First S&S ISA and Second Investment

Angie_B

Hi,

I have recently inherited a little money and I was wondering what you lovely people think of the below.

I have read Investing Demystified and am getting my head around the whole passive investing way of thinking.

I am 32 years old, single, own my home with tracker mortgage currently at 1.54%. No plans for children.

I currently have approx. £55k saved within my workplace pension and contribute 10% of my salary, with my Employer contributing another 5%. I am a higher rate tax payer.

I have £35k in a cash ISA which has been saved up over time and is there for a rainy day, house emergencies and new bathroom. Cash ISA rate at 1.4%.

I now have £25k left to invest somewhere. I plan on putting £20k into VLS 80 via a S&S ISA (I have yet to use this year's allowance).

I was considering putting the other £5k into a regular investment using VLS 60 to balance the risk a little, and then drip feeding monthly savings in as well, which could be up to £1k per month. I think my easy-access cash ISA is now big enough to cope with any major emergencies and will more than cover me for mortgage, bills and life in case of job loss etc.

I have a pretty secure job in Construction (as much as anything is secure these days) and am looking to save long term, hopefully towards early retirement!

Any opinions on the above?

Should I look to diversify more than just VLS 60 and VLS 80? I have also looked at the HSBC Global Strategy Balanced for the non-ISA pot but am not sure about the pros and cons of HSBC vs VLS 60?

Thank you in advance for any thoughts and opinions!

Eco_Miser

To better use your ISA allowance, transfer £25k of your cash ISA to your newly opened S&S ISA.
Replace this in your emergency etc. fund with the £25k you were going to invest, saved into the best savings, Regular Savings and interest paying current accounts you can find. (See many threads on here about maximising interest by using multiple accounts).
Invest your monthly savings into your S&S ISA, using this years allowance.
Result: all your S&S investments are ISA'd, some of your emergency fund is not ISA'd, but is earning higher interest.

On the investments, your plan seems reasonable, and I'm sure those with stronger opinions will be along shortly.

badger09

Have you thought about increasing your pension contributions? Obviously not accessible for a while yet, but worth thinking about, as a higher rate taxpayer, for the tax relief alone:cool:

enthusiasticsaver

I agree that putting £20k in a S and S ISA is a good idea and a VLS80 seems about right presuming this is a long term investment. I also think looking at upping your pension contributions is a tax efficient way of saving.

I personally do not think you need to diversify any further than the VLS funds. 50% of our portfolio is in VLS60 (we are older than you) and that is considerably more than you are thinking of investing. Drip feeding investments is always good.

1.4% on your cash isa is not the worst rate I have seen but as Eco says high interest current accounts will pay better rates (albeit on relatively small amounts) but take some setting up and moving money around, setting up direct debits etc. Personally I have moved away from multiple current accounts and doing the monthly shuffle but a lot of people do that. Work out the return and then decide if you think it is worth it. Lloyds Club, BOS, Tesco, Santander 123 all pay higher than your cash isa rate and you can earn up to £500 tax free as a higher rate tax payer. If you do this then transferring the cash isa to a s and s isa would be worth it to maximise your isa allowance.

Angie_B

Thanks all.

Yes, upping my pension contributions is next on the list of things to look at. My next point when I can change my contributions at work is January, so I am just doing the maths on upping to 15% or even 20%. This would obviously reduce my drip-feed amount for the investments.

I will definitely have a look at higher interest savings accounts and moving things between my cash isa and the S&S isa. My cash isa is flexible so I can take money out and put back in from monthly savings instead, so definitely an option.

Thanks so much for the help. I would not have thought about splitting the emergency fund around lower-balanced accounts on my own, so it really is much appreciated.

hels234

Have you considered a LISA (S&S)? If I remember correctly you can put £4k in with the government adding 25% (so £1000) of what you put in each year until your 50 I think. Only thing is that its locked away until your 60.

Alexland

Also worth considering a private pension to run alongside your employer pension?

20k in VLS80 sounds fine if you can cope with the volatility.

Angie_B

Eco_Miser wrote: »

To better use your ISA allowance, transfer £25k of your cash ISA to your newly opened S&S ISA.

Invest your monthly savings into your S&S ISA, using this years allowance.

Result: all your S&S investments are ISA'd, some of your emergency fund is not ISA'd, but is earning higher interest.

Sorry - I am sure this is a silly newbie question but I am going to ask anyway.

If I transfer £25k of my existing (previous years) cash ISA to, let's say, an iweb S&S ISA and put it into VLS 80, can I then invest this year's iweb S&S ISA into VLS 60?

I think I understand that the S&S ISA is grouped by platform, i.e. iweb, not by fund? Is this correct? So I could split next year's investments across more than one fund but only within one platform? Is that correct?

Thank you!

Eco_Miser

Yes, you can invest S&S money into as many funds (and other eligible investments) as you like on the one platform, subject to them being available on that platform.
You can start an S&S ISA with a different platform each financial year, if you want to, and could also split previous years' subscriptions across multiple platforms if you want to.
Current year subscriptions must all be on the one platform (but you could change platforms partway through the year if you wanted to.