New To Stocks & Shares ISAs

WSB

I am 55 and my wife is 50. Both are 40% tax payers working full time, with no debt and a paid off rental property bringing in a monthly income. My pension pot sits at £1million and we are currently working at filling my wife's pension pot which currently doesn't have much in.

We have £100k in cash isas (Yes, probably too much).

To diversify our investments a bit and putting aside more tax free money for the future when retired (5-10 years time), was thinking about investing our ISA allowance each year and possibly transferring our maturing cash isas by putting into stocks and shares isas.

Have read the MSE guide on this and feel that a S&S ISA with low charges and minimal effort from us is the way to go. So possibly a robo or managed fund of some sort.

Any hints/tips on where to start?

Am guessing that low charges are the way to go although not sure what sort of risk to go for?

Any recommendations on products?

Any other useful advice/pitfalls to avoid, greatly received.

Many Thanks

QrizB

For two 40% taxpayers with a combined gross income of more than £100k, having £100k in cash ISAs isn't an unreasonable position to be.

If one or both of you were made redundant, became ill or otherwise was unable to work then a cash buffer of one year's income could be quite useful.

Woodstok2000

Bear in mind any investment in the stock market should be taken with a long term view. If you're looking at surplus funds that you're not likely to need for at least 10 years then its a good option. Shorter timescales increase the risk of losing value due to short term market movements

Vitor

+Any hints/tips on where to start?+

I'd have a look at PensionCraft on YouTube and consider joining Ramin's PensionCraft website

+…when retired (5-10 years time)+

At the bottom end of that timeline, 5 years is a bit tight for very significant exposure to equity markets, even a cheap fund like Vanguard LifeStrategy

+Any other useful advice+

Given where you are with pension pot, income sources etc. I'd suggest seeking paid, independent, fee-only advice focused on retirement modelling.

dunstonh

Have read the MSE guide on this and feel that a S&S ISA with low charges and minimal effort from us is the way to go. So possibly a robo or managed fund of some sort.

Many robo's are not low cost. Indeed, some cost more than full advice.

Am guessing that low charges are the way to go although not sure what sort of risk to go for?

You go with the level of risk:

• you can afford to take (capacity for loss),
• no more than you need to take (some may still take higher risks than they need to, though),
• at a level you can handle (behavioural risk can lead to bad decision making - i.e. selling after a cash if you panic),
• Appropriate for the timescale to when the amount will be drawn.

To diversify our investments a bit and putting aside more tax free money for the future when retired (5-10 years time),

Timescale is to when the money is needed. Not to an event when it may not be needed. i.e. you may retire in 5-10 years but your retirement planning may not be calling on this money for a further 10 years. Or it may be that it is going to be called on in a phased manner. e.g. £x per month instead of lump sum.

So you would adjust the investments to suit that.

InvesterJones

What is your current 1m pension pot invested in?

If it's already in say global equities, adding additional equities in an ISA isn't bringing any more diversity, perhaps the opposite.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81864590#Comment_81864590

As above, you have to look at your investments inside and outside of pensions and see that there is some rationale in the way they are invested. It could make sense if they are invested differently, as the pension is probably more long term, but you should not see things in isolation. Plus also take into account your cash savings, which as already mentioned seem not that high in the context of your Million Pound pension pot, especially as cash interest rates remain above inflation.

Out of interest have you ever considered paying for financial advice?

WSB

https://forums.moneysavingexpert.com/discussion/comment/81864590#Comment_81864590

Yes, global equities but my main reason for the S&S ISAs would be to have an avenue to get money out when retired that isn't subject to income tax..

WSB

https://forums.moneysavingexpert.com/discussion/comment/81864743#Comment_81864743

I have advisors as part of my pension plans who also discuss my other investments but if I'm honest, I prefer to roll my sleeves up and work things out myself. Hence this post.

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/81864866#Comment_81864866

However, depending on your long term plan, it may be better to draw with basic rate tax on the pension and not the ISA.

InvesterJones

https://forums.moneysavingexpert.com/discussion/comment/81864866#Comment_81864866

In that case transferring maturing cash ISAs to S&S ISAs doesn't seem to meet those aims. For new contributions perhaps balance out the volatility/split asset types based on your emergency fund and likely timeframe of drawing from it. Given 1m in equities already I'd increase cash/gilts/commodities for something to draw from in the event equities suffer a crash.