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  • FIRST POST
    • Mrc44
    • By Mrc44 11th Jan 20, 1:26 PM
    • 11Posts
    • 0Thanks
    Mrc44
    Compound interest
    • #1
    • 11th Jan 20, 1:26 PM
    Compound interest 11th Jan 20 at 1:26 PM
    Hi everyone ,
    I would appreciate any advice/guidance from you wise people before I arranged to go see a financial advisor regarding my question.
    I wish I had done it sooner and been more switched on regarding finances but better late than never (just entered into my 30’s ). I am trying to read/learn ways to make my money work better for me. Where would people recommend to put a lump sum of between £10-15’000 and then £200mnth payments ongoing. I plan on leaving the money for 10+ years, hence the “compound interest” title. Currently sat in a Marcus account at 1.45% and was hoping it could do slightly better elsewhere?
    Any help or guidance pushing me in the right direction to go read about certain S&S Isas etc would be greatly appreciated.
    Thank you
Page 2
    • Mrc44
    • By Mrc44 13th Jan 20, 10:03 PM
    • 11 Posts
    • 0 Thanks
    Mrc44
    Thank you again for your helpful reply Albermarie ,
    I shall take all of what you have said onboard and it’s clear I need to do a lot more reading/research on the matter and which funds would be best to invest in.

    Can you just confirm I have this right : a s&s isa and SIPP are both essentially a tax free “wrapper” where you can invest in the same funds just with the SIPP you get the tax relief and your money is locked away until you reach 58?

    If I have it right (I’ll do more reading to be sure) my plan would be to open both a s&s isa and a SIPP and make a lump sum deposit in both but with the s&s isa I would just leave the £10’000 (I don’t mind the high risk element of trying to make my money grow best it can over a 10yr period with this) and then would make weekly/monthly (is weekly better?) contributions to my SIPP until retirement. Regarding the s&s isa I just like the idea of being able to touch said money in My early forty’s if ever a need arose as opposed to having to wait till I reached 58. I do and will have money available elsewhere but this is all new to me and once I’ve learnt and dipped my toe in the water of investing and build more confidence I will up my investments accordingly. I just wish I had learnt all about making my money work harder for me and invested in my teens/early 20s rather than 30!!!
    • AlanP
    • By AlanP 14th Jan 20, 9:00 AM
    • 1,838 Posts
    • 1,520 Thanks
    AlanP

    Can you just confirm I have this right : a s&s isa and SIPP are both essentially a tax free “wrapper” where you can invest in the same funds just with the SIPP you get the tax relief and your money is locked away until you reach 58?
    Originally posted by Mrc44
    Yes, that's it.

    Each has their own rules and limits but they are the fundamental differences - you get tax relief but no access until 55(58) with a SIPP, when 25% can be taken tax free and the remainder is treated as taxable income.
    • Flobberchops
    • By Flobberchops 14th Jan 20, 9:45 AM
    • 1,246 Posts
    • 1,159 Thanks
    Flobberchops
    my plan would be to open both a s&s isa and a SIPP and make a lump sum deposit in both but with the s&s isa I would just leave the £10’000
    Originally posted by Mrc44
    Sounds fine. If you truly want a "fire and forget" S&S solution then perhaps just buy a big chunk of a managed fund like the very popular VLS80.

    and then would make weekly/monthly (is weekly better?) contributions to my SIPP until retirement.
    Originally posted by Mrc44
    Check with your provider but it's more usual to be offered a cheap/free regular investment plan on a monthly basis.

    Regarding the s&s isa I just like the idea of being able to touch said money in My early forty’s if ever a need arose
    Originally posted by Mrc44
    You can. Money in a S&S ISA isn't by default "locked away" or anything like that, it's just that if you have a pressing need to liquidise funds then you'll find yourself at the whim of the market. What if you need to sell up in the middle of a financial crash and your £10k is currently only worth £5k? Ideally you would be buying MORE cheap units of stock at that time, not selling yours for a discount.

    I just wish I had learnt all about making my money work harder for me and invested in my teens/early 20s rather than 30!!!
    Originally posted by Mrc44
    Better today than tomorrow.
    I work for a UK bank, but any comments made on this forum are solely my personal opinion. Caveat Emptor!
    • Albermarle
    • By Albermarle 14th Jan 20, 4:53 PM
    • 2,193 Posts
    • 1,440 Thanks
    Albermarle
    Sounds fine. If you truly want a "fire and forget" S&S solution then perhaps just buy a big chunk of a managed fund like the very popular VLS80.
    Maybe to help with your learning curve , you could take this advice for the SIPP or the ISA but not in both .
    If you have a different investment in the other one, then you can see how they perform differently in different market conditions . But in any case stick to funds with a low OCF ( annual charge ) of around 0.25% .
    The ISA and SIPP platforms often try and direct you to their own expensive fund 'solutions' but don't be seduced by the marketing hype .
    • Mrc44
    • By Mrc44 14th Jan 20, 6:52 PM
    • 11 Posts
    • 0 Thanks
    Mrc44
    Thankyou for your reply flobberchops
    [QUOTE=Flobberchops;76719683]Sounds fine. If you truly want a "fire and forget" S&S solution then perhaps just buy a big chunk of a managed fund like the very popular VLS80.

    It’s not really about me “wanting” a fire and forget s&s solution or me being “lazy” it’s more me being a complete novice regarding investing So feel something like that would be better suited for me right now, I shall definitely be taking your advice and reading into the VLS80 option.

    Check with your provider but it's more usual to be offered a cheap/free regular investment plan on a monthly basis.

    Thank you and that suits me fine, I just wasn’t sure with getting money in there more frequently would be better, although at such small amounts I assume it wouldn’t make any difference at all anyhow.

    You can. Money in a S&S ISA isn't by default "locked away" or anything like that, it's just that if you have a pressing need to liquidise funds then you'll find yourself at the whim of the market. What if you need to sell up in the middle of a financial crash and your £10k is currently only worth £5k? Ideally you would be buying MORE cheap units of stock at that time, not selling yours for a discount.

    I am ok with taking that risk And “forgetting” about that money as such to let it just grow and ride out any dips. the figure I plan to invest into the s&s isa I am comfortable with if it all goes badly.
    • Mrc44
    • By Mrc44 14th Jan 20, 7:01 PM
    • 11 Posts
    • 0 Thanks
    Mrc44
    Once again thank you for your helpful reply Albermarie I appreciate all the help and advice I can get.
    My plan is to invest £10’000 into the s&s isa and then just leave alone for 10+ years and concentrate more on investing into a SIPP with a lump sum and then regular monthly payments as this gives me that tax relief + helps me on my self assessment returns each year.
    Would you recommend the VLS80 as a good investment for the s&s isa? Average returns?
    And could you kindly advise me of a few other investment funds You think would suit my SIPP goals that I could go away and have a read on.

    Thank you
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