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I sold my shares a day before labor announced the new taxes. I wouldn't suggest that someone who's still just starting to invest should start with scis. I think you should start with isa. Understand the basic principles of investing, understand risk and risk management. Any money you put inside an isa, as long as you've not crossed the limit is tax free. Any money you put through the stock and share, Lisa, you can invest it through that stock and shares isa. So most people say should I invest in a stock and share? That you can't invest in a stock and shares isa. You can invest through a stock and shares isa. Think of bonds like an iou. Like you borrowed money to somebody and now they are paying you some money. But if you borrow money to the UK government, it's called gilt G I L T. Big problem with bonds inflation. Inflation usually tends to outpace bonds, but bonds is much more safer than stocks in terms of volatility. Why some people won't buy bonds, they think, well, if I buy s and P500 is basically like the volatility is very low, there's high chance I'm going to be all right. But if you're getting closer to retirement or when you need the money, you want less stories.

So I'm just going to read directly from one of the options that you put on the email. One of the points is how to use ISAs and SCIs to invest tax efficiently in shares, bonds and startups. So I'm more interested in the bonds and startups anyway.

Fantastic question. Now if you followed me for a while, you know I'm a big fan of being tax efficient. Sometimes you're trying to hustle and make extra money, but some but just plug in your taxes. One of the things that people find eye opening in our one to one session is finding the areas where they are leaking thousands of cars. Sometimes it's 10,000, 12,000, 20. So it also applies to investing. So if you are saving your money now, if you've got up to £10,000 in savings here, it could be at risk of a penalty from hmrc, not for saving but because you might be getting an interest on your savings that is above the savings allowance and you're not declaring it. Let me explain that if you save money in a bank you get something called interest if it's in a savings account, let's just take a figure, let's say 5%. So if you save like 10,000 or let's say 20,000 in your bank account, regular bank account, and you get 5% of it. So you've already gotten a thousand pounds in interest. HMRC says that that is the maximum you can get tax free if you are a basic rate taxpayer. So if you're a basic rate taxpayer and you're paying just a 20%, that is the maximum you can get tax free. Now HMR says if you been a basic rate taxpayer, the maximum you can get interest tax free is £1,000. But if you are fortunate or unfortunate to be earning enough as you will be soon to be a higher rate taxpayer, that's about 50k. Now the maximum you're allowed is 500 pounds. So any, even if you get 10,000 and you have 5% interest, you've hit your maximum. Now any money above that in interest in that you need to declare it in your self assessment. Whether you do self assessment or not, you now have to do self assessment or college. Mrs. I made this money in interest, now I'm good. I've got to pay like a tax on it. So this is, these are the issues. How can you avoid that? You use a tax protector, a tax defender, which you mentioned, isa. Any money you put inside an isa, as long as you've not crossed the limit is tax free. So if I say to people you know about emergency fund, well done. Now I'm proud of you. You save three to six months of your living expenses before you start investing. Because that's one of the absolute things I suggest you do before you start investing so that you don't have to sell because you need money.

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But now don't take that emergency fund and put it in a random savings account. You want to put it in a cash isaac. That way any interest it yields because sometimes some people's Emergency from maybe 10k, 20k depending on your monthly expense, right? So you want to put it in a cash ISA so that that interest is not going to be taxed. There's also stock and shares isa. The stock and shares isa, unlike the cash isa, is just for investing. It's not for saving money, it's for investing. Now the stock and shares isa. One thing you could do is any money you put through the stock and shares isa, you can invest it through that stock and shares isa. So most people say, should I invest in a stock and shares isa? You can't invest in a stock and shares isa. You can invest through a stock and shares isa. So you can put money in the stock and shares ISA and then invest it. Now here's the magic. Any money you put through a stock and shares ISA is totally tax free. I mean the returns you get on it. That means if you invested 20,000, even if in five years you get a hundred thousand back, normally you're supposed to pay a percentage of that in taxes because if you incurred what we call it, capital gains. So remember, for those of you, we're at the beginning. Who are you? At the beginning I said I sold my shares a day before labor announced the new taxes. I sold my share. They were not in an isa. Now an ISA prevents that from happening. Capital gains starting 20 to 24% you have to pay. You can have a look at the exact figure on the increase of your investment. That's a rule, that's normal thing. I paid capital against tax in different countries in Nigeria and China if you invest so but in the UK we are blessed with something called stock and shares isa, which means that you can invest your money, it grows. You don't have to pay any tax on that groom as long as it was invested through an isa. Obviously the government is not going to allow you to invest a million pounds. The maximum you can do in an ISA is 20k per year. And that's where some people will take invest 20k for yourself, maybe invest 20k for your spouse. If you've got the extra money, obviously invest 9,000 for your kids because kids can have 9,000 in Junior Isa. Now that is how to use your car, your stock and shares. ISA for investing. You don't pay any interest on the capital gains. This is an opportunity to say that obviously ISA. Most people think that ISA is just a cash ISA. I think it's 78 of Brits that leave their money in the cash. I said because either they don't know about stock and shares. I saw they don't know about investing, or they're worried and all that. And so that's just one part of it. Now taking it a bit further. Bonds. Now whether you are buying shares, stock and shares, individual stock and shares like I do, or index funds like Nadu does, who spoke earlier on, or you just want to buy bonds basically because these are all investable assets. You can do all of that through your stock and shares isa. So that will be tax free. It's not the only instrument you can use to invest. Remember, most investing platforms will start with offering you a general investment account. They'll just say invest. If you click that stuff and start investing without using your stock and shares isa. You might be sad even when you make money because you know that you could have avoided that 2024 tax. So you want to make sure that you've utilized all your ISA allowance for the year, which is how much in a year taxes. Somebody help me. Oh, great. I wanted to make sure. So I wanted to make sure we're still here. So 20,000. So in a taxi. The taxi ends in April 5th, as sure as the sun rises tomorrow. April fortnight, April 5th, there's gonna be a lot of people ringing me, sending me messages, wanting to book one on one which will be absolutely not available then because they haven't done what they should do. And in night to tax. You know, so many things can happen that day. You lose out on your allowances, it goes wiped out if you not use it. If you're 39 and you're about to turn 40, if you've not opened your lifetime, I said you lose that opportunity forever if you've not claimed tax relief. I've got a gentleman now mastermind. Now, she's not claimed actually for five, six years. So he's about to claim for the for the past five years. Obviously you can't claim one now because that taxi has gone. So you want to do something about it between now and March. Don't wait till April 5th. So your ISA allowance disappears after April 5th, you get a fresh 20k allowance again. So the same thing when it comes to things like sip, pension allowance, everything works in taxes. Yeah. So it's really important to understand that. So for investing stock and shares, isa, you can use it to buy bonds, you can use it to buy index fund, you can use it to buy individual stocks. You can even use it to buy commodities. That's for soccer shares. Isaac, not a huge fan of short trades and commodities. Okay. Now the other level which you mentioned is scis. So SCIS is Seed Enterprise Investment Scheme. So that's the name. But what it basically means is that if I invest in a startup, a company, I think there's a size, the company needs to be less than 3 years old. Maybe capitalization needs to be less than 500k or 250k. If I invest in such a company, the government guarantees 50 of my money. So even if I lose 50 of that money, if I lose that money, the government writes up 50 of it as tax relief. So that's how SCIS works. Obviously there's EIS as well, which is for bigger companies. But SEIs. I wouldn't suggest that someone who's still just starting to invest should start with scis. I think you should start with Isaac. Understand the basic principles of investing. Understand risk and risk management before you. Then go ahead to, you know, try other things.

So expand a bit. Investment savings accounts. If I need to open one. Any recommendations or just Google it.

What's Investment Savings Account? Do you mean individual Savings account?

Sorry, Individual savings account.

The random one.

We go to the bank.

So here's the thing. There are different types of ISAs. It depends on which one you're opening. If you are opening a stock and shares isa, then one thing you're looking out for is purely fees. Which one charges zero or you know, the least possible fees. Then the second thing is, do they do what you need to do? For instance, if you want to invest in individual individual stocks but the platform only does index fund, then it might not be what you need. Now the other question is not just the fees they charge. There are other fees. Like if I decide to close my account, are they going to charge me money for closing my account and moving elsewhere? That's for stock and shares isa. You can open cash ISA in the same place. Lifetime isa, basically not everywhere offers it. I don't recommend one. Anyone in particular? Particular. Basically I could tell you the one I use or the one I would invest money for if I was investing for my 4 year old or 6 month old. I think I quite like invest engine in terms of their zero fees and also simple to use platform and very, very, very nice interface that makes it easy to manage but there are many options out there. Okay, just very quickly, bonds.

I tried to read up bonds on my own, but I felt a little bit tricky and it might be easy to understand for those that know about it, but I still not got the hang of it yet.

So bonds basically think about it this way. I know many people make it sound complex. Think of bonds like an IOU like you borrowed money to somebody and now they are paying you some money back. So if you borrow money to the UK government is called guilt. G I L T. So if you hear bankers saying guilt, they just sound a bit fancy. Is UK government bonds. Now U S bonds, U S government board is called treasuries and obviously other governments like Nigeria, Russia, Mexico, they also obviously give out some paper or whatever bonds and take your money. If you lend them the money, it's called bonds. Now what do you get in return? What you get in return is they pay you something called I'm not a premium. Now they give you a coupon. Basically they might decide to pay you twice a year or once a year on interest. For instance, if the interest rate is 5%, that means that if you lend the government money, they will pay you 5% interest. And you can buy a 10 year treasury bond or 10 year guild, they will pay you that money for the next 10 years. Let's say you invested 100k in the bonds. You get like that 5% every year. So that would be how much? 5,000. And at the end of 10 years they give you back your 100,000. So that's how bonds work. Big problem with bonds inflation. Inflation usually tends to outpace bonds. But bonds is much more safer than stocks in terms of volatility. I say safer with an inverted cover because safety depends on who owes you the money. If the UK government or US government owes you money, then your chances of getting it back are very high compared to. I'm sorry, but I'm just gonna say it again. Venezuelan government. So if government of Venezuela and even at some point Russia, Mexico, Argentina, they've defaulted on bond. So just say, well we're sorry, we can't pay you. 151 countries have defaulted on bonds in the last 60 years. So any country can default. Some are less likely to default. UK they pay their bills. US they pay their bills. Nigeria has never defaulted, but they've come very close. Many Times when you hear things like structural adjustment program, it means that they were very close to defaulted. And World bank comes in, IMF takes over. Let's make things a bit hard for the population, cut subsidies, cut this so that we can meet our bills and pay our bonds. So that's what happens. But Ghana has defaulted. So relatively bonds, especially sovereign bonds, government bonds are a bit more safer. I know seven years ago they tried to sell me Austrian bonds. Some investment banker, I, I thought, like, why would I ever buy Australian bonds? I was doing better in the stock market. So why some people won't buy bonds? I think, well, if I buy S&P 500 is basically like the volatility is very low. There's a high chance I'm going to be all right. But if you're getting closer to retirement or when you need the money, you want less stories. Some people start cashing into bonds. Analyzing bonds is a totally different story, is a different discussion. It's not something we can do in a one and a half hour session, but trying to work out bond yield, what we call bond yield. And quite frankly, most people don't need it because you're not a bond trader. If you're just buying some bonds to lower your volatility or to increase the banish the risk profile of your account, you can just take 10 or 20 or 30 of your money, depending on how far you are to buy the bonds. There's one big thing I want to point out here. Some investment advisors will do something we call 100 minus X rule for bonds. So where they say, okay, let's assume then you're 35 or 40, I know you're much younger than that. But they'll say, well, you're 40, so I'm going to 200 minus 40. That's your age. So take like 60 of the money you've got for investment and put it in stocks and they'll take 40 and put it in bonds. That's quite a silly thing to do for a doctor or healthcare professional because at the beginning of your life you're not earning that much. But as you're going, your, your income is high, is, is going up. By the time you're about that 40 or 35, even 35 to 45, your income sort of like gets to the peak. So that's the time you want to be aggressive in investing. Obviously when that's the time I'll be wanting to put more in the stock market to make sure that it's working for me because I've already missed out the earlier investing parts when I could have been investing a lot. Except you've been investing early. So if at 40 years you're already taking 40 of my money and put it in bonds, you're sitting around there earning 4% per year for the next 20 years, it means I'm going to miss out on a lot of growth that would have come from the stock market. I feel like it's too much high of high price to pay for safety. So if, if the person decided again, not professional advice because I don't know your current situation. If the person decides to say, well I'm just gonna take like that same amount, I'm going to put it in the stock market. Maybe when I'm 50, 60, I'm going to start cutting down some putting in the bonds. And this can be done automatically as well. Some pension funds, we, we address a lot of these things. I mean there's a reason why the investment master class was four weeks. It's not because we like seeing each other every weekend, it's just a lot. And I thought if I tried to, if you tried to teach it in one sitting, it wouldn't work. So we did it for four weeks and then we had full of lectures. They were in the group for 12 weeks with me. Just a follow up review. But yeah, I hope that gives you a general idea of bonds. Just one more thing on bonds is that all bonds are not equal. As you know there are bonds between governments, government bonds are stronger. There's also corporate bonds. Companies can sell bonds to raise money and there's junk bonds. People can sell bonds for a big project. You don't know if it will succeed or not. But the higher the risk, the less the return. If the Venezuelan government, I think one day I end up in Venezuela, they're going to stop me and ask me why do you keep mentioning us as an example? I'm just kidding. But Venezuelan government might be ready to pay you 22%. Why the UK government say no, we can pay you 4%. So the higher the risk, the higher the chances of return. But remember rule one of investing from my, I mean I look up to him quite a bit. Warren Buffett. Rule one is don't lose money. And rule two is never forget rule one. So before you dream of the money you're going to make, make sure you don't want to lose money. And that's why the first class we teach is risk management. Asset allocation. Risk management. Once you are safe as an investor, then you can do pretty much what you know, within your own area of competence. All right.

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