Hey guys, it's Sasha today I Want to tell you about some really interesting things about stocks and shares Isis I Won't talk to you about the very basic things that most people know. if you want to understand better what Isis are how they work all things like that I will link my complete guide in the description. so go and check it out. but in this video I thought I'd Talk about some of the points that many people don't know about stocks and shares.

Isis A few really crucial things that people sometimes get wrong with: stocks and shares. Isis That can be very painful and frustrating and can lose a lot of money if you get them wrong. Now if you're just getting your stocks and shares Isa for the very first time, maybe because it's a new Financial year or you've been saving into one for a few years already. you might find some of the tips in this video helpful and maybe some things that you didn't even know now very quickly.

What is a Stocks and Shares Isa It is an account available in the UK to investors where you can invest in the stock market without having to pay any taxes. I'm going to come back to this bit in a minute. You can see I put an asterisks next to the no taxes bit. As with all, Isis you don't have to pay any capital gains tax and you don't have to pay any dividend tax or any other major kind of tax when investing in the stocks and shares either.

This means you can invest your money in the stock market and however much it grows, it doesn't matter in the future, you won't have to pay taxes to the UK government at all when you decide to cash out. This is a huge Advantage when investing in stocks. The UK capital gains allowance has just been reduced from 12 300 pounds a year to six thousand pounds as of this financial year, and in the Autumn budget, the Chancellor announced that it will halve again to 3 000 pounds from April 2024. who knows, it could go lower from there afterwards.

The dividend allowance has already dropped from five thousand pounds to 2 000 pounds a few years ago and it's just been reduced to one thousand pounds and next year is going down to 500 pounds. So if you invest outside an Isa you will have to pay these taxes. And although dividend tax and capital gains tax are lower than income tax, they are still very substantial and an ISO lets you avoid paying them all Together, You're allowed to put in up to twenty thousand pounds a year into your ISO, which is more than enough for most people. and there is a risk that this annual amount will in the future because you know if the government needs more money, this is an obvious place to try to get it.

so you might want to go and use your allowance while it's there now. First, the first Quirk I wanted to highlight is about those taxes. Unfortunately, although a stocks and Shares Isa is tax free, you still have to pay some taxes. So although you don't pay capital gains and dividend tax, you still have to pay two other types of tax.

The first one that you have to pay is stamp duty. If you buy UK stocks, you will have to pay a 0.5 stamp duty every single time you buy a stock including inside an Isa. So if you go and buy 100 pounds worth of shares and Company trading on the London Stock Exchange Royal Mail Barclays Whatever you like, you will have to pay 50p in stamp Duty and only receive 99 pound 50 worth of stock. This tax only applies on buying but not on selling shares.

They only pay it once. There is a similar tax in some other European countries as well. So if you're buying stocks that trade in France or Switzerland for example, you'll have to pay that stamp Duty there as well. And the second tax that you have to pay is dividend withholding tax.

This one's quite important, but many people don't know it exists so you don't have to pay UK dividend tax inside your stocks and shares Isa But other countries will often take a cut of the dividends that you are owed before you receive them and this is called the dividend withholding Tax. Us is the most popular stock market in the world. Many people watching this video you probably will be investing in U.S stocks. And if you invest in U.S companies, you will lose 15 percent of the dividends that those companies pay you.

Because of this dividend withholding tax, you won't have to do anything. You don't have to pay it, You don't have to go and find the IRS or fill in forms online. The U.S tax man will take it out of the dividends before you even see them appear in your account. Now, this is not a big issue for most investors.

The most popular companies in the US either pay no dividends the big Tech giants like Tesla or pay very low dividends the S P 500. Overall, the entire 500 biggest companies in the US only have a dividend of 1.63 a year at the moment has been falling continuously for the last few decades. If you invest in the S P 500, the majority of your returns will be from stocks increasing in value, not from receiving dividends, and on average over the long term. The S P 500 returns about nine to ten percent a year.

So at the moment, 1.63 off that 9 to 10 comes in dividends and you have to pay 15 off that in dividend withholding tax. So you'll lose about 0.24 a year as a result. Now, 0.24 out of nine to ten percent Total return is not huge, but it's useful to know about. and I Also know that a lot of people on YouTube recommend that people go and invest in dividend stocks for whatever reason.

Well, if you invest in dividend stocks based in the US for example, inside your Isa, you will lose 15 percent of those dividends and that is a lot. But you don't lose anything on the growth and value of your shares because there's no capital gains tax, so that's just something to think about. Also, the same dividend withholding tax applies in some European countries as well. Now very few people will be investing in European stocks, so this is probably not going to affect most of you watching just from experience, but just something to be aware of.

The next point is a quick one, but it's super important and many people don't understand this bit properly. You can only pay into one stocks and shares Isa in every Financial year. So from the 6th of April and any one year to the fifth of April the next year, you can only pay into one stocks and shares Isa And that means that every Financial year you have a choice. you can go and open a new stocks and shares.

I Say if you want and start paying into that one or you can keep paying into your old one, any one of your old ones and continue paying into the same one for the rest of that Financial year. If you open a new stocks and shares ISO you can keep your old one. Nobody forces you to close it. So if you open a new one every year, you can have as many as you want and you can keep buying and selling stocks and all of your old ones as much as you want.

There's no restriction on that and you don't have to move your old Ices if you open a new one. There's absolutely no one telling you to do that. You can move if you want to because maybe you want to save on fees, but you don't have to now. I have links to the best value stocks and Shares Isos in the description and there is a link to a video where I break down the best stocks and shares Isis out there.

If you want to go and check it out later, remember that the stocks and shares Isa is only one type of Iso. You can also have a cash Isa a lifetime Isa or an Innovative Finance I Said that last one is just lending money to people. You can pay into one of each type of iset within the same Financial year so you could go ahead and for example, open a lifetime Isa and a stocks and shares either two separate ones and pay into both for example, in the same year. And this brings me nicely to the third useful hack.

You can invest more than twenty thousand Pounds into Isis if you wanted to. Now it's not rocket science, but people often see the twenty thousand pound allowance and they don't think outside the box. twenty thousand pounds is a lot. So for most people, you will never need a bigger allowance, but Live has a funny way of throwing things at you.

Maybe you'll sell your house and decide to rent or downsize. Maybe you'll get an unexpected bit of inheritance. Maybe you'll get a big bonus at work, Maybe your salary increases, and you can afford to save more into your Riser Whatever the reason, remember the twenty thousand pound allowance is per person. so if you're a couple, for example, then each of you gets that twenty thousand pound allowance and you can open an Isa each and each of you can put that amount into your own Ices.

And if forty thousand pounds is not enough for the two of you, there is a junior ISO allowance of nine thousand pounds per child. There aren't as many good Junior ISO options out there, but Junior Isis eventually convert to become normal Isis when a child turns 18 and at that point, you can do whatever you want with it. So as a family, you can save a heck of a lot of money into Isis every year if you want to do it if each member of the family has their own account. And remember, the twenty thousand pound per year limit is only on deposits, there is no limit at all on how much your Isa can grow if your Isa grows to 1 million pounds or 10 million pounds over time or whatever because you are the next Warren Buffett and you made such good Investments you can go and withdraw the full 10 million pounds and pay no tax whatsoever.

And while we're in the topic, the next really important point is not to pick your Isa just based on the fees alone. Often people comparing Isis just look at the fees and say well, this one's the cheapest and I'm gonna go and get that one and open that account. And recently a lot of new Brokers have turned up in the last few years offering free Isis or almost free ices. That the problem is that when the ISA is free, it means that the company that is offering it to you is losing a lot of money because they have to, you know, operate it and have staff and offices.

There is an old Russian saying that says that the only free cheese you get is in a mousetrap and sure enough, in recent years trading 212 offered a free Isa and then introduced a 0.15 foreign exchange fee. Now their Isa is still one of the best value out there and it's the cheapest on the market for those investing smaller amounts. That's one of the links I have in my description, but it's now not Free Free Trade Also increase their fees substantially multiple times since they arrived. so you can get a great deal from these new Brokers But just be careful of that bait and switch because if your broker suddenly decides to stop being free and magically increase their fees, you might have to move to a different provider if you don't want to continue paying those fees.

And surprise surprise, most of these new Brokers don't let you do in species transfers out, so sometimes you can transfer in but not out and in specie transfers out just means that you can't move your shares to a different broker. If suddenly they just tell you that their fees are increasing. So if that happens and you want to move, you'll have to sell all of your shares, pay all of the fees for selling the shares, then move the money, and then buy those shares again with a new broker paying even more fees. And if you do that, you might lose a heck of a lot more in fees by doing it than you would have said by opting for the very cheapest broker in the first place.

Now, having said that, the best known old-school Brokers that everyone knows about like Hargreaves Landsdowne have astronomical fees, you have to pay 0.45 a year on annual management fees, and a separate 0.45 on any funds you invest in. and you have to pay 12 pounds every single time you buy or sell shares. So if you put in a hundred pounds a month and you buy one stock, not multiple, you still have to pay 12 pounds. 12 of the money that you're putting in for just the ability to invest is mind-boggling and you have to pay one percent in foreign exchange fees on top of that fee when you buy foreign stocks.

For example, if you invest in U.S companies. So yeah, be aware of Brokers that are free, but that does not mean that you should go and pay absolutely insane ludicrous amounts and fees to Hargreaves Lands Down either or any of the other old school providers charging similar amounts If you want. my take on the best value stocks and Shares Isis I have links in this description and there's a video that explains all the main options and explains how expensive they are. The next really important point is that not all stocks and shares Isis let you invest in stocks and shares.

Now there are a lot of Ices that brand themselves as stocks and shares, but the only thing that you can buy inside them is one of a very small number of proprietary funds. They're very mysterious, and these funds carry very expensive fees and even the highest risk option that they offer severely underperforms the average of the stock market return in the long term, which makes absolutely no good sense. These providers Bank On people wanting to minimize their risk, they want someone to hold their hand. They play The investing is very hard.

Be careful out there, it's very dangerous. They play that marketing game so that a lot of the less Savvy Investors go and opt to have their Isis with them so that they can then sell you those funds. And hey, this is a personal opinion. Maybe I'm wrong because you know some people might prefer a bit of hand-holding People are scared of risk and these funds don't oscillate as much of the stock market.

So for example, if the stock market has a bad year and loses money, These funds might not lose as much money so in the way. I Guess there are some upsides, but they also make far less money in the good years than the average of the stock market. But for me, the stocks and shares Isis from the likes of money Farm wealthify, nutmeg, etc etc are not real stocks and shares. Isis You can't invest in actual stocks you can't invest in ETFs You can't invest in just a stock market index.

You can't expect to even match the average stock market return based on the numbers they provide, let alone have any chance of beating it. So I Personally would never recommend to my friends any of these options and I would never promote them for anyone who doesn't want the risk of investing in stocks and shares because you know you don't like the oscillations up and down. and maybe you can't sleep at night because you're worried about your money? Well, there are other types of Iso that don't average, have lower returns, but have none of the risks Associated so they might be the better option for you. And this brings me nicely to point number: six: Stocks and Shares Isis are actually great because they only let you invest in good things things like company shares or ETS.

Now not every company is a good investment and some will be really bad Investments But Isis in the UK are restricted compared to regular investing accounts. So inside an Isa you can't gamble. This is a really good thing in an Isa You can't go and buy options or buy Futures You can't trade Forex because money in your account has to be kept in pounds at all times. You can't buy Cfds or any other kind of instruments.

And this is really good because the vast majority of these things are really not appropriate for retail investors. Many of these are extremely volatile, very difficult to actually understand, which means a lot of new investors will often go and start gambling with leverage or short-term options or whatever and then to lose all of their money. This happens all the time in an Isa You are not allowed to buy any of those dumb things, so the temptation just isn't there. and you can't accidentally go and do something really stupid by buying a 10x leverage Cfd without maybe quite understanding what that means in terms of risks.

So an Isa is great for buying stocks and shares and also great for not letting you invest in all of the junk. And point number seven is that most stocks and shares Isis are not flexible. All three of the good value options are listed in the description below are not flexible and it's really important to know this. It means that if you take your money out of your Isa during Financial year, you can't go and put it back in.

So for example, let's say you have a nicer: you have a 20 000 pound annual allowance, you put in 10 000 pounds, and then you urgently need to take two thousand pounds out to say fix your car. If you withdraw that two thousand pounds because you already put in 10 000, you can still only put in another 10 1000 back into the account. So in total, after you take out the 2000, you will have only kind of contributed eighteen thousand pounds that year. Again, this is probably not a big issue for most people, but just something to be aware of.

If you take money out of your Isa, you are kind of losing a part of your allowance for that year if it's not flexible, so you can't just temporarily borrow money out of your stocks and shares I Say if it's not flexible I Hope you found this video useful. Remember to check the links for the best stocks and shares ice in the description and watch this video to see a complete breakdown of all the best options available and me explaining all of the fees. Thank you so much for watching and I'll see you guys later! Thank you.