New to ISAs

harvey180

Hi All,

I've not held an ISA before mainly because i've been paying of outstanding debts etc.

I'm in the position where I want to look at getting a S and S ISA where I can pay in surplus that I have at the end of each month. At the moment that can vary between £500 and £1000.

I'm very keen on the Vanguard Lifestrategy funds, but not sure where I should go to start with given I am starting from scratch. I don't have any lump to start or existing ISA to transfer and want to pay in variable amounts on a monthly basis.

I also need some advice about how I can get access to my account. Are funds locked in with an S and S ISA? I have a contingency for emergencies, but worry that if I lose my job I may need access to the ISA after 6 months.

Having said all that I do want to keep the funds in place for somewhere between 5 and 10 years.

thanks in advance.

Archi_Bald

If you don't have 6-12 months readily accessible cash in an emergency fund, you should not start any investments. Instant access cash always forms part of a balanced portfolio, and you need to start with the cash.

I would keep the cash in one or more interest paying current accounts.

Once you got the emergency fund in place, you can then start your investments - provided that you can go into this with a view of keeping the investments for at least 5 years, but longer if at all possible,

harvey180

Hi thanks for the quick response.

I currently have my emergency fund in place. Just looking to take my first steps, but a complete newbie.

I appreciate that investing is for longer term but wondered if there were any penalties I needed to be aware of if I needed to pull my money out of an S and S ISA for any reason. I know that this is a very broad question.

Thanks again.

jimjames

Generally you can get money out of s&s ISA in around 5 days so no lock in. Some have fees to close but not to just draw out cash.

Archi_Bald

You would have to pay any charges the ISA provider may levy - e.g. the obvious one would be the trading charge to sell some or all of your funds, and they might also charge for cash withdrawals.

But these charges should be fairly small. Your much bigger risk will be that you might not be able to sell above the price you paid, for a number of reasons, such as the initial dilution charge, platform and other charges, and most importantly the price of the fund at time of selling. If you are forced to sell during a temporary dive in the market, you might lose a lot of money.

I would keep all money that I might need this side of 5 or so years in cash.

pinklady21

I am also looking to invest in a S and S ISA - already have a mini cash ISA with max amount invested in there, and wanting to start investing spare cash elsewhere.
I am a higher rate tax payer - and looking to invest at least £500 per month.
Where to start selecting a provider?
Thanks!

AlanP_2

Archi_Bald wrote: »

I would keep all money that I might need this side of 5 or so years in cash.

That sounds very, very high to me for a working age person who can expect to receive an income even if redundancy or something causes an interruption and changes the employer paying it.

I would go with covering 4-6 months of NECESSARY EXPENDITURE so it does not need to allow for the proposed S&S ISA saving or holidays for example.

If you are a pensioner then a higher cash holding would be more sensible to avoid selling assets when prices are depressed.

AlanP_2

pinklady21 wrote: »

I am also looking to invest in a S and S ISA - already have a mini cash ISA with max amount invested in there, and wanting to start investing spare cash elsewhere.
I am a higher rate tax payer - and looking to invest at least £500 per month.
Where to start selecting a provider?
Thanks!

What time frame are you looking at to leave the money untouched?

See comments in this thread re Emergency Cash Fund?

Have you considered what assets you want to invest in as part of an overall, diversified Savings / Investment portfolio? For example if you had a pension scheme running that is heavily invested in US & UK equities you could counter that weighting by investing the majority of this pot in Europe, Asia, Emerging Markets etc so that you spread the risk of an economic downturn affecting all of your investments (although global equity markets are closely linked these days).

Pension? As a HRT you would gain a bigger bang for your buck using that as the wrapper as opposed to an ISA but you can't access it until you are at least 55-57'ish (exact age depends on your age now)

Archi_Bald

AlanP wrote: »

That sounds very, very high to me for a working age person who can expect to receive an income even if redundancy or something causes an interruption and changes the employer paying it.

If I know that I will buy e.g. a house or a car or a kitchen or a huge holiday/wedding etc etc in the next 5 years, and that I need £100K for that, I will not put the £100K into any investment, and I would never suggest to anyone else that they should.

Of course everybody can do as they please - only they know what they are happy with.

AlanP_2

Archi_Bald wrote: »

If I know that I will buy e.g. a house or a car or a kitchen or a huge holiday/wedding etc etc in the next 5 years, and that I need £100K for that, I will not put the £100K into any investment, and I would never suggest to anyone else that they should.

OK, that make sense and I would agree with you. I was referring to the Emergency Fund that the OP mentioned he had in place.

Saving for a particular "thing" whether it be a house, car, holiday, education fees is a different thing and I try and keep the pots separate (logically if not physically).

harvey180

jimjames wrote: »

Generally you can get money out of s&s ISA in around 5 days so no lock in. Some have fees to close but not to just draw out cash.

Thanks all for the advice.

Can I check, given I want to make variable payments in each month rather than an exact amount is there a particular platform that is geared better for this.

I've been looking at Cavendish, which seem to be reasonable.