Stocks & Shares ISA: The tax-free savings account everyone ignores
🔸 Plus: Gen Z workers are refusing to show up to jobs they’ve been offered. 🔸 Having savings is sexy, a survey says 🔸 Two investment funds that bet on disaster lost a lot of money 🔸
Hello! Here’s today’s 2-minute guide to demystifying money and making you richer
Why you need a stocks and shares ISA.
Gen Z workers are refusing to show up to jobs they’ve been offered.
Having a savings account is sexy, according to a survey of 2,000 people.
How a JPMorgan vice president with an extreme minimalist lifestyle retired at age 29.
Working from home is good for your health.
Two investment funds that bet on global disaster lost a lot of money.
The markets, year-to-date
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FTSE 100: 7,738.30 ⬆️ 0.042%
Bitcoin: $63,321.10 ⬆️ 43.35%
GBP to USD: $1.2718 ⬇️ 0.28%
GBP to EUR: €1.1708 ⬆️ 1.51%
Based on the most recent data or previous market close.
S&S ISAs: the tax-free savings account everyone ignores
It’s one of the most baffling discrepancies in personal finance:
More than half of UK adults have savings accounts, which pay interest on your money. But only 6% have a stocks and shares ISA, which offer greater returns than a vanilla savings account and are tax-free.
Savings accounts are offering around 5% interest on your money right now. But the average return on an S&S ISA over the past 10 years has been 9.64%.
The lack of demand for ISAs is all the more puzzling because no one who uses an ISA pays any tax on the gains. Everyone with a regular savings account is subject to tax.
A free-money scheme in disguise
So why don’t people use ISAs?
If you’re new to saving and investing, a “stocks and shares individual savings account” can sound pretty intimidating. Like everything in personal finance, ISAs have a complicated name designed to bore young people and disguise the fact that they are one of the government’s best free-money schemes.
Because the government actually wants you to provide for your own future, ISAs come with several advantages:
An ISA is like a bank account, but with extra options. It allows you to invest in stocks, shares, mutual funds, index funds, and ETFs.
Any gains you make inside your ISA are tax-free — unlike regular savings accounts. No income tax, no dividend tax, no capital gains tax.
You can pull your money out any time, without penalty.
There’s only one drawback: You are only allowed to add up to £20,000 a year into an ISA. (It might be a free money scheme, but it isn’t an unlimited free money scheme!)
If you’ve got more than £20K a year to save — congrats! That’s better than most people: The average amount in an S&S ISA is £9,203.
How to choose an ISA
If you are going to use your ISA for stocks, the usual warnings apply: Stocks go up and down. You will only get the superior gains of the stock market if you stay in for the long-term.
Most banks and all the online trading platforms offer S&S ISAs. The usual suspects include AJ Bell, Hargreaves Lansdown, Wealthify, Halifax, Plum, Barclays, Fidelity International, Vanguard, IG, Moneyfarm and eToro.
The way to choose between them boils down to two factors:
What are the fees? Some platforms charge zero fees but give you fewer investment options to choose from. If there are fees, they might seem low, but they can eat into your gains over time. A 2% fee will take 20 percentage points off your gains over 10 years — and that could be a lot of money. Choose the platform with the lowest fees possible.
How easy is it to use the platform? Some banks have clunky, difficult-to-use dashboards that can make buying and selling stressful. Others are really good at showing you how your money has grown over time, and which investments performed better than others.
Here are a few resources to help you choose:
ISAs are the next-level savings account that will put you on an even footing with the Warren Buffetts of the world, offering you stock market gains but no income tax or capital gains tax. Everyone should have one.
And for dessert …
Gen Z workers are ghosting employers who want them. According to Fortune: “A whopping 93% of Gen Zers told the global recruitment platform that they’ve flaked out of an interview. Worse still, a staggering 87% managed to charm their way through interviews, secure the job, and sign the contract, only to leave their new boss stranded on the very first day.” (Our advice: Don’t do this!)
Having a savings account is sexy, according to a survey of 2,000 people in serious relationships. 78% of respondents said that someone who has planned for their financial future “is more attractive” than someone who hasn’t.
A JPMorgan vice president with an extreme minimalist lifestyle earned $600,000 in 16 months but spent almost none of it. All of his possessions fit in a 10-pound bag and the most expensive thing he owns is a $55 jacket. He retired at age 29.
Working from home lets people eat healthier, reduces stress, and it lowers their blood pressure, according to a huge study of the pros and cons of remote working. But WFH-ers also risk eating more snacks, drinking, smoking, and putting on weight.
Investors who bet on calamity lost a ton of money. Two funds whose investment strategies predicted 2008-style “Black Swan” disasters for the global economy have seen massive losses because stocks just keep going up, according to Bloomberg. The Simplify Tail Risk Strategy ETF lost 99.8% of its value and closed. The Cambria Tail Risk ETF declined 46%.
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