Confused - ISAs - One of the Banks talking nonsense it seems :/

jr941

Interesting. Your advice seems to be in consensus with an Audiobook I am listening to these days. 

Can you please give an example of a global ETF?

Does Fundsmith fall in this category?

''The Company will invest in equities on a global basis. The Company’s approach is to be a long-term investor in its chosen stocks. It will not adopt short-term trading strategies. The Company has stringent investment criteria which Fundsmith LLP and Fundsmith Investment Services Limited as investment manager adheres to in selecting securities for the Company’s investment portfolio. These criteria aim to ensure that the Company invests in:

• high quality businesses that can sustain a high return on operating capital employed;
• businesses whose advantages are difficult to replicate;
• businesses which do not require significant leverage to generate returns;
• businesses with a high degree of certainty of growth from reinvestment of their cash flows at high rates of return;
• businesses that are resilient to change, particularly technological innovation;
• businesses whose valuation is considered by the Company to be attractive.

The Company will not invest in derivatives and will not hedge any currency exposure arising from within the operations of an investee business nor from the holding of an investment denominated in a currency other than sterling.''

https://www.fundsmith.co.uk/factsheet/

 https://youtu.be/ZV88BY1kwvo?feature=shared

masonic

jr941 said:

Interesting. Your advice seems to be in consensus with an Audiobook I am listening to these days. 

Can you please give an example of a global ETF?

Does Fundsmith fall in this category?

Fundsmith is an actively managed fund where you would be paying a fund manager to try to deliver superior returns to the market, whereas an ETF just holds the whole market and captures its returns in a low cost fashion. The lowest cost global ETFs are listed in this Monevator article, which also links within it some discussion of active vs passive investing: https://monevator.com/low-cost-index-trackers/

eskbanker

jr941 said:

Can you please give an example of a global ETF?

Does Fundsmith fall in this category?

No, Fundsmith isn't what would normally be meant by a global ETF, even though it is an ETF it's an OEIC, albeit technically global!

https://www.justetf.com/uk/how-to/invest-worldwide.html lists a range of what would typically be considered, i.e. passive funds tracking global equity indices via massively diversified holdings representing all markets and sectors, whereas Fundsmith is an actively managed product with only 27 holdings, as opposed to 3,633 with one of the Vanguard ETFs.

Edit: cross-posted with @masonic, albeit broadly similar sentiments!

jr941

Hi God's wonderful helpers,

So it is the new tax year yay

To my understanding, I can simply open a NEW ISA and deposit a max of 20 k in that account.

I have opened fixed deposit ISA account of TWO years. 

Does this mean I get to transfer 20 k this year and another 20 k next year?

Or do I need to leave this account alone for 2 years after transferring the max amount this month

AND open a completely new ISA and play the same game from scratch next year?

Please clarify. 

Many thanks. 

P.S. I am thinking to transfer 19 k and try my luck with the remaining 1000 in stocks and shares or global ETF or something. Is this a reasonable approach?

eskbanker

If you've opened a new two-year fixed term account then your ability to pay in a second £20K in 2025/26 will depend on its terms - most fixed term accounts don't allow funding beyond a short initial window, but a few do.  If you're unable to add to it in the next tax year, then you can open another ISA for next year's allowance.

You make a number of references to 'transfer', which, in the context of ISAs, usually means moving money from one ISA to another, rather than the more generic use which would include moving money to/from a non-ISA account such as a current or savings one, so worth being clear on terminology.

I can't comment on whether it's sensible to invest a small amount in a S&S ISA, you'd need to establish what the money is earmarked for and when, as well as your attitude to risk, etc - I haven't read back through the rest of the lengthy thread, so if that's already been covered then perhaps worth reiterating why you'd dabble in investing like that?

slinger2

You can only deposit £20k each tax year (best not to use the word "transfer" as it has a specific meaning for ISAs). So you can now put £20k into the 2-year fixed rate cash ISA. Almost certainly you won't be able to add to that ISA next year. However you can open a completely new one, another 2-year or perhaps a 1-year so it matures at the same time as the other. Same provider or a different one.

Beddie

"P.S. I am thinking to transfer 19 k and try my luck with the remaining 1000 in stocks and shares or global ETF or something. Is this a reasonable approach?"

If you want to do it for a bit of fun, then yes, go for it. Won't make much difference to your bigger financial picture, but if it's money you can leave to grow then I don't see why not. You can always add to it next tax year too.

Trading212 is good for a cheap way to buy and hold ETFs, but there are many others.

Kim_13

Late to this thread, unfortunately - but wouldn’t transferring the £1,800 of the (then) current year funds from the H2B to a S&S ISA have rectified the breach, assuming of course that NatWest did cancel rather than close the fixed product? OP - don’t do this now, it’s too late to make a difference, as 23/24 has ended as you say. If you wish to open a S&S ISA, do so with new money from this year’s allowance. If you just wanted to put a small amount in to try S&S, then Vanguard would accept £500 with no requirement for an ongoing Direct Debit - but you can only invest in Vanguard funds through them. Hargreaves Lansdown are minimum £100 with no direct debit and a wider range of funds, but I believe fees are higher.

If you want a fixed rate Cash ISA that you will still be able to add to in 25/26, then you should go with Shawbrook, Kent Reliance or apparently, Lloyds. Though as a Halifax customer (their accounts often mirror each other, as they are in the same group) I looked into theirs and future year contributions wouldn’t be accepted. One of these would be good if you think that Fixed ISA rates may be lower next tax year, as you’d otherwise be limited to the rates on offer on a new product at that time.

As you’re over 40, it’s impossible for you to contribute to an invalid combination of ISA’s in this tax year. I downloaded the SavingsGoal app (others are available I’m sure) and set a target with £20,000 for ISAs and add each ISA contribution there, which makes it easier to keep track of how much allowance I have remaining now that multiple ISAs are allowed.
 

jr941

Thanks everyone. 

One more innocent question:

Since I have opted for a TWO year fixed deposit ISA, I am assuming if I am putting 20 k there, I will still be allowed to deposit another 20 k to some OTHER ISA in April next year?

jr941

eskbanker said:

If you've opened a new two-year fixed term account then your ability to pay in a second £20K in 2025/26 will depend on its terms - most fixed term accounts don't allow funding beyond a short initial window, but a few do.  If you're unable to add to it in the next tax year, then you can open another ISA for next year's allowance.

You make a number of references to 'transfer', which, in the context of ISAs, usually means moving money from one ISA to another, rather than the more generic use which would include moving money to/from a non-ISA account such as a current or savings one, so worth being clear on terminology.

I can't comment on whether it's sensible to invest a small amount in a S&S ISA, you'd need to establish what the money is earmarked for and when, as well as your attitude to risk, etc - I haven't read back through the rest of the lengthy thread, so if that's already been covered then perhaps worth reiterating why you'd dabble in investing like that?

''Most fixed term accounts don't allow funding beyond a short initial window, but a few do.  If you're unable to add to it in the next tax year, then you can open another ISA for next year's allowance.''

Oh so there could be additional conditions? I thought a fixed deposit ISA is a fixed deposit ISA. The only condition is the upper limit of 20 k. Wow, finances are so complex.

''I can't comment on whether it's sensible to invest a small amount in a S&S ISA, you'd need to establish what the money is earmarked for and when, as well as your attitude to risk, etc - I haven't read back through the rest of the lengthy thread, so if that's already been covered then perhaps worth reiterating why you'd dabble in investing like that?''

Yes, I don't mind at least trying something new with at least £500.

What's the most pragmatic way to purchase gold and silver in your opinion? I heard when you buy something like that you have to pay pay annual storage and security costs or something and lots of tax as well