Fahad Ahmed: The thing is, it's really good for beginners and that's the thing
7:39
Fahad Ahmed: that's so good about it.
7:39
Kia: I agree.
7:40
Fahad Ahmed: So, even if I think back to myself before I
7:42
Fahad Ahmed: had opened a stocks and shares ISA, let's go back
7:44
Fahad Ahmed: a few years, so even before I was working in
7:46
Fahad Ahmed: financial services, anything like that, when I had just graduated, I
7:50
Fahad Ahmed: was actually working in retail at the time. And it was
7:52
Fahad Ahmed: the first time I had a little bit of money
7:54
Fahad Ahmed: coming in each month that I didn't have an immediate
7:55
Fahad Ahmed: need for it. I could actually put it aside for
7:58
Fahad Ahmed: the long term. And obviously, we've heard of this term
8:00
Fahad Ahmed: investing and it's something I've heard of and I'm thinking, " Maybe
8:04
Fahad Ahmed: I should invest some of this money." But the thing
8:06
Fahad Ahmed: is, at the time I thought it was something that was so far away from me.
8:08
Kia: Right? It seems like a Wolf of Wall Street, that
8:10
Kia: kind of stuff, that's so far away from reality.
8:12
Fahad Ahmed: Exactly, Kia. I thought it was for people that, like you say,
8:15
Fahad Ahmed: Wolf of Wall Street, they look a bit different to
8:17
Fahad Ahmed: us. They've definitely got more money than us. So, to
8:20
Fahad Ahmed: be honest, I put it aside for a while, I
8:22
Fahad Ahmed: didn't think it was accessible for me and I found
8:24
Fahad Ahmed: it a little bit daunting. But when I came across
8:26
Fahad Ahmed: stocks and shares ISAs and in particular the options they
8:28
Fahad Ahmed: have for how you can invest in it, that's when
8:31
Fahad Ahmed: I realized, oh, actually, this could be for me. So,
8:33
Fahad Ahmed: if it's okay, I could just touch on those different
8:36
Fahad Ahmed: options for how you can invest in a stocks and shares
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Fahad Ahmed: ISA. So, there's two main options. The first one is
8:41
Fahad Ahmed: what we'd call a DIY approach. So, this is where you pick
8:44
Fahad Ahmed: your own investments. You can pick things like corporate bonds,
8:48
Fahad Ahmed: government bonds, unit trusts. You can even go as far
8:51
Fahad Ahmed: as to pick your own individual company shares. And for
8:55
Fahad Ahmed: me, back then, that's what seemed a little bit daunting.
8:58
Fahad Ahmed: To be honest, even today, that would make me a little bit nervous.
9:00
Kia: It's a lot. It's very hands-on, isn't it?
9:02
Fahad Ahmed: Exactly. Exactly. So, for me, it's not really the one.
9:05
Fahad Ahmed: What I like is the second option, which we call
9:07
Fahad Ahmed: managed portfolios. Now, with a managed portfolio, you can take
9:11
Fahad Ahmed: a step back, you invest your money and you leave
9:14
Fahad Ahmed: it to the professionals, you leave it to the investment experts
9:16
Fahad Ahmed: to invest your money on your behalf. The only thing that
9:19
Fahad Ahmed: you've got to do is pick what level of risk
9:21
Fahad Ahmed: you want to take. So, providers that have this option,
9:23
Fahad Ahmed: they'll generally have a couple of managed portfolios, maybe three,
9:26
Fahad Ahmed: maybe five, that all have a different risk rating. So, you've
9:29
Fahad Ahmed: just got to decide whether you want to go for
9:31
Fahad Ahmed: the lower risk one, a medium risk one, a higher
9:33
Fahad Ahmed: risk one. Sometimes you'll see different terminology. They might use
9:36
Fahad Ahmed: words like cautious, adventurous, things like this, but it's the same
9:41
Fahad Ahmed: concept. And it's great for beginners because you don't have
9:43
Fahad Ahmed: to have a huge amount of knowledge. You can just
9:47
Fahad Ahmed: take a step back, let the professionals do their thing.
9:49
Kia: I'm glad you touched on that because I think it
9:50
Kia: is good to highlight that you don't have to be
9:52
Kia: an investing whiz to start, especially with stocks and shares
9:55
Kia: ISA, there's something for everyone. I think that's a good
9:58
Kia: thing when it comes to ISAs. So, we've mentioned how
10:01
Kia: good these different accounts are and how they work, but
10:04
Kia: what should someone be looking for when it comes to
10:05
Kia: picking the right provider for them?
10:08
Fahad Ahmed: So, there's a few different things. I've already mentioned options
10:11
Fahad Ahmed: for how to invest. Those two options that I said,
10:13
Fahad Ahmed: not all providers will have both of them. Some providers
10:16
Fahad Ahmed: have both. Some will only have one. So, it's decide
10:18
Fahad Ahmed: beforehand which of those two options is more appealing for
10:20
Fahad Ahmed: you and then find a company that provides that option.
10:24
Fahad Ahmed: Another thing would be, so I spoke about that misconception
10:27
Fahad Ahmed: about, I thought you needed more money. So, that's another thing
10:29
Fahad Ahmed: that people should take into account when they're picking a
10:31
Fahad Ahmed: provider. So, I don't know how it was back in
10:33
Fahad Ahmed: the day, but nowadays, it's actually very accessible and with
10:37
Fahad Ahmed: a lot of providers you can get started with just
10:39
Fahad Ahmed: very small amounts. So, our L& G stocks and shares
10:41
Fahad Ahmed: ISA, for example, you can get started with just either
10:44
Fahad Ahmed: 20 pounds a month or a 100 pound lump sum.
10:47
Fahad Ahmed: And that's not just ours. I know, a lot of
10:49
Fahad Ahmed: our peers, you can also get started with similarly small
10:51
Fahad Ahmed: amounts, but there may be some providers where you need a minimum of 5,
10:55
Fahad Ahmed: 000 pounds, 10, 000 pounds. So again, that's another thing to
10:59
Fahad Ahmed: take into account when picking a provider. Another thing is
11:02
Fahad Ahmed: fees. Now fees is-
11:03
Kia: Big one.
11:03
Fahad Ahmed: Yeah, big one, because it's going to impact how much
11:06
Fahad Ahmed: money you actually get in your pocket. So, this is
11:08
Fahad Ahmed: something you want to check. Just bear in mind when
11:10
Fahad Ahmed: you're checking fees, they don't all charge fees in the
11:13
Fahad Ahmed: same way. So, some providers, they're going to charge a
11:16
Fahad Ahmed: fee as a percentage of your overall investment. Other providers,
11:20
Fahad Ahmed: they're going to charge a flat monthly fee. So, just
11:23
Fahad Ahmed: bear that in mind when you're checking. Other things to check
11:25
Fahad Ahmed: is see whether or not you can change where your
11:28
Fahad Ahmed: money is invested. And by that I mean, remember we
11:31
Fahad Ahmed: were talking about the managed portfolios? Maybe at the start you
11:33
Fahad Ahmed: want to go for something that's higher risk. Maybe at
11:36
Fahad Ahmed: some point your circumstances change, you want to move your
11:38
Fahad Ahmed: money into a more cautious portfolio. So, check whether this
11:42
Fahad Ahmed: is possible to do and if it is, just check
11:44
Fahad Ahmed: if there's any charges associated with that, because that varies
11:47
Fahad Ahmed: between different providers. So, there's another one I wanted to
11:49
Fahad Ahmed: speak about, which is certain people might have certain values
11:53
Fahad Ahmed: that come from a religious perspective, so these people, they
11:55
Fahad Ahmed: should check whether they provide something called Sharia compliant funds.
12:00
Fahad Ahmed: I've seen some research recently that suggests that a lot of people in
12:03
Fahad Ahmed: our community, I'm speaking as a Muslim, a lot of
12:05
Fahad Ahmed: us, we're not actually aware that there's these options that
12:08
Fahad Ahmed: exist to get the benefits and the advantages of investing,
12:11
Fahad Ahmed: in a way that doesn't compromise our faiths and our
12:13
Fahad Ahmed: beliefs. So, I really just want to highlight that. A
12:16
Fahad Ahmed: lot of providers, they do have Sharia compliant funds and
12:19
Fahad Ahmed: these will not invest your money in things such as
12:22
Fahad Ahmed: gambling or alcohol companies. Anything that is not permissible in
12:26
Fahad Ahmed: our faith, we can rest assured our money won't be
12:28
Fahad Ahmed: invested in that. A lot of people, they're not aware that these exist and it would
12:32
Fahad Ahmed: be a shame if people are missing out. That doesn't
12:34
Fahad Ahmed: need to be a barrier to getting involved with investing.
12:36
Kia: I agree with you. I'm really glad you brought that
12:37
Kia: up because like you said, there is something for everyone and
12:40
Kia: I think even you highlighting that just goes to show
12:42
Kia: that everyone can benefit from having an ISA.
12:46
Fahad Ahmed: Hundred percent.
12:46
Kia: So, let's move on to other types of ISAs. A
12:50
Kia: big one for people who want to get on the property ladder
12:52
Kia: is the lifetime ISA or the LISA. So, it does seem like a
12:56
Kia: really good one if you want to buy a property one
12:58
Kia: day, isn't it?
12:58
Fahad Ahmed: Yeah. Yeah, a hundred percent. So, the LISA, like you say, it's
13:01
Fahad Ahmed: great for people that want to get on the property ladder,
13:03
Fahad Ahmed: but they don't own any property just yet. It's aimed towards
13:06
Fahad Ahmed: younger people. So, if you're between the ages of 18 and 39,
13:10
Fahad Ahmed: you can put up to 4, 000 pounds into a LISA
13:13
Fahad Ahmed: every tax year and the government will actually top this
13:16
Fahad Ahmed: up by an additional 25%. So, just to give you
13:19
Fahad Ahmed: an example, give you some numbers. If you were to
13:21
Fahad Ahmed: max this out over five years, you would've accumulated 20,000
13:24
Fahad Ahmed: pounds in your savings account, in your LISA, and the
13:27
Fahad Ahmed: government will put another 5K on top of this.
13:29
Kia: It's a good chunk of money.
13:30
Fahad Ahmed: It's great and it's genuinely, it's free money.
13:33
Kia: That's my favorite word. Free. I love that.
13:35
Fahad Ahmed: There you go. So, obviously Kia and me are getting
13:37
Fahad Ahmed: quite excited about this.
13:41
Kia: Yeah, we are.
13:41
Fahad Ahmed: But, and there is always a but, there are some rules that I've got to tell the listeners.
13:43
Fahad Ahmed: So, if for any reason you don't want to use
13:45
Fahad Ahmed: your money to buy a house, you can alternatively use
13:48
Fahad Ahmed: it for retirement savings, but that means you can't really
13:51
Fahad Ahmed: touch it until you're the age of 60. If you
13:54
Fahad Ahmed: want to withdraw your money before you turn 60 and
13:56
Fahad Ahmed: it's not to buy a property, there's going to be
13:58
Fahad Ahmed: a 25% penalty. And some people have a misconception that
14:02
Fahad Ahmed: the 25% penalty just means that you lose your 25% bonus.
14:06
Fahad Ahmed: But actually, without getting too deep into the maths of
14:09
Fahad Ahmed: it, you're going to lose your government bonus, but you're
14:11
Fahad Ahmed: also going to lose about 6% of your initial investment.
14:14
Kia: It's good to know.
14:15
Fahad Ahmed: Yeah, people should think long and hard before they open
14:17
Fahad Ahmed: one. Like we've said, they are really great, but if
14:19
Fahad Ahmed: you're thinking maybe renting is better for your lifestyle, maybe
14:23
Fahad Ahmed: you're thinking about moving abroad, perhaps the LISA is not for
14:26
Fahad Ahmed: you. Just bear that in mind.
14:27
Kia: Yeah, it's good. I'm glad you highlighted that. And it's also
14:29
Kia: good to note that a lot of people have opened
14:33
Kia: it up and think, " Right, I can just put money
14:34
Kia: in there and I can use it straight away." You also need to have it
14:36
Kia: open for 12 months before you can use it towards
14:38
Kia: your first property.
14:39
Fahad Ahmed: There you go. There you go.
14:40
Kia: There are some caveats to keep in mind, but I
14:41
Kia: think overall the lifetime ISA is a good one to have a look at
14:44
Kia: if you do want to get on the property ladder one day.
14:45
Fahad Ahmed: A hundred percent. And while we're talking about the rules, there's just one more
14:48
Fahad Ahmed: we should have probably mentioned, and that's the fact that
14:51
Fahad Ahmed: the property that you purchase, it has to be under
14:53
Fahad Ahmed: the price of 450K.
14:55
Kia: You've given us a lot of food for thought there,
14:57
Kia: so anyone who's in between that questions for them, I
15:00
Kia: think, like you said, it's up to people's personal circumstance,
15:03
Kia: but there's lots of information you've given us that people
15:05
Kia: can pick what's going to be best for them. There
15:07
Kia: have been a few changes recently when it comes to ISAs,
15:11
Kia: so can you give us a bit more of an
15:12
Kia: explanation of what the changes are?
15:13
Fahad Ahmed: So, from next month where we see the new tax
15:16
Fahad Ahmed: year begin, we're actually going to be able to put
15:18
Fahad Ahmed: money into multiple ISAs of the same type. So, just as
15:22
Fahad Ahmed: an example, you can open a stocks and shares ISA
15:25
Fahad Ahmed: with one company and put 1, 000 pound in, and then
15:27
Fahad Ahmed: you can open a stocks and shares ISA with another
15:29
Fahad Ahmed: company and put 500 pounds in. Right now, that's not
15:32
Fahad Ahmed: allowed. Next month, that will be allowed. And then the
15:34
Fahad Ahmed: other one, which was just mentioned the other day in
15:36
Fahad Ahmed: the spring budget, something called the British ISA, and this
15:40
Fahad Ahmed: is an additional 5K allowance on top of your existing
15:43
Fahad Ahmed: 20K allowance, specifically designed for UK investments. At the moment,
15:47
Fahad Ahmed: there's not too much more we can say on it.
15:49
Fahad Ahmed: It's just been announced and we don't have too many
15:51
Fahad Ahmed: details. What I would say is if it is something
15:54
Fahad Ahmed: that sounds like it's of interest to you, just listen
15:56
Fahad Ahmed: out for further updates.
15:57
Kia: That's really good. Keep your ear on the ground. But
15:59
Kia: there's been some good changes for people to hear about
16:01
Kia: when it comes to what's been announced recently. And also,
16:04
Kia: you can move parts of your money, can't you? You
16:07
Kia: can move bits from one ISA to another. You don't have to move whole lump sums. Right?
16:11
Fahad Ahmed: Exactly. There you go.
16:12
Kia: I love that. Some good changes. Good changes. Right. Before
16:14
Kia: we round off this episode, could you share your top
16:17
Kia: three tips when it comes to ISAs?
16:19
Fahad Ahmed: Absolutely. So, my first top tip would be ... We've spoken
16:24
Fahad Ahmed: a lot about long- term investing and things like this,
16:26
Fahad Ahmed: but my first top tip would actually be, make sure
16:28
Fahad Ahmed: you've got a sum of money, a pot of money
16:30
Fahad Ahmed: that you have instantly accessible to you. So, it's what
16:33
Fahad Ahmed: people would refer to as an emergency fund. It can
16:36
Fahad Ahmed: be in a cash ISA, an instant access cash ISA. We never know what
16:40
Fahad Ahmed: the future's going to hold, so just make sure you've
16:42
Fahad Ahmed: got that instantly accessible. My second top tip would be,
16:45
Fahad Ahmed: and this comes from personal experience, if you are opting
16:48
Fahad Ahmed: for a stocks and shares ISA, there's no need to
16:50
Fahad Ahmed: be checking your balance every single day. There's no need
16:53
Fahad Ahmed: to be doing that. I made this mistake, I just
16:56
Fahad Ahmed: wanted to look at it all the time. But the
16:57
Fahad Ahmed: thing is, you have to remember, your money's going to
16:59
Fahad Ahmed: go up and down and it's a long- term investment.
17:02
Fahad Ahmed: So, if you do fall into the trap of checking
17:04
Fahad Ahmed: it maybe a bit more than you should initially and
17:06
Fahad Ahmed: you're in the red and your money's gone down, there's
17:08
Fahad Ahmed: no need to panic. Remember, it's a long- term game.
17:11
Fahad Ahmed: You're investing for a minimum of five years. No need to
17:13
Fahad Ahmed: panic if it's down after a couple of days, weeks,
17:16
Fahad Ahmed: or even months. My third top tip would be do
17:19
Fahad Ahmed: your own research and choose what's right for you. So,
17:22
Fahad Ahmed: Kia touched on it earlier, personal finance, it's called personal
17:26
Fahad Ahmed: because it's personal.
17:27
Kia: It is.
17:27
Fahad Ahmed: And it depends on what's happening in your own life and
17:29
Fahad Ahmed: your own circumstances. We spoke a lot today about a
17:32
Fahad Ahmed: lot of different options, a lot of different accounts. Take
17:34
Fahad Ahmed: your time, do your own research. And what's right for
17:37
Fahad Ahmed: your best friend, or your dad, or Kia, or me,
17:40
Fahad Ahmed: it might not necessarily be what's best for you. That's
17:43
Fahad Ahmed: my third top tip.
17:44
Kia: Fahad, that was a great one to end on. I
17:46
Kia: love that. Make sure you do your research and pick
17:48
Kia: what is best for you. Thank you so much for
17:50
Kia: gracing the podcast and just sharing your gems when it
17:52
Kia: comes to ISAs.
17:54
Fahad Ahmed: Thank you so much, Kia.
17:54
Kia: Next time, I'll be having a friend of the show, Andy
17:57
Kia: Webb, back to talk to us about switching bank accounts
17:59
Kia: and getting the most out of your account. In the meantime,
18:03
Kia: I'd love it if you shared the podcast, tell a
18:05
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18:08
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18:11
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18:20
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