Stocks and shares ISA

[Vergus]

I have some funds (approx £65k) sitting in a high interest savings account. I'd like to make it work for itself so in about 13 - 15 years, when I retire, I can have a pot of money to help my sons out with, and for me to maybe do the house up a bit, or go on a once-in-a-lifetime trip with DH.

I was looking at opening a S&S ISA though Fidelity. I've also looked at some of the products on offer through Vanguard - LifeStrategy Fund and/or a Retirement Fund. I'll be totally, honest I've no experience in investing so I would probably look for a managed portfolio or managed product which I understand incur fees - but because I really don't know the first thing about S&S I'd rather have it taken care of.

I'm not happy keeping the money in a savings account because, I pay tax on the interest and long-term I understand it will depreciate in value as it won't keep in line with inflation or grow.

Has anyone had experience with investing, through any of the products above? Are S&S ISA's a good option? Is there any other product that might work better for me?

Thank-you!

Well for a start you should know that you can only put in £20k per tax year

Sadly I started an isa 5 or 6 years ago with 20k and the same wish. Its now worth 19900 and has never been over 20k!

Even taxed interest would have done better!

This was an advised product. I've recently left that IFA but of course without their charges on it, the returns would be in a better place.

I work in investing on the fund manager side. If you want a low cost, hassle free option, I'd look at the ready-made portfolios offered by Hargreaves Lansdown and AJ Bell.

Vanguard is vey popular but their funds of funds are passively managed (track an index) which have their place but can limit returns, particularly in non-US markets including the U.K. Vanguard has also just put its fees up so isn't as cheap as it was.

The other suggestion I'd make is to keep it diversified. The US has done extremely well but is highly concentrated around the US tech megacaps. This makes tracking a U.S. or global equity index less diversified than it was as they dominate both due to their market cap. They're also very highly valued and the fund managers point out that history suggests it will unwind at some point.

Although you could put in £20k now (assuming no other is as this year), your DH could put another £20k into a separate one, you could put £20k more in in mid April and then your dh could put the final £5k in at that time. Depends on whether you have joint finances though.

And definitely use your ISA (or SIPP) allowance as it's income and capital gains tax free. The capital gains allowance is now £3k a year compared to £12k a few years ago so you want to be tax efficient.

FTSE Global All Cap is my recommendation 🙂

Thanks all. Some interesting pointers here. I was aware that I could only put £20000 per year into an ISA - the funds aren't joint though - so am I allowed to open more than one ISA at once? I will certainly look at Hargreaves Lansdown and AJ Bell and @twobluehorses suggestion to increase the ISA amount in April.

@Feelingstrange2 That's not good! That is my worry with S&S ISA's TBH

What’s it invested in?

Cash now! As it turns out the advised product was only available through the advisor so they sold it when i went unadvised (although it was Brewin and Dolphin).

I need to look.into what I do with it.

Hi @Feb135 do you mean to take a look at eg the HL stocks & shares ISA? They have a number of offerings and I am not sure which one to choose for a medium term investment (eg 5-10 years)
thanks

Make sure you pick a fund with low charges. Some managed funds charge 2% per year but if the fund only grows 2% the manager takes all that and you see nothing. That probably happened to the person upthread who lost money.

Fees should be 1% or less per year. Nutmeg is ok for having small fees.

you can open more than one at once but the total you put into any type of isa in any tax year is £20,000

So if you really wanted to you could have two with £10,000 each but you couldn't open four in one tax year and put in say £20k, £20k, £20k and £5k. You'd have to do that over 4 tax years.

It’s a risk/reward balance. Yes, you could lose money with S&S ISA or have been better off in a high interest account. Over 15 years though, you should (using historic data) be better off. The last 5 years, investments were absolutely creased by Covid and then by Liz Truss’s budget.

if you are prepared to ride it out for 15 years and really won’t need to touch the money or bail out when markets go down, I would definitely do the S&S route.

@twobluehorses

So if you really wanted to you could have two with £10,000 each but you couldn't open four in one tax year and put in say £20k, £20k, £20k and £5k.

Ah ok - so it's not about the number of ISA's - more about the cap of £20k. Thanks - was getting muddled there.

Do you work ?
Have you considered putting more into your work pension, or a SIPP rather than an ISA ?

I have a Moneyfarm S&S ISA which went up 8% over the last year. I like it because it's an easily managed app on my phone. I have no interest in stock markets as such. Moneyfarm invest in a wide range of funds. The one piece of investment advice I'd give is don't go for ethical funds unless you're prepared to make much less money! (bitter experience there)

Yes the most you will be able to do (assuming you haven't used any of your isa allowance this tax year) is put £20k in now for the 24/25 tax year, £20k in mid April 25 for 25/26, £20k in mid April 26 for 26/27 and £5k in mid April 27 for 27/28.

Pension is going to be more tax efficient.

premium bonds also worth using whilst you wait for your next isa allowance to be released (assuming you've used all of your pension allowance).

Nutmeg has pretty high fees of 0.75% plus the fund fees so over 1%.

I've just moved to vanguard for this reason - their fees are 0.15% platform fee (min £4 per month) plus the fund fee, mine is 0.23% so less than 0.4%. I'm sure there are cheaper options as well.

Yes I got fed up,with Nutmeg and did the same thing

If you're under 40 but it in a life time ISA

Hi, just wondering, where could a first time investor start?
I'm 29 and want to start investing my savings. Is it possible to add to the investment over the years doing this monthly? Or better to just put 20k per year in one sum as an investment?

If you are 29 and not planning to take the money until you are 60...look at the lisa. You get a 25% uplift by government. Look at the restrictions though. I just opened one (using dodll) which is quite, straightforward

I’ve got a Vanguard Life-strategy S&S ISA. It’s currently up by 16.5% so I’m pleased with it. It really tanked during covid though.