Asians in the UK
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Asians in the UK

Expat Finance

Have you started using your ISA allowance yet?

The most important finance piece of knowledge that the expats often miss

Disclaimer: I am not a financial advisor. The post contains my experience and research. Before taking any money-related decisions, please do your own research.

Photo by Sharon McCutcheon on Unsplash

One of the biggest money mistakes that I did when I first moved to the UK was to not research saving and investment options. Back home, the most common saving option was to put money into your savings account or have a fixed deposit, where you lock away your money to get high-interest rates. All most all the people used savings accounts, current accounts were used by businessmen just because they want the ability to write checks.

The banking scene is entirely different in the UK. Almost everyone has a current account to which your salary is paid and in which you can get a debit card. Savings accounts are for putting money long term, and finally, there is this thing called ISAs.

I am a Barclays premier account holder. One advantage is that you get a dedicated account manager who helps you to get on top of your finances. After few months into opening my account, my account manager just slightly brought up the subject of opening the savings account and ISAs. At this stage, I was still figuring out the living expenses but also wanted a different account to put the remaining money away so that I won't be spending it on unnecessary things. So I worked with him to open a savings account (really it's not that hard, anyone can usually open a savings account online) and he also gave me information on other savings options like cash ISAs. The main point brought up was that any saving interest is liable to tax whereas in ISAs you get a 20000 tax-free allowance. This was enough to pick my interest and I started searching on the tax on savings.

This is when I found out about the “ Personal Savings Allowance”. However, this is the same time I realized that the interest on savings is really really low. It took only a few calculations to figure out that with the interest rate of my new savings account, there is no way I am going to exceed that savings allowance. This was enough for me to forget all about ISAs and live my life in blissful ignorance.

Fast forward a few years, after saving enough money to put in a deposit and buying a new home, I was looking for a new financial goal. This is when Barclays struck again with a promotion on investment ISAs. This was enough to pique my interest and do a search on what are the available options and fees.

This is the moment that I started realizing that I should have done this years ago. If you have read this far and are also interested in what ISAs and what are your options I highly recommend the following resources.

In short, ISA stands for Individual Savings Account. There are four types of ISAs

  • Cash ISA
  • Stock and Shares ISA
  • Lifetime ISA
  • Innovative Finance ISA

In each year you can put your money tax-free to one of each of these ISA types until you meet your 20000 tax-free allowance.

The research I did on these was my gateway to the investing world and FIRE movement. After doing a lot of research, I decided that for my financial goals what suits me the best was a Stock and Shares ISA of Index funds. Being a risk-averse person, Index funds had their appeal over investing in individual stocks and I selected Vanguard as the platform to invest in the index funds.

Here are few resources around the area. I recommend do your own research and before committing to a platform.

The other front runner in my platform selection was Trading 212. The main advantage of Trading 212 is that you do not have any platform fees and you can invest in ETFs and individual stocks.

While I started putting money into my Stock and Shares ISA in Vanguard, I also started a Trading 212 general investment account which I use for my pocket money.

If you are thinking of opening a Trading 212 account, here is my link: www.trading212.com/invite/HEbqCPy4

If you open an account using that we will both get one free share each.

So to summarise, if you have moved to the UK recently or haven’t started putting money into an ISA yet,

  1. Think about how you want to grow your money long term
  2. Do your own research on ISAs and platforms available in the UK.
  3. Open an ISA and start investing

Bonus Content

If you are interested in learning more about investments and personal finance in the UK I highly recommend the below youtube channels

Reset is also a book that I thoroughly enjoyed reading, but its more about Financial Independence

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Asians writing about their experience on living in the UK

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