Stocks & Shares ISAs

Halabala9

Hi Guys,

Forgive me if it`s a silly question but trying to find the answer myself I am still not 100% sure. I am interested in Shares ISA and one info is confusing for me.

https://www.moneysavingexpert.com/savings/ISA-guide-savings-without-tax/

It says: "You must save or invest by 5 April – the end of the tax year – for it to count for that year. Crucially, any unused allowance doesn't roll over – so if you don't use it, you lose it – forever. You'll get a new allowance the next tax year, but won't be able to contribute anything to the old ISA."

Does it mean that if I open Shares ISA account this tax year 2019/20 and transfer 20k onto it, I need to buy shares by midnight tomorrow? Or can I open an account, transfer 20k by midnight tomorrow to secure the allowance but buy shares let`s say next month?

I am not sure if I understand it correctly but my plan was to open an account today, transfer 20k to secure the allowance for 19/20 and then another one on 6th of April for another 20k (so I would have 40k altogether) but buy shares later this year. Am I allowed to do so?

One more question, once the account is open, is buying and selling shares exactly the same like outside ISA on my standard non ISA share account with Hargreaves Landsdown, so can do "day trading" and all those standard transactions like outside ISA? If so are the costs the same like outside of it or ISA`s rules are different?

I hope my question makes sense Thanks for the answer!

masonic

Mike997 said:

It says: "You must save or invest by 5 April – the end of the tax year – for it to count for that year. Crucially, any unused allowance doesn't roll over – so if you don't use it, you lose it – forever. You'll get a new allowance the next tax year, but won't be able to contribute anything to the old ISA."

Does it mean that if I open Shares ISA account this tax year 2019/20 and transfer 20k onto it, I need to buy shares by midnight tomorrow? Or can I open an account, transfer 20k by midnight tomorrow to secure the allowance but buy shares let`s say next month?

No, it just means you must pay into the S&S ISA by the end of the tax year. You don't have to buy investments immediately.

Mike997 said:

I am not sure if I understand it correctly but my plan was to open an account today, transfer 20k to secure the allowance for 19/20 and then another one on 6th of April for another 20k (so I would have 40k altogether) but buy shares later this year. Am I allowed to do so?

Most providers will let you hold uninvested cash for long periods of time. You should check your chosen provider doesn't have any restrictions around this, but there is nothing in the ISA rules to prevent you holding cash indefinitely.

Mike997 said:

One more question, once the account is open, is buying and selling shares exactly the same like outside ISA on my standard non ISA share account with Hargreaves Landsdown, so can do "day trading" and all those standard transactions like outside ISA? If so are the costs the same like outside of it or ISA`s rules are different?

Yes, it works much the same as the general investment account. There are day traders using ISAs, although the ISA wrapper doesn't make day trading any less ill-advised.

mikeb89

I've been trying to read up on compound interest several times in the past couple of years but find it so confusing. I keep reading that compound interest is the best way of maximising long term profits but I do not know what the best types of funds to invest in are that pay good dividends.

I started putting money into an class b - accumilation fund on Hargraves Lansdown as it has gone up by 200% in the past 5 years which means I would double my money (hopefully) several times in the next 20 years if it was to continue performing at a similar level (I know there is no guarantee of this) - This fund pays 0.6% dividends annually but my understanding is that those dividends pay the management fee.

Should I consider putting my money into another type of fund that pays higher dividends? If so, can someone advise what type of funds/asset class are best for this please? 

Thanks in advance. 

eskbanker

mikeb89 said:

I've been trying to read up on compound interest several times in the past couple of years but find it so confusing. I keep reading that compound interest is the best way of maximising long term profits but I do not know what the best types of funds to invest in are that pay good dividends.

I started putting money into an class b - accumilation fund on Hargraves Lansdown as it has gone up by 200% in the past 5 years which means I would double my money (hopefully) several times in the next 20 years if it was to continue performing at a similar level (I know there is no guarantee of this) - This fund pays 0.6% dividends annually but my understanding is that those dividends pay the management fee.

Should I consider putting my money into another type of fund that pays higher dividends? If so, can someone advise what type of funds/asset class are best for this please? 

Thanks in advance. 

If you're in it for the long term (as most investors are, sensibly) then it's best to focus on total return, i.e. capital growth and dividends, rather than arbitrarily subdividing these.  It's a generalisation, but companies paying higher dividends would often be expected to grow less, and vice versa - there are some stellar performers that have never paid a dividend.

Unfortunately your reference to buying a "class b - accumilation fund on Hargraves Lansdown" doesn't really signify what you've actually invested in, so nobody can say whether it's a sensible fund for your objectives and risk tolerance, even if we knew what they were!

mikeb89

It is the Baillie Gifford American fund (I am unable to post links because I haven't been on here long enough) The fund is a risk level of 6 out of 7.
Thank you for your comment, that really helps! The concept of calculating CAGR and all of the other calculations is what has thrown me off in the past. So to confirm, it is the total returns that are important not the dividends so a fund with a higher total return and low/no dividends is better than a lower return fund with higher paying dividends.

dunstonh

mikeb89 said:

I've been trying to read up on compound interest several times in the past couple of years but find it so confusing. I keep reading that compound interest is the best way of maximising long term profits but I do not know what the best types of funds to invest in are that pay good dividends.

I started putting money into an class b - accumilation fund on Hargraves Lansdown as it has gone up by 200% in the past 5 years which means I would double my money (hopefully) several times in the next 20 years if it was to continue performing at a similar level (I know there is no guarantee of this) - This fund pays 0.6% dividends annually but my understanding is that those dividends pay the management fee.

Should I consider putting my money into another type of fund that pays higher dividends? If so, can someone advise what type of funds/asset class are best for this please? 

Thanks in advance. 

In the last cycle (if you work on the basis we are now starting another), the US was the stand out performer.  In the cycle prior to that it was the stand out underperformer.     You never know which region/country is going to be best in the next cycle until it happens.    It is rare for the same sector to be best two cycles in a row.    If you go 100% into BG American are putting all your money in one place.  That is bad quality investing.    The fund is designed to be held in a portfolio of other single sector funds with your weightings set to match your risk profile.    
Plus, BG American is a higher risk US Equity fund.  As a new investor, can you handle the sort of volatility that you would get with that fund?

The fund is a risk level of 6 out of 7.

Do not follow the risk indicators of KIIDs.  They are not reliable enough. 

mikeb89

Tank you for your reply - I agree that risking everything in 1 region is not the best idea so I would like to spread it out across an Asian equivalent fund and possibly a UK one - I'll carry on with my research for now.  

eskbanker -"Unfortunately your reference to buying a "class b - accumilation fund on Hargraves Lansdown" doesn't really signify what you've actually invested in, so nobody can say whether it's a sensible fund for your objectives and risk tolerance, even if we knew what they were!" - Here is a link w w w.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/b/baillie-gifford-american-class-b-accumulation/charts

Thanks again!   

eskbanker

mikeb89 said:

Tank you for your reply - I agree that risking everything in 1 region is not the best idea so I would like to spread it out across an Asian equivalent fund and possibly a UK one - I'll carry on with my research for now.

The go-to answer for inexperienced investors wishing to DIY invest a small to medium pot (say <£50K) without IFA assistance is to select one of the low-cost global multi-asset funds, such as HSBC Global Strategy, Vanguard LifeStrategy, L&G Multi-Index and Blackrock Consensus, available on all the usual platforms.  These offer coverage of all the major markets while mitigating full exposure to equities by including bonds and the like, allowing a range of products at different levels of risk/volatility according to your appetite and objectives.

scasra

Hello Everyone, I'm just looking for some hints or tips:
I have a cash ISA with santander (54K) and willing to swap it to a S&S ISA right now, because the interest is near to nothing and I'm willing to risk it anyway. I can also add an extra 20K now for this year contribution as well. I check some provider and based on my plan (some funds and a few shares with 1-2 monthly trades) the best opportunities i find: ii, iweb or cavendish.
- How long it takes to transfer the cash ISA to the new account? (approximately)
- Is it better if I open my new S&S ISA then add the 20K first, then transfer the cash ISA afterwards?
Thanks guys for the answers, ideas or even other good providers.

masonic

ISA transfers are subject to delays at the moment for obvious reasons, so if you wish to start investing quickly, it would be better to add the £20k when you open the account and allow the transfer to follow.