Opening a S&S Isa?

ratnetwork

Hi everyone, it's my first post! I am reading all the tips since weeks!

I am totally new to investing and I am reading through all the different threads about stock and shares, but I am quite doubtful if I am doing the right thing, I explain the reasons.

At today I am saving in an help to buy ISA, I am planning to get an house with my partner in no more than 2 years time, and I got 2 more saving accounts, both are going to slash the interests to less than 1% basically (I have about 2k£ in total).

I don't have any other kind of ISA and I am have been always quite worried about stock and shares because I generally never been very lucky with "gambling" and, because of the H2B, I am not able to save more than 100£ per month to be put at risk (quite often I do a lot of overtime - I did 91 extra hours just in march-, so I can top up this amount easily). Some colleagues at work are using app like Moneybox and Trading212 with quite a good success and I got interested of this kind of investment because prices of shares looks more affordable. But I am quite skeptical about these apps because are free so I was looking mostly to MSE guides, my doubt after reading are:

- Is it investing right for my finances? Or is better keep looking for a better saving account?

- If it's okay for me investing, cause of my small amount of funds, it's better going for DIY platform like II or Iweb or platform like nutmeg? I read some previous threads where people suggesting as well HSBC world funds

I am quite amazed by cruises company shares, they looked quite stable in the past but the value dropped significantly, there's obviously a risk that they are going busted, but is it worth a try?

Sorry for so long post but reading through the old posts I notice that most of users don't explain in full the background so I wanted to be different

Thank you for every suggestion!

eskbanker

Keep reading, especially all the threads that point out how risky it is to consider investing money that you're likely to need within a few years - if you're building up a deposit prior to your first property (the purchase of which also typically entails many other costs) then stick to savings accounts and forget about investing for now.

Alexland

Shares are looking 'more affordable' at the moment as some of the companies are damaged and their future earnings per share are reduced. As you say some will probably even go bust and others will likely suffer shareholder dilution. Sure overall the market will probably recover eventually but that's true of the shares at the previous prices if this event hadn't happened.

In terms of your circumstances if you need this money to buy a property soon then it's best to stick to cash as you would need to invest in a sensible diversified product for at least 5 years to have much certainty of not withdrawing at a loss. If you go with a more concentrated investment over a shorter period of time it's a complete gamble.

In terms of how Trading 212 make their money that's a matter for debate. We believe they bait-and-switch to encourage customers into very profitable CFD trading where the customer is highly likely to loose a high proportion of their money. iWeb is better suited to large account valuations. Moneybox and Nutmeg both charge rather high fees and most of the regulars here would not use either platform for our investments. Often we suggest ISA beginners start with Vanguard Investor however usually the best way to invest in S&S is by making the most use of your pension or lifetime ISA options.

grumiofoundation

Are you eligible for a LISA? This may be a better option for you (depends exactly how much you have in HTB ISAs). Allows higher property price and potentially higher bonus.  https://www.moneysavingexpert.com/savings/lifetime-isas/

As said above stocks and shares are a huge risk if you want to be accessing the money within a short period of time. Within 2 years there is a distinct possibly you will be looking at your investments being worth less than they are now, there is also a distinct possibility they will be worth a lot more. Are you willing to take that risk?

ratnetwork said:

 Some colleagues at work are using app like Moneybox and Trading212 with quite a good success 

Maybe its just me but I would treat this with a HUGE pinch of salt. 

ratnetwork

Thank you all for the suggestions! Fortunately I asked before doing regretful mistakes I started to be sensible about money just recently cause of work instability, hopefully I will have more time to study about investment!

grumiofoundation said:

Are you eligible for a LISA? This may be a better option for you (depends exactly how much you have in HTB ISAs). Allows higher property price and potentially higher bonus.

I was thinking about the LISA, I should be eligible, at the moment I got 3600£ in the H2B at 2.50% rate with nationwide, thanks to a salary pay-rise I should be able to save an extra 4k during this year to add at the 2400 for the H2B: is it better to drip the H2B over the 2 financial years in the LISA? Or shall i leave the money in the H2B thanks to the higher interest waiting the last minute to move it?

I am genuinely thankful with everyone!

grumiofoundation

Probably the most sensible thing would be to open a LISA today with £1. Since the LISA has to be open for 12 months get the ball rolling.  
Then since the LISA contribution limit is 4000 per tax year, not calendar year, you would be able to contribute £3999 next march (2020/2021 tax year), then £4000 in april (2021/2022 tax year) - already a higher bonus than HTB. 

You are able to contribute to both HTB and LISA at the same time so can continue to pay into HTB. This gives you the option to use HTB for purchase if buy before 12 months or you decide not to go with LISA. If you do use LISA to purchase can just withdraw from HTB (penalty free).

The drawback of the LISA is that you have to pay a penalty if withdrawing for reason other than house/retirement whereas HTB can withdraw penalty free - therefore need to be sure that this money will definitely be used for house and you wont have any other reason to access. 

ratnetwork

grumiofoundation said:

Probably the most sensible thing would be to open a LISA today with £1. Since the LISA has to be open for 12 months get the ball rolling.  
Then since the LISA contribution limit is 4000 per tax year, not calendar year, you would be able to contribute £3999 next march (2020/2021 tax year), then £4000 in april (2021/2022 tax year) - already a higher bonus than HTB. 

You are able to contribute to both HTB and LISA at the same time so can continue to pay into HTB. This gives you the option to use HTB for purchase if buy before 12 months or you decide not to go with LISA. If you do use LISA to purchase can just withdraw from HTB (penalty free).

The drawback of the LISA is that you have to pay a penalty if withdrawing for reason other than house/retirement whereas HTB can withdraw penalty free - therefore need to be sure that this money will definitely be used for house and you wont have any other reason to access. 

This sounds a great plan! Thank you for the suggestion!