What will a financial adviser do for me?

bowlhead99 wrote: »

Yes - in recent years we have seen changes on dividend tax rates and allowances for example and if you are investing a large chunk of money it makes sense to use the available wrappers that they give you. If you hadn't used your ISA allowance this year, you could do £15k into a S&S ISA before 5 April, £20k into an S&S ISA on 6 April '17, and another £20k on 6 April '18. That would be over £50k entirely protected from tax and available for investment, in the space of only 13 months. Pretty good.

Unless you did not want so much investment risk and wanted to have more cash products in which case you might find higher rates for some of that £50k outside ISAs ( I haven't been following your whole thread)

LISA comes with a government top up, but the downside of that top up is a penalty of greater than the top up if you want to take it out for a non-qualifying reason (i.e. you are not buying a qualifying property and you are not age 60+). So having money in a 'normal' S&S ISA, forgoing the bonus, is sensible if you may want earlier access for an emergency or some opportunity which you had not forseen today.

For example you might decide in ten years time that you wanted to make a large pension contribution and get 40% tax relief as a higher rate tax payer (turning £6000 into £10000 for a 67% 'bonus') rather than having taken the government 25% bonus in the LISA. So using the standard 'non LISA' S&S ISA product with penalty-free access would be quite useful for building towards that objective.

You are not going to be able to get more than £4k (plus bonus) of new contributions into a LISA each year anyway, because of the annual limit.

Yes. The government (via the ISA manager) credits your account. It is up to you to decide what to do with the cash that arrives in your account.

In the world of pensions, there are some provider's products where you are making monthly direct debit /standing order contributions into the pension and into underlying funds each month, and then when the pension provider claims the tax relief each month, they automatically invest it into the same funds in the same proportions that you had set up on your fixed monthly allocation of contributions. So, some providers might offer something similar to that, when they get their LISAs up and running and settled down.

However, the admin is easier if they just throw all the claimed government bonus money into a 'cash pot' within your account and then you decide which fund(s) to spend it on. That would certainly be the case in the first year when the first government bonus is not going to be claimed by your provider until after the end of the tax year. The bonus claims will be able to happen in-year during year two onwards, but by that point the customer expectations will probably be that the bonuses will be available to do with as the customer wants, and so most/all managers will probably run the accounts that way.

dunstonh wrote: »

A book author does not fit that criteria. A multi-asset solution or a portfolio via an IFA would.

Multi-asset funds and model portfolios are live allocations. Not cast in stone and not restricted to the level a book author has made up their own allocation. And do note, that the allocations they have are just made up. They would not pass regulatory scrutiny. This does not make them bad. It just makes them basic and restricted and things like that tend to give lower returns. i.e. when the general consensus is that high yield bonds and global bonds are more favourable, your book tells you to use short term gilts. Since the book was last published, sterling has heavily fallen and a number of asset classes/markets are above their long term average. How has your book been updated to reflect those changes?

bowlhead99 wrote: »

Yes, although if you have not made any decisions yet you could also put it in a Cash ISA now and after April 5 and leave it there until you have decided which fund you want to buy and in what proportion and with what S&S ISA provider, and then transfer to the provider you want to use who is good value for money for the fund you want to use. Instant access cash ISAs don't have exit fees and transfers from them to the provider of your choice are quite quick.

Not every platform offers access to every fund. If you don't know what you want, don't rush, but in the meantime if you want to take advantage of the ISA allowance in 2016/7 you could just keep it in a cash ISA, or as uninvested cash within a S&S ISA.

Well, I might say that shows a lack of ambition given you may be 27,28 years from state pension retirement age - presumably you are not going to be retiring particularly early as you don't have any pension provision of your own to speak of. Almost three decades is a long time to become an important person at work who gets paid enough to trigger high rate tax.

Still, the comment was really just to agree with your point that it is useful to use S&S ISA rather than LISA because of penalty-free flexibility for whatever life throws at you. It could be an opportunity to get higher rate tax relief. It could be an opportunity to extend or improve or move your house. If it turns out you don't really see yourself using the S&S ISA money before retirement you could always just chuck it in a pension later as you could be doing anyway now. As mentioned you can't put all your money in a LISA anyway because of the annual limit so there isn't really a danger of locking 'everything' away in a LISA.

You would get £2500 bonus on £10k in a LISA. But once you have opened a LISA (which you can't open yet, because the product will not exist until next tax year), you can keep contributing £4k a year and getting bonuses until you are age 50. As you are not even 40 yet, that's at least a decade, which is at least £40k, which is a lot more than £2.5k bonus.

If you don't plan to use the money until retirement or semi-retirement age, why wouldn't you want the bonus? 25% is a nice chunk of free money for someone who is behind the curve in terms of making plans for funding their retirement. Alternatively you could just use a traditional pension. No access (even by paying a penalty) but a nice 25% boost from tax relief.