ISAs and HMRC

Aegis

bubbleoflife wrote: »

Still a bit far, relatively ... 20+ years or so?
What would you suggest? And would it be tax free type of savings like ISA HMRC do not need to know about?

You might want to consider using your stocks and shares ISA. Up to £10,200 this year and £10,680 next year, with no capital gains tax, income tax on interest or higher rate income tax on dividends. Over 20 years stocks and shares should significantly outperform cash holdings, plus you'll still be able to access the money when you need it.

bubbleoflife_2

Aegis wrote: »

You might want to consider using your stocks and shares ISA. Up to £10,200 this year and £10,680 next year, with no capital gains tax, income tax on interest or higher rate income tax on dividends. Over 20 years stocks and shares should significantly outperform cash holdings, plus you'll still be able to access the money when you need it.

Very interesting :cool: BUT.... I've never dabbled in stocks & shares. How do I get started? Do I need to open a new ISA?

Loughton_Monkey

Buying a Stocks & Shares ISA is not difficult. Many platforms provide help on this and refund all the 'initial charges' (on the vast majority of funds). A typical such provider is Hargreaves Lansdown, and there are others like Cavendish. Their websites might inform you further.

A 'fund' is simply a large 'bag' of Shares (and sometimes other assets like bonds, gilts, and property) which will have a particular 'focus' - such as UK Smaller Companies. Or Indian companies. Or Natural Resources.......

It is perceived wisdom - and it has held true for most of the time for most of us - that over a long period (10+ years) such funds will significantly outperform 'Cash' saving. Currently, cash savings, even tax free, do not keep up with inflation. [Personally, I saw about 13% growth on my entire 'equity' funds during 2010]

You must bear in mind that shares and funds are 'volatile'. It is quite possible that they can go down or up by 20% or more in any one year. But over the longer term they can usually be expected to produce 6% minimum, and maybe 10% per annum over 'bad'/'good' decades.

I should point out the the 'funds' you could choose for a Stocks & Shares ISA would tend to have almost exact 'lookalikes' within a pension. So two people with similar funds would receive just about exactly the same growth over any period. However, the 'pension' investor would have received tax relief (25% of which can end up in your own pocket if you take the tax free lump sum). The ISA investor gets no such benefit. But the ISA fund is totally 'yours' to keep invested and/or spend as and when you choose. A pension, on the other hand, has restrictions - which generally involve taking most of it 'on the drip'.

My own preferance was to retire with a mixture of both. Not having pensions would be considered a 'blessing' for those who die younger than 'normal'. Conversely, those who live far beyond their 'expectancy' would have received extremely good value from pensions.

bubbleoflife_2

Loughton_Monkey wrote: »

Buying a Stocks & Shares ISA is not difficult. Many platforms provide help on this and refund all the 'initial charges' (on the vast majority of funds). A typical such provider is Hargreaves Lansdown, and there are others like Cavendish. Their websites might inform you further.
A 'fund' is simply a large 'bag' of Shares (and sometimes other assets like bonds, gilts, and property) which will have a particular 'focus' - such as UK Smaller Companies. Or Indian companies. Or Natural Resources.......
It is perceived wisdom - and it has held true for most of the time for most of us - that over a long period (10+ years) such funds will significantly outperform 'Cash' saving. Currently, cash savings, even tax free, do not keep up with inflation. [Personally, I saw about 13% growth on my entire 'equity' funds during 2010]
You must bear in mind that shares and funds are 'volatile'. It is quite possible that they can go down or up by 20% or more in any one year. But over the longer term they can usually be expected to produce 6% minimum, and maybe 10% per annum over 'bad'/'good' decades.
I should point out the the 'funds' you could choose for a Stocks & Shares ISA would tend to have almost exact 'lookalikes' within a pension. So two people with similar funds would receive just about exactly the same growth over any period. However, the 'pension' investor would have received tax relief (25% of which can end up in your own pocket if you take the tax free lump sum). The ISA investor gets no such benefit. But the ISA fund is totally 'yours' to keep invested and/or spend as and when you choose. A pension, on the other hand, has restrictions - which generally involve taking most of it 'on the drip'.
My own preferance was to retire with a mixture of both. Not having pensions would be considered a 'blessing' for those who die younger than 'normal'. Conversely, those who live far beyond their 'expectancy' would have received extremely good value from pensions.

Thank you for that