Author Topic: Fully Subscribing to ISA  (Read 1975 times)

ruffles

  • 5 O'Clock Shadow
  • *
  • Posts: 12
Fully Subscribing to ISA
« on: April 06, 2018, 01:22:10 AM »
Hi all,

Happy New Tax Year. Just a quick question regarding ISAs as it's the start of a fresh allowance. If you had £20,000 lying around would you stick it all in your ISA today, or would you spread it out throughout the year. For example, £1,666 per month?

cerat0n1a

  • Handlebar Stache
  • *****
  • Posts: 1075
  • Location: England
Re: Fully Subscribing to ISA
« Reply #1 on: April 06, 2018, 02:03:34 AM »
I'm putting it all in today.

However - this is a topic which has been investigated a lot (not specifically with ISAs but in terms of is it better to invest a lump sum all at once vs drip-feed into the market) so a bit of searching on the forums and/or google will turn up plenty of maths & debate on which is better.

ruffles

  • 5 O'Clock Shadow
  • *
  • Posts: 12
Re: Fully Subscribing to ISA
« Reply #2 on: April 06, 2018, 02:59:56 AM »
Thanks for the information. I was just asking what individual people would do as opposed to whether it's a good idea or not. Perhaps I should have created a poll.

never give up

  • Pencil Stache
  • ****
  • Posts: 696
  • Location: UK
Re: Fully Subscribing to ISA
« Reply #3 on: April 06, 2018, 04:37:01 AM »
From the threads I have read on this I think investing it all in one go is generally seen as the way forward. It could be averaged over 12 months and then the market could fall at that point meaning itís not necessarily helping to reduce risk in any way. There is also the risk of missing out on gains and as the market spends more time going up that adds weight to the all in now approach. Bob with his poor market timing is always an article referred to when this subject comes up too.

Having said that if I had Ďthe problemí of knowing what to do with a £20,000 lump sum I would go with the monthly approach. Itís probably important though to provide some context with regards to my investing personality here as I appreciate Iím in the minority. I am more cautious than a field mouse attempting to escort three generations of field mouse family through the Barn Owl Forest and across the Valley of the Snake.

sea_saw

  • Bristles
  • ***
  • Posts: 282
Re: Fully Subscribing to ISA
« Reply #4 on: April 06, 2018, 09:16:42 AM »
I once filled an annual ISA allowance (I think it was more like £15k at the time) - I'd been saving into a bank savings account for all my working life and once I started to read up on the possibility of investing, I just opened one up and filled it right before the end of the financial year. It was less than half of my savings though. Given I held it for 2014-18 and it almost doubled in size, my main regret is that I didn't put the rest of my money in ASAP too :) but I didn't really have any specific goals for it to help me make my decision so I hedged my bets.

Every situation is going to be different. Really the key questions are:
  • What is the purpose of this money Ė available for spending on e.g. travel; emergency fund in case of e.g. job loss; being saved for a house deposit; early retirement savings; traditional retirement savings, etc?
  • Therefore, where would it make the most sense to hold this money Ė keep in the bank, move to an ISA, move to a SIPP, etc.
 
For me personally, if someone gave me £20k, I'd put £19k of it in my ISA and buy myself some furniture with the last grand, ha. But at this point in my life I doubt I'll ever end up with such a large pot of money just 'lying around' again - money available for long term savings gets whisked away as soon as my pay comes in each month.

I personally wouldn't hold back from putting it all in out of market timing concerns Ė if I was certain the money could be assigned to long term goals, I see little benefit in drip feeding it (as cerat0n1a said, this has been discussed at length, but can be summarised as 'the market goes up more than it goes down, so it's generally better to get your money in ASAP'). I might do so out of personal circumstances concerns, e.g. if I was worried about the stability of my job. But that's basically saying my emergency fund is too small for comfort, so I'd assign whatever money I felt was appropriate to stay in cash, and then invest the rest for my long term plans.

rob/d

  • 5 O'Clock Shadow
  • *
  • Posts: 37
  • Age: 54
  • Location: blighty
  • Grumpy ? me ?
Re: Fully Subscribing to ISA
« Reply #5 on: April 06, 2018, 10:12:32 AM »
 Yep i'm all in this year again, and wifey too.
 You don't say how old you Ruffles are or what term your looking at . Anything more than ten years invested , i would max it out and ride the wave , eyes shut off course.
 Usual referral to this...
 
   http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/

   and this                   

   https://www.youtube.com/watch?v=T71ibcZAX3I&ab_channel=TalksatGoogle

As to where it's going ? Low cost funds .Probably vanguard ones this time.

shelivesthedream

  • Magnum Stache
  • ******
  • Posts: 3515
  • Location: London, UK
Re: Fully Subscribing to ISA
« Reply #6 on: April 06, 2018, 02:21:14 PM »
Long term, I'm sure the difference is minimal. I am very risk-averse (though have been working on it and getting more sensible!) but I am also very lazy and very keen to make my investments as simple as possible. I would chuck it all in at once so I didn't have to think about it again.

TartanTallulah

  • Bristles
  • ***
  • Posts: 459
  • Location: The Middle of Scenic Nowhere
Re: Fully Subscribing to ISA
« Reply #7 on: April 06, 2018, 04:41:51 PM »
If I had £20,000 to invest in an ISA, I'd put it all in now rather than spreading it over 12 months, and then try to avoid looking at it again until next year. I did something similar last year when I transferred a bundle of cash ISA savings into a S&S ISA. What's likely to happen is that I'll have a smaller lump sum to invest early in the tax year, and then make occasional small deposits when there's some money left at the end of an month.



frugledoc

  • Pencil Stache
  • ****
  • Posts: 539
Re: Fully Subscribing to ISA
« Reply #8 on: April 06, 2018, 04:58:44 PM »
And donít forget LISA.

RetirementInvestingToday

  • 5 O'Clock Shadow
  • *
  • Posts: 64
    • Retirement Investing Today
Re: Fully Subscribing to ISA
« Reply #9 on: April 07, 2018, 07:07:48 AM »
I put all £20,000 into my II (formerly TD Direct) S&S ISA yesterday.  Will invest it all into a Vanguard ETF on Monday.
45 years of age, UK based (for now) and FI.  Will FIRE in mid-2018.  A lot more detail on my blog http://www.retirementinvestingtoday.com/

TartanTallulah

  • Bristles
  • ***
  • Posts: 459
  • Location: The Middle of Scenic Nowhere
Re: Fully Subscribing to ISA
« Reply #10 on: April 07, 2018, 08:41:58 AM »
And donít forget LISA.

Yes! I'm too old for LISA, but my son, who is in his early twenties and has always been very organised about managing his money, has decided that he wants to be able to afford a house in a particular location by the time he's 30. I helped him to transfer a lump sum into a basic global tracker fund in a LISA wrapper at the end of the last tax year and he has set up a monthly direct debit. Even if he goes off the idea of buying a house, it won't do him any harm to have a freestanding retirement fund.



londonstache

  • 5 O'Clock Shadow
  • *
  • Posts: 82
Re: Fully Subscribing to ISA
« Reply #11 on: April 09, 2018, 04:01:45 AM »
Mrs londonstache has always been in the habit before of dumping the full 20k in at the start of every tax year, which is the most sensible approach IMO. She did need some education in why a cash ISA is not a suitable long-term investment vehicle, but other than this the approach is solid.

Alas we don't currently have a handy £40k sitting around at the moment, otherwise we'd both be in immediately so the tentative plan is Lifetime ISA @ £8k straight away, followed by as much as we can reasonably shove in now, getting to £40k easily before the end of the tax year.

ruffles

  • 5 O'Clock Shadow
  • *
  • Posts: 12
Re: Fully Subscribing to ISA
« Reply #12 on: April 09, 2018, 05:20:12 AM »
Thanks everyone for your replies. To add some background: I had been saving for a while so that I could pay a chunk off of my mortgage when my current product comes to an end later this year. I changed my plans and decided to not pay any more off, so was wondering whether I should use the money to fill my ISA for the year. I don't intend on touching it for more than 10 years.

Because I've been saving for a while I think I have gotten used to having a significant balance in my savings account, even though it isn't working very hard for me. For now, I think I am going to drip feed £1,666 per month into the ISA, so that I can fully subscribe this year, while keeping a significant balance in my savings account with the money that I save from my pay each month.

Although I didn't take the advice from the majority of you, I did listen to it! I can always change my mind later :)

dashuk

  • 5 O'Clock Shadow
  • *
  • Posts: 73
Re: Fully Subscribing to ISA
« Reply #13 on: April 12, 2018, 04:40:33 AM »
All in on the 6th here, LISA first then regular S&S ISA, for self and OH.

Part laziness (one set of transactions then forget).

In the case of the LISAs to get the Govt contribution paid and invested ASAP.

Part because it's been sitting round in cash for too long already (also laziness and poor research on my part, had assumed non-ISA investments would wind up with me having to start doing tax returns, so sat on it another year to go straight to ISA. Having just looked up thresholds was probably wrong)

Also having seen everything dip over the last quarter, applying the "hey look, everything is on sale" principle as distraction. ;)

Almost certainly the last time we'll have that much cash kicking around at the start of the year, but aiming to at least max the LISAs again next time round.

PropJoe

  • 5 O'Clock Shadow
  • *
  • Posts: 29
Re: Fully Subscribing to ISA
« Reply #14 on: April 12, 2018, 09:31:18 AM »
I was in the same position of having the cash sitting in a current account (earning 1.5%) and have now moved it to fill my ISA allowance.
It occurred to me that I should have invested the money in a taxable account instead of a current account and then transferred to the ISA when the new allowance started. I'm told this technique is called "Bed and ISA".

From what I can tell there are no downsides to doing this? Unless you trigger CGT but that's unlikely given the account would never get that huge (max 20-30k probably), I don't think I would incur any taxes.

shelivesthedream

  • Magnum Stache
  • ******
  • Posts: 3515
  • Location: London, UK
Re: Fully Subscribing to ISA
« Reply #15 on: April 12, 2018, 11:53:45 AM »
Why would you defer investing in an ISA if you had the allowance free just so you could invest in a taxable account instead?

dashuk

  • 5 O'Clock Shadow
  • *
  • Posts: 73
Re: Fully Subscribing to ISA
« Reply #16 on: April 12, 2018, 12:21:58 PM »
Don't know, what I did was hold onto cash that could have been invested in a taxable account until I had ISA allowance free because I was a bit lazy and ill-informed.

Think that's what PropJoe was saying too. Minus the lazy, etc

Although given our investment growth over that period was about the same as the interest on the cash savings account, not like it was a disaster.

PropJoe

  • 5 O'Clock Shadow
  • *
  • Posts: 29
Re: Fully Subscribing to ISA
« Reply #17 on: April 12, 2018, 01:26:15 PM »
Maybe I wasn't clear, last year's ISA allowance was full already. I accumulated another 20k+ in a current account over the course of the year but I had to wait until now to put that into this year's ISA allowance.

I'm saying, instead of accumulating in the current account, I should have used a taxable account instead  (invested in trackers) in the expectation that the market would outperform my current account.


shelivesthedream

  • Magnum Stache
  • ******
  • Posts: 3515
  • Location: London, UK
Re: Fully Subscribing to ISA
« Reply #18 on: April 12, 2018, 01:58:50 PM »
Aha, with you now. I thought it was taxable vs ISA as opposed to taxable vs current account.

Playing with Fire UK

  • Handlebar Stache
  • *****
  • Posts: 2269
Re: Fully Subscribing to ISA
« Reply #19 on: April 17, 2018, 05:57:28 AM »
This year I'm all about dumping it in straight away.

If the market was at a wild high and I was feeling like a 'fraidy cat then I'd think about putting in a quarter every quarter until there was a drop in the market. It slightly increases my fees, but sometimes I think it's worth it.

skip207

  • Stubble
  • **
  • Posts: 240
  • Location: UK
Re: Fully Subscribing to ISA
« Reply #20 on: April 28, 2018, 03:17:16 PM »
Anyone got any advice on which Vangard fund to go for?

Currently have £20k in VLS20 ACC and £21k in VLS100 ACC.

Would prob be 20-30k in 3 lumps over next 6-12 months.

londonstache

  • 5 O'Clock Shadow
  • *
  • Posts: 82
Re: Fully Subscribing to ISA
« Reply #21 on: April 30, 2018, 04:13:30 AM »
Anyone got any advice on which Vangard fund to go for?

Currently have £20k in VLS20 ACC and £21k in VLS100 ACC.

Would prob be 20-30k in 3 lumps over next 6-12 months.

Depends entirely on your risk appetite, age and investment horizons. At the moment you are at roughly a 60/40 split for equities/bonds. If you bought another 20k of VLS100, then your overall profile would be 73/23 (someone correct me if my maths is wrong here). I'm a big fan of VLS80, but this represents 100% of my ISA investments and is based on 20+ years until FI/RE. If I was closer then I might be more risk adverse.

FIFTWUK

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: Fully Subscribing to ISA
« Reply #22 on: April 30, 2018, 08:42:03 AM »
A silly question perhaps, but assuming you all draw down on your ISA when FIRE'd, do you switch from acc to income funds or just sell acc funds every few months?

frugledoc

  • Pencil Stache
  • ****
  • Posts: 539
Re: Fully Subscribing to ISA
« Reply #23 on: April 30, 2018, 02:51:52 PM »
A silly question perhaps, but assuming you all draw down on your ISA when FIRE'd, do you switch from acc to income funds or just sell acc funds every few months?

whatever you want, it makes no difference.

Playing with Fire UK

  • Handlebar Stache
  • *****
  • Posts: 2269
Re: Fully Subscribing to ISA
« Reply #24 on: May 06, 2018, 01:36:34 AM »
A silly question perhaps, but assuming you all draw down on your ISA when FIRE'd, do you switch from acc to income funds or just sell acc funds every few months?
whatever you want, it makes no difference.

I'm in Inc funds for taxable accounts because it makes the tax maths vastly easier. For my ISA the transaction cost of selling every month or two would be pricier than I'd like, so I'll use Inc there too.

I'll also look at switching provider at the time - it might be worth moving to reduce sales costs.

PropJoe

  • 5 O'Clock Shadow
  • *
  • Posts: 29
Re: Fully Subscribing to ISA
« Reply #25 on: May 08, 2018, 05:57:47 AM »
A silly question perhaps, but assuming you all draw down on your ISA when FIRE'd, do you switch from acc to income funds or just sell acc funds every few months?
whatever you want, it makes no difference.

I'm in Inc funds for taxable accounts because it makes the tax maths vastly easier. For my ISA the transaction cost of selling every month or two would be pricier than I'd like, so I'll use Inc there too.

I'll also look at switching provider at the time - it might be worth moving to reduce sales costs.

Yep, I've recently moved to VG and there are zero fees for selling.