Beat the urgent ISA deadline – top cash ISAs for savers, stocks & shares for investing

25:00Castle Trust 4.49%. Shorebrook 4.48%. So the rate is lower in fixed rate cash ISA. So if you're not paying tax, you'll probably want to go for the top savings there. If you are paying tax, cash ISA still smacking the pants off the normal savings. The only advantage of cash ISA fixes over normal fixes. With a cash ISA fix, they can't lock your money away. Put your money in a normal fixed rate savings, you can't touch it for the term. Put your money in a cash ISA. The rules say they have to allow you access to your money. Now, they normally charge you an interest penalty. You lose 90 or 180 days worth of interest.

25:31So you're not going to get the interest. On the whole lot or on what you take out? You generally have to close it to take it out anyway. So it's on the whole lot. So there is an advantage. For those people who are saying, I almost certainly want to lock money away for a year or two years, and I know I can lock it away for two years, but there is a tiny chance in an emergency I will need that cash. At least in a cash ISA, you do have access to the money in an emergency. It'll cost you. You will lose interest on it, but you could get your capital back. And that's actually not a bad feature. And we'll be talking stocks and shares ISAs in a moment.

26:01And I've got more of your cash ISA questions to answer later on in the podcast. So don't go anywhere. Well, actually, that's not true. You can go where you like as long as you're still listening. The TELUS, the financial light bulb moment. Yes. Have you ever had a light bulb, financial light bulb moment, when you suddenly realised you'd approached something financially the wrong way, then it all made sense to you? We want to know what it was and how did the realisation occur. Matt, putting the amount of pet insurance premium into a bank account each month rather than taking out insurance. With two dogs, I now have 4K in the bank for treatment and pay for regular dog check-ups with it.

26:38So that's known as self-insuring. It is something that people do. The problem with self-insuring is the initial months before you've got the savings put away. if something were to happen then, you've got a real problem. If you get a bill for three grand and you've only got 200 quid in that savings, if things have gone well for a few years, there's another way that people could do it. I've never really checked it out in pet insurance. I talk about it in private medical insurance. One way to do self-insuring is you have a really high excess. So you get a cheap insurance policy with a very high excess.

27:06I'm not going to claim the first two grand. So that you basically have it there in case there's a stuff hits the fan emergency, but you self-insure in the meantime, brings your insurance premium down lower. So for small things, you're going to pay for them and you're only going to claim on the pet insurance. Which in practice is what you tend to do with car insurance anyway, isn't it? Yeah, but car insurance is a compulsory, is a grudge purchase, you have to have it. But with private medical insurance, there are some people who use that. I've not done it. I've not heard anyone doing it on pet insurance.

27:34I can't see why it wouldn't be possible depending on the excess situation. But yeah, it's an interesting one. Okay. Anyway, Tim in Bath says, my lightbulb moment in his late 30s in a queue for baking sandwiches at the local rugby club. There's a bloke in front talking in a very animated way about being upset how anyone could be in such a bad financial state. And he said, look, it's just so simple. You don't spend more than you earn, which sounds startlingly obvious. I suppose it's true, unless you've got to feed your kids. Well, one of the great problems we've had over the last few years, being straight and being depressing, is when you talk to the big money and debt agencies, your citizens' advices.

28:18When people have come into citizens' advice and they've had the expert help on budgeting and money management and cutting down their minimum expenditure, over 50 % of those people are still deficit budgeting. In other words, over 50 % of the people on minimum expenditure still have less income than minimum expenditure. so for those who can do it it's absolutely the right way to go forward and I've always been supportive of budgeting and doing money you know money makeovers on yourself but currently it isn't possible for everybody. Let's go to a different one, Penny. Moving my mortgage payment date.

28:47If you have bills piling up and are worried about going overdrawn your mortgage payment is due before your next pay packet. See if you can change it to a few days after you're paid but within the same calendar month. Most people seem to get paid at the end of the month but others are paid mid-month. So if you've changed jobs but never changed your mortgage payment date, see if it could work for you. So I actually often talk about moving it to just before your next payment date, right, so that you're going to be overdrawn for as little time as possible. You want your big bills coming just before you're paid so that it clears them straight away rather than it leaves you on a lower amount, certainly.

29:18It's a different way. Moving payment dates can be really effective. Can I tell you mine? Yeah. Right. I ask myself, I ask myself, having spoken to you every week, why don't I address to these things? Why don't we look at everything from my broadband, mortgage, I mean, you name it. Sky, etc. Why am I not tackling this? And I did a job on myself. The reason I'm not is because I'm actually frightened about what I'll find. I'm frightened to find out how much I've been diddle so far. There's almost a sunk cost fallacy, I suppose. I don't want to realise how stupid I've been being for the 5, 10, 20 years, whatever.

29:56I've just had my head in the sand. So that is not an uncommon thing. But I think what's an interesting answer to it so I remember when I started out, I mean 20 years ago now, and I had to do makeover, I hate doing makeover programmes where I go in because my whole thing is teaching people how to do it themselves, not doing it for them and I didn't like it. But hey, I was young and it was a career and they gave me a programme called Make Me Rich and I was like, please can we not call it that title? It's the opposite to what I do. Can we have a question mark? No, it's first commission. These days I say, this is what the title's going to be.

30:25You know, it's changed. and I would go into people's houses and it would often be people with debt and I'd look through their finances and I'd say, look, you do realise this is your total amount of debt, you're in£40 ,000 of debt and their faces would absolutely crumple in front of me with that dawning realisation of quite how badly they were in the mire. And then the thing I'd say to them, which I think applies to you, is you feel like you are in a much worse position than you were at the start of the day but in reality you are in a much better position because you have just taken the first step towards sorting it out and you have to get through that transition.

31:04You have to accept that transition towards fixing the problem as with all of the forms of people in denial about what the issue is. You actually just have to take the first step and then you can be, think of, and there'll be people out there now get in touch who've done this and then they get a wonderful feeling. You know, it's like starting on a run. It's a horrible thought starting on the run. You run. You know that once you get the euphoria and towards the end you feel good about yourself. So I would urge you to forgive yourself your past errors and actually get the joy at the end of that as realising, do you know what?

31:38I'm not being diddled anymore. I've sorted it all out. I'm in a better situation. And I always talk about for most people, see it as a job of work. If you have to take a day off work to sort your finances, for most people who've never done it before, The gains can be thousands of pounds in a day. You don't get paid that much, so it's the best paid day of the year. It's almost a political assumption that the market will sort itself out. So if I don't do anything, the market in everything will default to just... But I know it's absurd. It's stinking thinking. The market's job is price differentiation to make everybody pay as much as they will pay a company.

32:16And you are at the top end of that. You're paying the most. Those who don't look after these things pay the most. Yeah. I'm an idiot is what we are trying to say, but I will. I'm going to argue against that because, I mean, yes, in the generality, obviously, but not in this. No, you're not. But in the specific, that's a representative of what many people think. And, you know, let's be really straight about this. There are many people who have abnormality. It's often interlinked with mental health. There are people who are neurodiverse who find ADHD can make these type of things really difficult.

32:52There are lots of blocks, both for everybody and because of all the different forms of people that we are out there who are listening to this, who don't do those things. So we need to take away the stigma of the past problems and actually take away the warmth and encouragement of, why not give it a try? You might just feel better at the end and you'll certainly have more money in your pocket.

33:15OK, shall we do some stocks and share ISA questions? Should we bring in some help on this? Yes, so, I mean, it's a regulated subject. I'm not regulated and I don't cover stocks and shares investing. Let me do my normal statement I say on that. And I said it in a select committee recently, not on Energy, a different one. I always get concerned because I worry the fact I don't talk about investing makes people think that I'm anti-investing and they shouldn't invest. And we're already a risk averse nation. I do invest personally. It's not my professional expertise, so I don't talk about it professionally.

33:52And it's a regulated subject, so I don't talk about it. But I do invest. And if you're going to be putting money away for more than five years, you will generally find that in the long run, a decent spread of investments will outperform savings. So don't take my silence on it as anything other than it's not my subject. You know, I don't talk about medical health care, but it doesn't mean I don't think you should go and see a doctor. It's just not my subject, and that's the only reason I don't talk about it, not that I'm anti it. OK, well, we've got Ed Marshall with us, Chartered Financial Planner, Independent Advisor with Dean Wealth Management.

34:26Ed, how are you doing? Hey, very well, thank you very much. Good to be with you today. Right, so Susie says, How do you know which S &S stocks and shares ISA is best as you can't compare interest rates like a cash ISA? Please explain what fees are involved. So maybe we start with you can put up to£20 ,000 in the stocks and shares ISA. It protects you from capital gains tax and it protects your dividends from tax as well, doesn't it, Ed? It does, yeah. I mean, it's a tax wrapper, as you were saying earlier. So it's a great way to shelter£20 ,000, no dividend tax, no interest, tax to pay on your interest, no capital gains.

35:01So we're on the winner for starters. The whole thing with investing in stocks and shares is that over the long term, you expect to get more peaks than troughs, more positive years than negative years. You're trying to outperform cash. You're trying to outperform inflation. You want a real return for your money. So there's two questions. First of all, which platform do I want to have my stocks and shares with? And then the second question is, which fund or funds am I going to buy that matches my attitude to risk? That's the risk that we're willing to take along the way and the returns that I expect to be compensated for in exchange for taking that risk.

35:34There are a number of different platforms, a number of different funds. We can dive into some of those options very easily today. So the platform is very simply who you're going to put it with and you're going to be looking at what its charges are and what its choice of investments are. So that could be a Hargree Flansman like AJ Bell, a triple I. It could be anyone. But what Suzy's asking, she's asking the simplest question of all, is, well, who's going to make me the most money? Because obviously you're not getting interest on it, but it's not cash. Let's start. And one of the reasons I don't talk about investment, Ed can give you his best analysis of what he thinks is going to happen in future, but he doesn't know because he doesn't have a crystal ball.

36:12And that's what puts people off investing. They want certainty and there isn't certainty. It is. But where are you going on this, Ed? I can just say, Ed, you could look at past performance of any particular firm. Literally, by law, they have to tell you that that does not reflect future performance. Yeah, so risk and return are intrinsically linked. If I want to take more risk, I should expect a higher return. You mentioned before about diversification. That's absolutely crucial as well. So if you don't care about short-term volatility, you don't mind when the markets go down, you just want to hold it because they're going to make you more profit over time.

36:41You buy 100 % global equity fund. You buy as many shares as you can within that single fund, and you will generate over time a higher expected return. So what is a global equity fund? So a global equity fund would be something like, for example, Vanguard, a lot of us have heard of Vanguard, they have a range of funds called life strategy funds. So if you buy the 100 % equity life strategy fund, you are getting around about 6 ,000 to 10 ,000 different shares around the world. You've bought the world roughly as it looks, the global stock markets. And because you've diversified so heavily, your peaks shut out where the troughs, you should get a higher return over time.

37:18Not everybody, though, wants to take that level of risk. Because if we think back, it was only five years ago that the markets fell by a third in six weeks because we were going into the pandemic. And that stressed everybody. So if you don't want that level of risk, you buy a fund that's also got bonds. So government and corporate bonds within there, take a little less risk, get a bit of a lower return, but you moderate out that volatility along the way. Give us an example of a fund where you could add that in. So again, the Vanguard Life Strategy Funds, I just used this as an example. You can have 20 % bonds, 80 % equities, 40 % bonds.

37:51Equities are shares, aren't they? Just to help. That's right. Global stock markets. Yeah. And so you've got other fund managers like dimensional fund managers. And when you're looking at different platforms thinking, but there's so much choice, where do I go? You can look at the likes of Money Saving Expert. You can look at YouSwitch. You could also look at Which. There are different platforms listed like AJ Bell. You've got Vanguard on there. You've got Interactive Investor and they can help you make those choices. And I think one thing that's important to say to people, as I often get questions about my shares have gone down, should I sell them?

38:22My shares have gone up, should I sell them? There are only two dates that really matter with shares. It's the date you buy them and the price you buy them, and it's your date you sell them and the price that you sell them. Now, if the share price has gone down, it doesn't mean it's necessarily going to go up. My view, it'd be interesting to hear yours, Ed, is you should always look at this at the situation on the day. if you have£2 ,712 worth of a share, the fact it's gone down or up in the past is to an extent irrelevant. The question is, am I happy to have£2 ,712 of that share at the moment of where it's going to go in future?

38:55There's no sort of rationale linked to where it's moved in the past, is there? But there's also... Sorry, take that one, Ed. Yeah, well, the fact is that the markets will always provide a higher return over... Just looking at the global markets, the global economy has always got to expand by more than it contracts. So the global markets are always going to give you a return above cash and inflation. So yes, you've got that£2 ,700 invested. It will fluctuate in value. But if you're well diversified, and what I mean by diversified is you've not bought a fund manager who's got 80 different stocks in that fund.

39:26They're telling you they're going to outperform the market. They've done it for the last five years, and then they fall off a cliff in terms of the performance. They've called the market wrong, and you've lost more than the market. Nothing more frustrating than that. Just buy into funds where the only risk is the risk of the markets. And then over time, time does take away risk. There's another variable which Susie identifies is that it's not only how that fund performs, but how much they're going to charge you to be in that fund. Yeah, great point. So you've normally got two costs that you need to bear in mind here.

39:56You've got your fund platform cost, i.e. what's the cost of that platform? typically between 0.15 % and 0.45 % a year is what you might expect to pay for that investment platform. That's where you log on to, you see the value of your investment. Then you've got the fund cost, which might be quarter of a percent to half a percent a year. You never see the cost of the fund. The cost of the fund is deducted before the unit price is calculated, but it is there and it impacts on performance. High charges will reduce your returns. Of course, you could get a financial planner who will explain all of this to you and give you advice.

40:30But if you want to DIY, do it yourself, then you just need to pay attention to fees. Perhaps we pay no more than 0.75 % a year overall. It's very easy to achieve that. So just to do some of the language, effectively what you're talking about is between active and passive fund management. Passive fund management is something that's tracking an index or tracking global shares without active fund management you talked about before is when you've got someone who's picking stocks for you. And you're moving towards the passive saying, well, actually, I'm not sure that that's much point in the active, which is, it's a big debate in the industry, but a lot of people tend to go that passive will work there.

41:04I think that works well. In terms of an independent financial advisor or financial planner, look, I think for most people who don't know what they're doing, that's a very good thing. But let's be honest, between you and I, you need a bulk of wealth to do that. You're, and this isn't denigrating you. Actually, I just have to say, I've had investment people come on before and I'm always like, you've got to talk the type of funds people should get and they won't name funds. Ed, I'm so pleased that you've done it and you've been brilliant. Thank you very much for that. But Ed, let's just set expectations.

41:30How much would someone need to have or to be putting away a month to go towards a financial planner or a financial advisor? You're not going to do it for somebody who's just got a 500 quid lump sum, are you? It's not your, your while, or worth the fee that they'd pay. No, a lot of financial planners, though, will just simply charge you a fixed fee. They'll charge you a planning fee. So whether that fee is£500,£2 ,500, they will charge you a fee. they will give you advice and they will set up that plan. And even if you're only contributing£100 a month into it, the value of that advice, having paid the planning fee and having got the plan set up, it will pay dividends for you over the years because they've set you on the right track.

42:08But it is for people with bigger amounts of money. Let's just be plain on that because you've got to factor in the cost you're going to pay. I'm in favour of it. I'm saying people should do it, but we need to be realistic. Just one more quick question. can you transfer shares you hold outside an ISA into an ISA? Yes, better an ISA ring it's called. And you'd do it for capital gains, wouldn't you? Yeah, too. You would. Okay. So I'm going to do some more with Ed. Hopefully, as long as he can stay on the podcast, we'll do some more questions like that on the podcast. But I think you should play that theme tune now, Adrian.

42:42Hello, welcome to Martin's Money Mastermind, where Adrian picks from a three-option multiple-choice question. He has currently got eight right, got it right last week, and 12 wrong. So now I wanted to admit I had an issue with my credit card this week. I know I probably shouldn't say that. The clickbait tabloids will be all over it. I decided I was going to buy Adrian a little trophy in anticipation of him getting this mastermind question right. Unsurprisingly, that was flagged as suspicious activity. Equally, Adrian's own credit card statement is confused. He bought an emotional support tortoise two years ago, and he's now transferred that balance to his current credit card, on which he bought a 12-foot inflatable power drill when the card was on a promotional rate.

43:28And yesterday, he purchased an antique fogcorn on the same card. No one has any idea why, unless they read his Guardian column, in which case this type of thing is rather mundane. So the key question, Adrian, all those three debts are on the same credit card at different interest rates. One is at 0%, one is at 18.9%, and one is at 24.9 % on the same credit card. When you pay off 200 quid, where does the credit card company allocate the repayment? A, it pays off the highest interest rate debt first. B, it pays off the largest debt first. C, it pays off the lowest interest rate debt first. Oh, God.

44:24I just wish you could all see Adrian's face where I asked the question. There's this sort of frown and, oh my, where are you taking me? The question is, what are they paying off first? When you've got multiple interest rates on one card, what do they pay off first? I would... I think they're paying the one with the biggest... the biggest one. Not the highest interest rate, but the one with the biggest principal. What would you want them to do? Well, I don't know, because I think probably the highest interest rate I think I'd probably want them to do. Yeah, you would. You'd want them to pay the highest interest rate.

45:08But you're saying A was the highest interest rate, B the largest debt, C the lowest interest rate. And you're going for B the largest debt first. Well, what I can safely tell you is there's never been a situation where they pay the largest debt off first. That's never happened. So let's have the uh-uh. That's wrong. 8.13. Until 2010, credit card companies would default with certain things about minimum repayments and various other things. but they would default to paying off the lowest interest rate first, which meant if you had two different types of debt on the card, your highest interest rate debt was effectively trapped until you paid the lowest interest rate debt, accruing more money.

45:44Now, I was involved in the campaign, and it was Gordon Brown's finance team at Number 10 who changed the laws, and I was involved in it at the time, which I'm quite proud of. But in 2010, the rules were changed. They now have to, by law, pay off the highest interest rate debts first. So if you had a debt at 0 % and you had a debt at 24.9%, your payments would go first towards the 24.9 % debt, the one that is accruing cost at the greatest rate, not the 0 % rate. But that could be£10. You could only have£10 on that. The first money goes towards clearing that. Well, that philosophy is what I would always...

46:20People who have... We take this further because I talk about people who've got debts on different cards. You've got one card at 10%, one card at 15%, one card at 20%. Your biggest debt may be at 10%, But I would say focus all your spare cash on paying off the 20 % card. That's the one that's growing quickest. Once the 20 % card has gone, then pay the 15 % off card. And on the cards that you're not focused putting your money on, you just pay the minimums. Now, normally, anti-minimum payments, when you've got one card, you want to pay off more. But with multiple cards, you want to get rid of the debt that's costing you the most and growing quickest.

46:52And that's what we did in 2010. It's got the law changed so that card companies, if you have different interest rates on one card, have to do what you would do if you had a choice to pay it off, which is pay off the highest interest rate debt first. So thankfully, at least in that, years ago I used to say, never, ever, ever spend on a balance transfer card because the spending would be at 20 % and the balance transfer would be at 0 % and you'd trap the spending in. I mean, you still generally shouldn't do it because you should go and get a special card for spending on. But that never, ever, ever was one of my catchphrases along with in full.

47:23I don't do it in the same way anymore. OK, we've got a whole minute left together. How should we spend? Ask me a cash ISA question or an ISA question if you've got one. OK. I will... Hang on, I've got to go. I've got to find the... That's the one. I've got to find the questions for that. That's the one. If you're in between retrieving interest monthly or annually, which is best, Ruth says? If you're not taking money out of the account, it makes absolutely no difference. If you want to take money out of the account, then you've got to do it monthly, and that's a way that you can use the income.

47:55The reason the interest rates tend to be different on the same account is because when they do the monthly interest, they're assuming that you take the money out so they're not compounding it, whereas the annual interest is compounding it over the year. You're actually being paid the same amount. If you leave the money in, you get the same amount. But obviously, if you're taking money out of an account, you won't be any interest on that account, and that's why the interest rates tend to be slightly different between monthly and annual on the same account. So I've got Ed Marshall from Dean's Wealth Management back with me now to do a few more of your stocks and shares ISA questions before I do a few more of your cash ISA questions.

48:28OK, Ed, Janet's got an interesting question here. I currently have a stocks and shares child trust fund worth approximately£16 ,000 for my 15-year-old. Payments of around£100 go in each month. Is it worth moving to a junior ISA or leaving where it is until it matures when he's 18? Just while you think about that, when it comes to child trust funds, they are effectively now just like a junior ISA. Now, in the savings side, if you've got a savings child trust fund, because child trust funds are closed accounts and junior ISAs are open accounts, the rates are better in junior ISAs. So it is always worth transferring the child trust fund into a junior ISA because with cash ISAs, it's very simple.

49:07If the rate pays more, go for the higher rate. It's more complicated in stocks and shares though, isn't it? Well, it can be. But because for the same reason child trust funds are closed on the stocks and shares side of things, you're going to have far more choice by going for a junior ISA. And by choice, I mean availability of funds and also more competitiveness in terms of charges. So you might want to look at the fund that you're invested in with the child trust fund and look at the charges and think, could I switch that over to a junior ISA, get a fund that's more appropriate and pay lower charges at the same time?

49:40And the answer is most likely, yes, it is going to be worth your while switching. A few places where she should look at doing that, please. Yep, you could look at Vanguard. You could look at AJ Bell. You could look at Hargreaves Lansdowne if you're looking at platforms that will allow you to do it yourself. There are also platforms that independent financial advisors would use, such as Transact, such as Quilter, who all offer juniorisers as well. Okie dokie. Mick, I have some shares from a company save as you earn scheme. I would obviously pay capital gains tax on a chunk if I sold any. How do I transfer them into any form of ISA to minimise the capital gains tax liability?

50:19So you can transfer those shares out of the Save As You Earn scheme. You can transfer them across into an ISA, a bed and ISA, as you mentioned earlier. In order to not pay tax... I probably confuse people with that term. So a bed and ISA is what you do. There isn't a product, is there? It basically means you sell your shares outside an ISA and put them into an ISA. That's right, Martin. Yeah, so you're in a taxable environment and you're moving them into a tax-free environment. Now, if you want to move them from a Save As You Earn scheme and get them over into an ISA, you've got to do that within 90 days of having got them out of the Save As You Earn scheme.

50:50And you're likely going to want to use a platform such as Redmayne Bentley, such as Hargreaves Lansdowne, where you can hold those shares on the platform and then instruct the platform to move those shares across into the ISA wrapper for you. Alternatively, you could go to a stockbroking firm and get them to do it, but most people want to do it themselves. The important thing is that you hold the shares on that investment platform, which means you've got to effectively re-register those shares from the nominee platform that they're currently held on with the Save As You Earn scheme over to the platform of your choice.

51:27It's not particularly cumbersome. It's just a couple of pieces of paper, but it can take a couple of months for them to move across. So difficult to get done before the end of the tax year, but not impossible. Of course, there's something called bed and breakfasting with non-ISA shares too, isn't there? Which is where you sell your shares because you want to crystallise the capital gains tax gain or loss at that point. And then you can't buy them back for 30 days and you buy them back and that crystallises what's happening in capital gains. That's bed and breakfasting, isn't it? That is. And you've got a£3 ,000 capital gains allowance this tax year and it's use it or lose it.

52:02So that doesn't mean that you've sold£3 ,000 worth of shares. It means the shares that you've sold, you've created£3 ,000 worth of profit,£3 ,000 worth of gain. Now, if you're married, if you've got a spouse, then that means that you could also transfer shares into their name. They will then use your base cost for those shares when they're sold as well. So you've got another£3 ,000 worth of capital gains allowance to use. And of course, we're very close to the... What's that called? Is that bed and spousing, which is sounding a bit dodgy of that? We could go with a bed. Bed and spousing works for me.

52:32I don't think it's got any. And of course, we're in the new tax year soon, 6th of April. You can do the whole thing all over again. Yeah, let's move on to the next one. Thanks, Ed. I'm slightly confused what this one is about. Adam, should I pull any stocks and shares out before April to use potential higher limit before end of tax year and changes or leave where they are? Will this avoid any tax on my shares? And should I also gift some to my wife's ISA before April? What are the rules? I presume he's talking about capital gains tax. Yeah, it sounds like we've got taxable investments that he wants to be able to sell down.

53:06Again, crystallise that gain. And yeah, by all means, I mean, if you've got those surplus proceeds and you've already used your ISER allowance, make sure that you use your wife, your spouse's ISER allowance as well. Because again, use it or lose it. Your ISER is so valuable because of that tax-free nature. And with all the changes that we've seen coming through in the budget with Rachel Reeves last year, like ISERs have never been more valuable than they are right now. I know the answer to this, but it's your job to answer it. I think you can do it in one word. Christina, shares ISAs. Is it possible to invest in other countries' stock markets?

53:40100%. You can buy shares from all over the world as long as they are listed on a recognised stock exchange. And of course, most people choose to invest their stocks and shares ISAs into funds, which of course then in turn will buy those shares all around the world. Dave Kimberoo, my son wants to start a stocks and shares junior ISA, focusing on the S &P. He's been doing his research. Seems quite a volatile time to be doing this. What are the pros and cons versus the cash ISA? Well, it's always a volatile time. If he's young and he's planning to hold it for a long time, brilliant. The longer you hold it, hopefully the better it'll do.

54:13It's like investing almost in the American economy, you could argue. As for versus a cash ISA, it's a bit like saying, what do you want for dinner? Do you want a steak or a Diet Coke? They're not the same thing. A cash ISA gives you a defined return with no risk, apart from the risk of you're not going to beat inflation. A stocks and shares ISA, you're putting the money in with risk, but in the hope that it will grow much, much faster over the longer period, and it generally will. We have to be more brave in this country about investing, I think, Ed. Yeah, and if you look at the culture in America, they are certainly much braver when it comes to investing.

54:48It's a much more normal thing to do. Buying stocks in the UK, it isn't quite so much. Another point I'd make is that the S &P 500, so you're buying a really narrow part of the global stock market. The US is about 60 % of the world stock market. The S &P 500 is part of that. But what about the rest of the global markets? This is why you really want to look global, because the more you diversify that stocks and shares portfolio that you've got, we're talking thousands of stocks, perhaps up to 15 ,000 shares around the world, the less the risk you take, the diversification helps to take some risk off the table.

55:22So don't limit yourself to just the S &P 500. Think global. Ed, I'm doing this one. It's my show, I'm allowed. Tin Alien says, can ISAs be switched between different types, so from cash to stocks and shares or stocks and shares to cash, when needed for market stability? Yes, they can. It's a very simple one. And we'll do the final one, which someone's got a negative question, so we'll do that. It's always worth doing one. Steve, I've been badly bitten by these products in the past, with charges applied and mismanagement risks inherent. How can I minimise the risk of not really making any profit or even making a loss?

55:54Well, that is always a risk. That is the risk of investing. But I think, you know, there are ways. You were talking tracker funds earlier. Yes. One of the risks that we hear that people have encountered in the past is they've invested in a stocks and shares, ISA. They've lost money. They've cashed out. And when you say, right, so where did you invest? You suddenly find that they were invested in very specific funds, maybe technology funds, maybe finance funds, areas of the markets that have been particularly hard hit at particular points in time. They've seen their fund drop by half, by three quarters.

56:26They've never made it back. They've cashed out at a loss. When you diversify and you buy global, you've just got all the components of the global markets thrown in there. And some are going to do terribly and some are going to do brilliantly, but they all average out, which is why it helps to take some risk off the table. That's why you ideally want to get a bit of advice. Or when you're doing your research, Just look at these principles that we've discussed today. Thank you so much. That is Ed Marshall. Ed, brilliant. Lovely to have someone being direct and answering questions. You know, it's a bit ballsy to do so on this type of subject, broad brush, but people want to know some specifics.

57:02You can't guarantee to be 100 % right on your fund choice, but at least you've done the analysis to get there, which is what people want. So thank you so much. My pleasure. So that was me asking Ed questions. Now I've got podcast producer Hannah in the studio to ask me some cash ISA questions. Just the final few of your different ones that came in. What have you got for me, Hannah? So Fiona says, my son wants to start saving for his first property. We live in an expensive area and are hoping to get a house with his partner. I understand there is a limit on the house price. Is he better off just having a normal ISA?

57:36How does it work if the house price is over the threshold? So I presume you're talking about the lifetime ISA known as a LISA. with the Lysa it is only usable as a first-time buyer on a property that costs under£450 ,000. Now the Lifetime ISA when it works well is a fantastic product or fantastic wrapper. I should be more technical I was talking about all that earlier. It's where you can put up to£4 ,000 per tax year in and then the state will add 25 % on top of what you put in. So if you put in the full£4 ,000, you'll get£1 ,000 on top, and you can do that year after year. And as long as you've had it open for a year and you're buying a qualifying property, which is any residential property under£450 ,000, you then get that bonus to use towards your first-time deposit.

58:22The other time you can use a bonus is once you're age 60, but as the lifetime ISA is only openable when you're age 18 to 39, and it's only been going since 2017, no one has hit the 60 when you can use it yet. So you have got to the nub of the problem with your question. And it's something I've been campaigning on, I think it's the third time I've mentioned giving evidence to a select committee, but I gave to a select committee on this a couple of weeks ago. I have a big problem with the fact that if you were to buy a property over£400 ,000, or your son is to buy a property over£450 ,000 and he's been saving in a lifetime, he will effectively have to pay a fine of 6.25%.

58:55So if he's put£10 ,000 in, he's only going to get around£9 ,400 of it back, although there will be interest that's added on top, because you have to pay a fine to withdraw from a lifetime ISA for any other reason than buying a qualifying property or once you're age 60. I have been asking them to change the rules so that if you're buying a property, if it's over 450, while you won't get the bonus, you shouldn't have the fine. It's technical. Currently, the fine is actually you get 25 % bonus and you get a 25 % fine. When you add 25 % on and take 25 % off, it's minus 6.25%. I'm saying you should get a 25 % bonus and the 20 % fine, which will roughly leave you with what you put in in the first place.

59:37That hasn't happened. The law hasn't been changed. So at the moment, that's a risk. So you ask me which is better. The question is, how likely is he to buy his first-time property that would be over£450 ,000? If it is pretty likely, then you might not want to put the money in a lifetime ISA. If it's pretty unlikely, then you will want to put the money in a lifetime ISA, as long as he is definitely going to be buying a property. I hope they change the rules. I hope by the time your son gets there, the rules will be different because it's an absolutely ridiculous system that puts people off getting a lifetime ISA, but I can't tell you they will.

1:00:13Samantha says, can I open a stocks and shares ISA for my grandchildren and then gift it to them when they're older if they already have a junior one? You can't gift an ISA. An ISA is an individual savings account. So you can open a stocks and shares ISA. You could gift them the returns of that ISA. They could put it into an ISA, but you can't gift them the ISA allowance, if that's what you're asking me. You can't say, I've got my ISA allowance. I'd like you to have an ISA allowance. You can have the value of it, but you can't get the tax wrapper. The cling film, if you go back to my initial analogy, is non-transferable.

1:00:49There is a case on the event of death, but we're not talking about that. The cling film is non-transferable, I'm afraid. Joe says, my son opened a one-year online ISA last year at the end of March when he turns 16. He matures soon, but the age for an ISA went up to 18 last April, so what can he do as he'll be 17? It's too much for a junior ISA as he has over nine grand, which I think is the limit. What an interesting question. OK, so they changed the rules so you could only open an ISA now if you're aged 18. It used to be aged 16 and the junior ISA goes up to 18, so you could have both a junior ISA and a cash or shares ISA.

1:01:30But before that cutoff, if you had opened it age 16 before the cutoff, then, and you'd got your ISA in just before that point, you could now have a maturing, I presume it's a maturing, say, a one-year fixed rate ISA, and therefore it's still in a cash ISA. Now, the transitional arrangement said that for those people who are aged 16 or 17, it would be 17, I'm just doing, you'd have to be 17 on a one-year, that for those who are age 17, while they can't open a new ISA, they would be able to do an ISA transfer. So the rules state that you should be able to go apply to open a new cash ISA, do a transfer, you can't add any money to it because you're not 18 and you have to be 18 to get a normal ISA, not a junior ISA, but then just do a transfer form and move your money in.

1:02:19the difficulty is I suspect many of the ISA providers require you to be 18 to open an ISA because those are the rules even though there are transitional arrangements that allow them to take money on the transfer for a 17 year old and I have not checked which providers will allow this but it is a very interesting question so if you'll bear with me I will try and have an answer for you I'm typing now to remind myself, answer on which providers allow 17-year-olds to transfer cash ICES. I'll try and get you that back in the podcast bit in next week's show. Lovely. Lynn says, how can I combine or add to my annual ICES when they are fixed term and all started on different dates?

1:03:07I would like to combine them together for tidiness and ease of admin. Well, combining cash ises is often something many people should do in case you lose track of them or it makes management difficult. Look, but these are fixed rates like any other fixed rates. So what I would suggest you do is when these... The easiest way to do this, if I'm only looking at answering your question technically rather than looking at the returns and whether you want to fix them or not, is when each one of these fixes matures, transfer it to an easy access cash isa, get the best easy access cash ISA that you can and then once they've all matured you will have them all in an easy access cash ISA and then transfer that to a fix because with fixes you have to fund them within the first 30, 60, 90 days to get the money in you're not going to be able I think it's very unlikely you're going to be able to step them and move them all straight into a fix so if your whole thing is I want them all to be in one place then moving them into easy access until you've got them all in one place than fixing.

1:04:09But of course, there's a risk that you might miss the best fixes doing that. The currently easy access rates are paying slightly more than fixes anyway. So hopefully it will work out well for you. But I can't promise it will work out well on rate if you're trying to do that because you want them all in one place. Joe says, how do you split and transfer money into a matured child trust fund into two ISAs at once, one cash and one investment? I need to do this with my daughter this Easter, otherwise she'll have no funds for next term. Again, within the rules you can do that, but whether the individual providers will allow it is my question.

1:04:40So you could try it. I would suggest if you're struggling, you sort of follow what I've just said, I would transfer it all into an easy access cash ISA, assuming it's all in easy access at the moment anyway, assuming it's into a savings cash ISA. And then once it's all in the savings cash ISA, I'd then transfer some of that into your stocks and shares cash ISA if the providers won't allow you to do a partial transfer. And Simon says, I heard you can now have multiples of the same ISA. is that coming in this year or is it already in place? Already in place. So what that means is you could open a cash ISA in the current year with three different providers as long as you're not putting in more than£20 ,000 in all of them in total.

1:05:16And that is our last ISA. So I hope that for some of you an ISA is nicer and you decide to do it. OK, I know the pod is running long but I really did like this week's Tell Us, Hannah. So I would love us to do just a few more of those before we finish because we had so many good ones coming in. I will go with Sue's to start. And remember, the tellers was all about your financial lightbulb moment when you suddenly realised. Sue says,

1:05:50So many people pay council tax by 10 monthly instalments, which is a bit weird. You can actually now, in almost all cases, arrange for it to be switched to a 12-monthly repayment. But in Sue's case, she likes the budgeting benefit of having a couple of months without and it pays off her car insurance. I like that. What have you got? So I've got Rod who says, changing the payment of my car tax from direct debit to car payment. The direct debit would have been taken on the 1st of April at the new rates. Paying now by card means that I pay at the old rate. While we're on that, just a quick tip. I've mentioned it before.

1:06:22If you have an electric vehicle, electric vehicles are going to be paying duty from April. but you can renew your electric vehicle duty currently for free so you anybody can go who's got an electric vehicle if you renew now then you're renewing for a year and you get the next year for free and that is irrelevant of whether when you renewed before so you might have only actually done your renewal your annual renewal two months ago you could go and renew now and you'll get a year from this point uh for free so you're postponing the period at which you'll have to pay for your electric vehicle duty.

1:06:55Just a quick extra unplanned tip from me there. Tracy says, overpaying my mortgage was my light bulb moment. I didn't understand how it came down faster, but it made a massive difference. Yeah, because when you overpay your mortgage, effectively, it's a bit like you're shortening the term. And the two functions of debt are the interest rate, the higher the interest rate, the more you pay, and the length of borrowing. The longer you borrow, the longer the interest has to accrue, the more you pay. So by overpaying in the right way to reduce the capital you're paying, You're effectively, and you go and read guides on how to do this properly, shortening the term so less interest accrues.

1:07:31And if you're taking four or five years off, I mean, we can be talking tens of thousands of pounds. Let's do two more each. So Daniel says, saving X amount of pounds each month and paying insurance and other bills as lump sums rather than as monthly payouts. I realised it saved money, but then there was the benefit of interest too. Now I do it that way for so many things, including holidays. It's the same as a monthly bill, but it's more liberating and empowering. Much better that way round. Dave, use my cash back card for all my spending, then pay off in full at the end of the month. Especially good with a very large purchase of his vehicles, etc.

1:08:07Yeah, if you've got a cash back card that's doing that, I mean, they're paying you to spend on it. As long as you're paying it off in full, you're neutering its ability to charge your interest as long as you don't withdraw cash on it and you don't go over your credit limit. It works really well. Your last one, what's your top pick, Hannah? Michael, he says, paying extra into my work pension scheme, therefore paying less tax and national insurance resulted in no reduction in my monthly take-home pay was an eye-opener for me. Oh, I like that one. And I'll do Gemma. I tell everyone now to ignore their direct debit values when setting up energy bills.

1:08:41Excuse the pun, but the lightbulb moment – I see what you did there, Gemma, and I like it – came from checking unit rates and standing charges, not payment amounts. quite right. The unit rate and standard charges dictate what you pay. The direct debit is just their estimate of what you should pay. One of the problems some people have is they go onto their energy firm and they say, oh, can you lower it for me? And say, yeah, we'll lower your direct debit. Well, they're just lowering your estimate. What you pay is dictated by your unit rates and your standing charges. That's what you should be looking at.

1:09:08A comparison site will compare those for you. But those are the crucial thing that dictates in total how much you're actually going to pay. And I think that's a rather nice, it was unplanned, but it's a rather nice segue into the final bit of the show. I promise you we'd put in the bit from Radio 4, which reported on the evidence that was given in Parliament, including by me, all about back billing on energy yesterday. So let's play that now. The consumer champion Martin Lewis has told MPs the rules that allow energy suppliers to send customers bills for gas and electricity consumed up to a year earlier should be tightened.

1:09:47And he said companies that repeatedly broke the rules on so-called backbilling should lose their licence to operate. David Cornock reports. Backbilling is when an energy supplier issues customers with a new bill for energy used more than 12 months ago. It's against Ofgem regulations and was banned in 2018. But last year, more than 3 ,000 people complained to the Energy Ombudsman about receiving back bills. Martin Lewis, the journalist who founded moneysavingexpert.com, told MPs on the Energy Committee that many consumers were unaware of the rules. Then there are those who complain to the companies, and as many companies do in energy companies specifically, some of their staff are not well-trained or it's negligent, or it may be deliberate but I have no proof of that.

1:10:33Those companies then use legalese to say, no, you do owe us the money. and many people when they get you do owes the money, they get worried, they get scared, I'm going to have bailiffs at my door, even if it's not being suggested, that's what they worry about, so they pay. And he explained why he thought backbilling had become more of an issue. Bills are bigger. So backbills are bigger. I actually think it's a function of, you know, if you get a backbill for 150 quid, you spit and swear a bit and you pay it and you get on with it. If you get a backbill for£10 ,000, you try and fight it. A Lib Dem, Claire Young, was concerned by what she'd heard.

1:11:05How effectively are energy suppliers being held to account over breaches of the backbilling rules? And do we need tougher penalties for repeat offenders? Martin Lewis agreed it was time to get tough. I would say you probably shouldn't have a licence if you're a repeat offender and you've been warned by the regulator. Why should you be allowed to have an energy licence if you're backbilling people and causing them catastrophic finances? I mean, a year is a very long time to get your bills right. And if you've cocked up as a company, why are you asking the customer to pay for your cock-up? People don't know they're being backbilled.

1:11:34They're not expecting they don't have the finances. You know, not everybody is able to pay for a backbill that they didn't know. In 2023, the energy suppliers paid around£25 million in fines linked to billing and metering issues. Tim Jarvis from the regulator Ofgem said the watchdog was looking at cutting the time companies had to send bills. But that was only part of the problem. It's often not so much the bill, it's the treatment of the customer when they query the bill. that they're having to battle for months on end to get a resolution rather than being treated fairly. So we have a range of licence conditions that we will look at, including treating customers fairly to make sure they get good treatment.

1:12:16He said the three main reasons for backbilling were a supplier not having an up-to-date metre reading, a change of tenancy or a householder's direct debit being too low. Labour's Luke Murphy was concerned about how energy companies pursued customers for payment. In terms of instances of threatening and bullying behaviour, whether it has been made by energy suppliers when seeking payment for back bills, what actions have you been taking? What instances have you seen of that? Answering this time, another Ofgem executive, Beth Martin, who said bullying and threatening behaviour was never acceptable.

1:12:53As Martin Lewis says, we have a fundamental licence condition which is around our standards of conduct, so suppliers have to treat customers fairly, honestly and in a professional manner. That's a critical part of our licence condition. It applies to every single interaction that a supplier has with a customer, and we will take action on that if we need to. Finally, the MPs questioned the Energy Minister, Miata Phan Buller. She thought the problems with backbilling could be a symptom of wider issues. The thing that I'm candidly worried about is that this is a bit of the canary in the coal mine.

1:13:28So what you start finding are these examples that go through the likes of Sissons advice and through money saving that kind of alert you to a problem, which is why we've moved pretty quickly to ask the regulator to look at this and to make sure it's not happening. Labour's Melanie Onn suggested fining companies wasn't enough to make a difference. Is there a case to be made for giving the regulator more powers to remove licences from some of these retailers where they are repeat offenders for failing to do the very basics of their job? Miata Farnbullar agreed there was an argument for a more powerful regulator.

1:14:03I'm not here to defend energy suppliers, but I think it's really important that we put the issue of backbilling in context. So, yes, there are absolutely, you know, a number and a sizable number of them. But in the context of millions of bills that are issued, it is a small proportion. Now, for the consumers that are impacted, it's not small. And that's why I care about it and that's why it matters. But in the end, she said the government had the wider job of raising standards and improving customer service across the board. That's it for this week. If you've enjoyed it, please tell your friends that you've been listening to the Martin Lewis podcast and suggest they do too.

1:14:41You can subscribe so that you get it. The podcast tends to drop every Thursday. And if you've not enjoyed it, why not try origami? That's a much slower pace. Maybe that's better for you. I don't care, friendly. It's your business. You don't like my podcast? I don't like your origami. Go and do some paper folding on your own.

1:15:02Martin Lewis is the founder of monysavingexpert.com, but other consumer and price comparison websites are available. You can get in touch with Martin's podcast team by emailing martinlewispodcast at bbc.co.uk. The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double checking as the details can date.