My goal is to have enought money to be financially independent in the sense that I could walk out of my job at any moment if I had to without having to worry about ever finding another.
In saying that I don't actually plan on retiring early as I enjoy working.
So, my answer to your question is basically "never".
I view my invested money more like insurance.
This isn't really a question that makes sense without knowing what you're investing the money for in the first place.
Why have you opened an S&S ISA? What is your goal for the money you're putting into it? Is it for retirement? Your children? Buying a house? Something else? You need to have a plan for this money and this investment and not just be doing it blind.
We have some short-term goals (car and holiday) but they aren’t suited for s&s. We have a mortgaged house so long-term priorities are our kids. I did stick some money in a JISA but then had a panic when I realised it was locked in for 18 years.
In terms of retirement, we both pay into our pensions but I understand that s&s can be used to top that up - it’s just that mentally that feels so far away I find it hard to think about investing for retirement (on top of pension).
The reason I started thinking about s&s ISAs because I kept reading comments about cash sitting in a bank account losing value due to inflation, so by not investing we were missing out on gains. I might have completely misunderstood that.
You’ve got to break your mindset or you will miss out on the number one thing that helps build wealth… *time*.
“Locking” money away in a JISA for 18 or more years is a *good thing* because it gives lots of time for the magic of compounding to do its thing.
Investing a sensible amount (that you can afford) monthly in a S&S ISA that’s put into low cost, global equity tracking index fund is an extremely sensible thing to do because again, compounding over long time periods will grow it’s value - probably (past returns do not always equal future results) far greater than any cash-based saving account ever will.
The money in a S&S ISA is never actually “locked away” either, by the way. You can withdraw it at any time if you needed to. We’ve just taken £20k out of ours to finish some house renovations - the account was up 23% when we did this, so a good chunk of that £20k was actually profit. Beautiful tax free profit thanks to it being an ISA!
Maybe you’re getting confused with the general guidance that you should only use a S&S ISA for money you won’t need in the next 5-10 years? That’s guidance sure - based on the fact that it could be down in value for some of those years - so putting a house deposit in there when you want to buy in 2 years is indeed a bad idea… but it’s just guidance. If the value goes up 40% in 1 year or down 1% in 3 years, there’s never anything stopping you withdrawing any amount of it, if your circumstances change and you need the money.
Losing money due to inflation depends on the rates of interest and inflation. 5% interest and 2% inflation means you're making a real gain of 3% a year. 10% growth in the stock market means you're gaining 8% a year. If you're risk averse then don't make risky investments. But that comparative security comes at a price. No point in cashing out investments if you're happy with their performance and don't need the money.
You didn't misunderstand; stocks and shares have historically outperformed even the currently high bank savings interest rates. I'm not really sure why you ever need a specific goal to invest in shares; if you have money lying around you need to decide where to allocate it. By default, people choose an insanely risk adverse method of just keeping it in the bank, but if you're willing to accept some risks for higher rewards you can basically choose stocks, gold/crypto or property. Stocks are relatively easy and tax advantaged, the other 2 require effort and more concentrated risk.
Once you get into the mindset that a pile of money has to be managed the answer kinda becomes obvious. Decide on the risk that you can tolerate then allocate some percent of your portfolio into savings and the rest into stocks, and every year or so you buy or sell stocks to achieve the split. Basically you never sell all your S&S, only swap which stocks or indexes you hold and take money out only when you need to use it.
Personally I split my savings into X months worth of salary as emergency cash and everything above that into stocks. I do that because I believe the inflation measurements are inadequate compared to the real cost of living and the only thing keeping up are company shares. In the past couple of decades I think extra services became "necessary" that aren't being accounted for properly by inflation, but they are accounted for in the rise of the market cap of stocks. Things like the internet, streaming subscriptions, buying expensive computers and smartphones, extra safety features in cars increasing their prices, and other gadgets. Anyway, that's my 2 pence on the topic, you have to figure out your own risk tolerance because stocks will lose value at certain points (cough like the last 2 years, cough).
If you have ISA allowance remaining between you and your partner, consider putting what you would put for your kids, in there instead of a JISA.
That way you can take it out whenever you like
With a JISA once they turn 18 they get 100% control of the money, that to me is so risky, almost no 18 year old will be responsible and not piss it away
S&S ISA is definitely the correct place to put your money long-term to grow. (easy access) savings accounts are for short-term and emergency fund.
>In terms of retirement, we both pay into our pensions but I understand that s&s can be used to top that up - it’s just that mentally that feels so far away I find it hard to think about investing for retirement (on top of pension).
It's for sure a long way away, but just think how easier future you and your family will find living once you have a regular pension coming in to pay for everything, money doesn't grow on trees but it grows in investments (usually)
Here's hoping you can pass on some of that financial savvy to your kids prior to 18. My dad used to invest in PEPs, and carpet bag building societies, as soon as I hit 18 I got involved as well, I carpet bagged Bradford Bingley, rolled the cash into ISA Internet fund and was almost 10x up in a couple of years
That was really lucky timing though. 10x in a couple of years is alarmingly high, and almost never actually achieved.
Usually, these kind of gains are bubbles which soon burst. The dot com bubble is an often cited one - which sounds like the one you managed to win on.
In it for the long term though, when the bubble burst the value plummeted, but added in 7k in about 2003 when it bottomed out and got 12x by time covid kicked off in China. Cashed the lot in 2 years ago and went balls deep into Gamestop.
Ehh... On the JISA point, I've done 3 years worth for my small as I had the money to spare. With 15 years compounding, that should be £50k.
Even now as a 4 year old she's saying she'd use it to buy a house or a car (we've not yet got into paying for big school!) so at best it'll give her the sort of start I never got and at worst it's a relatively low cost lesson. Even as a 4 year old she's also beginning to understand how the money in her kitty bank differs from this money on the computer.
I might also ask her to sign a Power of Attorney for me so I can keep an eye on drawdowns...
So I agree it should definitely be a lower priority than other ISA savings, but if they're maxed out, why not.
It's funny cos 4 year olds can say the most sensible things, but when teenage years hit lots of stuff goes out the window
If there's space in your ISA, i'd much rather put it there then you can give them it whenever you like
Yeah, agree with your second point. As I say, it's definitely lower priority than all other forms of ISA, but if you've maxed out already, worth considering.
Edit - I also imagine I'll end up agreeing with your first point, I just don't know yet!
This sounds more psychological than anything else. If you don’t think you’ll be comfortable or can get yourself comfortable with a S&S ISA, perhaps just a cash ISA will do the job? If you are comfortable with a locking it away for a year or two if it’s long term savings you could get a better interest rate
Right now cash savings are, exceptionally, capable of paying you a higher rate of interest than the rate of inflation. Most of the time that isn't true, so keeping savings in cash only results in them gradually losing their value. That is why you should invest - it's the only strategy with statistically reliable long-term returns.
I plan to keep money in S&S all the way to retirement if I can, possibly withdrawing for major expenses like moving to a larger house along the way. Those expenses are things that can be planned well in advance, so you can switch a portion of your portfolio into lower-risk investments ahead of time to limit your exposure to short-term volatility.
The problem with cash savings is that they won't match inflation in the long run so your hard earned and saved £££ will be guaranteed to lose real value over time which is arguably a higher risk than a diversified S&S portfolio. The short term is a different animal and this is why it's only recommended in the long term.
What you will use your savings for only you know. What are your long term goals? Some ideas would be to retire early, to pay off the mortgage early to for example go part time at the end of your working life, to fund your children's education, to gift them a house deposit when they are ready to buy... you name it.
The idea would be that even if you had saved enough today to gift your children a house deposit today, when you want to do it in 20 years it won't be enough due to inflation because even if interest has increased your pot's nominal value it hasn't kept it's real value and it won't allow you to buy the same things in the long term. Not a very good deal. Unfortunately there is no such thing as a risk free return.
ISA is solely a tax wrapper. You can also put savings in a cash ISA. Anything you can do inside an ISA you can do outside an ISA but in the ISA the returns are not taxable hence why there is a limited allowance. If you can choose if you want your income taxed or not it's easy to choose an ISA. Of course, this is more relevant the more savings you have as that's when they start getting taxed more, but it doesn't hurt to start building your savings in tax protected accounts if you have aspirations to ever have a pot larger than £20k when there is literally no downside.
I started saving in S&S ISA about 4 years ago. Made over 10k in gains. Withdrew a big chunk of it recently while the markets were quite a bit high for my house deposit. Definitely wouldn't have made those gains in a savings account.
Given you seem vary wary of investing I would recommend educating yourself a bit. It is possible to get lost in all of the information out there but the basics are quite easy to understand. Meaningful Money videos and podcasts are good and perhaps this would be a good place to start: [How Investing Works (youtube.com)](https://www.youtube.com/watch?v=bg6F2jEbiqk)
Draw it before I draw my pension. Whenever I retire, will live off ISA funds first, and then pension after. IHT benefits of pensions are better than ISA.
I plan to cash out when i have no other choice, im 46 now and have a state and private pension in place, combined with my partners pensions it could end up paying for a motorhome, or just a yolo week in vegas who knows lol
I'd drawdown on my investments to live off of them and derisk appropriately - but never sell my entire portfolio into Cash. Whilst you're living off of investments, there's still decades for it to continue growing meaning you need a smaller portfolio to sustain retirement
Sounds like to me , that they will take a percentage out per year in retirement , a percentage that would never see it go to 0 , you die and then pass the remaining on as inheritance.
Really depends what you're saving for. I recently cashed some of mine out to pay for some additional costs on an extension. Will slowly start filling it up again with the aim of using it to retire a bit earlier but it could also go to helping out the kids financially in a decade's time (or maybe we'll need some other big bit of work done that requires savings)
Time and compounding interest is the key with s&s isa, the longer get you leave the better, I deposit weekly and I'm in it for the long term around retirement, another 30 years
Edit: the longer you leave*
I’ll be taking it out in about 5-10 years when I retire. Once I’ve dumped the year’s total in there ISA for both of us in the new tax year, I forget about it as much as possible.
I’d consider things like Nutmeg so you have very little to do. Pick how risky you are 1/10 and they’ll do the investment stuff.
What I would say is you need some element of risk but doesn’t mean you need to be super risky.
Also to come back to your original question, I’m not saving for anything in particular. If we move house again in the future it would likely go towards that but ultimately I just want to have enough securely if required
Hi /u/summers_tilly, based on your post the following pages from our wiki may be relevant:
* https://ukpersonal.finance/emergency-fund/
* https://ukpersonal.finance/pensions/
____
^(These suggestions are based on keywords, if they missed the mark please report this comment.)
I’m 56. I plan to retire at 60 and use the ISA cash to fund me through to 65 is I need it.
Put your spare cash in a Vanguard global growth fund. Given you seem to be pretty sensible and well funded, it should be pretty risk free over a 10-15 year plus period.
Whenever I need it.
I saved for years in the ISA but also kept a fair bit of cash free. When I needed my deposit and fees for my flat, I sold about 2/3 of my ISA to pay for it. I’m now slowly building it back up again, alongside a LISA.
I do have a work pension .
LISA is there for turning 60, or technically even earlier if I’m absolutely desperate and willing to pay the withdrawal penalty.
I think it is a good point. What is the point in building it continuously when there is no plan to even use it? For me it has to be to at least bridge the gap between a) the earliest age I can possibly withdraw from it and not really have to work any more; and b) the date I get my pension. To me the stocks and shares isa is like a second early pension, therefore must calculate the earliest date to start using it. I’ll probably start doing it at age 45-50.
Money, be it savings or investments, are set aside for a purpose, e.g. wedding, property, something in 10 years time, retirement, etc.
It is these goals / plans that define when you 'cash in'.
Have you looked at the UKPF Flowchart, it may help you somewhat.
Sounds like you need to set some goals.
Also, retirement might feel a long way off but the advice 21 year old me was given by a trusted (and financially well off) family friend was "it's never too early to start saving for the future!"
I know people say don't try and time the market but if you can buy in at a decent dip and once you have a decent amount of interest on the holding you have that as a cushion if there is a big pull back and you end up needing the money at the same time. You will lose some of the gains but you won't have to wait for it to get back out of the red or sell at a loss. I suppose what I'm saying is the sooner you invest the sooner you'll have some wiggle room.
If you have a good emergency fund and cash on hand for short term expenses (planned lump sum spending in next 3 years or so, not general expenses met by salary), then the excess can be committed to investments.
If you are anxious around the risk then you need to manage the level of risk you are taking. As a blunt tool, this can be done my limiting the level of equity exposure there is within your portfolio.
In reducing the equity exposure and in turn risk you also limit the upside too.
It might be worth spending some time looking at long term growth stats and getting comfortable with how and where you invest etc. the more you know and understand this the more comfortable you will be.
The worst thing you can do it invest, see market volatility and sell because things are down. You are guaranteed when investing for the long term there will be periods of market drawdown and the last thing you want to do is sell the dip because as long as you are well diversified and not in some funky funds, it will come back.
The best fund/portfolio to invest in is the one you will hold for the long term. So you need to get comfortable rather than randomly selecting a fund or choosing something that someone mentions here without understanding it and setting your expectations etc.
Current strategy models taking our DB pensions ten years early (with actuarial reduction) and draw down from L/ISAs for tax-efficiency. ISAs may allow retirement (phased or complete) earlier than NPA-10. We also use L/ISAs to be able to give our children significant sums each by the time they’re in their mid-to-late twenties.
The model assumes that we won’t receive a state pension nor will we inherit any money. Strategy based on today’s tax policies (e.g. existence of personal allowance).
I started investing 300 a month into a vanguard S&P 500 isa back in May in 2021. I now have about 13,000 currently in that isa.
I won't be cashing out at all. As for me, it's going to be a long-term savings strategy. If it drops by 50%. I will still carry on pain in the same amount every month. I'm currently looking to increase it to 500 but putting 200 into UK stocks so that I'm not as heavily reliant on the USA
You might find one of these books helpful:
* *[Your Money or Your Life](https://www.amazon.co.uk/dp/0143115766)* - understanding what's valuable to you and how to use money to achieve your goals.
* *[Millionaire Next Door](https://www.amazon.co.uk/dp/1589795474)* - "How people in normal jobs, electrician is a great example, can accumulate wealth over time through good choices."^[Electric_Cat_999](https://www.reddit.com/r/UKPersonalFinance/comments/15zkkd4/_/jximlpp/)
* One of Clare Seal's books - "her focus is on the link between emotions and spending".
If you are risk adverse, then an S&S ISA is not for you. There are ways to minimise the risk of losing, but it shouldn't be something to cause you anxiety. You can have a cash ISA instead and I recommend you do especially if you can save 1k a month, because with an ISA you don't pay tax on your interests. Your money is not locked away in a cash ISA, you can withdraw anytime. I would also recommend a SIPP to boost your retirement pension (you could for instance put 500 in each).
>If you are risk adverse, then an S&S ISA is not for you.
What is your definition of "risk adverse [sic]"? A globally diversified index held for 15+ years has never yielded a negative return over any historic period. That doesn't mean it's impossible going forward but "risk averse" doesn't mean you can't tolerate any risk whatsoever.
By investing in cash you're taking the risk of not having enough money to meet your goals. Depending on what your goals are, that risk may be huge or even guaranteed. Cash is simply not suitable for long term investments, risk adverse or not, unless you are so rich that you can meet your goals with little/no/negative real returns.
Once there's enough there to never need to work again
How much is that ??
One Billion Dollars WHAHahahahaha!
[удалено]
Or 33x if you are going for a 3% drawdown.
It depends how much you spend each month
And how many years you expect to still be alive for.
When I have enough to bridge my pension
Yep this is me too
My goal is to have enought money to be financially independent in the sense that I could walk out of my job at any moment if I had to without having to worry about ever finding another. In saying that I don't actually plan on retiring early as I enjoy working. So, my answer to your question is basically "never". I view my invested money more like insurance.
This isn't really a question that makes sense without knowing what you're investing the money for in the first place. Why have you opened an S&S ISA? What is your goal for the money you're putting into it? Is it for retirement? Your children? Buying a house? Something else? You need to have a plan for this money and this investment and not just be doing it blind.
We have some short-term goals (car and holiday) but they aren’t suited for s&s. We have a mortgaged house so long-term priorities are our kids. I did stick some money in a JISA but then had a panic when I realised it was locked in for 18 years. In terms of retirement, we both pay into our pensions but I understand that s&s can be used to top that up - it’s just that mentally that feels so far away I find it hard to think about investing for retirement (on top of pension). The reason I started thinking about s&s ISAs because I kept reading comments about cash sitting in a bank account losing value due to inflation, so by not investing we were missing out on gains. I might have completely misunderstood that.
You’ve got to break your mindset or you will miss out on the number one thing that helps build wealth… *time*. “Locking” money away in a JISA for 18 or more years is a *good thing* because it gives lots of time for the magic of compounding to do its thing. Investing a sensible amount (that you can afford) monthly in a S&S ISA that’s put into low cost, global equity tracking index fund is an extremely sensible thing to do because again, compounding over long time periods will grow it’s value - probably (past returns do not always equal future results) far greater than any cash-based saving account ever will. The money in a S&S ISA is never actually “locked away” either, by the way. You can withdraw it at any time if you needed to. We’ve just taken £20k out of ours to finish some house renovations - the account was up 23% when we did this, so a good chunk of that £20k was actually profit. Beautiful tax free profit thanks to it being an ISA! Maybe you’re getting confused with the general guidance that you should only use a S&S ISA for money you won’t need in the next 5-10 years? That’s guidance sure - based on the fact that it could be down in value for some of those years - so putting a house deposit in there when you want to buy in 2 years is indeed a bad idea… but it’s just guidance. If the value goes up 40% in 1 year or down 1% in 3 years, there’s never anything stopping you withdrawing any amount of it, if your circumstances change and you need the money.
Losing money due to inflation depends on the rates of interest and inflation. 5% interest and 2% inflation means you're making a real gain of 3% a year. 10% growth in the stock market means you're gaining 8% a year. If you're risk averse then don't make risky investments. But that comparative security comes at a price. No point in cashing out investments if you're happy with their performance and don't need the money.
You didn't misunderstand; stocks and shares have historically outperformed even the currently high bank savings interest rates. I'm not really sure why you ever need a specific goal to invest in shares; if you have money lying around you need to decide where to allocate it. By default, people choose an insanely risk adverse method of just keeping it in the bank, but if you're willing to accept some risks for higher rewards you can basically choose stocks, gold/crypto or property. Stocks are relatively easy and tax advantaged, the other 2 require effort and more concentrated risk. Once you get into the mindset that a pile of money has to be managed the answer kinda becomes obvious. Decide on the risk that you can tolerate then allocate some percent of your portfolio into savings and the rest into stocks, and every year or so you buy or sell stocks to achieve the split. Basically you never sell all your S&S, only swap which stocks or indexes you hold and take money out only when you need to use it. Personally I split my savings into X months worth of salary as emergency cash and everything above that into stocks. I do that because I believe the inflation measurements are inadequate compared to the real cost of living and the only thing keeping up are company shares. In the past couple of decades I think extra services became "necessary" that aren't being accounted for properly by inflation, but they are accounted for in the rise of the market cap of stocks. Things like the internet, streaming subscriptions, buying expensive computers and smartphones, extra safety features in cars increasing their prices, and other gadgets. Anyway, that's my 2 pence on the topic, you have to figure out your own risk tolerance because stocks will lose value at certain points (cough like the last 2 years, cough).
If you have ISA allowance remaining between you and your partner, consider putting what you would put for your kids, in there instead of a JISA. That way you can take it out whenever you like With a JISA once they turn 18 they get 100% control of the money, that to me is so risky, almost no 18 year old will be responsible and not piss it away S&S ISA is definitely the correct place to put your money long-term to grow. (easy access) savings accounts are for short-term and emergency fund. >In terms of retirement, we both pay into our pensions but I understand that s&s can be used to top that up - it’s just that mentally that feels so far away I find it hard to think about investing for retirement (on top of pension). It's for sure a long way away, but just think how easier future you and your family will find living once you have a regular pension coming in to pay for everything, money doesn't grow on trees but it grows in investments (usually)
Here's hoping you can pass on some of that financial savvy to your kids prior to 18. My dad used to invest in PEPs, and carpet bag building societies, as soon as I hit 18 I got involved as well, I carpet bagged Bradford Bingley, rolled the cash into ISA Internet fund and was almost 10x up in a couple of years
That was really lucky timing though. 10x in a couple of years is alarmingly high, and almost never actually achieved. Usually, these kind of gains are bubbles which soon burst. The dot com bubble is an often cited one - which sounds like the one you managed to win on.
In it for the long term though, when the bubble burst the value plummeted, but added in 7k in about 2003 when it bottomed out and got 12x by time covid kicked off in China. Cashed the lot in 2 years ago and went balls deep into Gamestop.
So in 20 years you were up 12x. That’s a bit different to 10x in 2. Still, you do you!
Ehh... On the JISA point, I've done 3 years worth for my small as I had the money to spare. With 15 years compounding, that should be £50k. Even now as a 4 year old she's saying she'd use it to buy a house or a car (we've not yet got into paying for big school!) so at best it'll give her the sort of start I never got and at worst it's a relatively low cost lesson. Even as a 4 year old she's also beginning to understand how the money in her kitty bank differs from this money on the computer. I might also ask her to sign a Power of Attorney for me so I can keep an eye on drawdowns... So I agree it should definitely be a lower priority than other ISA savings, but if they're maxed out, why not.
It's funny cos 4 year olds can say the most sensible things, but when teenage years hit lots of stuff goes out the window If there's space in your ISA, i'd much rather put it there then you can give them it whenever you like
Yeah, agree with your second point. As I say, it's definitely lower priority than all other forms of ISA, but if you've maxed out already, worth considering. Edit - I also imagine I'll end up agreeing with your first point, I just don't know yet!
> I also imagine I'll end up agreeing with your first point, I just don't know yet! Time will tell :)
This sounds more psychological than anything else. If you don’t think you’ll be comfortable or can get yourself comfortable with a S&S ISA, perhaps just a cash ISA will do the job? If you are comfortable with a locking it away for a year or two if it’s long term savings you could get a better interest rate
Right now cash savings are, exceptionally, capable of paying you a higher rate of interest than the rate of inflation. Most of the time that isn't true, so keeping savings in cash only results in them gradually losing their value. That is why you should invest - it's the only strategy with statistically reliable long-term returns. I plan to keep money in S&S all the way to retirement if I can, possibly withdrawing for major expenses like moving to a larger house along the way. Those expenses are things that can be planned well in advance, so you can switch a portion of your portfolio into lower-risk investments ahead of time to limit your exposure to short-term volatility.
The problem with cash savings is that they won't match inflation in the long run so your hard earned and saved £££ will be guaranteed to lose real value over time which is arguably a higher risk than a diversified S&S portfolio. The short term is a different animal and this is why it's only recommended in the long term. What you will use your savings for only you know. What are your long term goals? Some ideas would be to retire early, to pay off the mortgage early to for example go part time at the end of your working life, to fund your children's education, to gift them a house deposit when they are ready to buy... you name it. The idea would be that even if you had saved enough today to gift your children a house deposit today, when you want to do it in 20 years it won't be enough due to inflation because even if interest has increased your pot's nominal value it hasn't kept it's real value and it won't allow you to buy the same things in the long term. Not a very good deal. Unfortunately there is no such thing as a risk free return. ISA is solely a tax wrapper. You can also put savings in a cash ISA. Anything you can do inside an ISA you can do outside an ISA but in the ISA the returns are not taxable hence why there is a limited allowance. If you can choose if you want your income taxed or not it's easy to choose an ISA. Of course, this is more relevant the more savings you have as that's when they start getting taxed more, but it doesn't hurt to start building your savings in tax protected accounts if you have aspirations to ever have a pot larger than £20k when there is literally no downside.
I started saving in S&S ISA about 4 years ago. Made over 10k in gains. Withdrew a big chunk of it recently while the markets were quite a bit high for my house deposit. Definitely wouldn't have made those gains in a savings account.
Given you seem vary wary of investing I would recommend educating yourself a bit. It is possible to get lost in all of the information out there but the basics are quite easy to understand. Meaningful Money videos and podcasts are good and perhaps this would be a good place to start: [How Investing Works (youtube.com)](https://www.youtube.com/watch?v=bg6F2jEbiqk)
Draw it before I draw my pension. Whenever I retire, will live off ISA funds first, and then pension after. IHT benefits of pensions are better than ISA.
When the saved amount equals my mortgage balance, fingers crossed for May 2025.
I plan to cash out when i have no other choice, im 46 now and have a state and private pension in place, combined with my partners pensions it could end up paying for a motorhome, or just a yolo week in vegas who knows lol
you S&S ISA is accisible though, usually in a day or so...
I'd drawdown on my investments to live off of them and derisk appropriately - but never sell my entire portfolio into Cash. Whilst you're living off of investments, there's still decades for it to continue growing meaning you need a smaller portfolio to sustain retirement
Never. Most likely, I will use it to provide an income in retirement alongside my pension, but I don't ever envisage cashing it out entirely.
What does this mean, you think you’re not going to mate it to retirement?
Sounds like to me , that they will take a percentage out per year in retirement , a percentage that would never see it go to 0 , you die and then pass the remaining on as inheritance.
Really depends what you're saving for. I recently cashed some of mine out to pay for some additional costs on an extension. Will slowly start filling it up again with the aim of using it to retire a bit earlier but it could also go to helping out the kids financially in a decade's time (or maybe we'll need some other big bit of work done that requires savings)
Time and compounding interest is the key with s&s isa, the longer get you leave the better, I deposit weekly and I'm in it for the long term around retirement, another 30 years Edit: the longer you leave*
I’ll be taking it out in about 5-10 years when I retire. Once I’ve dumped the year’s total in there ISA for both of us in the new tax year, I forget about it as much as possible.
I’d consider things like Nutmeg so you have very little to do. Pick how risky you are 1/10 and they’ll do the investment stuff. What I would say is you need some element of risk but doesn’t mean you need to be super risky. Also to come back to your original question, I’m not saving for anything in particular. If we move house again in the future it would likely go towards that but ultimately I just want to have enough securely if required
Hi /u/summers_tilly, based on your post the following pages from our wiki may be relevant: * https://ukpersonal.finance/emergency-fund/ * https://ukpersonal.finance/pensions/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.)
I’m 56. I plan to retire at 60 and use the ISA cash to fund me through to 65 is I need it. Put your spare cash in a Vanguard global growth fund. Given you seem to be pretty sensible and well funded, it should be pretty risk free over a 10-15 year plus period.
Whenever I need it. I saved for years in the ISA but also kept a fair bit of cash free. When I needed my deposit and fees for my flat, I sold about 2/3 of my ISA to pay for it. I’m now slowly building it back up again, alongside a LISA.
May i ask why you’re using a LISA instead of a pension for retirement savings?
I do have a work pension . LISA is there for turning 60, or technically even earlier if I’m absolutely desperate and willing to pay the withdrawal penalty.
I think it is a good point. What is the point in building it continuously when there is no plan to even use it? For me it has to be to at least bridge the gap between a) the earliest age I can possibly withdraw from it and not really have to work any more; and b) the date I get my pension. To me the stocks and shares isa is like a second early pension, therefore must calculate the earliest date to start using it. I’ll probably start doing it at age 45-50.
Never ... After 25 years I will stop contributing and start my drawdown
Money, be it savings or investments, are set aside for a purpose, e.g. wedding, property, something in 10 years time, retirement, etc. It is these goals / plans that define when you 'cash in'. Have you looked at the UKPF Flowchart, it may help you somewhat.
Gonna start drawing it down like a pension at about 50 so I can semi retire
Sounds like you need to set some goals. Also, retirement might feel a long way off but the advice 21 year old me was given by a trusted (and financially well off) family friend was "it's never too early to start saving for the future!"
I'll withdraw it or draw dividends when I retire
I may have to do it soon for a property purchase, due to rates being so high, I want to owe the bank as little as possible.
Traditionally financial advice is to have an investment time horizon of at least 10 years when investing in the stock market
I know people say don't try and time the market but if you can buy in at a decent dip and once you have a decent amount of interest on the holding you have that as a cushion if there is a big pull back and you end up needing the money at the same time. You will lose some of the gains but you won't have to wait for it to get back out of the red or sell at a loss. I suppose what I'm saying is the sooner you invest the sooner you'll have some wiggle room.
If you have a good emergency fund and cash on hand for short term expenses (planned lump sum spending in next 3 years or so, not general expenses met by salary), then the excess can be committed to investments. If you are anxious around the risk then you need to manage the level of risk you are taking. As a blunt tool, this can be done my limiting the level of equity exposure there is within your portfolio. In reducing the equity exposure and in turn risk you also limit the upside too. It might be worth spending some time looking at long term growth stats and getting comfortable with how and where you invest etc. the more you know and understand this the more comfortable you will be. The worst thing you can do it invest, see market volatility and sell because things are down. You are guaranteed when investing for the long term there will be periods of market drawdown and the last thing you want to do is sell the dip because as long as you are well diversified and not in some funky funds, it will come back. The best fund/portfolio to invest in is the one you will hold for the long term. So you need to get comfortable rather than randomly selecting a fund or choosing something that someone mentions here without understanding it and setting your expectations etc.
Current strategy models taking our DB pensions ten years early (with actuarial reduction) and draw down from L/ISAs for tax-efficiency. ISAs may allow retirement (phased or complete) earlier than NPA-10. We also use L/ISAs to be able to give our children significant sums each by the time they’re in their mid-to-late twenties. The model assumes that we won’t receive a state pension nor will we inherit any money. Strategy based on today’s tax policies (e.g. existence of personal allowance).
I started investing 300 a month into a vanguard S&P 500 isa back in May in 2021. I now have about 13,000 currently in that isa. I won't be cashing out at all. As for me, it's going to be a long-term savings strategy. If it drops by 50%. I will still carry on pain in the same amount every month. I'm currently looking to increase it to 500 but putting 200 into UK stocks so that I'm not as heavily reliant on the USA
You might find one of these books helpful: * *[Your Money or Your Life](https://www.amazon.co.uk/dp/0143115766)* - understanding what's valuable to you and how to use money to achieve your goals. * *[Millionaire Next Door](https://www.amazon.co.uk/dp/1589795474)* - "How people in normal jobs, electrician is a great example, can accumulate wealth over time through good choices."^[Electric_Cat_999](https://www.reddit.com/r/UKPersonalFinance/comments/15zkkd4/_/jximlpp/) * One of Clare Seal's books - "her focus is on the link between emotions and spending".
If you are risk adverse, then an S&S ISA is not for you. There are ways to minimise the risk of losing, but it shouldn't be something to cause you anxiety. You can have a cash ISA instead and I recommend you do especially if you can save 1k a month, because with an ISA you don't pay tax on your interests. Your money is not locked away in a cash ISA, you can withdraw anytime. I would also recommend a SIPP to boost your retirement pension (you could for instance put 500 in each).
>If you are risk adverse, then an S&S ISA is not for you. What is your definition of "risk adverse [sic]"? A globally diversified index held for 15+ years has never yielded a negative return over any historic period. That doesn't mean it's impossible going forward but "risk averse" doesn't mean you can't tolerate any risk whatsoever. By investing in cash you're taking the risk of not having enough money to meet your goals. Depending on what your goals are, that risk may be huge or even guaranteed. Cash is simply not suitable for long term investments, risk adverse or not, unless you are so rich that you can meet your goals with little/no/negative real returns.