Saving advice for a financially !!!!!! 18 year old please.

scott_lawrence

Hello there, for some time now I have been interested in saving some of my income, I think that a Mini-Cash ISA is probably the best bet. I am 18 years old and have a disposable income of about £150 per week, I have a few questions regarding Mini ISAs if any body can offer any advice I would be extremely grateful-

1. Can I fill one cash ISA in one year with one company and move this to another company at the end of the financial year and still have a new years' ISA allocation? And will it still gain tax free interest?
2. Can I have a new ISA with a different company each year and keep the previous years' in the previous account or do I have to transfer it?
3. When the ISA is full where is the best place to put any savings, I know that there's another £4000 ISA for Stocks and Shares, however I know very little about the stock market, are there companies that will invest the money from the ISA, presumably with a commision on any profit, for me with 'experts' dealing with the money?

Any adivce would be well received, thanks,
Scott

Sillychuckie

scott_lawrence wrote: »

Can I fill one cash ISA in one year with one company and move this to another company at the end of the financial year and still have a new years' ISA allocation? And will it still gain tax free interest?

Yes, yes, and... Yes. You can transfer ISA's from one company to another (do not withdraw the money) and maintain the funds ISA status.

scott_lawrence wrote: »

Can I have a new ISA with a different company each year and keep the previous years' in the previous account or do I have to transfer it?

The transfer of previous years allowances is entirely optional, so Yes, you can open with a new company each year and No, you don't HAVE to transfer old balances to it.
However, its usually nicer and easier to manage keeping it together.

scott_lawrence wrote: »

When the ISA is full where is the best place to put any savings, I know that there's another £4000 ISA for Stocks and Shares, however I know very little about the stock market, are there companies that will invest the money from the ISA, presumably with a commision on any profit, for me with 'experts' dealing with the money?
Any adivce would be well received, thanks,
Scott

As an 18 year old (yet to be on the property ladder I assume, and probably with a lower tax liability), I'd probably (for now) stick to savings accounts for the rest and fixed rate bonds (e.g. 6.9% at anglo irish). However, it depends on how much you are talking about.

Thinking of the equity portion of your ISA however is also a good idea, since, what you place into this now will ALWAYS be tax free (for as long as ISAs exist). But, investing is usually a long term thing (~ 10 years min) so money you put into that wouldn't be available for house deposits in the near future etc.
If you are still interested in this though, let us know. There are things that could suit you and risk levels vary. There would be nothing wrong with drip feeding various unit trusts via a discount broker (e.g. Hargreaves Landsdown) at your age, but I'd probably stick to bonds for now.
Depends on your circumstances.

SC.

scott_lawrence

SC, first of all thank you for your advice.
As I would be looking to invest £150 per week a cash ISA would be filled in about 20 weeks, this would leave roughly £4000 in the year to invest or save elsewhere. I like the idea of the stock and shares ISA but in don't know anything about the market, as you pointed out there are savings account that give a fairly good return. What would you recommend?
Thanks, Scott

Chaddee

I hope you don't mind if I add a question to this! An advisor in HSBC today (where I already have an ISA) told me that if in April 2007 I open an ISA with another company I would not be able to keep the £3000 that's already in the HSBC ISA there. I'm thinking of NS&I who I believe don't accept transfers. Does that mean that if I open the new ISA I have to take the money I've already saved out of the old one and put it in a different savings account? Seems rather crazy to me!

jem16

The "advisor" is talking rubbish!

On the 6th April you can open another ISA with whoever you like. Your current ISA can stay put where it is earning interest or you can move it to somewhere that does accept transfers - your choice.

dunstonh

I hope you don't mind if I add a question to this! An advisor in HSBC today (where I already have an ISA) told me that if in April 2007 I open an ISA with another company I would not be able to keep the £3000 that's already in the HSBC ISA there. I'm thinking of NS&I who I believe don't accept transfers. Does that mean that if I open the new ISA I have to take the money I've already saved out of the old one and put it in a different savings account? Seems rather crazy to me!

Was that really an adviser you saw or an account manager? Whichever it is, it is wrong. If they cannot get it right on one of the simplest products there is then what hope is there for them getting it right on the more technical site. Its not as if they have the product range either to get mixed up with either. Thank goodness they only have about 10 products to worry about and not the tens of thousands proper advisers have available.

jamesd

scott lawrence, it's looking to me as though you've lots of extra income and a maxi stocks and shares ISA could be most appropriate, with 7000 limit this year, 7200 next. Nothing wrong with some short term borrowing to fully use the 7000 this year if that's what it takes. The better funds in the medium risk UK equity income sector have returned around 15% each year, way more than savings accounts. But also much more variation year to year. The long term average for UK and for world has been around 12%, but it's possible to do better than average.

I'm assuming that you don't need the money for a few years and are flexible enough to leave it invested for a couple or three years if the stock market takes a sudden downturn and needs that time to recover. You can switch investments to those with less up and down movement potential as the time when you think you'll withdraw the money approaches.

Read Ok then - How do I choose a S&S ISA and the discussions linked from it to get an idea of what a sector allocation is as well as the practical details of how to use one of the fund supermarkets.

If you've already put money into a mini cash ISA this year the most you can do with the S&S one is a mini S&S ISA with 4000 limit. Next tax year the limits change to maximum 7200 total each year, no more than 3600 of which can be cash, and the maxi and mini distinctions go away.

cookie9

You could also consider investing in a regular savers account once you have reached your cash isa limit. Although these are not tax free they often offer good rates of interest. Your investment is likely to be tied up for a year but it would be a less risky invesment then stocks and shares.

rathernot

scott_lawrence wrote: »

SC, first of all thank you for your advice.
As I would be looking to invest £150 per week a cash ISA would be filled in about 20 weeks, this would leave roughly £4000 in the year to invest or save elsewhere. I like the idea of the stock and shares ISA but in don't know anything about the market, as you pointed out there are savings account that give a fairly good return. What would you recommend?
Thanks, Scott

OK let's assume firstly you fill your Cash ISA with the £3k max.

You could then open a Mini S&S ISA and invest in shares/stocks/funds, the returns should be higher but typically that will be over the long term, and IMO it's something you would need to devote a little time to managing vs. "stick it in the bank and watch it grow".

A couple of other options would be to look for one of the high-interest "regular saver" accounts, I'm not too clued up on these but I know there were a few that offered ridiculously high rates up to around £3k a year.

If you find yourself with a lump sum you could stick it in somewhere like Icesave, where you'll get 6.2%, monthly interest and near instant access, or you could go for a bond which will offer a higher APR (up to 6.9% over 12 months) but of course your money is tied up.

dunstonh

I think you should also look at a pension. At age 18, you could put £30pm net into it and if you kept that index linked until retirement, you wouldnt really ever need to increase it above that amount in real terms to get £10k of pension income at state retirement age of 68.

That would save you a higher contribution than if you started at 25 or 30. To do the same at 25 would cost you £50pm and at 30 would cost you £72pm. £30pm in real terms should be affordable even when you get a house or start a family. However, finding £108pm at 35 when you havent been used to paying it will be a lot harder than paying £30pm when you have.

Chaddee

dunstonh wrote: »

Was that really an adviser you saw or an account manager? Whichever it is, it is wrong. If they cannot get it right on one of the simplest products there is then what hope is there for them getting it right on the more technical site. Its not as if they have the product range either to get mixed up with either. Thank goodness they only have about 10 products to worry about and not the tens of thousands proper advisers have available.

Thanks dunstonh and jem16 - it was a woman in a uniform with a clip board standing near the leaflets who I arranged with to have a full financial chat with next week. Maybe I should ask to have someone else! Maybe she was new...either way it's good to know I can leave the £3k there to continue to be tax free!

Thanks for your help.