First ISA!!!

tiggermadvic

Hi Guys,

Now i've started posting I cant stop!! LOL!!! I am desperately saving to buy my first house and am looking for some SIMPLE advice!!! I know the first thing I need to do is get an ISA but...stupid question I'm sure.......what do you do with the 3000 you put in there, at the end of the financial year? Also I am aiming to save approx 5000 a year over the next 3 years, so what should I do with the other £2000? Help!!!

xxx

david78

You can put £3000 in each tax year and leave it to accumulate interest in future tax years.

i.e.

put £3000 in now (for the 2005/06 tax year) Total saved £3000
put £3000 in after April 6th 2006 (the 2006/2007 tax year) Total saved £6000 plus interest
put £3000 in after April 6th 2007 (the 2007/2008 tax year) Total saved £9000 plus interest
etc.

If you can afford it (don't need the money) just leave your money in there to build up with interest at the start of each new tax year.

dunstonh

You could use the other £4000 ISA allowance in stocks and shares ISAs (which doesnt have to include stockmarket investments if you dont want. A range of low risk investments can be put in there too).

flossy_splodge

Hey dh, how can you put non stocks and shares in a stocks and shares ISA? Sorry if this is a daft question! And how does one do ones own research about what to put in? Thanks.

ReportInvestor

It's not quite such a daft question, flossy_splodge..

PIBs (Building Society Permanent Interest Bearing Shares) and Corporate Bonds both qualify. These are both (relatively) high yielding assets whose capital value will fluctuate with interest rates (among other things). Nor are they guaranteed (a building society doesn't legally have to pay out a PIBs income - but they always have - and Corporate Bonds depend on the financial health of the company issuing them - remember the recent Parmalat scandal in Italy? Corporate bond investors lost their shirts. ). You can buy corporate bonds (but not PIBs) in a collective fund, however, to reduce risk.

The current consensus is that they are perhaps overvalued. But who knows in this Brave New World of low interest rates, ageing investors and falling annuity rates?

And in both cases it is tax free income of around 5.5%. (Pension annuities of, say, 6.5% are taxed and you have lost your capital for ever.)

There's a lot of people chasing this nirvana.

As with any investment, you shouldn't just choose it for the tax wrapper, but in this case the tax wrapper does help add 1.1% pa for a basic rate taxpayer and 2.2% pa for a higher rate taxpayer.

And should they pay 1%+ pa for a company to manage their corporate bonds, or take some more risk and buy their own, gradually build up their own small portfolio of top name British Companies? Hmmmm. Discuss. (Probably not suitable for the OP or any first ISA investor.)

But if f_s meant, "How can I keep cash into a stocks & shares ISA" the answer is more complicated and may restart World War III .

See here if you've got a spare 20 minutes

dh will no doubt add any other investments eligible for a shares ISA.

P.S. Great name, f_s .

cheerfulcat

flossy_splodge wrote:

Hey dh, how can you put non stocks and shares in a stocks and shares ISA? Sorry if this is a daft question! And how does one do ones own research about what to put in? Thanks.

flossy_splodge, you can open a S&S ISA with a broker like Squaregain

( the link takes you to the ISA page - for info only ) and buy things to put in it. It's pretty straightforward.

There's a good introduction to funds, and a fund screener for choosing funds by risk, at iii, here. You have to set up an account, but it's free.

dunstonh

low risk sectors (non-stockmarket) would be commercial property, corporate bonds, gilts and fixed interest.

flossy_splodge

Big thanks to those that offered help and info. Sorry to be so slow acknowledging, but been reading! It's all a lot more complicated than I thought so rathervthan rush in I shall take time to follow up the links provided above and do m'research! It's so nice to get help. x

Deemy

Also with self select isa's the univested cash earns some interest on account.... though it is taxed.

flossy_splodge

Input, I need input! Sorry deemy, don't quite follow....x

david78

I planning to put £1000 of my mini stocks and shares allowance into a commercial property fund after April 6th (no idea which one yet). The remaining £3000 will be dripped in monthly split over 5 different equity funds from different managers (£50 per month each) with emerging and global market bias.