daft financial question
Discussion
Right this is well off topic.
Can someone tell me what an ISA is?
You can assume I'm a complete div when it comes to things like banks.
I know it stands for Individual Savings Account, but to me this simply sounds like a normal bank account. I know you also get tax relief (which is nice) but how exactly does it work and what is exactly is it?
Is it just a normal tax free bank account or is it somehow related to stockmarkets and stuff?
I have an ISA. Is it possible that I could lose money on it?
Andy
Can someone tell me what an ISA is?
You can assume I'm a complete div when it comes to things like banks.
I know it stands for Individual Savings Account, but to me this simply sounds like a normal bank account. I know you also get tax relief (which is nice) but how exactly does it work and what is exactly is it?
Is it just a normal tax free bank account or is it somehow related to stockmarkets and stuff?
I have an ISA. Is it possible that I could lose money on it?
Andy
www.sharepeople.com/links/google0203/accounts.html
www.gymuser.org.uk/money/equity_isas.htm?source=gu12
i don't know how much use these will be, but might explain it in a bit more detail.
www.gymuser.org.uk/money/equity_isas.htm?source=gu12
i don't know how much use these will be, but might explain it in a bit more detail.
This has a concise explanation and a guide (series of adverts) as to what's available. And yes, you can lose money on any element that's not held as a savings account.
Edited to add: It's not a daft question BTW. Building societies/Banks are woefully bad at telling you what you're buying and what the risks are. I'll do my best to answer any personal finance questions or point people in the right direction (NOT an IFA but 30+ years of managing family finances)
>> Edited by mrsd on Thursday 13th March 17:51
Edited to add: It's not a daft question BTW. Building societies/Banks are woefully bad at telling you what you're buying and what the risks are. I'll do my best to answer any personal finance questions or point people in the right direction (NOT an IFA but 30+ years of managing family finances)
>> Edited by mrsd on Thursday 13th March 17:51
Is it possible that I could lose money on it?
Andy
not knowledgeable enough on the subject to go into any great depth but in a word, yes!
my (limited) understanding are that they money will be invested on the stock market in accordance with your own views on whether you want a cautious fund, or a more risky fund. Either way, they can go down.
I stuck a £3k bonus in a mini-ISA 2 years ago and its now worth about 2/3 of the original value. Friends/family who invested at the same time in ISA's are having a similar return - at the moment. But best not viewed as a particularly short term thing. Mine will be part of several investments to pay off my mortgage.
There are not enough swear words in the dictionary for the way I feel right now.
I saw the words Savings Account and assumed (Doh!) that you put money in and then you take it out later.
I put the money in about 5 months ago and I'll be needing it at the end of May.
I didn't realise it was linked to the stock market at the time. If I had there is no way in hell I'd I've put my money there.
OH bollocks. I may have to go down to the bank and find out exactly how much of it is left.
I'm not feeling very good about this.
I'm just a poor student and can't afford to take any losses. I wouldn't have put my money at risk had I known what exaclty was involved.
This will teach me to read the small print and not accept things banks try to sell you over the counter. Dammmit
Andy
I saw the words Savings Account and assumed (Doh!) that you put money in and then you take it out later.
I put the money in about 5 months ago and I'll be needing it at the end of May.
I didn't realise it was linked to the stock market at the time. If I had there is no way in hell I'd I've put my money there.
OH bollocks. I may have to go down to the bank and find out exactly how much of it is left.
I'm not feeling very good about this.
I'm just a poor student and can't afford to take any losses. I wouldn't have put my money at risk had I known what exaclty was involved.
This will teach me to read the small print and not accept things banks try to sell you over the counter. Dammmit
Andy
I've just read the small print properly and it does say on it that the investment should be considered as a long term investment, typically 5 years. It also says that investments can fall as well as rise.
You cannot save a fool from himself. And right now I feel like a fool.
I should have read the small print more thouroughly.
I wonder how much dosh I actually have left.
Methinks I'm going to the bank tommorrow.
Andy
You cannot save a fool from himself. And right now I feel like a fool.
I should have read the small print more thouroughly.
I wonder how much dosh I actually have left.
Methinks I'm going to the bank tommorrow.
Andy
There are several different types of ISA ...
Cash ISAs are tax free bank accounts ... they can't lose money
The other two types invest either directly or indirectly in the stock market and can therefore go down.
If you have been sold an ISA without understanding what it entails, then whoever sold it to you may have breached the rules set out by their regulator, the Financial Services Authority and you may have redress. I'm not sure what the regulatory framework is for this kind of product, but typically if you are selling shares to the general public you have to be able to demonstrate to the regulator that you took reasonable steps to ensure that the customer understood what they were buying.
editted to say, having read your last post, assuming the small print wasn't too small, that probably was a reasonable explanation.
>> Edited by ATG on Thursday 13th March 18:20
Cash ISAs are tax free bank accounts ... they can't lose money
The other two types invest either directly or indirectly in the stock market and can therefore go down.
If you have been sold an ISA without understanding what it entails, then whoever sold it to you may have breached the rules set out by their regulator, the Financial Services Authority and you may have redress. I'm not sure what the regulatory framework is for this kind of product, but typically if you are selling shares to the general public you have to be able to demonstrate to the regulator that you took reasonable steps to ensure that the customer understood what they were buying.
editted to say, having read your last post, assuming the small print wasn't too small, that probably was a reasonable explanation.
>> Edited by ATG on Thursday 13th March 18:20
There are two types of ISA.
A Mini and a Maxi, comprising of various components.
The MINI ISA has an overall investment limit of £6000.
You can invest a maximum of £3000 in a cash/deposit account.
and up to a maximum of £4000 in stocks and shares.
You can also invest £1000 into a life assurance component as long as it doesn't take you over your 6k limit.
With a MINI ISA you can have your holdings with more than one provider.i.e cash with Woolwich and Stocks & Shares with L&G
A Maxi ISA is slightly different in that you can invest a maximum of £7k, either as £3000 in a cash component and £4000 in stocks and shares, or up to the full £7k in stocks and shares.
The £1000 Life Assurance component can also be used to make up the £7000, but in reality few providers offer the Life component.
With a Maxi ISA you are tied to the same Provider.
That's basically what they do.
The cash component will pay interest with no tax deducted like an ordinary investment/savings account.
The stocks and shares component will pay a distribution at regular intervals, either by cheque, as an income fund,or reinvested (i.e buying more units).
The other way of payment is as an accumulation fund, where your distribution is paid back to the fund as a whole.Instead of getting more units, the fund size increases thus increasing the unit price.
The tax paid on both of these are recredited to your account and buys more units.
Hope this helps.
Lee.
P.S Guess what my daytime job is
A Mini and a Maxi, comprising of various components.
The MINI ISA has an overall investment limit of £6000.
You can invest a maximum of £3000 in a cash/deposit account.
and up to a maximum of £4000 in stocks and shares.
You can also invest £1000 into a life assurance component as long as it doesn't take you over your 6k limit.
With a MINI ISA you can have your holdings with more than one provider.i.e cash with Woolwich and Stocks & Shares with L&G
A Maxi ISA is slightly different in that you can invest a maximum of £7k, either as £3000 in a cash component and £4000 in stocks and shares, or up to the full £7k in stocks and shares.
The £1000 Life Assurance component can also be used to make up the £7000, but in reality few providers offer the Life component.
With a Maxi ISA you are tied to the same Provider.
That's basically what they do.
The cash component will pay interest with no tax deducted like an ordinary investment/savings account.
The stocks and shares component will pay a distribution at regular intervals, either by cheque, as an income fund,or reinvested (i.e buying more units).
The other way of payment is as an accumulation fund, where your distribution is paid back to the fund as a whole.Instead of getting more units, the fund size increases thus increasing the unit price.
The tax paid on both of these are recredited to your account and buys more units.
Hope this helps.
Lee.
P.S Guess what my daytime job is
You lot did notice the link at the beginning of my post 
ATG said: There are several different types of ISA ...
Cash ISAs are tax free bank accounts ... they can't lose money
>> Edited by ATG on Thursday 13th March 18:20
WOOOHOOO
You've just made my day ATG (and SUPRAMAN).
This is the type of ISA I've got. Money in, then money out later on. Phew, that was a close one.
Now all I have to do is account for a 900 quid hole in my (normal) bank account. I think Christmas may have had something to do with it
Thanks for all the advice people. It would have been panic city if it hadn't been for all the help.
Cheers
Andy
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