WEBVTT - ISAs Explained: How to Make Your Money Work Harder 0:00:00.300 --> 0:00:02.940 This series is bought to you by L& G, helping 0:00:02.940 --> 0:00:04.980 you build a future that's a little bit richer. 0:00:06.269 --> 0:00:09.330 Hello, I'm Iona Bain, and welcome back to A Little 0:00:09.330 --> 0:00:12.330 Bit Richer, the podcast where we break down big financial 0:00:12.330 --> 0:00:16.950 topics into digestible steps for your future. Now, today we 0:00:16.950 --> 0:00:19.890 are revisiting a topic that is essential for your long- 0:00:19.890 --> 0:00:25.440 term financial health, and that's individual savings accounts, aka ISAs. 0:00:25.739 --> 0:00:28.860 With new changes announced in the autumn budget regarding cash 0:00:29.100 --> 0:00:32.820 ISA limits, the ISA landscape is shifting. So we wanted 0:00:32.820 --> 0:00:36.330 to dive deeper into the different types available so that 0:00:36.330 --> 0:00:40.140 you can decide which one fits your current life stage. 0:00:40.409 --> 0:00:42.720 So whether you're saving for your first home or your 0:00:42.720 --> 0:00:46.440 next home, starting a family, or you're just trying to protect 0:00:46.440 --> 0:00:50.130 your hard- earned money from inflation, understanding these tax efficient 0:00:50.190 --> 0:00:53.730 wrappers is a total game- changer. And to help us 0:00:53.730 --> 0:00:56.820 do all this is Paula Hughes. Paula works in the 0:00:56.970 --> 0:00:59.490 ISA product team at L& G and so is very 0:00:59.490 --> 0:01:02.760 well placed to give us some insights on this particular 0:01:02.760 --> 0:01:06.179 topic. So Paula, to kick things off, I'm going to 0:01:06.750 --> 0:01:08.069 put you on the spot, but I think you can 0:01:08.069 --> 0:01:11.550 handle it. Can you explain why we should care about 0:01:11.940 --> 0:01:16.110 ISAs in 30 seconds or less? Are you ready? 0:01:16.260 --> 0:01:16.860 I think so. 0:01:16.980 --> 0:01:17.520 You'll nail it. 0:01:17.640 --> 0:01:19.050 First of all, we have to start with the fact 0:01:19.050 --> 0:01:21.929 that they're tax- free, and that means that you can 0:01:21.930 --> 0:01:25.140 have a tax- free interest on your savings if that applies 0:01:25.140 --> 0:01:27.959 to you. And also as it grows, it's tax- free 0:01:27.959 --> 0:01:30.720 growth as well. So no capital gains tax. There are 0:01:30.870 --> 0:01:35.220 different types of ISAs for different needs, so hopefully people will 0:01:35.220 --> 0:01:37.650 be able to see the one that suits those. And 0:01:37.650 --> 0:01:40.289 I think finally, the earlier start, the better it is 0:01:40.530 --> 0:01:44.010 as you have that compound effect of interest growing over time. 0:01:44.220 --> 0:01:46.290 Oh, you just did it. 0:01:46.290 --> 0:01:46.770 Just did it. Great. 0:01:46.950 --> 0:01:52.680 Well done. So can you talk us through the main types of ISAs 0:01:53.310 --> 0:01:56.309 that are available and how you would know which one 0:01:56.310 --> 0:01:57.000 to choose? 0:01:57.420 --> 0:01:59.970 Yeah. And it can be quite overwhelming because there's four 0:01:59.970 --> 0:02:03.780 main types of ISA all with a slightly different own 0:02:03.780 --> 0:02:06.450 rules as well. So if I try and break that 0:02:06.450 --> 0:02:09.899 down as simply as possible. So the most common one 0:02:09.900 --> 0:02:12.328 that people tend to know about is the cash ISA, 0:02:12.840 --> 0:02:15.690 and that is for cash savings. The next one is 0:02:15.690 --> 0:02:19.139 a stocks and shares ISA, and that's for investing. So 0:02:19.139 --> 0:02:22.079 a stocks and shares ISA can take various different forms. 0:02:22.590 --> 0:02:25.110 You can invest directly in the stock market, or you 0:02:25.110 --> 0:02:28.620 can invest through investment funds, and the fund manager chooses 0:02:28.620 --> 0:02:31.710 those stocks and shares for you. With a stocks and 0:02:31.710 --> 0:02:35.430 shares ISA, any amount that grows in the fund is tax- 0:02:35.430 --> 0:02:38.549 free. So those dividends don't have income tax and also 0:02:38.550 --> 0:02:41.370 any growth is free of capital gains tax as well. 0:02:41.460 --> 0:02:41.760 Right. 0:02:41.760 --> 0:02:44.639 So they're the first two main ones. They're available to 0:02:44.639 --> 0:02:47.610 anybody in the UK who's over 18. And then we 0:02:47.610 --> 0:02:51.959 have two other ISAs that are restricted to ages and specific 0:02:51.960 --> 0:02:55.590 saving goals. The first one is a lifetime ISA, sometimes 0:02:55.590 --> 0:02:58.380 called a LISA or a LISA, depending on how you want 0:02:58.590 --> 0:03:02.280 to pronounce it. These are available to 18 to 39- year- 0:03:02.280 --> 0:03:06.239 olds and they're for two specific saving goals. So firstly, 0:03:06.240 --> 0:03:10.320 buying a home and secondly, retiring. The benefit of a 0:03:10.320 --> 0:03:13.410 LISA is the government can also add a bonus for 0:03:13.410 --> 0:03:16.320 you, but you should be aware that if you don't 0:03:16.320 --> 0:03:19.380 save for one of those goals for a different reason, or 0:03:19.380 --> 0:03:21.570 if you want your money out early, then you could 0:03:21.570 --> 0:03:24.630 forfeit the bonus and also have a penalty included. So 0:03:24.630 --> 0:03:27.120 that's something to watch out for with a LISA. 0:03:27.120 --> 0:03:28.260 Yeah, you've got to really commit to it. 0:03:28.410 --> 0:03:31.710 Absolutely. Then there's a junior ISA, which as it says 0:03:31.710 --> 0:03:35.130 on the tin is for children's savings. And lastly, an 0:03:35.160 --> 0:03:39.930 innovative finance ISA, which is difficult sometimes to say, but 0:03:39.930 --> 0:03:41.940 that's more of a niche product and it's peer- to- 0:03:41.940 --> 0:03:45.090 peer lending that comes with a higher risk. So quite 0:03:45.090 --> 0:03:47.040 a lot of choice, I would say. And I think 0:03:47.040 --> 0:03:50.010 to your first question really, how do you choose between 0:03:50.010 --> 0:03:53.160 all of that? It's a personal decision, but I think 0:03:53.160 --> 0:03:55.890 really you start off with thinking, what are you saving 0:03:55.890 --> 0:04:00.270 for? What your savings goals? Over what time horizon? When 0:04:00.270 --> 0:04:03.090 do you want access to your money? And how flexible 0:04:03.210 --> 0:04:06.120 do you want that accessibility to be? And what kind 0:04:06.120 --> 0:04:08.610 of risk do you want to take? Is it zero risk 0:04:08.700 --> 0:04:11.190 or is it higher risk? So just think about the 0:04:11.190 --> 0:04:13.620 types of risk, and that could be different risk for 0:04:13.620 --> 0:04:17.219 different time horizons. If you're not sure and you just 0:04:17.220 --> 0:04:19.919 want to save just because you've always thought you should 0:04:19.920 --> 0:04:23.100 be saving for the future, then maybe choose something that's 0:04:23.100 --> 0:04:26.460 got less restrictions on it and without any penalty if 0:04:26.460 --> 0:04:28.680 you did need to get your money out sooner than 0:04:28.680 --> 0:04:29.520 you might intend. 0:04:29.730 --> 0:04:33.300 That's a really helpful overview, Paula, because at first glance, 0:04:33.300 --> 0:04:35.820 the ISA family does seem a bit daunting, but actually 0:04:35.820 --> 0:04:37.980 you broke that down in a really, really easy to 0:04:37.980 --> 0:04:41.730 understand way. But how do you know which one to choose? 0:04:41.760 --> 0:04:44.460 Just start small. And if you think about whether you 0:04:44.460 --> 0:04:47.070 want to mix and match, maybe do a little bit 0:04:47.070 --> 0:04:50.219 in cash, first of all, because cash is familiar to 0:04:50.220 --> 0:04:53.130 lots of people. And as your confidence grows, think about 0:04:53.130 --> 0:04:55.740 a stocks and shares ISA that does have lower risk 0:04:55.740 --> 0:04:58.170 funds as well. So you can just start and as 0:04:58.170 --> 0:05:00.360 your confidence grows, you can build as you go along. 0:05:00.900 --> 0:05:04.169 Always being aware that there is risk with stocks and 0:05:04.170 --> 0:05:04.770 shares ISAs. 0:05:04.770 --> 0:05:06.960 Absolutely. Yes. Thank you for keeping me honest there. There 0:05:06.960 --> 0:05:11.040 is a risk with stocks and shares ISA. So whilst investing 0:05:11.100 --> 0:05:15.480 does have the potential and aligned to outperform cash, there 0:05:15.480 --> 0:05:17.460 is a risk to stocks and shares ISA. It is 0:05:17.460 --> 0:05:20.339 an investment. So I think that's a really good point 0:05:20.339 --> 0:05:22.320 in terms of how you choose to think about your 0:05:22.320 --> 0:05:26.969 savings horizons. So broadly speaking, cash is short- term savings, 0:05:26.970 --> 0:05:30.720 so below five years. Stocks and shares ISA tends to 0:05:30.720 --> 0:05:35.010 be medium to longer term savings, five years plus. And 0:05:35.010 --> 0:05:37.650 the reason we say that is because it's invested in 0:05:37.650 --> 0:05:40.380 stocks and shares, which goes up as well as down. 0:05:40.560 --> 0:05:43.620 So hopefully you can ride out those fluctuations to have 0:05:44.070 --> 0:05:46.050 an upward trend over the five years plus. 0:05:46.529 --> 0:05:49.050 That's good to know. And anyone who has a cash 0:05:49.230 --> 0:05:52.260 ISA, would they be paying tax on the interest that 0:05:52.260 --> 0:05:54.960 they earn anyway, even if they didn't have a cash ISA? 0:05:55.529 --> 0:05:59.010 So not necessarily. It does depend how much you earn. So 0:05:59.010 --> 0:06:01.830 if you're a basic rate taxpayer, you can have up to 1, 0:06:01.830 --> 0:06:04.950 000 pounds on interest, for a higher rate taxpayer that goes 0:06:04.950 --> 0:06:07.710 down to 500 pounds. And if you've got an additional 0:06:07.740 --> 0:06:10.890 taxpayer, it goes down to zero. So it does depend 0:06:10.890 --> 0:06:13.890 really on how much you earn, but also if you think 0:06:13.890 --> 0:06:17.370 about, for example, stocks and shares ISA, that could grow 0:06:17.370 --> 0:06:20.550 over time to quite significant amounts. And you might find 0:06:20.550 --> 0:06:22.950 yourself in a position where you might have to pay 0:06:22.950 --> 0:06:26.040 capital gains tax. So everybody, I guess, is unique to 0:06:26.040 --> 0:06:27.089 their own tax position. 0:06:27.360 --> 0:06:31.170 And interest rates are also really important, but you might 0:06:31.170 --> 0:06:34.409 not necessarily always get the best deals on cash ISAs 0:06:34.410 --> 0:06:37.020 compared to other types of savings. Is that right? 0:06:37.290 --> 0:06:38.909 That's absolutely correct. Yes. 0:06:38.940 --> 0:06:41.760 And when it comes to deciding whether to take out 0:06:41.760 --> 0:06:44.940 a cash ISA, what should people be looking at? Because 0:06:45.029 --> 0:06:48.750 often interest rates play a big factor in people deciding where 0:06:48.960 --> 0:06:49.291 to put their savings. 0:06:49.291 --> 0:06:52.950 There are so many cash savings account in the market, both 0:06:53.220 --> 0:06:56.430 cash ISAs, and also just standard cash savings account as 0:06:56.430 --> 0:06:58.680 well to look at all the different interest rates that 0:06:58.680 --> 0:07:02.010 are payable and just make sure that you're getting the best 0:07:02.010 --> 0:07:05.160 one for your money. So it's really important with any 0:07:05.160 --> 0:07:08.190 savings vehicle, and this goes for stocks and shares, check 0:07:08.190 --> 0:07:11.040 the fees, check the charges as well, because there are 0:07:11.040 --> 0:07:14.580 some charges with stocks and shares ISA, and just do 0:07:14.580 --> 0:07:17.430 a comparison to make sure that you're going to be 0:07:17.430 --> 0:07:20.400 better off, I guess, from investing in these areas as 0:07:20.400 --> 0:07:23.220 opposed to maybe some accounts that you might be leaving. 0:07:24.090 --> 0:07:28.110 So you mentioned about cash ISA limits before. In the 0:07:28.110 --> 0:07:32.280 autumn budget, there were some changes to those limits. Can 0:07:32.280 --> 0:07:35.040 you talk about that and why the government has decided 0:07:35.040 --> 0:07:37.770 to make those changes and what that might mean for people? 0:07:38.160 --> 0:07:40.860 As an ISA geek, it's a really exciting time for ISAs 0:07:41.610 --> 0:07:45.000 in April 2027. The limits are applying to the cash ISA, 0:07:45.300 --> 0:07:48.720 as you say, and we are a nation of cash 0:07:48.720 --> 0:07:52.410 savers. We love cash in the UK, which is great. 0:07:52.620 --> 0:07:54.450 Cash is not a bad thing. It's absolutely got its 0:07:54.450 --> 0:07:58.140 place. However, it's not maybe the best place to put 0:07:58.140 --> 0:08:01.230 your money over the longer term, because obviously the effect 0:08:01.230 --> 0:08:05.310 of inflation does downgrade the value, I guess, of cash 0:08:05.460 --> 0:08:09.239 purchasing power over longer term. So the government obviously recognizes 0:08:09.240 --> 0:08:12.510 this and wants to create a culture of investing in 0:08:12.510 --> 0:08:15.000 the UK. And so it's made some changes to the 0:08:15.000 --> 0:08:18.000 cash ISA allowance to try and encourage people to start 0:08:18.000 --> 0:08:21.450 thinking about maybe investing in things like stocks and shares 0:08:21.720 --> 0:08:25.290 ISA to complement their cash savings. So the changes they've 0:08:25.290 --> 0:08:28.020 made are to the amount you can put in to 0:08:28.080 --> 0:08:31.290 the cash ISA. It's probably worthwhile just spending a little 0:08:31.290 --> 0:08:32.880 bit of time of where we are now and what 0:08:32.880 --> 0:08:36.870 those changes are going to. So in terms of the 0:08:36.870 --> 0:08:40.860 amount you can put in, you can put 20, 000 pound per person, per tax 0:08:40.860 --> 0:08:43.890 share. So historically with a cash ISA and stocks and shares 0:08:44.010 --> 0:08:47.670 ISA, you could put all your 20,000 pounds into the 0:08:47.670 --> 0:08:50.730 cash ISA if you wanted to. Obviously it's a generous amount. 0:08:51.150 --> 0:08:54.210 Most people don't have the 20,000 pounds to invest in 0:08:54.210 --> 0:08:55.980 there, but if you have, that's great and you could 0:08:55.980 --> 0:08:58.980 do that. What the government will be doing from April 0:08:59.010 --> 0:09:03.270 2027 for under 65s is limiting the amount you can 0:09:03.270 --> 0:09:07.470 put within that 20,000 pound allowance into cash to 12, 000 0:09:07.470 --> 0:09:10.650 pounds. And that's to encourage people to start thinking about 0:09:10.650 --> 0:09:13.350 investing in the stocks and shares ISA. 0:09:13.440 --> 0:09:15.480 I see. So the change here is that if you 0:09:15.480 --> 0:09:18.990 had 20,000 pounds to put into a cash ISA, now 0:09:18.990 --> 0:09:22.679 you're limited to 12, 000 pounds, maybe, so the thinking goes, 0:09:22.679 --> 0:09:25.710 you'll put the other 8, 000 into a stocks and 0:09:25.710 --> 0:09:26.490 shares ISA. 0:09:26.670 --> 0:09:30.210 Yes. That is the hypothesis. But of course, I think 0:09:30.330 --> 0:09:33.870 along with that, it's really important to have lots of financial 0:09:33.870 --> 0:09:36.929 education for people to understand a little bit more about 0:09:37.140 --> 0:09:40.200 stocks and shares ISA, especially if it's the first time 0:09:40.200 --> 0:09:41.580 that people have considered investing. 0:09:41.670 --> 0:09:45.270 Yeah, absolutely. And if somebody has a preference to save 0:09:45.270 --> 0:09:49.469 into cash rather than invest in stocks and shares, what 0:09:49.470 --> 0:09:50.250 would you say to them? 0:09:50.429 --> 0:09:54.209 Cash is a really good savings vehicle and it's here 0:09:54.210 --> 0:09:56.939 to stay. It's familiar with people. It gets people starting 0:09:56.940 --> 0:09:59.670 saving, which is one of the big gaps in the 0:09:59.670 --> 0:10:03.750 UK in terms of people saving for building financial resilience. 0:10:04.140 --> 0:10:07.800 However, it's probably not the best place potentially to put 0:10:07.800 --> 0:10:10.650 your money for the longer term. And that's because over 0:10:10.650 --> 0:10:13.349 time, cash tends to not be able to keep up 0:10:13.350 --> 0:10:16.890 with purchasing power because the effect of inflation. If you 0:10:16.890 --> 0:10:20.460 think about 5, 10 years ago, the price of buying 0:10:20.730 --> 0:10:23.580 a bar of chocolate even compared to now, but yeah, 0:10:23.580 --> 0:10:26.010 cash does struggle to keep up with the purchasing power. 0:10:26.340 --> 0:10:30.569 Whereas if you're investing, that does have the potential to 0:10:30.630 --> 0:10:34.829 outperform cash because of the different places it invests in. However, 0:10:34.830 --> 0:10:36.270 as you say, it can go up as well and 0:10:36.270 --> 0:10:39.569 down, so it's not guaranteed, which is why we say you need 0:10:39.570 --> 0:10:42.030 to think about it for five years plus to eke out 0:10:42.030 --> 0:10:45.599 those market fluctuations. So I don't think it's a case of 0:10:45.840 --> 0:10:48.870 cash or investing. I think it's a case of cash 0:10:49.200 --> 0:10:50.250 and investing. 0:10:50.490 --> 0:10:50.640 Yeah. 0:10:50.640 --> 0:10:52.679 So just do both of them because they both compliment 0:10:52.679 --> 0:10:56.010 each other. Cash for the shorter term, investing for the 0:10:56.010 --> 0:10:57.059 medium to longer term. 0:10:57.120 --> 0:10:59.520 Yeah. Team cash and team investing. 0:10:59.550 --> 0:11:02.070 Yeah. And I tell you, Gen Z have got it right. 0:11:02.070 --> 0:11:06.840 So it's about 40% of 18 to 25 year olds already holding 0:11:06.840 --> 0:11:10.260 investments. So the power of social media for financial education 0:11:10.260 --> 0:11:12.420 has really worked for a force of good there. 0:11:12.540 --> 0:11:15.689 Yeah. And starting young could really benefit them in the 0:11:15.690 --> 0:11:19.559 long term if they're already investing aged 18, 19, 20. 0:11:19.620 --> 0:11:21.870 The earlier you start, like anything, the better it is. 0:11:22.350 --> 0:11:25.830 Yeah, that's definitely something to consider. Food for thought. Now 0:11:25.830 --> 0:11:29.730 we're coming into ISA season now. This is something that 0:11:29.790 --> 0:11:33.480 people might see in the media. They might wonder, what 0:11:33.480 --> 0:11:35.730 on earth is ISA season? It does not sound as 0:11:35.730 --> 0:11:40.620 fun as other types of seasons, but there are some 0:11:40.830 --> 0:11:43.920 smart things that people should do before the new tax 0:11:43.920 --> 0:11:46.530 year starts, especially when it comes to their ISA. Can 0:11:46.530 --> 0:11:47.880 you talk me through what those might be? 0:11:47.910 --> 0:11:50.939 Yeah. So ISA season, as you say, which is really 0:11:50.940 --> 0:11:54.990 exciting for people like me, but not necessarily as exciting 0:11:54.990 --> 0:11:56.189 as other seasons like Christmas. 0:11:56.189 --> 0:11:58.920 Hey, look, maybe we can make it trendy and cool and fun 0:11:59.400 --> 0:12:00.059 and exciting. 0:12:00.059 --> 0:12:02.520 That's exactly what I aim to try and do. Yeah. 0:12:02.880 --> 0:12:05.250 So in terms of April being, I guess the important 0:12:05.250 --> 0:12:07.710 date, as we said, if you are lucky enough to 0:12:07.710 --> 0:12:11.340 be able to have 20,000 pounds of that allowance to invest, 0:12:11.580 --> 0:12:14.610 then the clock does restart on the 6th of April. 0:12:14.610 --> 0:12:17.100 So make sure that you do it before the 5th of 0:12:17.100 --> 0:12:19.980 April, otherwise you will lose that allowance. So that's the 0:12:19.980 --> 0:12:22.679 first part of why April is so important. But even 0:12:22.679 --> 0:12:25.620 if you're not looking to invest 20, 000 pound, which the 0:12:25.620 --> 0:12:28.500 majority of people don't, I think it's always good to 0:12:28.500 --> 0:12:31.439 have a goal to look at your personal finances, certainly 0:12:31.440 --> 0:12:34.380 for myself. Otherwise, it's one of those things that you 0:12:34.380 --> 0:12:36.420 mean to do and you never quite get around to 0:12:36.420 --> 0:12:39.000 it because there's always more exciting things to think about. 0:12:39.480 --> 0:12:42.599 So in terms of April and ISA season, it's a 0:12:42.600 --> 0:12:46.170 good time to think about starting to save. Just start 0:12:46.170 --> 0:12:48.929 to invest. As we said, the earlier you start, the better 0:12:48.929 --> 0:12:51.630 that can be over time. There's the thing called compound 0:12:51.630 --> 0:12:55.350 interest, which is if you start investing now, not only 0:12:55.350 --> 0:12:58.740 do you have tax- free interest in ISA on the amount 0:12:58.740 --> 0:13:02.490 you invest, but also you have interest on that interest 0:13:02.490 --> 0:13:05.910 as well. So start investing or saving. If you're already 0:13:05.910 --> 0:13:08.820 doing it, think about increasing the amount you put in 0:13:08.820 --> 0:13:11.069 just a little bit. You can increase from a pound, 0:13:11.070 --> 0:13:13.530 5 pounds. It doesn't have to be a lot. If 0:13:13.530 --> 0:13:16.559 you've already done an ISA, great. Well done. Fantastic. 0:13:16.559 --> 0:13:16.770 Tick. 0:13:17.970 --> 0:13:21.300 But just maybe think about reviewing the fees and the 0:13:21.300 --> 0:13:24.660 charges in your ISA, because ISA products are changing all 0:13:24.660 --> 0:13:27.809 the time. It could be that you might be better 0:13:27.809 --> 0:13:31.260 off transferring to a different product with lower charges or 0:13:31.260 --> 0:13:34.709 better interest rates, which means more money in your pocket. 0:13:35.309 --> 0:13:37.140 A word of warning there though, if you do look 0:13:37.140 --> 0:13:41.250 at transferring, make sure you do it between the providers 0:13:41.460 --> 0:13:43.559 rather than take the money out and then put the 0:13:43.559 --> 0:13:46.590 money into another product. The reason for that is if 0:13:46.590 --> 0:13:49.740 you do it between providers, you don't use your allowance. 0:13:49.890 --> 0:13:52.320 If you take it out and put it in of yourself, 0:13:52.650 --> 0:13:55.380 it goes towards your 20,000 pound allowance. So if you're going 0:13:55.380 --> 0:13:58.020 to move money, ask the providers to do that between 0:13:58.020 --> 0:14:00.480 themselves, not taking the money out and reinvesting. 0:14:00.480 --> 0:14:01.441 You don't touch it yourself. 0:14:01.441 --> 0:14:01.442 Don't touch it yourself. 0:14:01.442 --> 0:14:01.502 You let them take care of it. 0:14:03.780 --> 0:14:04.740 Absolutely. Absolutely. 0:14:04.890 --> 0:14:07.620 And can you just quickly talk us through the different 0:14:07.620 --> 0:14:10.319 options available if you're interested in taking out a stocks 0:14:10.320 --> 0:14:11.130 and shares ISA? 0:14:11.190 --> 0:14:13.320 So you do have options in terms of the types 0:14:13.320 --> 0:14:15.840 of stocks and shares ISA you want as well. So you can 0:14:15.840 --> 0:14:19.200 either choose to invest directly into the stock market where 0:14:19.200 --> 0:14:23.520 you choose individual company funds and stocks and shares, or 0:14:23.520 --> 0:14:26.700 you can invest via something called an investment fund where 0:14:26.700 --> 0:14:30.270 the fund manager chooses underlying stocks and shares for you. 0:14:30.570 --> 0:14:33.750 So it really depends how involved you want to be 0:14:33.750 --> 0:14:36.990 in choosing those underlying investments, or if you just want to 0:14:36.990 --> 0:14:40.140 leave it to an investment fund manager to do that 0:14:40.140 --> 0:14:40.950 picking for you. 0:14:41.220 --> 0:14:46.290 So let's just chat briefly about myths surrounding ISAs and 0:14:46.290 --> 0:14:49.380 investing. And these might put people off. Let's try and 0:14:49.380 --> 0:14:50.400 bust some of those myths. 0:14:50.430 --> 0:14:52.740 I think the first one really is that you need 0:14:52.740 --> 0:14:55.200 a lot of money to start investing, and that is 0:14:55.200 --> 0:14:58.170 not the case. So for most stocks and shares ISAs, 0:14:58.500 --> 0:15:00.780 they start from about 20 pounds a month. There are 0:15:00.780 --> 0:15:03.510 some that start lower than that, but that's broadly the 0:15:03.510 --> 0:15:07.320 amount that they start from. And you can stop, start, 0:15:07.470 --> 0:15:10.740 add to that whenever you want. So it's pretty flexible. 0:15:10.740 --> 0:15:12.720 So it's not as if once you start, you're committed to 0:15:12.720 --> 0:15:15.390 that forever and a day, you've got the flexibility to 0:15:15.390 --> 0:15:19.020 do that. Obviously we say thinking about it as a five- year plus 0:15:19.020 --> 0:15:22.260 horizon, but you can get your money out with most 0:15:22.260 --> 0:15:24.930 stocks and shares ISAs without penalties. And that's another myth 0:15:24.930 --> 0:15:26.430 that once you start, you're not going to be able to get your 0:15:26.430 --> 0:15:30.030 money out for five years. You can, we just say, 0:15:30.180 --> 0:15:31.800 just be aware that if you take your money out 0:15:31.800 --> 0:15:34.619 and the stock market's down, that your value might have 0:15:34.620 --> 0:15:36.060 gone down at that point. 0:15:36.180 --> 0:15:36.330 Right. Yeah. 0:15:36.600 --> 0:15:38.400 I think another myth as well is that you need 0:15:38.400 --> 0:15:40.020 to be almost like a wolf of Wall Street to 0:15:40.020 --> 0:15:43.620 know everything about investing. Again, that's not true. There are 0:15:43.650 --> 0:15:46.980 lots of guidance out there. There are funds that help 0:15:46.980 --> 0:15:49.860 you choose the risk you want to take, and this 0:15:49.860 --> 0:15:53.130 is the fund for you to support you along that 0:15:53.130 --> 0:15:57.660 journey. And finally, a really important myth that people have is the 20, 0:15:58.290 --> 0:16:01.800 000 pounds figure. It tends to get confused, I think, 0:16:01.800 --> 0:16:06.270 with value and contribution. So lots of people think, " I've 0:16:06.270 --> 0:16:09.360 already got 20,000 pounds in my ISA now. That's it. 0:16:09.360 --> 0:16:11.610 I can't pay into another ISA because I've hit the 0:16:11.610 --> 0:16:15.090 limit." The limit is the amount you put in. So 0:16:15.090 --> 0:16:17.490 your value of your ISA has nothing to do with that 20, 0:16:17.490 --> 0:16:20.940 000. It could go up and up and up infinitum. 0:16:21.330 --> 0:16:24.360 It's just the amount that you put in per tax 0:16:24.360 --> 0:16:25.680 year as opposed to the value. 0:16:25.800 --> 0:16:29.220 So this has been really enlightening. I think people will, 0:16:29.490 --> 0:16:30.930 if they're like me, want to go and have a 0:16:30.930 --> 0:16:32.850 cup of tea or a cup of coffee to think 0:16:32.850 --> 0:16:36.570 about what we've been discussing today. So whilst they wait 0:16:36.570 --> 0:16:39.600 for the kettle to boil, what is one thing that 0:16:39.600 --> 0:16:41.940 people can do to get started with their ISAs? 0:16:42.180 --> 0:16:45.570 I would say the earlier you start, the better it is 0:16:45.570 --> 0:16:48.090 from that compound interest we said. So growth upon growth 0:16:48.090 --> 0:16:52.050 upon growth. And just get started. It's not complicated at 0:16:52.050 --> 0:16:54.810 all. You can start from as little as five pounds 0:16:54.810 --> 0:16:57.090 a month if you're looking at cash ISAs or maybe 0:16:57.090 --> 0:16:59.610 20 pounds a month for stocks and shares. So get 0:16:59.610 --> 0:17:03.210 started. You can always stop. Take that first bold move. 0:17:03.330 --> 0:17:06.149 Couldn't have put it better myself. Paula, thank you so much. 0:17:06.210 --> 0:17:06.780 Thank you. 0:17:08.280 --> 0:17:10.379 Well, that's all we've got time for today. I hope 0:17:10.380 --> 0:17:12.540 that that cleared up some of the myths around ISAs 0:17:12.540 --> 0:17:15.540 and inspired you to get stuck in. If you enjoyed 0:17:15.540 --> 0:17:18.419 this episode, why not share the podcast and help others 0:17:18.420 --> 0:17:21.390 get a little bit richer too? Next time, we have 0:17:21.390 --> 0:17:24.480 a special two- part series all about investing, how to 0:17:24.480 --> 0:17:27.629 start, how to manage your emotions, and how to grow 0:17:27.630 --> 0:17:29.609 your money for the long- term with friend of the 0:17:29.609 --> 0:17:33.420 show, Emilie Bellet from The Wallet Podcast. This podcast is 0:17:33.420 --> 0:17:35.609 brought to you by L& G. You can keep up 0:17:35.609 --> 0:17:40.409 with the show on YouTube, TikTok, and Instagram, @ legalandgeneral, where we'll be 0:17:40.410 --> 0:17:44.100 sharing clips and more tips from this conversation. If you 0:17:44.100 --> 0:17:46.170 have a question or a topic that you would like 0:17:46.170 --> 0:17:48.629 answered on the show, then please do get in touch 0:17:48.660 --> 0:17:51.480 on our socials. We'd love to hear from you. Until 0:17:51.480 --> 0:17:54.810 next time, see you soon and thanks for listening and watching.