Busted – the 7 biggest myths of investing

Busted – the 7 biggest myths of investing

Think investing is only for the rich? You’re not alone. There are many myths about investing that simply aren’t true. Understanding what these are will help you become a savvy saver and get your money working much harder for you.

1. Investing is only for the wealthy
Wrong! You can get started with a small amount and build it up by making regular top-ups. In fact, the sooner you start making regular top-ups the better because the interest you make on your growing investments can make a significant difference to your total over the long-term.

2. You need specialist knowledge to be a successful investor
Using an online advice tool from an independent financial adviser like Heritage Financial Solutions Ltd means you don’t need any special knowledge. Our easy-to-use interactive online tool will guide you to make the right investment fund choice for you, with the peace of mind that your decision is safeguarded by the fact it’s a product offered by an independent financial advice firm regulated by the Financial Conduct Authority (FCA).

3. I need a large lump sum before I get started
You can start investing in a tax-free stocks and shares ISA using our online advice tool with just £1,000. Topping up your investment regularly with smaller amounts gives you the opportunity to increase the interest you get on your investment over the long term.

4. I need to speak to a financial advisor before getting started
Getting advice from a qualified financial advisor can be incredibly valuable and have a big impact on your potential returns. However, if you’re investing less than £20,000 per year and plan to leave it there for three years or more, a tax-free stocks and shares ISA that you can buy online is a great option. Choosing one using our online tool means you’ll get the backing of a specialist financial advice firm but without the need to speak with an adviser directly.

5. Banks offer good deals for tax-free ISAs
There are lots of different options for investing in an ISA, not just through the banks. Most high street bank cash ISAs currently pay very low interest rates that are below the rate of inflation. This means the real value of your savings is actually falling, not rising. If you’re prepared to trade off some risk for higher potential returns, a stocks & shares ISA could potentially earn you a lot more interest, particularly if you’re happy to invest for three years or more. Our online investing tool is easy to use and will help you choose the right type of ISA for you.

6. Investing is too risky
While there is some risk in any investment linked to stocks and shares, you do have the ability to choose how much risk you’re willing to accept and, importantly, how much risk you can afford to take. As well as shares – or equities as they’re also called – there are other options that can offer less risk, such as government bonds. These are the equivalent of you lending money to the government for a guaranteed return.

Many ‘stocks and shares’ ISAs use these as part of their mix of investment options. When it comes to risk, it’s important to remember that while we hear about stocks rising and falling in value, if you’re investing for a number of years, the long-term performance of ‘stock market’ investments has historically risen in value.

7. You need to try and ‘beat the market’
“Sell high and buy low” is the holy grail for investors but it’s a fool’s game. The truth is it’s ‘time in the market’, not ‘timing the market’ that leads to successful investing, particularly when it comes to stocks and shares. Banks certainly have their place for small amounts of short term savings, but if you’re looking to make your money really work for you over the long-term, it’s well worth adopting an ‘investor’ rather than a ‘saver’ mentality and exploring your options.

If you’re looking for a straightforward, affordable way to invest into an ISA or Investment Account, and have decided that you don’t want face to face advice, then using our Personal Finance Portal may be the answer.

Please note this article is for information purposes only.




ISA – Individual Savings Accounts Online

ISA – Individual Savings Accounts Online

Top up your ISA Allowances.

Making the most of your tax-free allowance is easy.

An ISA is a ‘wrapper’ designed to go around an investment, to make it tax-efficient.

There are two types of ISA investments.

Stocks and shares ISA: this gives you the chance to invest your money in equities, bonds or commercial property without paying personal tax on any returns you might make

Cash ISA: this is like a normal deposit account – except that you pay no tax on the interest you earn.

The ISA limit for 2017/18 is £20,000.

You can invest up to the annual limit in a cash ISA or a stocks and shares ISA or a combination of both.

The annual ISA allowance is for every eligible adult. This means a husband and wife, for example, could put up to £40,000 between them into ISAs this tax year.

THE STRAIGHTFORWARD AND AFFORDABLE WAY TO INVEST INTO AN ISA OR INVESTMENT ACCOUNT

These days, we are all more aware of the need to provide for our financial futures, and to fit in with our busy lives, we’re increasingly comfortable with researching and buying products online.

If you’re looking for a straightforward, affordable way to invest into an ISA or Investment Account, and have decided that you don’t want face to face advice, then using our Personal Finance Portal may be the answer.

End of Tax Year Checklist

End of Tax Year Checklist

Make the most of the tax year end with these helpful tax allowance tips. Please note tax rules are subject to change over time and the benefits of these tax wrappers depend on individual circumstances.

  • Open an ISA (Individual Savings Account) – You can shelter upto £15,240 from income and capital gains tax this year. Remember if you dont lose your ISA allowance for the tax year, you lose it!
  • Open a Junior ISA – The junior ISA allowance is currently £4,080 and offer similar tax benefits to adult ISAs. All children are now eligible for these new tax wrappers.
  • Use your Personal Allowance – Reports are suggested that the Chancellor is considering cutting tax relief in an effort to reduce costs, this could mean higher rate and additional rate tax payers lose out.
  • Use your Capital Gains Tax Allowance (CGT) – This tax year you can realise £11,100 without paying tax, if you hold shares or funds outside of a tax wrapper it could be a good time to sell some.
  • Reduce your Inheritance Tax (IHT) – Make gifts of upto £3,000 from capital each tax year, which will be exempt from inheritance tax. You can also carry forward any unused allowance from last tax year.
  • Seek advice – if you need help in making the most of your tax shelters and allowances, speak to an Independent Financial Adviser who can assist you.

Understand the New NISA Rules

On 1 July 2014 ISAs changed. The New ISA, or “NISA” (New Individual Savings Account) changes allow ISAs to be used as a home for even more money by increasing the yearly contribution limit, and improve flexibility by allowing money to be transferred from stocks and shares ISAs into cash ISAs.

NISA qualification

Different NISAs have varying degrees of qualification. You must be:

  • Aged 16 or over to open a cash NISA
  • Aged 18 or over to open a stocks and shares NISA
  • There are separate NISAs for children under the age of 16 – these are called junior NISAs

NISA allowance

The allowance is the amount the government permits you to invest in your NISA accounts during each tax year. At the start of each new tax year (6 April) you’ll receive a new allowance. If you don’t use it, you lose it – the allowance can’t be rolled over to the next tax year. By using your NISA allowance each year it’s possible to accumulate a significant amount of tax-efficient savings.

In the 2014-15 tax year, individuals can invest up to £15,000 a year in cash NISA accounts, stocks and shares NISAs, or any mixture of the two – you can save the entire £15,000 in cash if you so wish. In the 2015-16 tax year this limit will increase to £15,240.

Remember that you’re only able to open a maximum of one cash NISA and one stocks and shares NISA each year. Once open you can transfer money between these different types of NISAs freely, subject to your provider’s terms.

This differs to the old Individual Savings Account (Isa) rule where you could transfer money from cash ISAs to stocks and shares ISAs, but not vice versa.

Transferring NISAs

You can easily switch your NISA provider without losing your tax-free allowance, but it’s vital that you transfer the NISA rather than withdrawing the money to open a new account.

Under the old Isa rules, cash ISAs could be transferred into stocks and shares ISAs, but not vice versa. NISAs allow transfers either way – from stocks and shares to cash and vice versa.

As with ISAs, it is also still possible to transfer each type of NISA to another product of the same type. You can, for example, transfer one cash NISA to another, something you may want to consider to obtain a better interest rate.

Within a tax year you’re only able to transfer the whole of your annual NISA to a new provider. Amounts from previous years may be transferred as a whole or in parts as you wish, but you should be aware that not all NISA providers will allow part transfers.