# ISAs and LISAs: Are You Missing Out?

An episode of [A Little Bit Richer](https://invisiblenetwork.ai/podcast/1706157445), 14 Mar 2024, 18 min.

Audio: https://pscrb.fm/rss/p/traffic.omny.fm/d/clips/2e9a850c-e6b9-48c2-afec-a8f8010f70f4/61b6e292-1c73-49e1-81ce-b075010b275f/3f5aec68-d961-4ed3-9e15-b13200f9b97c/audio.mp3?utm_source=Podcast&in_playlist=aee4b1cb-b4f6-4283-99aa-b075010cd6b0

April will ring in the beginning of a new tax year so you may have noticed that there’s a lot of talk about ISAs. But what are they and might they be useful for you? Here to help us understand a little bit more is Legal & General’s ISA Product Manager, Fahad Ahmed. Fahad and our host Kia Commodore chat through the different types of ISAs for saving and investing your money, how the Lifetime ISA can help you get on the property ladder, what to consider when choosing a provider and the changes in this new tax year. You can play the podcast and find other useful content on Legal & General’s website: https://www.legalandgeneral.com/podcasts/a-little-bit-richer You can find out a little bit more about ISAs on Legal & General’s website: https://www.legalandgeneral.com/investments/stocks-and-shares-isa/guides/investing-for-beginners/ Kia and her guests share their own personal thoughts and opinions in this podcast. These might be different from Legal & General’s take on things. They give financial guidance for a UK audience that’s relevant at the time of recording. It’s general best practice, not the kind of personalised advice you’d get from a financial adviser. See omnystudio.com/listener for privacy information.

## Transcript

[0:01] Kia: Welcome to another episode of A Little Bit Richer. This
[0:04] Kia: is Kia, and today we're talking ISAs. We touched on
[0:07] Kia: them in a few earlier episodes, but we're diving a
[0:09] Kia: little bit deeper. You may notice at this time of
[0:12] Kia: the year there's always a bit of a buzz around
[0:14] Kia: ISAs because we're approaching the end of the tax year,
[0:17] Kia: the last chance to use your annual allowance. And in the
[0:20] Kia: recent budget, a new ISA was announced, so we thought
[0:23] Kia: it would be great to explain the basics including when an ISA is
[0:25] Kia: a good idea and when it probably isn't. A Little
[0:29] Kia: Bit Richer is brought to you by Legal & General. So
[0:32] Kia: who better to talk about this topic than the ISA
[0:34] Kia: product manager at Legal & General, Fahad Ahmed. Welcome, Fahad.
[0:38] Fahad Ahmed: Hi, Kia. Thanks for having me.
[0:40] Kia: Thank you for coming. So, could you talk us through
[0:43] Kia: what ISAs are and the different types and why could an ISA be useful
[0:47] Kia: to some of our listeners?
[0:48] Fahad Ahmed: Absolutely. So, ISAs, it stands for an individual savings account and it's a
[0:52] Fahad Ahmed: tax efficient way for you to either save or invest
[0:54] Fahad Ahmed: your money. What that means is you don't have to
[0:57] Fahad Ahmed: pay tax on any returns that you get, which is
[0:59] Fahad Ahmed: obviously it's a great thing because it means more money
[1:01] Fahad Ahmed: in your pocket. There's a few different types of ISAs. So,
[1:04] Fahad Ahmed: we've got stocks and shares ISAs, cash ISAs, lifetime ISAs,
[1:09] Fahad Ahmed: and there's even junior ISAs, which is for under 18s. We're
[1:12] Fahad Ahmed: going to talk more about what each ISA is and when
[1:14] Fahad Ahmed: they might be appropriate. But a key thing to bear in mind is that
[1:18] Fahad Ahmed: you don't have to pick just one. You can mix
[1:19] Fahad Ahmed: and match. Just as long as you don't go over
[1:22] Fahad Ahmed: your annual allowance, which is 20K. So, just as an
[1:26] Fahad Ahmed: example, you could put 1, 000 pounds into a stocks and
[1:29] Fahad Ahmed: shares ISA. You could put 500 pound into a cash
[1:31] Fahad Ahmed: ISA, and if you want, you could put 4, 000
[1:34] Fahad Ahmed: pounds into a lifetime ISA. At the moment, you're only
[1:37] Fahad Ahmed: able to save or invest into one of each type
[1:39] Fahad Ahmed: of ISA in a tax year. However, this is going to
[1:42] Fahad Ahmed: be changing next month. In the new tax year, you'll
[1:45] Fahad Ahmed: be able to save or invest into multiple ISAs of
[1:47] Fahad Ahmed: the same type.
[1:48] Kia: So, you've explained what they are, which is great, but
[1:51] Kia: why could an ISA be useful to some of our listeners?
[1:54] Fahad Ahmed: It's a way of investing or saving where you don't
[1:56] Fahad Ahmed: have to pay tax. So, that's a wonderful advantage. They're
[1:59] Fahad Ahmed: a good way, especially stocks and shares ISAs, you can
[2:02] Fahad Ahmed: see really good long- term growth.
[2:03] Kia: Amazing. So, let's just say you might have some money
[2:08] Kia: and you want to save it, right? But you might
[2:12] Kia: need it in the next few years. So, opening a
[2:14] Kia: cash ISA might be the option that you go for.
[2:17] Kia: Can you give us a bit more detail on these accounts?
[2:21] Fahad Ahmed: Yeah, for sure. So, a cash ISA is a type
[2:23] Fahad Ahmed: of savings account where you don't have to pay tax
[2:26] Fahad Ahmed: on the interest that you earn. It's good for shorter
[2:28] Fahad Ahmed: term savings. When we're saying shorter term, we're talking about
[2:31] Fahad Ahmed: under five years. There's a few different types of cash
[2:34] Fahad Ahmed: ISAs. So, you've got instant access cash ISA, so that
[2:37] Fahad Ahmed: you can access your money as and when you like.
[2:40] Fahad Ahmed: You've got fixed rate cash ISAs, so this is where
[2:43] Fahad Ahmed: you put your money away for a fixed period of
[2:45] Fahad Ahmed: time, it is usually between one and five years. Then you've
[2:48] Fahad Ahmed: got something called notice cash ISAs. When you want to
[2:51] Fahad Ahmed: take money out of this, you've got to give a
[2:53] Fahad Ahmed: certain period of notice, usually 30 days, 60 days, or
[2:56] Fahad Ahmed: 90 days. And then finally, you have regular cash ISA
[3:00] Fahad Ahmed: or regular saver cash ISAs. So, with these you have
[3:02] Fahad Ahmed: to commit to putting in a certain amount every month.
[3:05] Fahad Ahmed: The thing to bear in mind with these is that there's
[3:06] Fahad Ahmed: usually a trade- off between flexibility and the interest rate
[3:10] Fahad Ahmed: that you get. So, for example, with the instant access
[3:12] Fahad Ahmed: cash ISA, since that one's the most flexible, it's generally
[3:16] Fahad Ahmed: going to offer the lowest interest rate. Another thing to
[3:19] Fahad Ahmed: bear in mind is that the interest rate that you
[3:20] Fahad Ahmed: get, it can vary quite widely depending on which provider
[3:24] Fahad Ahmed: you go with. If you've decided you want to go
[3:26] Fahad Ahmed: for a cash ISA, you want to do your research
[3:28] Fahad Ahmed: and compare different providers and make sure you're getting the
[3:31] Fahad Ahmed: best rate out there. The best way to do this is
[3:33] Fahad Ahmed: just to jump onto Google, search best cash ISA, and
[3:36] Fahad Ahmed: then what you'll get is comparison websites. If you go
[3:39] Fahad Ahmed: onto these websites, then in a very simple way, they'll
[3:41] Fahad Ahmed: lay out tables and things like this and they'll make it very
[3:44] Fahad Ahmed: easy for you to identify which ISA has the best
[3:47] Fahad Ahmed: rate for you.
[3:47] Kia: I think that's really good, like you said, comparing the
[3:49] Kia: different rates and understanding the trade- off between the different
[3:53] Kia: types is what you need to factor in depending on
[3:55] Kia: what your goal is for your money. A question that
[3:57] Kia: I know a lot of people will have is how
[3:59] Kia: safe is their money? I think that's all that people
[4:01] Kia: think. You're saving big amounts, but is my money safe?
[4:04] Kia: So, is your money safe if you're putting it into
[4:06] Kia: something like a cash ISA?
[4:07] Fahad Ahmed: So, what you need to make sure when you do
[4:09] Fahad Ahmed: pick a provider, you need to make sure that it's
[4:11] Fahad Ahmed: UK authorized and somewhere on the provider's website there should
[4:15] Fahad Ahmed: be mention of something called the FSCS, and this stands
[4:18] Fahad Ahmed: for Financial Services Compensation Scheme. This will make sure that
[4:21] Fahad Ahmed: your money is safe and secure up to 85,000. Now,
[4:24] Fahad Ahmed: obviously, we said the cash ISA limit is 20, 000 a
[4:26] Fahad Ahmed: year, but just in case you're somebody who's really fortunate
[4:29] Fahad Ahmed: and has that much money, can accumulate that over the
[4:31] Fahad Ahmed: years, up to 85, 000 pounds, your money will be safe
[4:34] Fahad Ahmed: and secure.
[4:35] Kia: So, if someone were to open up a standard savings
[4:37] Kia: account, so i. e., not an ISA account, would they
[4:40] Kia: still need to pay tax on any interest that they earn?
[4:43] Fahad Ahmed: Not necessarily. So, we do also have something called a
[4:46] Fahad Ahmed: personal savings allowance. Now, if you are a basic rate
[4:49] Fahad Ahmed: taxpayer, that means you're currently paying 20% in income tax,
[4:53] Fahad Ahmed: you have a personal savings allowance of 1, 000 pounds. So,
[4:56] Fahad Ahmed: what this means is that you can earn up to 1,
[4:58] Fahad Ahmed: 000 pounds in interest before you have to worry about
[5:01] Fahad Ahmed: paying any tax on that. If you are a higher
[5:04] Fahad Ahmed: rate taxpayer, so you're paying 40% in income tax, your
[5:07] Fahad Ahmed: personal savings allowance is 500 pounds. And that means you
[5:10] Fahad Ahmed: can earn up to 500 pounds in interest without having
[5:13] Fahad Ahmed: to pay tax on it. If you earn, let's say for example,
[5:15] Fahad Ahmed: 550 pounds, the 500 pounds, tax- free, and that additional
[5:19] Fahad Ahmed: 50 pounds you'll have to pay tax on that. So,
[5:22] Fahad Ahmed: if you are just saving, let's say, a couple of hundred pounds,
[5:25] Fahad Ahmed: or even in the low thousands, it might be the
[5:27] Fahad Ahmed: case that a standard savings account is actually better than
[5:30] Fahad Ahmed: a cash ISA, because you can find sometimes they have
[5:32] Fahad Ahmed: better rates. What I would say, though, is if you
[5:35] Fahad Ahmed: do go for a standard savings account, make sure that
[5:37] Fahad Ahmed: you're keeping an eye on your balance, especially if you're
[5:40] Fahad Ahmed: putting money in on a regular basis every month, because
[5:43] Fahad Ahmed: situations can change quite quick. You might think, oh, you're
[5:46] Fahad Ahmed: miles away from actually exceeding your personal savings allowance, but
[5:49] Fahad Ahmed: let's say you get a salary increase that pushes you
[5:51] Fahad Ahmed: to be a higher rate taxpayer, then your personal savings
[5:54] Fahad Ahmed: allowance is going to half just like that. So, just
[5:56] Fahad Ahmed: keep an eye on it and be prepared that at some
[5:58] Fahad Ahmed: point over the coming months or years, just be ready
[6:01] Fahad Ahmed: that it might be a good option to transfer your money to a cash ISA.
[6:04] Kia: That's really good to highlight. I think a lot of
[6:06] Kia: people don't realize that they have a personal savings allowance.
[6:07] Fahad Ahmed: Yeah. Yeah. Yeah.
[6:08] Kia: So, like you said, it's just keeping in mind how
[6:11] Kia: much you earn and how much tax are you paying and what does
[6:13] Kia: that mean for your savings? And maybe do you need
[6:15] Kia: to switch to an ISA that's going to be better suited for you?
[6:17] Kia: But as we always say, personal finance is personal, so
[6:20] Kia: make sure you're making decisions that's best for your personal
[6:23] Kia: situation. Let's move on to investing. So, if someone is
[6:29] Kia: considering investing in the stock market, could a stocks and
[6:33] Kia: shares ISA be worth taking a look at?
[6:35] Fahad Ahmed: Yeah. So, I'm going to be a little bit biased
[6:37] Fahad Ahmed: because of my job, but I absolutely love stocks and
[6:39] Fahad Ahmed: shares ISAs. So, first of all, you've got that tax-
[6:42] Fahad Ahmed: free element that we spoke about. So, any money that
[6:44] Fahad Ahmed: you make through gains in the stock market, you don't
[6:46] Fahad Ahmed: have to worry about paying tax on it. The good
[6:48] Fahad Ahmed: thing about stocks and shares ISAs is that if you
[6:51] Fahad Ahmed: invest for the long term and we're talking about over
[6:54] Fahad Ahmed: five years, you can generally expect to see better returns
[6:57] Fahad Ahmed: than what you would see if you just left your money
[7:00] Fahad Ahmed: in, let's say, your current account or even a cash
[7:02] Fahad Ahmed: ISA. So, that's another thing that's really good. I do
[7:05] Fahad Ahmed: need to stress though that with stocks and shares ISAs, it's an investment
[7:08] Fahad Ahmed: and when we're talking about investing, it's all about the
[7:10] Fahad Ahmed: long term. It's all about that minimum five years. That's
[7:13] Fahad Ahmed: the key number to remember. But the longer you leave
[7:15] Fahad Ahmed: your money invested, the more chance there is that you'll
[7:18] Fahad Ahmed: actually see positive returns. As I said, though, it's an
[7:21] Fahad Ahmed: investment, so your money, it will go up and down
[7:24] Fahad Ahmed: and you could actually get back less than you put in.
[7:26] Kia: Investing, it's always that thing, people are thinking about the
[7:29] Kia: future, thinking about how they can grow their money and
[7:31] Kia: it's a good thing to have a look at. If you do want to start investing, it's a good
[7:34] Kia: account to definitely have a look at.
[7:35] Fahad Ahmed: The thing is, it's really good for beginners and that's the thing
[7:39] Fahad Ahmed: that's so good about it.
[7:39] Kia: I agree.
[7:40] Fahad Ahmed: So, even if I think back to myself before I
[7:42] Fahad Ahmed: had opened a stocks and shares ISA, let's go back
[7:44] Fahad Ahmed: a few years, so even before I was working in
[7:46] Fahad Ahmed: financial services, anything like that, when I had just graduated, I
[7:50] Fahad Ahmed: was actually working in retail at the time. And it was
[7:52] Fahad Ahmed: the first time I had a little bit of money
[7:54] Fahad Ahmed: coming in each month that I didn't have an immediate
[7:55] Fahad Ahmed: need for it. I could actually put it aside for
[7:58] Fahad Ahmed: the long term. And obviously, we've heard of this term
[8:00] Fahad Ahmed: investing and it's something I've heard of and I'm thinking, " Maybe
[8:04] Fahad Ahmed: I should invest some of this money." But the thing
[8:06] Fahad Ahmed: is, at the time I thought it was something that was so far away from me.
[8:08] Kia: Right? It seems like a Wolf of Wall Street, that
[8:10] Kia: kind of stuff, that's so far away from reality.
[8:12] Fahad Ahmed: Exactly, Kia. I thought it was for people that, like you say,
[8:15] Fahad Ahmed: Wolf of Wall Street, they look a bit different to
[8:17] Fahad Ahmed: us. They've definitely got more money than us. So, to
[8:20] Fahad Ahmed: be honest, I put it aside for a while, I
[8:22] Fahad Ahmed: didn't think it was accessible for me and I found
[8:24] Fahad Ahmed: it a little bit daunting. But when I came across
[8:26] Fahad Ahmed: stocks and shares ISAs and in particular the options they
[8:28] Fahad Ahmed: have for how you can invest in it, that's when
[8:31] Fahad Ahmed: I realized, oh, actually, this could be for me. So,
[8:33] Fahad Ahmed: if it's okay, I could just touch on those different
[8:36] Fahad Ahmed: options for how you can invest in a stocks and shares
[8:38] Fahad Ahmed: ISA. So, there's two main options. The first one is
[8:41] Fahad Ahmed: what we'd call a DIY approach. So, this is where you pick
[8:44] Fahad Ahmed: your own investments. You can pick things like corporate bonds,
[8:48] Fahad Ahmed: government bonds, unit trusts. You can even go as far
[8:51] Fahad Ahmed: as to pick your own individual company shares. And for
[8:55] Fahad Ahmed: me, back then, that's what seemed a little bit daunting.
[8:58] Fahad Ahmed: To be honest, even today, that would make me a little bit nervous.
[9:00] Kia: It's a lot. It's very hands-on, isn't it?
[9:02] Fahad Ahmed: Exactly. Exactly. So, for me, it's not really the one.
[9:05] Fahad Ahmed: What I like is the second option, which we call
[9:07] Fahad Ahmed: managed portfolios. Now, with a managed portfolio, you can take
[9:11] Fahad Ahmed: a step back, you invest your money and you leave
[9:14] Fahad Ahmed: it to the professionals, you leave it to the investment experts
[9:16] Fahad Ahmed: to invest your money on your behalf. The only thing that
[9:19] Fahad Ahmed: you've got to do is pick what level of risk
[9:21] Fahad Ahmed: you want to take. So, providers that have this option,
[9:23] Fahad Ahmed: they'll generally have a couple of managed portfolios, maybe three,
[9:26] Fahad Ahmed: maybe five, that all have a different risk rating. So, you've
[9:29] Fahad Ahmed: just got to decide whether you want to go for
[9:31] Fahad Ahmed: the lower risk one, a medium risk one, a higher
[9:33] Fahad Ahmed: risk one. Sometimes you'll see different terminology. They might use
[9:36] Fahad Ahmed: words like cautious, adventurous, things like this, but it's the same
[9:41] Fahad Ahmed: concept. And it's great for beginners because you don't have
[9:43] Fahad Ahmed: to have a huge amount of knowledge. You can just
[9:47] Fahad Ahmed: take a step back, let the professionals do their thing.
[9:49] Kia: I'm glad you touched on that because I think it
[9:50] Kia: is good to highlight that you don't have to be
[9:52] Kia: an investing whiz to start, especially with stocks and shares
[9:55] Kia: ISA, there's something for everyone. I think that's a good
[9:58] Kia: thing when it comes to ISAs. So, we've mentioned how
[10:01] Kia: good these different accounts are and how they work, but
[10:04] Kia: what should someone be looking for when it comes to
[10:05] Kia: picking the right provider for them?
[10:08] Fahad Ahmed: So, there's a few different things. I've already mentioned options
[10:11] Fahad Ahmed: for how to invest. Those two options that I said,
[10:13] Fahad Ahmed: not all providers will have both of them. Some providers
[10:16] Fahad Ahmed: have both. Some will only have one. So, it's decide
[10:18] Fahad Ahmed: beforehand which of those two options is more appealing for
[10:20] Fahad Ahmed: you and then find a company that provides that option.
[10:24] Fahad Ahmed: Another thing would be, so I spoke about that misconception
[10:27] Fahad Ahmed: about, I thought you needed more money. So, that's another thing
[10:29] Fahad Ahmed: that people should take into account when they're picking a
[10:31] Fahad Ahmed: provider. So, I don't know how it was back in
[10:33] Fahad Ahmed: the day, but nowadays, it's actually very accessible and with
[10:37] Fahad Ahmed: a lot of providers you can get started with just
[10:39] Fahad Ahmed: very small amounts. So, our L& G stocks and shares
[10:41] Fahad Ahmed: ISA, for example, you can get started with just either
[10:44] Fahad Ahmed: 20 pounds a month or a 100 pound lump sum.
[10:47] Fahad Ahmed: And that's not just ours. I know, a lot of
[10:49] Fahad Ahmed: our peers, you can also get started with similarly small
[10:51] Fahad Ahmed: amounts, but there may be some providers where you need a minimum of 5,
[10:55] Fahad Ahmed: 000 pounds, 10, 000 pounds. So again, that's another thing to
[10:59] Fahad Ahmed: take into account when picking a provider. Another thing is
[11:02] Fahad Ahmed: fees. Now fees is-
[11:03] Kia: Big one.
[11:03] Fahad Ahmed: Yeah, big one, because it's going to impact how much
[11:06] Fahad Ahmed: money you actually get in your pocket. So, this is
[11:08] Fahad Ahmed: something you want to check. Just bear in mind when
[11:10] Fahad Ahmed: you're checking fees, they don't all charge fees in the
[11:13] Fahad Ahmed: same way. So, some providers, they're going to charge a
[11:16] Fahad Ahmed: fee as a percentage of your overall investment. Other providers,
[11:20] Fahad Ahmed: they're going to charge a flat monthly fee. So, just
[11:23] Fahad Ahmed: bear that in mind when you're checking. Other things to check
[11:25] Fahad Ahmed: is see whether or not you can change where your
[11:28] Fahad Ahmed: money is invested. And by that I mean, remember we
[11:31] Fahad Ahmed: were talking about the managed portfolios? Maybe at the start you
[11:33] Fahad Ahmed: want to go for something that's higher risk. Maybe at
[11:36] Fahad Ahmed: some point your circumstances change, you want to move your
[11:38] Fahad Ahmed: money into a more cautious portfolio. So, check whether this
[11:42] Fahad Ahmed: is possible to do and if it is, just check
[11:44] Fahad Ahmed: if there's any charges associated with that, because that varies
[11:47] Fahad Ahmed: between different providers. So, there's another one I wanted to
[11:49] Fahad Ahmed: speak about, which is certain people might have certain values
[11:53] Fahad Ahmed: that come from a religious perspective, so these people, they
[11:55] Fahad Ahmed: should check whether they provide something called Sharia compliant funds.
[12:00] Fahad Ahmed: I've seen some research recently that suggests that a lot of people in
[12:03] Fahad Ahmed: our community, I'm speaking as a Muslim, a lot of
[12:05] Fahad Ahmed: us, we're not actually aware that there's these options that
[12:08] Fahad Ahmed: exist to get the benefits and the advantages of investing,
[12:11] Fahad Ahmed: in a way that doesn't compromise our faiths and our
[12:13] Fahad Ahmed: beliefs. So, I really just want to highlight that. A
[12:16] Fahad Ahmed: lot of providers, they do have Sharia compliant funds and
[12:19] Fahad Ahmed: these will not invest your money in things such as
[12:22] Fahad Ahmed: gambling or alcohol companies. Anything that is not permissible in
[12:26] Fahad Ahmed: our faith, we can rest assured our money won't be
[12:28] Fahad Ahmed: invested in that. A lot of people, they're not aware that these exist and it would
[12:32] Fahad Ahmed: be a shame if people are missing out. That doesn't
[12:34] Fahad Ahmed: need to be a barrier to getting involved with investing.
[12:36] Kia: I agree with you. I'm really glad you brought that
[12:37] Kia: up because like you said, there is something for everyone and
[12:40] Kia: I think even you highlighting that just goes to show
[12:42] Kia: that everyone can benefit from having an ISA.
[12:46] Fahad Ahmed: Hundred percent.
[12:46] Kia: So, let's move on to other types of ISAs. A
[12:50] Kia: big one for people who want to get on the property ladder
[12:52] Kia: is the lifetime ISA or the LISA. So, it does seem like a
[12:56] Kia: really good one if you want to buy a property one
[12:58] Kia: day, isn't it?
[12:58] Fahad Ahmed: Yeah. Yeah, a hundred percent. So, the LISA, like you say, it's
[13:01] Fahad Ahmed: great for people that want to get on the property ladder,
[13:03] Fahad Ahmed: but they don't own any property just yet. It's aimed towards
[13:06] Fahad Ahmed: younger people. So, if you're between the ages of 18 and 39,
[13:10] Fahad Ahmed: you can put up to 4, 000 pounds into a LISA
[13:13] Fahad Ahmed: every tax year and the government will actually top this
[13:16] Fahad Ahmed: up by an additional 25%. So, just to give you
[13:19] Fahad Ahmed: an example, give you some numbers. If you were to
[13:21] Fahad Ahmed: max this out over five years, you would've accumulated 20,000
[13:24] Fahad Ahmed: pounds in your savings account, in your LISA, and the
[13:27] Fahad Ahmed: government will put another 5K on top of this.
[13:29] Kia: It's a good chunk of money.
[13:30] Fahad Ahmed: It's great and it's genuinely, it's free money.
[13:33] Kia: That's my favorite word. Free. I love that.
[13:35] Fahad Ahmed: There you go. So, obviously Kia and me are getting
[13:37] Fahad Ahmed: quite excited about this.
[13:41] Kia: Yeah, we are.
[13:41] Fahad Ahmed: But, and there is always a but, there are some rules that I've got to tell the listeners.
[13:43] Fahad Ahmed: So, if for any reason you don't want to use
[13:45] Fahad Ahmed: your money to buy a house, you can alternatively use
[13:48] Fahad Ahmed: it for retirement savings, but that means you can't really
[13:51] Fahad Ahmed: touch it until you're the age of 60. If you
[13:54] Fahad Ahmed: want to withdraw your money before you turn 60 and
[13:56] Fahad Ahmed: it's not to buy a property, there's going to be
[13:58] Fahad Ahmed: a 25% penalty. And some people have a misconception that
[14:02] Fahad Ahmed: the 25% penalty just means that you lose your 25% bonus.
[14:06] Fahad Ahmed: But actually, without getting too deep into the maths of
[14:09] Fahad Ahmed: it, you're going to lose your government bonus, but you're
[14:11] Fahad Ahmed: also going to lose about 6% of your initial investment.
[14:14] Kia: It's good to know.
[14:15] Fahad Ahmed: Yeah, people should think long and hard before they open
[14:17] Fahad Ahmed: one. Like we've said, they are really great, but if
[14:19] Fahad Ahmed: you're thinking maybe renting is better for your lifestyle, maybe
[14:23] Fahad Ahmed: you're thinking about moving abroad, perhaps the LISA is not for
[14:26] Fahad Ahmed: you. Just bear that in mind.
[14:27] Kia: Yeah, it's good. I'm glad you highlighted that. And it's also
[14:29] Kia: good to note that a lot of people have opened
[14:33] Kia: it up and think, " Right, I can just put money
[14:34] Kia: in there and I can use it straight away." You also need to have it
[14:36] Kia: open for 12 months before you can use it towards
[14:38] Kia: your first property.
[14:39] Fahad Ahmed: There you go. There you go.
[14:40] Kia: There are some caveats to keep in mind, but I
[14:41] Kia: think overall the lifetime ISA is a good one to have a look at
[14:44] Kia: if you do want to get on the property ladder one day.
[14:45] Fahad Ahmed: A hundred percent. And while we're talking about the rules, there's just one more
[14:48] Fahad Ahmed: we should have probably mentioned, and that's the fact that
[14:51] Fahad Ahmed: the property that you purchase, it has to be under
[14:53] Fahad Ahmed: the price of 450K.
[14:55] Kia: You've given us a lot of food for thought there,
[14:57] Kia: so anyone who's in between that questions for them, I
[15:00] Kia: think, like you said, it's up to people's personal circumstance,
[15:03] Kia: but there's lots of information you've given us that people
[15:05] Kia: can pick what's going to be best for them. There
[15:07] Kia: have been a few changes recently when it comes to ISAs,
[15:11] Kia: so can you give us a bit more of an
[15:12] Kia: explanation of what the changes are?
[15:13] Fahad Ahmed: So, from next month where we see the new tax
[15:16] Fahad Ahmed: year begin, we're actually going to be able to put
[15:18] Fahad Ahmed: money into multiple ISAs of the same type. So, just as
[15:22] Fahad Ahmed: an example, you can open a stocks and shares ISA
[15:25] Fahad Ahmed: with one company and put 1, 000 pound in, and then
[15:27] Fahad Ahmed: you can open a stocks and shares ISA with another
[15:29] Fahad Ahmed: company and put 500 pounds in. Right now, that's not
[15:32] Fahad Ahmed: allowed. Next month, that will be allowed. And then the
[15:34] Fahad Ahmed: other one, which was just mentioned the other day in
[15:36] Fahad Ahmed: the spring budget, something called the British ISA, and this
[15:40] Fahad Ahmed: is an additional 5K allowance on top of your existing
[15:43] Fahad Ahmed: 20K allowance, specifically designed for UK investments. At the moment,
[15:47] Fahad Ahmed: there's not too much more we can say on it.
[15:49] Fahad Ahmed: It's just been announced and we don't have too many
[15:51] Fahad Ahmed: details. What I would say is if it is something
[15:54] Fahad Ahmed: that sounds like it's of interest to you, just listen
[15:56] Fahad Ahmed: out for further updates.
[15:57] Kia: That's really good. Keep your ear on the ground. But
[15:59] Kia: there's been some good changes for people to hear about
[16:01] Kia: when it comes to what's been announced recently. And also,
[16:04] Kia: you can move parts of your money, can't you? You
[16:07] Kia: can move bits from one ISA to another. You don't have to move whole lump sums. Right?
[16:11] Fahad Ahmed: Exactly. There you go.
[16:12] Kia: I love that. Some good changes. Good changes. Right. Before
[16:14] Kia: we round off this episode, could you share your top
[16:17] Kia: three tips when it comes to ISAs?
[16:19] Fahad Ahmed: Absolutely. So, my first top tip would be ... We've spoken
[16:24] Fahad Ahmed: a lot about long- term investing and things like this,
[16:26] Fahad Ahmed: but my first top tip would actually be, make sure
[16:28] Fahad Ahmed: you've got a sum of money, a pot of money
[16:30] Fahad Ahmed: that you have instantly accessible to you. So, it's what
[16:33] Fahad Ahmed: people would refer to as an emergency fund. It can
[16:36] Fahad Ahmed: be in a cash ISA, an instant access cash ISA. We never know what
[16:40] Fahad Ahmed: the future's going to hold, so just make sure you've
[16:42] Fahad Ahmed: got that instantly accessible. My second top tip would be,
[16:45] Fahad Ahmed: and this comes from personal experience, if you are opting
[16:48] Fahad Ahmed: for a stocks and shares ISA, there's no need to
[16:50] Fahad Ahmed: be checking your balance every single day. There's no need
[16:53] Fahad Ahmed: to be doing that. I made this mistake, I just
[16:56] Fahad Ahmed: wanted to look at it all the time. But the
[16:57] Fahad Ahmed: thing is, you have to remember, your money's going to
[16:59] Fahad Ahmed: go up and down and it's a long- term investment.
[17:02] Fahad Ahmed: So, if you do fall into the trap of checking
[17:04] Fahad Ahmed: it maybe a bit more than you should initially and
[17:06] Fahad Ahmed: you're in the red and your money's gone down, there's
[17:08] Fahad Ahmed: no need to panic. Remember, it's a long- term game.
[17:11] Fahad Ahmed: You're investing for a minimum of five years. No need to
[17:13] Fahad Ahmed: panic if it's down after a couple of days, weeks,
[17:16] Fahad Ahmed: or even months. My third top tip would be do
[17:19] Fahad Ahmed: your own research and choose what's right for you. So,
[17:22] Fahad Ahmed: Kia touched on it earlier, personal finance, it's called personal
[17:26] Fahad Ahmed: because it's personal.
[17:27] Kia: It is.
[17:27] Fahad Ahmed: And it depends on what's happening in your own life and
[17:29] Fahad Ahmed: your own circumstances. We spoke a lot today about a
[17:32] Fahad Ahmed: lot of different options, a lot of different accounts. Take
[17:34] Fahad Ahmed: your time, do your own research. And what's right for
[17:37] Fahad Ahmed: your best friend, or your dad, or Kia, or me,
[17:40] Fahad Ahmed: it might not necessarily be what's best for you. That's
[17:43] Fahad Ahmed: my third top tip.
[17:44] Kia: Fahad, that was a great one to end on. I
[17:46] Kia: love that. Make sure you do your research and pick
[17:48] Kia: what is best for you. Thank you so much for
[17:50] Kia: gracing the podcast and just sharing your gems when it
[17:52] Kia: comes to ISAs.
[17:54] Fahad Ahmed: Thank you so much, Kia.
[17:54] Kia: Next time, I'll be having a friend of the show, Andy
[17:57] Kia: Webb, back to talk to us about switching bank accounts
[17:59] Kia: and getting the most out of your account. In the meantime,
[18:03] Kia: I'd love it if you shared the podcast, tell a
[18:05] Kia: mate, leave a review and help other people start getting
[18:08] Kia: a little bit richer. And if there's anything you'd like
[18:11] Kia: me to discuss on future episodes, get in touch via
[18:13] Kia: Legal & General's Instagram and TikTok channels. You can also see some fun
[18:17] Kia: behind the scenes videos and exclusive tips from a range
[18:20] Kia: of our experts. A Little Bit Richer is brought to you
[18:22] Kia: by Legal & General. Thank you for listening, and see you soon.

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