MSE News: Martin Lewis suggests alternative to cutting cash ISA limit – a 'starter investment ISA'

Yorkie1

saajan_12 said:

5% of £1000 is the grand sum of £50.. its not enough to turn heads on a large scale, but would come at the cost of a lot of admin to administer a new cap and incentive payments. 

If anything, just make the LISA for Stocks & Shares only, not cash - that way its an existing bonus so no incremental cost and the new admin is lite. 

Except that most people are using the LISA for a house purchase and will not want to be at risk of the vagaries of hte stock market just when they need to commit the funds,

kim_ta22

MSE_Helen_K said:

MoneySavingExpert.com founder Martin Lewis has made a suggestion on how to get young people investing WITHOUT cutting the £20,000 tax-free cash ISA limit...

Read the full story:
'Martin Lewis suggests alternative to cutting cash ISA limit – a 'starter investment ISA''

If you haven’t already, join the forum to reply.

I'm not sure pushing young people to a S&S ISA is the solution without education or some form of protections in place that they can only invest in bonds or FTSE100 companies. Even with education and protections in place, investments will always come with risks, right? Cash ISA is the only way for guaranteed returns (albeit slower and barely staying above inflation, if at all).

I'm nearly 40 years old, degree educated and generally sensible in nature. I've only started utilising my S&S ISA in the last year, and last month, I fell for a "pump and dump" scam, where I invested heavily in a stock upon the advice of an "Investment Advisor" seemingly from a reputable company that has been operating for decades, and am now £80k poorer for it. I was watching the stock app several times a day, it was an obsession. The stocks went up to $9 per share, then within minutes, dropped to 56cents per share. Didn't have time to sell, didn't have the education or foresight to set a Sale Order for if the share price tanked or dropped below a certain value. Today my 22,104 shares are worth $0.13 per share. Held in my S&S ISA. 

I'm fortunate that I didn't throw all my ISA into this stock and that I'm able to weather this loss, but it was a huge loss which could've gone towards a home deposit and my mental health and confidence has taken a major hit.

Back to the bigger point - do I want my children, cousins, nieces & nephews to be incentivised to invest in stocks & shares and potentially lose a lot of it, or do I want to encourage them to go for lower risk options like cash savings? I certainly would advocate for financial education and highlight that investing inherently comes with risk.

My misfortune/mistake above might be unique and avoidable, but stock market crashes can and do occur due to wars, sanctions, pandemics, politics, financial institutions making dubious choices etc. 

booneruk

kim_ta22 said:

I fell for a "pump and dump" scam, where I invested heavily in a stock upon the advice of an "Investment Advisor" seemingly from a reputable company that has been operating for decades

Sorry to hear that. Let's not forget many people have lost the entirety of their deposits into what they thought were safe as houses cash/fixed bond scams.

History does suggest those utilising the stock market make the largest long term returns. There should be a level of education, the first lesson if I ruled the world would be don't plough everything into single stocks, especially single meme stocks!

Albermarle

kim_ta22 said:

MSE_Helen_K said:

MoneySavingExpert.com founder Martin Lewis has made a suggestion on how to get young people investing WITHOUT cutting the £20,000 tax-free cash ISA limit...

Read the full story:
'Martin Lewis suggests alternative to cutting cash ISA limit – a 'starter investment ISA''

If you haven’t already, join the forum to reply.

I'm not sure pushing young people to a S&S ISA is the solution without education or some form of protections in place that they can only invest in bonds or FTSE100 companies. Even with education and protections in place, investments will always come with risks, right? Cash ISA is the only way for guaranteed returns (albeit slower and barely staying above inflation, if at all).

I'm nearly 40 years old, degree educated and generally sensible in nature. I've only started utilising my S&S ISA in the last year, and last month, I fell for a "pump and dump" scam, where I invested heavily in a stock upon the advice of an "Investment Advisor" seemingly from a reputable company that has been operating for decades, and am now £80k poorer for it. I was watching the stock app several times a day, it was an obsession. The stocks went up to $9 per share, then within minutes, dropped to 56cents per share. Didn't have time to sell, didn't have the education or foresight to set a Sale Order for if the share price tanked or dropped below a certain value. Today my 22,104 shares are worth $0.13 per share. Held in my S&S ISA. 

I'm fortunate that I didn't throw all my ISA into this stock and that I'm able to weather this loss, but it was a huge loss which could've gone towards a home deposit and my mental health and confidence has taken a major hit.

Back to the bigger point - do I want my children, cousins, nieces & nephews to be incentivised to invest in stocks & shares and potentially lose a lot of it, or do I want to encourage them to go for lower risk options like cash savings? I certainly would advocate for financial education and highlight that investing inherently comes with risk.

My misfortune/mistake above might be unique and avoidable, but stock market crashes can and do occur due to wars, sanctions, pandemics, politics, financial institutions making dubious choices etc. 

On this forum the guidance is usually to never invest in individual shares or even a small portfolio of shares unless you really know what you are doing.
Only investing in bonds or FTSE 100 companies would not be good advice either.
Diversified Global tracker funds or multi asset funds are the go to if you want a simple low cost well diversified long term investment.

 but stock market crashes can and do occur due to wars, sanctions, pandemics, politics, financial institutions making dubious choices etc. 
Stock market crashes are inevitable and will occur regularly. However they recover ( usually quite quickly but not always) and the long term trend is up.

dorsetdweller

The Chancellor has said that she wants people to save in Investment ISA's and have a better understanding of investing. Most young people don't have the money or the knowledge to be confident to do this. If her concern is genuinely about increasing peoples knowledge, rather than raising cash, why not leave the £20k limit for cash ISA’s and create something new. The government could set up a 'Starter Investment ISA' for students at the beginning of year 10. Each student would be given a voucher, for say £100, that is used in a Maths lesson to open an Investment ISA. Students would then spend the next 2 school years,  having guidance on how their investment is performing. It could only be used to invest in British companies and only withdrawn to fund a pension or house purchase, similar to a LISA. If children were actively taught how to manage their own investment and use an app to see how investments work and are affected by world affairs we would hopefully have a new generation of investors to give British industry the boost the chancellor wants. This scheme would cost the government less than half the cost of the Child Trust Funds. Hopefully financial institutions would support this and, if given some incentives, could be funded/part funded by the financial sector.

ChadValley

The £1000 should be treated in the same way premium bonds are, you don't lose your capital but you might not makes any money.

The Premium bond limit should be raised to 1 million, and money held in bonds for 7 years prior to death should be exempt from inheritance tax.  

eskbanker

ChadValley said:

The £1000 should be treated in the same way premium bonds are, you don't lose your capital but you might not makes any money.

Perhaps I'm misunderstanding what you mean by 'the £1000', but if you're talking about the starter investment ISA idea being floated back when this thread was originally active, then a fundamental element of encouraging people to invest is to emphasise how this differs from using capital-protected savings products!

Who do you propose would underwrite investment losses?