WEBVTT - ISAs and LISAs: Are you missing out? 0:00:01.139 --> 0:00:04.110 Welcome to another episode of A Little Bit Richer. This 0:00:04.110 --> 0:00:07.440 is Kia, and today we're talking ISAs. We touched on 0:00:07.440 --> 0:00:09.599 them in a few earlier episodes, but we're diving a 0:00:09.599 --> 0:00:12.090 little bit deeper. You may notice at this time of 0:00:12.090 --> 0:00:14.159 the year there's always a bit of a buzz around 0:00:14.280 --> 0:00:17.040 ISAs because we're approaching the end of the tax year, 0:00:17.369 --> 0:00:20.610 the last chance to use your annual allowance. And in the 0:00:20.610 --> 0:00:23.340 recent budget, a new ISA was announced, so we thought 0:00:23.340 --> 0:00:25.139 it would be great to explain the basics including when an ISA is 0:00:25.560 --> 0:00:28.110 a good idea and when it probably isn't. A Little 0:00:29.639 --> 0:00:32.159 Bit Richer is brought to you by Legal & General. So 0:00:32.159 --> 0:00:34.229 who better to talk about this topic than the ISA 0:00:34.229 --> 0:00:38.458 product manager at Legal & General, Fahad Ahmed. Welcome, Fahad. 0:00:38.850 --> 0:00:39.900 Hi, Kia. Thanks for having me. 0:00:40.019 --> 0:00:43.019 Thank you for coming. So, could you talk us through 0:00:43.050 --> 0:00:47.039 what ISAs are and the different types and why could an ISA be useful 0:00:47.040 --> 0:00:47.909 to some of our listeners? 0:00:48.000 --> 0:00:51.809 Absolutely. So, ISAs, it stands for an individual savings account and it's a 0:00:52.469 --> 0:00:54.960 tax efficient way for you to either save or invest 0:00:54.960 --> 0:00:57.240 your money. What that means is you don't have to 0:00:57.240 --> 0:00:59.880 pay tax on any returns that you get, which is 0:00:59.880 --> 0:01:01.710 obviously it's a great thing because it means more money 0:01:01.710 --> 0:01:04.679 in your pocket. There's a few different types of ISAs. So, 0:01:04.679 --> 0:01:08.879 we've got stocks and shares ISAs, cash ISAs, lifetime ISAs, 0:01:09.179 --> 0:01:12.029 and there's even junior ISAs, which is for under 18s. We're 0:01:12.029 --> 0:01:14.970 going to talk more about what each ISA is and when 0:01:14.970 --> 0:01:18.090 they might be appropriate. But a key thing to bear in mind is that 0:01:18.090 --> 0:01:19.800 you don't have to pick just one. You can mix 0:01:19.800 --> 0:01:22.470 and match. Just as long as you don't go over 0:01:22.650 --> 0:01:26.429 your annual allowance, which is 20K. So, just as an 0:01:26.429 --> 0:01:29.100 example, you could put 1, 000 pounds into a stocks and 0:01:29.100 --> 0:01:31.830 shares ISA. You could put 500 pound into a cash 0:01:31.830 --> 0:01:34.110 ISA, and if you want, you could put 4, 000 0:01:34.110 --> 0:01:37.560 pounds into a lifetime ISA. At the moment, you're only 0:01:37.560 --> 0:01:39.779 able to save or invest into one of each type 0:01:39.780 --> 0:01:42.179 of ISA in a tax year. However, this is going to 0:01:42.179 --> 0:01:45.420 be changing next month. In the new tax year, you'll 0:01:45.420 --> 0:01:47.789 be able to save or invest into multiple ISAs of 0:01:47.789 --> 0:01:48.449 the same type. 0:01:48.779 --> 0:01:51.810 So, you've explained what they are, which is great, but 0:01:51.810 --> 0:01:54.300 why could an ISA be useful to some of our listeners? 0:01:54.390 --> 0:01:56.490 It's a way of investing or saving where you don't 0:01:56.490 --> 0:01:59.910 have to pay tax. So, that's a wonderful advantage. They're 0:01:59.910 --> 0:02:02.339 a good way, especially stocks and shares ISAs, you can 0:02:02.340 --> 0:02:03.660 see really good long- term growth. 0:02:03.870 --> 0:02:08.310 Amazing. So, let's just say you might have some money 0:02:08.610 --> 0:02:12.000 and you want to save it, right? But you might 0:02:12.000 --> 0:02:14.550 need it in the next few years. So, opening a 0:02:14.550 --> 0:02:17.399 cash ISA might be the option that you go for. 0:02:17.880 --> 0:02:21.119 Can you give us a bit more detail on these accounts? 0:02:21.210 --> 0:02:23.940 Yeah, for sure. So, a cash ISA is a type 0:02:23.940 --> 0:02:26.609 of savings account where you don't have to pay tax 0:02:26.610 --> 0:02:28.650 on the interest that you earn. It's good for shorter 0:02:28.650 --> 0:02:31.590 term savings. When we're saying shorter term, we're talking about 0:02:31.800 --> 0:02:34.560 under five years. There's a few different types of cash 0:02:34.740 --> 0:02:37.919 ISAs. So, you've got instant access cash ISA, so that 0:02:37.919 --> 0:02:39.958 you can access your money as and when you like. 0:02:40.350 --> 0:02:43.560 You've got fixed rate cash ISAs, so this is where 0:02:43.560 --> 0:02:45.240 you put your money away for a fixed period of 0:02:45.240 --> 0:02:48.570 time, it is usually between one and five years. Then you've 0:02:48.570 --> 0:02:51.119 got something called notice cash ISAs. When you want to 0:02:51.120 --> 0:02:53.430 take money out of this, you've got to give a 0:02:53.520 --> 0:02:56.610 certain period of notice, usually 30 days, 60 days, or 0:02:56.610 --> 0:03:00.240 90 days. And then finally, you have regular cash ISA 0:03:00.240 --> 0:03:02.850 or regular saver cash ISAs. So, with these you have 0:03:02.850 --> 0:03:05.339 to commit to putting in a certain amount every month. 0:03:05.460 --> 0:03:06.870 The thing to bear in mind with these is that there's 0:03:06.990 --> 0:03:10.650 usually a trade- off between flexibility and the interest rate 0:03:10.650 --> 0:03:12.749 that you get. So, for example, with the instant access 0:03:12.750 --> 0:03:16.078 cash ISA, since that one's the most flexible, it's generally 0:03:16.079 --> 0:03:19.109 going to offer the lowest interest rate. Another thing to 0:03:19.109 --> 0:03:20.970 bear in mind is that the interest rate that you 0:03:20.970 --> 0:03:24.030 get, it can vary quite widely depending on which provider 0:03:24.030 --> 0:03:26.040 you go with. If you've decided you want to go 0:03:26.040 --> 0:03:28.409 for a cash ISA, you want to do your research 0:03:28.590 --> 0:03:31.169 and compare different providers and make sure you're getting the 0:03:31.169 --> 0:03:33.480 best rate out there. The best way to do this is 0:03:33.480 --> 0:03:36.780 just to jump onto Google, search best cash ISA, and 0:03:36.780 --> 0:03:39.000 then what you'll get is comparison websites. If you go 0:03:39.000 --> 0:03:41.550 onto these websites, then in a very simple way, they'll 0:03:41.580 --> 0:03:44.220 lay out tables and things like this and they'll make it very 0:03:44.220 --> 0:03:47.010 easy for you to identify which ISA has the best 0:03:47.010 --> 0:03:47.489 rate for you. 0:03:47.820 --> 0:03:49.529 I think that's really good, like you said, comparing the 0:03:49.530 --> 0:03:53.039 different rates and understanding the trade- off between the different 0:03:53.039 --> 0:03:55.080 types is what you need to factor in depending on 0:03:55.080 --> 0:03:57.120 what your goal is for your money. A question that 0:03:57.120 --> 0:03:59.460 I know a lot of people will have is how 0:03:59.460 --> 0:04:01.410 safe is their money? I think that's all that people 0:04:01.410 --> 0:04:04.320 think. You're saving big amounts, but is my money safe? 0:04:04.320 --> 0:04:06.480 So, is your money safe if you're putting it into 0:04:06.599 --> 0:04:07.650 something like a cash ISA? 0:04:07.799 --> 0:04:09.420 So, what you need to make sure when you do 0:04:09.420 --> 0:04:11.670 pick a provider, you need to make sure that it's 0:04:11.670 --> 0:04:15.060 UK authorized and somewhere on the provider's website there should 0:04:15.060 --> 0:04:18.270 be mention of something called the FSCS, and this stands 0:04:18.270 --> 0:04:21.599 for Financial Services Compensation Scheme. This will make sure that 0:04:21.599 --> 0:04:24.450 your money is safe and secure up to 85,000. Now, 0:04:24.450 --> 0:04:26.488 obviously, we said the cash ISA limit is 20, 000 a 0:04:26.490 --> 0:04:29.729 year, but just in case you're somebody who's really fortunate 0:04:29.730 --> 0:04:31.979 and has that much money, can accumulate that over the 0:04:31.980 --> 0:04:34.799 years, up to 85, 000 pounds, your money will be safe 0:04:34.800 --> 0:04:35.250 and secure. 0:04:35.370 --> 0:04:37.529 So, if someone were to open up a standard savings 0:04:37.529 --> 0:04:40.529 account, so i. e., not an ISA account, would they 0:04:40.529 --> 0:04:43.530 still need to pay tax on any interest that they earn? 0:04:43.710 --> 0:04:46.650 Not necessarily. So, we do also have something called a 0:04:46.650 --> 0:04:49.650 personal savings allowance. Now, if you are a basic rate 0:04:49.650 --> 0:04:52.800 taxpayer, that means you're currently paying 20% in income tax, 0:04:53.370 --> 0:04:56.219 you have a personal savings allowance of 1, 000 pounds. So, 0:04:56.220 --> 0:04:58.320 what this means is that you can earn up to 1, 0:04:58.380 --> 0:05:01.080 000 pounds in interest before you have to worry about 0:05:01.080 --> 0:05:04.289 paying any tax on that. If you are a higher 0:05:04.289 --> 0:05:07.770 rate taxpayer, so you're paying 40% in income tax, your 0:05:07.770 --> 0:05:10.650 personal savings allowance is 500 pounds. And that means you 0:05:10.650 --> 0:05:13.560 can earn up to 500 pounds in interest without having 0:05:13.560 --> 0:05:15.809 to pay tax on it. If you earn, let's say for example, 0:05:15.809 --> 0:05:19.678 550 pounds, the 500 pounds, tax- free, and that additional 0:05:19.678 --> 0:05:22.200 50 pounds you'll have to pay tax on that. So, 0:05:22.680 --> 0:05:25.410 if you are just saving, let's say, a couple of hundred pounds, 0:05:25.680 --> 0:05:27.779 or even in the low thousands, it might be the 0:05:27.779 --> 0:05:30.120 case that a standard savings account is actually better than 0:05:30.120 --> 0:05:32.909 a cash ISA, because you can find sometimes they have 0:05:32.910 --> 0:05:35.460 better rates. What I would say, though, is if you 0:05:35.460 --> 0:05:37.768 do go for a standard savings account, make sure that 0:05:37.770 --> 0:05:40.469 you're keeping an eye on your balance, especially if you're 0:05:40.469 --> 0:05:43.650 putting money in on a regular basis every month, because 0:05:43.830 --> 0:05:46.020 situations can change quite quick. You might think, oh, you're 0:05:46.020 --> 0:05:49.230 miles away from actually exceeding your personal savings allowance, but 0:05:49.230 --> 0:05:51.450 let's say you get a salary increase that pushes you 0:05:51.450 --> 0:05:54.570 to be a higher rate taxpayer, then your personal savings 0:05:54.570 --> 0:05:56.339 allowance is going to half just like that. So, just 0:05:56.339 --> 0:05:58.440 keep an eye on it and be prepared that at some 0:05:58.440 --> 0:06:01.439 point over the coming months or years, just be ready 0:06:01.439 --> 0:06:04.590 that it might be a good option to transfer your money to a cash ISA. 0:06:04.740 --> 0:06:06.240 That's really good to highlight. I think a lot of 0:06:06.240 --> 0:06:07.981 people don't realize that they have a personal savings allowance. 0:06:07.981 --> 0:06:08.760 Yeah. Yeah. Yeah. 0:06:08.820 --> 0:06:11.639 So, like you said, it's just keeping in mind how 0:06:11.639 --> 0:06:13.349 much you earn and how much tax are you paying and what does 0:06:13.349 --> 0:06:15.539 that mean for your savings? And maybe do you need 0:06:15.540 --> 0:06:17.758 to switch to an ISA that's going to be better suited for you? 0:06:17.760 --> 0:06:20.700 But as we always say, personal finance is personal, so 0:06:20.700 --> 0:06:23.130 make sure you're making decisions that's best for your personal 0:06:23.130 --> 0:06:29.700 situation. Let's move on to investing. So, if someone is 0:06:29.790 --> 0:06:33.059 considering investing in the stock market, could a stocks and 0:06:33.059 --> 0:06:35.700 shares ISA be worth taking a look at? 0:06:35.700 --> 0:06:37.890 Yeah. So, I'm going to be a little bit biased 0:06:37.890 --> 0:06:39.900 because of my job, but I absolutely love stocks and 0:06:39.900 --> 0:06:42.060 shares ISAs. So, first of all, you've got that tax- 0:06:42.060 --> 0:06:44.460 free element that we spoke about. So, any money that 0:06:44.460 --> 0:06:46.770 you make through gains in the stock market, you don't 0:06:46.770 --> 0:06:48.630 have to worry about paying tax on it. The good 0:06:48.630 --> 0:06:51.570 thing about stocks and shares ISAs is that if you 0:06:51.570 --> 0:06:54.179 invest for the long term and we're talking about over 0:06:54.180 --> 0:06:57.750 five years, you can generally expect to see better returns 0:06:57.930 --> 0:07:00.089 than what you would see if you just left your money 0:07:00.089 --> 0:07:02.640 in, let's say, your current account or even a cash 0:07:02.820 --> 0:07:05.428 ISA. So, that's another thing that's really good. I do 0:07:05.428 --> 0:07:08.430 need to stress though that with stocks and shares ISAs, it's an investment 0:07:08.849 --> 0:07:10.829 and when we're talking about investing, it's all about the 0:07:10.830 --> 0:07:13.440 long term. It's all about that minimum five years. That's 0:07:13.440 --> 0:07:15.780 the key number to remember. But the longer you leave 0:07:15.780 --> 0:07:18.900 your money invested, the more chance there is that you'll 0:07:18.900 --> 0:07:21.840 actually see positive returns. As I said, though, it's an 0:07:21.840 --> 0:07:23.850 investment, so your money, it will go up and down 0:07:24.509 --> 0:07:26.249 and you could actually get back less than you put in. 0:07:26.340 --> 0:07:29.009 Investing, it's always that thing, people are thinking about the 0:07:29.010 --> 0:07:31.650 future, thinking about how they can grow their money and 0:07:31.860 --> 0:07:34.800 it's a good thing to have a look at. If you do want to start investing, it's a good 0:07:34.800 --> 0:07:35.941 account to definitely have a look at. 0:07:35.941 --> 0:07:39.120 The thing is, it's really good for beginners and that's the thing 0:07:39.120 --> 0:07:39.870 that's so good about it. 0:07:39.870 --> 0:07:39.900 I agree. 0:07:40.139 --> 0:07:42.179 So, even if I think back to myself before I 0:07:42.179 --> 0:07:44.369 had opened a stocks and shares ISA, let's go back 0:07:44.370 --> 0:07:46.799 a few years, so even before I was working in 0:07:46.799 --> 0:07:50.070 financial services, anything like that, when I had just graduated, I 0:07:50.070 --> 0:07:52.140 was actually working in retail at the time. And it was 0:07:52.140 --> 0:07:53.820 the first time I had a little bit of money 0:07:54.240 --> 0:07:55.980 coming in each month that I didn't have an immediate 0:07:55.980 --> 0:07:58.080 need for it. I could actually put it aside for 0:07:58.080 --> 0:08:00.989 the long term. And obviously, we've heard of this term 0:08:00.990 --> 0:08:04.770 investing and it's something I've heard of and I'm thinking, " Maybe 0:08:04.770 --> 0:08:06.840 I should invest some of this money." But the thing 0:08:06.840 --> 0:08:08.581 is, at the time I thought it was something that was so far away from me. 0:08:08.581 --> 0:08:10.410 Right? It seems like a Wolf of Wall Street, that 0:08:10.410 --> 0:08:12.450 kind of stuff, that's so far away from reality. 0:08:12.450 --> 0:08:15.210 Exactly, Kia. I thought it was for people that, like you say, 0:08:15.210 --> 0:08:17.219 Wolf of Wall Street, they look a bit different to 0:08:17.219 --> 0:08:20.730 us. They've definitely got more money than us. So, to 0:08:20.730 --> 0:08:22.109 be honest, I put it aside for a while, I 0:08:22.109 --> 0:08:24.150 didn't think it was accessible for me and I found 0:08:24.150 --> 0:08:26.310 it a little bit daunting. But when I came across 0:08:26.310 --> 0:08:28.920 stocks and shares ISAs and in particular the options they 0:08:28.920 --> 0:08:31.200 have for how you can invest in it, that's when 0:08:31.200 --> 0:08:33.900 I realized, oh, actually, this could be for me. So, 0:08:33.900 --> 0:08:36.029 if it's okay, I could just touch on those different 0:08:36.030 --> 0:08:38.460 options for how you can invest in a stocks and shares 0:08:38.580 --> 0:08:41.789 ISA. So, there's two main options. The first one is 0:08:41.789 --> 0:08:44.968 what we'd call a DIY approach. So, this is where you pick 0:08:44.970 --> 0:08:48.030 your own investments. You can pick things like corporate bonds, 0:08:48.030 --> 0:08:51.210 government bonds, unit trusts. You can even go as far 0:08:51.210 --> 0:08:55.290 as to pick your own individual company shares. And for 0:08:55.290 --> 0:08:58.350 me, back then, that's what seemed a little bit daunting. 0:08:58.859 --> 0:09:00.841 To be honest, even today, that would make me a little bit nervous. 0:09:00.841 --> 0:09:00.958 It's a lot. It's very hands-on, isn't it? 0:09:02.520 --> 0:09:05.160 Exactly. Exactly. So, for me, it's not really the one. 0:09:05.280 --> 0:09:07.560 What I like is the second option, which we call 0:09:07.740 --> 0:09:11.309 managed portfolios. Now, with a managed portfolio, you can take 0:09:11.309 --> 0:09:14.009 a step back, you invest your money and you leave 0:09:14.009 --> 0:09:16.650 it to the professionals, you leave it to the investment experts 0:09:16.799 --> 0:09:19.230 to invest your money on your behalf. The only thing that 0:09:19.230 --> 0:09:21.030 you've got to do is pick what level of risk 0:09:21.030 --> 0:09:23.610 you want to take. So, providers that have this option, 0:09:23.760 --> 0:09:26.910 they'll generally have a couple of managed portfolios, maybe three, 0:09:26.910 --> 0:09:29.939 maybe five, that all have a different risk rating. So, you've 0:09:29.940 --> 0:09:31.199 just got to decide whether you want to go for 0:09:31.200 --> 0:09:33.900 the lower risk one, a medium risk one, a higher 0:09:33.900 --> 0:09:36.569 risk one. Sometimes you'll see different terminology. They might use 0:09:36.570 --> 0:09:41.220 words like cautious, adventurous, things like this, but it's the same 0:09:41.220 --> 0:09:43.950 concept. And it's great for beginners because you don't have 0:09:43.950 --> 0:09:47.039 to have a huge amount of knowledge. You can just 0:09:47.040 --> 0:09:48.900 take a step back, let the professionals do their thing. 0:09:49.049 --> 0:09:50.490 I'm glad you touched on that because I think it 0:09:50.490 --> 0:09:52.650 is good to highlight that you don't have to be 0:09:52.980 --> 0:09:55.468 an investing whiz to start, especially with stocks and shares 0:09:55.469 --> 0:09:58.290 ISA, there's something for everyone. I think that's a good 0:09:58.290 --> 0:10:01.290 thing when it comes to ISAs. So, we've mentioned how 0:10:01.290 --> 0:10:04.078 good these different accounts are and how they work, but 0:10:04.080 --> 0:10:05.939 what should someone be looking for when it comes to 0:10:05.940 --> 0:10:07.950 picking the right provider for them? 0:10:08.219 --> 0:10:11.098 So, there's a few different things. I've already mentioned options 0:10:11.100 --> 0:10:13.680 for how to invest. Those two options that I said, 0:10:13.710 --> 0:10:16.200 not all providers will have both of them. Some providers 0:10:16.200 --> 0:10:18.510 have both. Some will only have one. So, it's decide 0:10:18.510 --> 0:10:20.759 beforehand which of those two options is more appealing for 0:10:20.760 --> 0:10:24.150 you and then find a company that provides that option. 0:10:24.360 --> 0:10:27.000 Another thing would be, so I spoke about that misconception 0:10:27.000 --> 0:10:29.848 about, I thought you needed more money. So, that's another thing 0:10:29.850 --> 0:10:31.380 that people should take into account when they're picking a 0:10:31.380 --> 0:10:33.450 provider. So, I don't know how it was back in 0:10:33.450 --> 0:10:37.320 the day, but nowadays, it's actually very accessible and with 0:10:37.320 --> 0:10:39.120 a lot of providers you can get started with just 0:10:39.120 --> 0:10:41.639 very small amounts. So, our L& G stocks and shares 0:10:41.820 --> 0:10:44.549 ISA, for example, you can get started with just either 0:10:44.549 --> 0:10:47.040 20 pounds a month or a 100 pound lump sum. 0:10:47.580 --> 0:10:49.110 And that's not just ours. I know, a lot of 0:10:49.110 --> 0:10:51.720 our peers, you can also get started with similarly small 0:10:51.720 --> 0:10:55.800 amounts, but there may be some providers where you need a minimum of 5, 0:10:55.800 --> 0:10:59.040 000 pounds, 10, 000 pounds. So again, that's another thing to 0:10:59.040 --> 0:11:02.219 take into account when picking a provider. Another thing is 0:11:02.219 --> 0:11:03.660 fees. Now fees is- 0:11:03.660 --> 0:11:03.661 Big one. 0:11:03.661 --> 0:11:06.328 Yeah, big one, because it's going to impact how much 0:11:06.330 --> 0:11:08.790 money you actually get in your pocket. So, this is 0:11:08.790 --> 0:11:10.980 something you want to check. Just bear in mind when 0:11:10.980 --> 0:11:13.890 you're checking fees, they don't all charge fees in the 0:11:13.890 --> 0:11:16.650 same way. So, some providers, they're going to charge a 0:11:16.650 --> 0:11:20.640 fee as a percentage of your overall investment. Other providers, 0:11:20.730 --> 0:11:23.218 they're going to charge a flat monthly fee. So, just 0:11:23.219 --> 0:11:25.680 bear that in mind when you're checking. Other things to check 0:11:25.920 --> 0:11:28.470 is see whether or not you can change where your 0:11:28.470 --> 0:11:31.199 money is invested. And by that I mean, remember we 0:11:31.200 --> 0:11:33.958 were talking about the managed portfolios? Maybe at the start you 0:11:33.960 --> 0:11:36.179 want to go for something that's higher risk. Maybe at 0:11:36.179 --> 0:11:38.490 some point your circumstances change, you want to move your 0:11:38.490 --> 0:11:42.238 money into a more cautious portfolio. So, check whether this 0:11:42.240 --> 0:11:44.309 is possible to do and if it is, just check 0:11:44.309 --> 0:11:46.890 if there's any charges associated with that, because that varies 0:11:47.100 --> 0:11:49.618 between different providers. So, there's another one I wanted to 0:11:49.620 --> 0:11:53.309 speak about, which is certain people might have certain values 0:11:53.309 --> 0:11:55.830 that come from a religious perspective, so these people, they 0:11:55.830 --> 0:11:59.790 should check whether they provide something called Sharia compliant funds. 0:12:00.270 --> 0:12:03.240 I've seen some research recently that suggests that a lot of people in 0:12:03.240 --> 0:12:05.730 our community, I'm speaking as a Muslim, a lot of 0:12:05.730 --> 0:12:08.790 us, we're not actually aware that there's these options that 0:12:08.790 --> 0:12:11.400 exist to get the benefits and the advantages of investing, 0:12:11.670 --> 0:12:13.858 in a way that doesn't compromise our faiths and our 0:12:13.860 --> 0:12:16.049 beliefs. So, I really just want to highlight that. A 0:12:16.049 --> 0:12:19.650 lot of providers, they do have Sharia compliant funds and 0:12:19.679 --> 0:12:21.960 these will not invest your money in things such as 0:12:22.230 --> 0:12:26.220 gambling or alcohol companies. Anything that is not permissible in 0:12:26.220 --> 0:12:28.950 our faith, we can rest assured our money won't be 0:12:28.980 --> 0:12:32.760 invested in that. A lot of people, they're not aware that these exist and it would 0:12:32.849 --> 0:12:34.708 be a shame if people are missing out. That doesn't 0:12:34.708 --> 0:12:36.119 need to be a barrier to getting involved with investing. 0:12:36.480 --> 0:12:37.920 I agree with you. I'm really glad you brought that 0:12:37.920 --> 0:12:40.380 up because like you said, there is something for everyone and 0:12:40.380 --> 0:12:42.270 I think even you highlighting that just goes to show 0:12:42.270 --> 0:12:45.870 that everyone can benefit from having an ISA. 0:12:46.020 --> 0:12:46.500 Hundred percent. 0:12:46.889 --> 0:12:50.939 So, let's move on to other types of ISAs. A 0:12:50.940 --> 0:12:52.708 big one for people who want to get on the property ladder 0:12:52.708 --> 0:12:56.939 is the lifetime ISA or the LISA. So, it does seem like a 0:12:56.940 --> 0:12:58.468 really good one if you want to buy a property one 0:12:58.470 --> 0:12:58.771 day, isn't it? 0:12:58.771 --> 0:13:01.470 Yeah. Yeah, a hundred percent. So, the LISA, like you say, it's 0:13:01.470 --> 0:13:03.419 great for people that want to get on the property ladder, 0:13:03.719 --> 0:13:06.689 but they don't own any property just yet. It's aimed towards 0:13:06.750 --> 0:13:09.990 younger people. So, if you're between the ages of 18 and 39, 0:13:10.379 --> 0:13:13.290 you can put up to 4, 000 pounds into a LISA 0:13:13.530 --> 0:13:16.319 every tax year and the government will actually top this 0:13:16.320 --> 0:13:19.350 up by an additional 25%. So, just to give you 0:13:19.350 --> 0:13:21.389 an example, give you some numbers. If you were to 0:13:21.389 --> 0:13:24.838 max this out over five years, you would've accumulated 20,000 0:13:24.840 --> 0:13:27.569 pounds in your savings account, in your LISA, and the 0:13:27.660 --> 0:13:29.459 government will put another 5K on top of this. 0:13:29.459 --> 0:13:30.601 It's a good chunk of money. 0:13:30.601 --> 0:13:33.000 It's great and it's genuinely, it's free money. 0:13:33.240 --> 0:13:35.458 That's my favorite word. Free. I love that. 0:13:35.460 --> 0:13:37.560 There you go. So, obviously Kia and me are getting 0:13:37.830 --> 0:13:38.850 quite excited about this. 0:13:41.490 --> 0:13:41.550 Yeah, we are. 0:13:41.550 --> 0:13:42.809 But, and there is always a but, there are some rules that I've got to tell the listeners. 0:13:43.740 --> 0:13:45.988 So, if for any reason you don't want to use 0:13:45.990 --> 0:13:48.870 your money to buy a house, you can alternatively use 0:13:48.870 --> 0:13:51.420 it for retirement savings, but that means you can't really 0:13:51.420 --> 0:13:54.030 touch it until you're the age of 60. If you 0:13:54.030 --> 0:13:56.848 want to withdraw your money before you turn 60 and 0:13:56.849 --> 0:13:58.889 it's not to buy a property, there's going to be 0:13:58.889 --> 0:14:02.639 a 25% penalty. And some people have a misconception that 0:14:02.639 --> 0:14:06.209 the 25% penalty just means that you lose your 25% bonus. 0:14:06.540 --> 0:14:09.030 But actually, without getting too deep into the maths of 0:14:09.030 --> 0:14:11.640 it, you're going to lose your government bonus, but you're 0:14:11.640 --> 0:14:14.309 also going to lose about 6% of your initial investment. 0:14:14.460 --> 0:14:15.150 It's good to know. 0:14:15.270 --> 0:14:17.639 Yeah, people should think long and hard before they open 0:14:17.639 --> 0:14:19.949 one. Like we've said, they are really great, but if 0:14:19.950 --> 0:14:23.339 you're thinking maybe renting is better for your lifestyle, maybe 0:14:23.340 --> 0:14:26.070 you're thinking about moving abroad, perhaps the LISA is not for 0:14:26.070 --> 0:14:27.660 you. Just bear that in mind. 0:14:27.750 --> 0:14:29.820 Yeah, it's good. I'm glad you highlighted that. And it's also 0:14:29.820 --> 0:14:33.359 good to note that a lot of people have opened 0:14:33.360 --> 0:14:34.710 it up and think, " Right, I can just put money 0:14:34.710 --> 0:14:36.599 in there and I can use it straight away." You also need to have it 0:14:36.599 --> 0:14:38.819 open for 12 months before you can use it towards 0:14:38.820 --> 0:14:39.419 your first property. 0:14:39.419 --> 0:14:39.809 There you go. There you go. 0:14:40.199 --> 0:14:41.789 There are some caveats to keep in mind, but I 0:14:41.789 --> 0:14:44.039 think overall the lifetime ISA is a good one to have a look at 0:14:44.430 --> 0:14:45.960 if you do want to get on the property ladder one day. 0:14:45.960 --> 0:14:48.720 A hundred percent. And while we're talking about the rules, there's just one more 0:14:48.720 --> 0:14:51.060 we should have probably mentioned, and that's the fact that 0:14:51.420 --> 0:14:53.520 the property that you purchase, it has to be under 0:14:53.520 --> 0:14:54.840 the price of 450K. 0:14:55.020 --> 0:14:57.150 You've given us a lot of food for thought there, 0:14:57.210 --> 0:15:00.179 so anyone who's in between that questions for them, I 0:15:00.180 --> 0:15:03.240 think, like you said, it's up to people's personal circumstance, 0:15:03.240 --> 0:15:05.520 but there's lots of information you've given us that people 0:15:05.520 --> 0:15:07.860 can pick what's going to be best for them. There 0:15:07.860 --> 0:15:10.590 have been a few changes recently when it comes to ISAs, 0:15:11.040 --> 0:15:12.029 so can you give us a bit more of an 0:15:12.030 --> 0:15:13.349 explanation of what the changes are? 0:15:13.440 --> 0:15:16.230 So, from next month where we see the new tax 0:15:16.230 --> 0:15:18.630 year begin, we're actually going to be able to put 0:15:18.630 --> 0:15:22.260 money into multiple ISAs of the same type. So, just as 0:15:22.260 --> 0:15:24.540 an example, you can open a stocks and shares ISA 0:15:25.110 --> 0:15:27.990 with one company and put 1, 000 pound in, and then 0:15:27.990 --> 0:15:29.429 you can open a stocks and shares ISA with another 0:15:29.429 --> 0:15:32.130 company and put 500 pounds in. Right now, that's not 0:15:32.130 --> 0:15:34.529 allowed. Next month, that will be allowed. And then the 0:15:34.529 --> 0:15:36.450 other one, which was just mentioned the other day in 0:15:36.450 --> 0:15:40.080 the spring budget, something called the British ISA, and this 0:15:40.080 --> 0:15:43.260 is an additional 5K allowance on top of your existing 0:15:43.260 --> 0:15:47.910 20K allowance, specifically designed for UK investments. At the moment, 0:15:47.910 --> 0:15:49.410 there's not too much more we can say on it. 0:15:49.590 --> 0:15:51.960 It's just been announced and we don't have too many 0:15:51.960 --> 0:15:54.330 details. What I would say is if it is something 0:15:54.330 --> 0:15:56.490 that sounds like it's of interest to you, just listen 0:15:56.490 --> 0:15:57.480 out for further updates. 0:15:57.480 --> 0:15:59.100 That's really good. Keep your ear on the ground. But 0:15:59.100 --> 0:16:01.650 there's been some good changes for people to hear about 0:16:01.980 --> 0:16:04.500 when it comes to what's been announced recently. And also, 0:16:04.860 --> 0:16:07.229 you can move parts of your money, can't you? You 0:16:07.230 --> 0:16:10.830 can move bits from one ISA to another. You don't have to move whole lump sums. Right? 0:16:11.070 --> 0:16:12.000 Exactly. There you go. 0:16:12.389 --> 0:16:14.700 I love that. Some good changes. Good changes. Right. Before 0:16:14.700 --> 0:16:17.910 we round off this episode, could you share your top 0:16:17.940 --> 0:16:19.740 three tips when it comes to ISAs? 0:16:19.890 --> 0:16:24.449 Absolutely. So, my first top tip would be ... We've spoken 0:16:24.450 --> 0:16:26.579 a lot about long- term investing and things like this, 0:16:26.639 --> 0:16:28.830 but my first top tip would actually be, make sure 0:16:28.830 --> 0:16:30.720 you've got a sum of money, a pot of money 0:16:30.960 --> 0:16:33.420 that you have instantly accessible to you. So, it's what 0:16:33.420 --> 0:16:36.630 people would refer to as an emergency fund. It can 0:16:36.630 --> 0:16:40.889 be in a cash ISA, an instant access cash ISA. We never know what 0:16:40.889 --> 0:16:42.509 the future's going to hold, so just make sure you've 0:16:42.509 --> 0:16:45.810 got that instantly accessible. My second top tip would be, 0:16:45.839 --> 0:16:48.570 and this comes from personal experience, if you are opting 0:16:48.570 --> 0:16:50.880 for a stocks and shares ISA, there's no need to 0:16:50.880 --> 0:16:53.730 be checking your balance every single day. There's no need 0:16:53.730 --> 0:16:56.460 to be doing that. I made this mistake, I just 0:16:56.460 --> 0:16:57.840 wanted to look at it all the time. But the 0:16:57.840 --> 0:16:59.819 thing is, you have to remember, your money's going to 0:16:59.820 --> 0:17:01.890 go up and down and it's a long- term investment. 0:17:02.250 --> 0:17:04.138 So, if you do fall into the trap of checking 0:17:04.138 --> 0:17:06.329 it maybe a bit more than you should initially and 0:17:06.330 --> 0:17:08.369 you're in the red and your money's gone down, there's 0:17:08.369 --> 0:17:11.070 no need to panic. Remember, it's a long- term game. 0:17:11.220 --> 0:17:13.590