VLS80 & Help to Buy

LWoodhouse

Hello,

I've recently got my first job and i'm looking to save and invest some of my money. I currently have a Help to Buy ISA, However I recently found out about the LifeStrategy funds.
On the website LifeStrategy funds are labelled ISAs so would they effect my Help to Buy in anyway?
I'm relatively new to this and understand there are some limits on ISAs and your tax free savings.

Thanks for any advice.

eskbanker

LWoodhouse wrote: »

On the website LifeStrategy funds are labelled ISAs so would they effect my Help to Buy in anyway?

Which website?

If there is a website that says that in those actual words then ignore it!

The main thing to understand is that there's a significant difference between saving and investing. Saving involves putting your money into cash-based products where the capital value is protected, such as bank or building society accounts. Investing entails putting money into products that aren't guaranteed in that way, but potentially involve better returns (or losses), such as shares, funds, etc.

There are four types of ISAs - cash ISAs (including HTB) are savings products, whereas stocks & shares ISAs are investment vehicles/wrappers.

Within a S&S ISA there are a huge range of different actual products that you can invest in, one of which is Vanguard LifeStrategy.

So the short answer to your question is that you can invest in a S&S ISA while concurrently paying into a HTB ISA (subject to the overall annual ISA contribution allowance of £20K per tax year) but realistically you'd need to do much more research before even starting to think about investing....

LWoodhouse

eskbanker wrote: »

Which website?
So the short answer to your question is that you can invest in a S&S ISA while concurrently paying into a HTB ISA (subject to the overall annual ISA contribution allowance of £20K per tax year) but realistically you'd need to do much more research before even starting to think about investing....

vanguardinvestor co uk /investing-explained/what-are-lifestrategy-funds This is where I saw it labelled as an ISA
So by Investing a meant the LifeStrategy, because the way i understood it, was i could put money in an almost leave it there or put money in every month towards it.
I know that i definitely do not have the knowledge to invest myself.

eskbanker

LWoodhouse wrote: »

vanguardinvestor co uk /investing-explained/what-are-lifestrategy-funds This is where I saw it labelled as an ISA

I can see why someone accessing https://www.vanguardinvestor.co.uk/investing-explained/what-are-lifestrategy-funds could form the impression that they're ISAs as the wording is poor, but the reality is that a S&S ISA is a wrapper/container held with a platform, into which individual investments (such as LifeStrategy) can be added, although Vanguard muddies the water a bit by offering both the platform and the underlying investments.

LWoodhouse wrote: »

So by Investing a meant the LifeStrategy, because the way i understood it, was i could put money in an almost leave it there or put money in every month towards it.

You might want to revisit this sentence as it doesn't really make much sense as it stands!

If you are interested in finding out about investing, I'd usually recommend starting your research at sites suited to inexperienced investors, such as:

https://www.moneyadviceservice.org.uk/en/articles/investing-beginners-guide
https://www.hl.co.uk/beginners-guides/investing
http://www.monevator.com
http://kroijer.com/
http://diyinvestoruk.blogspot.com/
https://www.ifa.com/indexfundsthemovie/

as well as bearing in mind a number of key points of principle:

1. Only consider investing once you have adequate accessible cash reserves.
2. Only invest if you're happy to commit for at least 5-7 years and preferably 10-15 or more.
3. Diversify - ignore individual shares, etc, and concentrate on collective investments that spread your eggs over many baskets. Global multi-asset funds are a good place to start, available from the likes of HSBC Global Strategy, Vanguard LifeStrategy, Blackrock Consensus and L&G Multi-Index.
4. Choose what you want to invest in before considering which platform to hold it/them on.
5. Keep an eye on ongoing costs for funds and platforms - they shouldn't be the primary consideration but can make a noticeable difference over the long term.
6. Use a Stocks & Shares ISA as a tax-efficient wrapper to avoid liability for income and capital gains tax.

bowlhead99

LWoodhouse wrote: »

vanguardinvestor co uk /investing-explained/what-are-lifestrategy-funds This is where I saw it labelled as an ISA
So by Investing a meant the LifeStrategy, because the way i understood it, was i could put money in an almost leave it there or put money in every month towards it.
I know that i definitely do not have the knowledge to invest myself.

Basically

1) the LifeStrategy fund is a type of investment fund that invests in a bunch of other specialist funds run by the same fund manager (Vanguard) so that if you buy some shares in the Lifestrategy fund you will be invested in a broad spread of underlying investments (from shares in Apple and Microsoft, to UK government bonds).

2) you can invest in shares of the lifestrategy fund via Vanguard's UK website - by opening an account on their own investment platform at Vanguardinvestor.co.uk - or through accounts with other fund platforms (other third party websites).

So it is an investment fund product, and isn't in itself an ISA. However you could invest in it through an ISA account. In an ISA, any gains or income is tax free.

3) You have a choice to hold the investment inside an investment 'Stocks & Shares' ISA or just a normal non-ISA account. Most people who want to invest would use an ISA unless they had used up all their annual subscription allowance for the tax year. If you don't use an ISA you need to keep records for tax purposes (even if you don't end up with any tax to pay) so it's less hassle to just use an ISA if you can.

4) having a Help to Buy ISA (a special type of Cash ISA) doesn't stop you also having a S&S ISA with Vanguard, as they are two separate products. As long as you don't make total subscriptions over £20k in any one tax year across the different products, you're fine. As HTB ISAs don't let you put in more than £200 a month after your initial deposit, you'd have plenty of 'space' within that £20k allowance to make S&S investments - with Vanguard or someone else.

Obviously investments can go down as well as up, so if your main goal is saving for a deposit on a house you might not want to put too much into investment ISAs otherwise you might need to delay your purchase waiting for a stock market recovery.

LWoodhouse

eskbanker wrote: »

You might want to revisit this sentence as it doesn't really make much sense as it stands!

Thanks for all the help, I was at work so was hurrying to write it haha.
The point in the sentence has kind of been clarified now i think.

bowlhead99 wrote: »

4) having a Help to Buy ISA (a special type of Cash ISA) doesn't stop you also having a S&S ISA with Vanguard, as they are two separate products. As long as you don't make total subscriptions over £20k in any one tax year across the different products, you're fine. As HTB ISAs don't let you put in more than £200 a month after your initial deposit, you'd have plenty of 'space' within that £20k allowance to make S&S investments - with Vanguard or someone else.

Obviously investments can go down as well as up, so if your main goal is saving for a deposit on a house you might not want to put too much into investment ISAs otherwise you might need to delay your purchase waiting for a stock market recovery.

Thank you for the clarification in this area, also I plan to have separate savings for my deposit.

For the LifeStrategy I planned on making a deposit and then a monthly direct debit into it. Is this the best method or is there no difference in how I pay into it after i have deposited my money?

bowlhead99

LWoodhouse wrote: »

For the LifeStrategy I planned on making a deposit and then a monthly direct debit into it. Is this the best method or is there no difference in how I pay into it after i have deposited my money?

That sounds fine.

Whenever you put the money in and buy shares in the fund, you will be buying shares at the market price at that time. Generally you would hope that the shares price rises over time, so if you have a lump sum that's already available to invest, you could stick that in now, rather than waiting for some future date when the price might be higher.

Whereas for the rest of the money what will just become available to you over time out of your spare salary, you can't really do anything other than invest it when you have it. A regular monthly direct debit can be handy for that, because it gives you the automatic discipline of always investing month in month out, rather than deciding you'll skip a month because you want to buy some new gadgets or have a large one down the pub. And removes temptation from you thinking maybe you'll try to make manual one off purchases or withdrawals whenever you 'have a good feeling' about what the stock market is going to do next.

The market doesn't always rise of course, sometimes it falls, and it can fall quite far. If you are putting the same amount of cash in each and every month it helps take your mind off it, and if the price goes down temporarily you'll get more shares for your money with that month's purchase.

So a lump sum followed by direct debits is quite normal. But there's no 'best' way to do it. They don't let you have a better price just because you have more money to invest at a particular point in time. Vanguard just charge a fixed percentage of your average asset balance each month/year, so it doesn't matter if you make 1 purchase or 13 purchases each year to invest the money. Your fee is just based on an average of what's invested at a point in time.

LWoodhouse

bowlhead99 wrote: »

The market doesn't always rise of course, sometimes it falls, and it can fall quite far. If you are putting the same amount of cash in each and every month it helps take your mind off it, and if the price goes down temporarily you'll get more shares for your money with that month's purchase.

So really it would be a good idea to keep an eye each month on when it is low and add a little extra in as such?