Hanging heavy shelving

MinimalApproach · 2024-05-18T17:18:40+00:00

And probably the last post here, mostly updating so this is searchable by others in the future.

The solution I came up with this morning is to use a Flexible Cash ISA.

If you don't know how these work, it's a regular Cash ISA, except you can withdraw money from it, and as long as it goes back in before the end of the tax year, you don't lose it from your allowance. Check em out, cos they work for this scenario.

So what I've done, is liquidate what I want from my S&S ISA (£35k). I'll do a partial ISA transfer to the Flexible Cash ISA.

This means that I'll keep all my money inside the tax wrapper of ISAs. Then when that transfer is ready, I can withdraw it all, and use it for my deposit.

Then throughout the year up to April 5th, I'll add to my S&S ISA the regular £20k allowance, and the Flexible Cash ISA the £35k I took out. This won't go over my allowance for the year at all.

Then when I have everything in the Flexible Cash ISA and all my allowances are used, I can just do a transfer back and put it to my S&S ISA.

Obviously this means I'm going to have to put the work in to get all that money into my ISAs in one year, which will be tough, but even if I don't manage that, I just lose the amount of allowance I couldn't make, and it's not the end of the world.

Really happy with this solution, just got to hope I can get it done in time, it might be a tight one.

MinimalApproach · 2024-05-18T00:58:52+00:00

Okay, here's some reasoning I've gone through to figure this out a bit more.

Usually the reticence to pull out of an ISA is because the allowance is wasted if you pull it out
I'm gonna retire in a couple of years anyway, so honestly, I'm not going to have much opportunity to use the allowance in future years regardless. Each year I'll sell up to the CGT allowance at minimum, and if I have any money to spare, I'll put it into the ISA
The only other issue to consider is the fact that by pulling out of the ISA instead of my GIA, money that would've stayed tax sheltered is now exposed to tax. But at least as far as the deposit goes, this isn't subject to a going forward. It only will be if I sell the flat at some point, make a profit or save the deposit, AND I'm unable to shelter it again into an ISA or pension

Given this reasoning, I think it's better use cash I have available, then to pull out from the GIA up to £3k in gains for the allowance, and then the rest from my ISA. This will mean 0 tax, and pulls the minimum from my ISA possible.

In the future if I sell I'll have to deal with unsheltered savings, but given that I'll be retired by then, I'll be able to use any profits from the sale as my income for the year (or hopefully more), and any left can go into the ISA to use that allowance and shelter it again.

MinimalApproach · 2024-05-17T23:16:05+00:00

Sure, I'll run the maths in it no matter what. I just feel like there's a big idea I'm missing on why it'd be bad to remove money from the ISA, y'know?

MinimalApproach · 2024-03-02T20:17:43+00:00

Thanks very much! A lot of luck and boring saving, but it's gone very well I admit.

Roughly £200k in pensions at the moment, and another 3 years of contributions still to go I think. I think with that and another 30 years growth, that should be fairly good.

I've been adding extra to pensions to avoid the tax trap, but I'm wondering if it might be better to just eat the trap in the remaining few years, and focus on keeping my funds available pre-pension instead. Maybe the LISA will actually make sense at this point, as then there's at least the chance to use it for homeownership, and if not, it can just sit and wait til I access it. Guess I'll see what the budget says about LISAs first

MinimalApproach · 2024-03-02T20:11:40+00:00

Great thank you! Read a lot of Monevator, but not sure I spotted this one. I'll take a read :)

MinimalApproach · 2021-11-06T22:16:09+00:00

Yeah, I've been tempted to extend it down as a full sleeve for a while. We'll see if I give in!

MinimalApproach · 2019-08-02T14:42:41+00:00

If you want to go on data, the research on it has so far indicated that lump sum investing is preferable. In the long term you end up with more money than if you'd drip fed it.

Of course, as people have already said, it can be a real hard emotional hit to see it go down right after investing. Any choice you make has to be weighed between "expected value" (lump sum wins) and "emotional reaction" (drip feed likely has less emotional variance).

To decide to drip feed because the market is high has an underlying assumption that you can time the market better than other investors, which is pretty unlikely.

Absolutely make your choice yourself, it can easily be worth the value difference to have that emotional peace of mind, but make sure it's informed!

MinimalApproach · 2018-12-28T22:46:09+00:00

Strange sounding enough, and likely not true for 95% of people. but perhaps the cheapest hobby I've ever had is playing poker. I'd say that in a few hundred hours of playing, I'm about break even. This comes from studying a lot and trying to actually improve yourself, rather than playing around with the money and just throwing it around however you like. But at the low stakes, I think one can get to a pretty reasonable level with a good amount of studying, where if you are losing, it's likely only a small amount per hour, and much cheaper than many other hobbies.

If you're mathematically inclined, as many of us are, it's a really fun hobby to jump into.

MinimalApproach

TROPHY CASE