Alex and Sam recently got in touch: they’ve been prudent with their savings, making the most of the generous interest rates on offer with their bank.
Their fixed term is coming to an end – and so is the 5.2% interest rate they were previously benefitting from. Their local branch has unfortunately closed, which prompted them to reach out to us.
They are both young, working hard and contributing into their workplace pension schemes. They want to invest, although don’t want to ‘lock’ their money away.
So, we got to work seeing what arrangements could fit the bill…
Alex has just turned 30 and Sam is 31. Neither of them have ever invested in an Individual Savings Account (ISA) before.
After getting to know them both a little better, we put some of their hard-earned savings to work – but crucially, we made sure to leave some funds available to them to cover any unexpected expenditures that could arise.
In the end, we established a new Stocks & Shares ISA for each of them: £20,000 for Alex and £9,000 for Sam.
Alex told us that he ‘likes taking a punt’ and although (understandably!) doesn’t want to ‘lose it all’, he’s willing to take more risk.
However, Sam is a little more cautious with her money, seeing herself as ‘middle of the road’ when it comes to investment risk.
After some consideration, we recommended that Alex invests in our Growth Portfolio; we agreed this would place him at a level of risk that he can both tolerate and afford.
Sam, meanwhile, has invested into our Balanced Portfolio. This is likely to be less volatile and – with their remaining cash savings – provides a great balance. Importantly, it also keeps everything tax efficient and accessible for them.
Going forward, Sam and Alex will be able to compare performance – again, flexibility is key – and funds can be switched and changed at anytime at no extra cost.
We’ll of course continue to keep track of everything, ensuring that their money is always invested in the right place and working hard for them.
Flexible ISAs: quick facts
Flexible ISAs are a popular method of saving money, allowing holders to deposit up to £20,000 per year, completely tax free.
The two most frequently used variants are Cash ISAs (containing your funds only) and Stocks and Shares ISAs (where your money is invested on the stock market).
The key benefit of a flexible ISA is that you’re able to access (and if you’d like, later replace) your funds whenever you need it without paying a penalty, so they’re not locked away out of reach once invested.
For example, you could have £100,000 invested in your ISA over previous tax years – having made five £20,000 deposits over five years – and withdraw the lot in one go.
And crucially, you’d then be entitled to replace the entire sum (all £100,000) with an additional £20,000 on top within the same tax year if so desired – giving you unrivalled control over your investments with zero tax headaches.
To learn more about saving the smart way with a tax-free Flexible Stocks & Shares ISA, download our new guide below:
Note:
*The price and value of any investments and any income from them can fluctuate and may fall, so you may get back less than the amount you invested. Rules for Lifetime ISAs may differ.
This information is for education purposes only – it does not constitute financial advice and should not be acted upon without taking professional advice.
If you feel investing your funds in a Stocks & Shares ISA could be right for you, get in touch below for a no-obligation introductory chat with our financial experts.
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