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Saving for a rainy day…

It’s that time of year again, my lovelies.  You know, daffs and tulips popping up everywhere, the sun peeping through, beginning to worry about what your winter legs are going to look like in the cold light of day, thinking about investing sensibly in a new tax year.

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Pardon?   ‘Investing sensibly’?  ‘New tax year’?  Crikey.  That all sounds a bit serious.  Not my sort of thing at all.  Now, what was it we were saying about getting my legs out…?

Thing is, it is important.  And, if you’re anything like me (and please, for your sake, tell me you’re not) you would probably rather do just about anything rather than think about financial planning.

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Lucky for me, I’ve got an inside line to investment manager Susie Bewell from family firm Raymond James in Hitchin.  That said, Susie is about friendly as you could hope for – and the firm even runs month open days where you can rock up with your questions and they’ll chat through them with you (get this) free of charge.  Susie told me that often when investors first come to her it’s because they’ve already got ISAs but aren’t sure if they’re doing ok – and they’ll tell you that for free.  Ok, so maybe my ‘inside line’ isn’t quite as exclusive as I might have wanted you to think…

I’ve asked Susie to share some pearls of wisdom in answer to my oh-so-basic questions about ISAs – as well as the new Junior ISAs.  Pay attention, people.  It’s for your own good – well, mostly for mine — and she’s promised to make it all as painless as possible.

Er, what does ISA even stand for?  And what are they?

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ISA stands for Individual Savings Account. To put it simply, an ISA is a tax- efficient “moneybox.”

This coming year, you can put up to £15,240 into an ISA.  That’s quite a chunk.

Cash ISAs?  Stocks and Shares ISAs?  What’s going on with those?

Cash ISAs are basically a bank savings account, so you just have cash in here.  Stocks and Shares ISAs are accounts into which you can put lots of different types of investments.

Think of Cash ISAs as a way of saving – you put money in, and it sits there earning interest.  You do tend to have to leave it there for at least 2 years in order to get a better rate.

Stocks and Shares ISAs are a way of investing – at whatever risk level suits you.  These could increase your income, but they’re riskier than Cash ISAs – although getting someone to manage them carefully can help limit that risk.  It doesn’t have to be scary!

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So, should I play it safe?  Or go for broke?

Lots of people who haven’t invested before tend to see Cash ISAs as a safer place for their money – but low interest rates can mean that the investment loses ‘real’ value because of inflation.  The most important thing to remember is to get a second opinion: don’t just go with the first piece of advice you get.  Make sure you’re doing something that’s right for you and that you feel comfortable about.

And Junior ISAs, what are they?

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They’re just like grown-up ISAs, only they’re a way to put aside money on behalf of someone under 18.  Doesn’t have to be your child – could be a god child, a nephew or niece, a grandchild, whoever.  And the child doesn’t have access to it until they’re 18.  They’re a great way to save for something like university fees.  This year, the amount you can put in each account is £4,080.

I have Child Trust Fund accounts already for my kids.  What about those?

From this year, CTFs can be transferred to Junior ISAs – which is great news, given the restrictions on a lot of CTFs and the next-to-nothing returns that lots of them have been getting.  Definitely worth considering making the switch.

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So, clearer?  Still not sure my legs are ready, though.

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