The Big ISA Mistake Everyone Makes!

When it comes to ISA is use it or lose it. If you don't use it in that taxi, it's gone. You can't come back and use it again. Now, the lifetime ISA can only be used for two buying your first home or investing for retirement. The big mistake many people are doing is after they buy their first house, they don't realize they can still use the Lifetime ISA, invest towards retirement, and also get that extra £1,000 from the government. Second big mistake, they just put their money in the ISA and think it's working for them. No, ISA is just like a tax wrapper. It's just a tax protector. And that ISA that doesn't invest your money for you, it just means that if you put in money through that isa, you can invest it without any taxes based on your returns. Right. So the ISA allowance is, I think, blessings asking. Is the ISA allowance 20k maximum? And does it also compound? So your ISA, you are allowed £20,000 per taxi. That's the maximum you can put in the tax here. And can somebody help me out here, please? When does the taxes start? April. April 5th. Okay, 6th of April. Okay, that's good.

No, 6.

6Th of April, number 6. That's important. 6. Thank you. So the taxi starts at April 6th. It ends April 5th. So your ISA allowance is April to April, from April 6th to April 5th. If you miss your SIP, for instance, if you just heard about SIP and your pension allowance, if you feel, oh, I've missed this thing, I've not been contributing, you can do carry forward. There's something called carry forward. You can still claim for three years back. So that's something some people do especially. Like, I've got, like. Some consultants are working in London in Harley Street. They made some big private practice money. They're thinking, oh, what am I gonna do? Some of them are able to do carry forward, but when it comes to Isaac is use it or lose it. If you don't use it in that taxi, it's gone. You can't come back and use it again. So many people only find out after April 5th. Once April 5th passes, you can't use that ISA again. So that's why it's really important to understand ISIS clearly. Now, ISIS themselves, the maximum you can put in a tax here is £20,000. Okay? Now, how do you distribute this £20,000? If you're. If you're still a young dude, like, I can see Kinsley in the picture, you know, full of energy, life, and you're less than 40 years. I'm less than 40 years, but I'm almost there. If you're less than 40 years, you can use the Lifetime ISA. So the Lifetime ISA allows you to put up to £4,000 in a tax year. So if you put up to £4,000 in the taxi, the government gives you an extra £1,000, actually a bonus for you. Basically 25% of what you put in the lifetime ISA. The government can actually give you 25% of that. So basically that's a lifetime asset for you, but that lifetime is still part of your whole ISA allowance. Okay, and that's. That bit is clear. Now the lifetime ISA can only be used for few things, buying your first home or investing for retirement. That bit is there. Engage. Now, one thing to remember is that if you buy a house that's about 450k, you can't use it, but you can't use the lifetime. However, I use the lifetime ISA for retirement and as long as the, as far as the lifetime is concerned, retirement age is. What age? Can somebody help me out here? 60, 60 years. Right. So I've read over 250 plus personal finance books, but not one of them explain issues that affect medics like the NHS pension. There's much more NHS pension, investing, taxes, financial anxiety, student loans and much more. Hi, I'm Dr. Andy Egwim. I'm the founder of moneywifedoctor.com for over 21 years I've been investing personally and studying personal finance. I mean I left my salary at NHSGP row three years ago after achieving what we call financial freedom. Since then, over 1200 medics have joined our tax efficient investing masterclass. And More than that, 10,000 medics, doctors and healthcare professionals have used my content to make smarter financial decisions and avoid costly mistakes. That's why I wrote the Money Wise Doctor. So the Money Wise Doctor, a book that I've written to simplify, step by step the path from confusion to clarity for medics to help you make smarter financial decisions and avoid costly mistakes takes with your financial future. So far we've helped over a thousand doctors to learn how to save smarter, invest tax efficiently and finally fill in control. If you are ready to gain clarity, confidence and control with your money, tap below to join the wait list for the Money Wife Doctor book. See you soon. Let's jump right back to the episode are you seeing retirement is not retirement like for different. There are different ages for retirement. So if you come to sleep, you're talking 55. You're talking 57. 7 lifetime. I 760 pension is 60, NHS pension is 68. So when someone says retirement, ask them what retirement in particular are you talking about? And of course for some of you as well, you're aiming to retire far earlier than that, like 50, 56, 50 different ages. So not everyone wants to retire at the same time. That's with the isa. Now, I've only talked about the lifetime isa is just one of the ISAs, there are four of them. I think three of them are relevant here. So I'm going to talk about those three lifetime isa, maximum you can do is for one isa. If you're married or if you got a partner, you can each do 4k each and you still get like the 1000, both of you, and can use it towards buying your first home. Because if you leave the UK, you can't contribute more to the ISA. And once you cross 50 years of age, you can't put more money to the isa. The big mistake many people are doing is after they buy their first house, they don't realize they can still use the Lifetime ISA, invest towards retirement and also get that extra £1,000 from the government. So they stop the second big mistake. That will be what this session for you, if you already have a lifetime isa, is that a lot of people leave their lifetime. I sign cash. I mean, if I'm buying my first house, then I want you to leave my lifetime outside cash. I don't want to put it in the market. I don't know, the market goes up and down. No, it might be that when I needed to buy my house, the market is down. But if you bought your first house and you're now looking at retirement and you're only 40 or 41 or 38 or whatever age you are, then probably looking another 20 years, leave your money lying around in cash, then inflation basically just sort of like messes you up, isn't it? Your money is not growing faster than inflation. The value of that money is going to be far less than what it is in 20 years time. So in my case, my lifetime ISA is not in cash, it's in stock and shares. So don't confuse it with stock and shares isa, which is the next one I'll tell you about about the lifetime isa. And there are two types. The lifetime is a cash, the lifetime ISA Token, shares, Lifetime ISA, any type. You can open it above 40 if they want to do it before your fault. If you're above 40, that doesn't mean you can't have a light and ISA, but you can't have the lifetime ISA, you can have other types of lifestyle. Is there any confusion on that so far? It's not a confusion, just a quick question. Yeah, sure. So you did mention, like still using the Lisa even after using it for mortgage, you can still keep contributing and you just use yourself as an example that instead of just leaving it there as cash, you rather put it into stock so, you know, like, so I can still make a profit on its own. Add an inflation creeping in on the cash, you've left it. Yeah. Now, does that mean that after each financial year you take the money out and put into stock or how do you move that from Liza to stock, if that makes sense. Basically, if the same way you deal with your any investment account, if you have a lifetime isa, once you buy your first house, you notify the platform that you want to change from life on Isaac cash to lifetime asset stock and shares. If they don't have lifetime as I talk and shares, you can just ask them to move it to another platform that provide lifetime ISA stock and shares. And again, thank you for. That's a very important question because it links to Blessings Christian. It says what happens to the money after putting. After putting it in? Is it being invested by the ISA people? I like how you think that there are some extra people. That's so cute. Yeah, but that's a very relevant question because Blessing, a lot of people are making the same mistake in the uk. They just put their money in the ISA and think it's working for them. No, ISA is just like a tax wrapper. It's just a tax protector. And that ISA doesn't invest your money for you. It just means that if you put in money through that isa, you can invest it without any taxes based on your returns, including your dividends and your capital gains. Yeah, thank you for that question. But if you ask me, how do you invest your isa, I'll take you back to what we already explained. That came from Migdala's question. How do you invest? You can invest by yourself if you know what you're doing. You can buy broad, well diversified index 1 or individual stocks, depending on your skills or bonds or whatever. You can buy into a target date fund that actually invests with a goal. You set your goal for investing. Or you can pay somebody to invest your money, which is the one I'm not a big fan of.

All right, so my question is that. So like my bank, for instance, Monzo, there was a time it was advertised isa, ISA stocks and stuff like that. And I think I went for there's this one they called ISA stocks and shares. What I do is I throw in my small, small pennies as like into the pot. It's called an investment pot. So I don't really understand is it that the money is not working in the pot? Is not money is not working at all for me and I need to invest it personally or. Because I'm looking at the pot now and yeah I'm seeing that they said up by so, so percent things investing. So like in this case, is it the bank that is investing this my own isa or I may be confused because I was thinking that as I'm. That as I have this stocks and shares ISA account with Monzo that they are investing for me. So I just need a clarification on that.

Thank you. That's a relevant question. A lot of people are confused about things like that as well Monzo. If you've indicated for them to invest for you, they'll invest for you. But you're not in control, you don't know what they're doing. Yeah, you don't know if they're investing in your own interest. A lot of times people also say, well if you have that sort of strategy you will not be, you will not be bold enough to invest as well as you should. For instance, part of what we teach in the Mastermind is that you should be looking to invest 15 to 20% of your income so that you can get quickly to your financial destiny, your freedom. If you're looking to achieve financial freedom at the point where your passive income pays for your life, you can't just put in £20 now, £10 there because that's what you do because you're not sure what they are doing. But if you're already, you're following the steps, you've saved the emergency fund and you have your emergency fund in place, you have your income protection, you have your life insurance and you've done those seven things. I don't know, can somebody from my team share that resource? 7 things you need to do before you start investing. So you guys can download it, look at it. If you have those things in place like some of you here have, especially those of you I'm seeing that I've had a one on one sessions with. If you, if you've gotten to that point then you start investing more thoughtfully, investing with more intention, then you're not just putting like any penny or anything because you know that you have a clear plan now regarding investing Monzo, I don't know which pack, which package you've got but most of the banks will offer you some sort of investment. Let us invest your money. A lot of it is absolute garbage. A lot of it. Why? Because basically like there are fees that are hidden there. They're getting the same returns as S P500 or the broad market index. Sometimes they are doing worse. The question is why don't you check and find out if your bank is doing better? I doubt it than the general market. Are these fees justified? Again we are limited in time but basically this is what we delve into for four weeks for the master class which is part of the mastermind if you ask me what should be the next step. Next step I think you should do blessing is to go and look at your bank fees. Check how much of the fees they are charging you on that platform. Acadana just checked and said oh it's compound and Agriflanza has been around for a while. Check what are the fees are they charging you and maybe just ask them why are we charging these fees? If they tell you because we're investing your money. Ask them are you doing better than the market average? You know and it would be interesting to hear what they say. They're going to speak a lot of grammar but again math don't lie. You can talk about anything with a lot of words but mass don't lie. Okay. Right. Okay. Does that make sense?

Yeah.

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