Cash ISA / S&S ISA / Pension Contributions - HELP!!!

adrian_bond

Hi all,
its been ages since my last post so please be patient!

Basically I would like to clarify a few questions I have about ISA`s; At the mo, I have approx £5500 in a cash ISA built up from previous years as well as a little I have paid in this year.

Now what I would like to do is transfer £3500 to a stocks and shares ISA once I start one, and keep the other £2000 as an emergency fund (preferably in a cash ISA) should I ever need it. Is this possible?

Now I can afford to pay £100 per month into the S&S ISA, and would like to know roughly what kind of charges I can expect to pay, where is a good company to Choose to manage the ISA and any investments involved? (im a novice see)

I also have the possibility of adding an extra £1500 later in the year (selling my vespa) to either the S&S or emergency savings.

I also currently have a company pension (only joined in January) whereby I am paying in 11% with the company matching 4%. I understand that it would be normal for me to
Only pay 4% in and use the rest to pay into the ISA, but I have a track record in the last couple of years of dipping into my ISA (slapped wrists all round), so have chosen this investment
vehicle for the time being.

For some background info, I am 31, earn £32640 per annum. I have no previous pension schemes other than the money I have saved via my NatWest cash ISA.

I am also a homeowner taking full advantage of cheap mortgage rates and currently overpaying by £300 approx per month; so building up equity fairly quickly.

I'm sure there is lots there that people will want to comment on, so please feel free as any advice / feedback / arguments are appreciated. Cheers

lisyloo

Is this possible?

Yes, you can xfer from cash to S&S but you can NOT go back the other way.

Is £2000 enough for an emergency fund? How long would that last if you were out of work.

where is a good company to Choose to manage the ISA and any investments involved?

What service do you require?
Are you looking for investment advice or jist an ISA wrapper to contain trackers?
I get advice (quarterly report) and I pay about 1.3% per annum.
Trackers where you get no advice are a lot less.

I understand that it would be normal for me to Only pay 4% in

Normal? There is no normal.
Be aware you cannot get at this money until 55 (under current rules).
Pernsions have some very good features but you need to be aware of the downsides as well.
This money is put by for your retirement and you cannot touch it even if you're starving and homeless (hope that doesn't happen just making the point).
I am worried that your emergency fund is insufficient TBH, please tell us how you arrived at the figure.

Do you have any insurance for long term sickness? What about redundancy?

atush

As a homeowner, I don't feel that 2000 is a large enough emergency savings pot.

I would leave the 5500 alone, and invest all future monies into a S&S isa.

If you feel you might spend this ISA money, you could transfer some of it into fixed rate isas that you can't touch for a year- but unless you choose one that can be accessed in an emergency (generally carries a penalty) that would negate the fund as an emergency fund.

Johnny_Tightlips

Hello all, long term lurker, first time poster.

As a general rule of thumb, it is advisable to have 3 months wages put away for an emergency. In your case, this amounts to approx £8,160 (we usually use gross figures). Based on that, I'd suggest leaving the money in the cash ISA but making sure you are getting the best rate of interest, even if you have to move it once a year after the bonus periods most banks give you has ended.

As lisyloo has mentioned, you may also want to look at some protection policies (income protection for sure). These are relatively inexpensive, and worth every penny.

lisyloo

As a general rule of thumb, it is advisable to have 3 months wages put away for an emergency.

Personally I don't think this is enough in times of recession.
Of course personaly circusmtances come into it, but I work in IT and have skilled colleagues, but I would personally think 8 months is a possible period for being out of work in a recession.

However it's individual so you need to think about YOUR siutaiton.
You might find it easier than average to get a job or perhaps your chacnes are worse than average? This depends on many factors like age, mobility (not good as a house owner), specialism etc.

Also I would say consider living costs not just income.
If you can live on a lot less than your income then it's not necessary to save (or possibly pay into a pension) when you're out of work, therefore I'd say 6-12 months living costs not 3 months wages.
But it is quite variable depending on circumstance.

Johnny_Tightlips

lisyloo wrote: »

Personally I don't think this is enough in times of recession.

Quite true. I should have qualified this by saying that this is the period drummed into advisers by the CII and IFS when studying. In reality, we often advise our clients to keep at least 6 months wages in cash. (I am an IFA, by the way)

But as you've pointed out, it does all depend on your own circumstances and expenditure.

adrian_bond

thank you all for your responses. some very sound advice there!

regarding sickness benefits, long term and short term, redundancy, and finding a new job im very well covered. I get substantial coverage for all through my pension / contract and life insurances at work....but there is no provision for redundancy as far as I know (the company I work for is yet to make any!!!)

as far as basic fixed living costs - these equate to £1000 per month (mortgage, food, bills etc) with other bills for non essentials making up the rest (gym, car, entertainment, train etc). so if I use the minimum monthly expenditure of £1000 at best I have only 5 months savings in my current cash ISA!!!!

therefore I think its a good idea to top this up as much as possible and then start a S&S ISA. So, without digressing too much further; who is a good company to choose (or should I use a singular IFA) to manage my future S&S ISA?

I know little about fund choice, investing et al, so would need the fund actively managed and cheap to run (depending upon projected growth / previous successes / gut feeling etc).

by spreading my bets, I am hoping to secure myself a comfortable retirement if im ever allowed to retire (currently 68 and counting I think)? I can afford a moderate to high risk profile due to my age, so hopefully there is a wide spread to choose from.

Thank you all again for taking the time to reply. it really is appreciated as no one I have talked to seems to know much about ISA`s and pension arrangements (which is a worry in itself)!!!

Cheers

Johnny_Tightlips

adrian_bond wrote: »

therefore I think its a good idea to top this up as much as possible and then start a S&S ISA. So, without digressing too much further; who is a good company to choose (or should I use a singular IFA) to manage my future S&S ISA?

This mainly depends on how much you have to put in at the outset. If you're only looking at £2,000 or £3,000 I'd say its not worth going to an IFA due to the costs involved.

Your best bet would be take head over to moneysupermarket and compare the S&S ISAs available at the moment. Most product providers will give you a list of their most popular managed funds.

If you build up enough funds in the ISA it may be worth taking it to an IFA who may be able to give you more guidance on investments, but remember that this will cost you money.

If you really don't trust yourself to pick an investment fund though you can always bite the bullet and head to an IFA straight away, check out unbiased.co.uk to find a local one.