Hey guys, it's sasha: where should you put your money, should you put as much as possible into your pension? Should you go and max the twenty thousand pound i set allowance? Should you use lifetime isis? I get asked these questions all the time. So, let's talk about it, it is really important to consider what the best strategy is, but just before we get into the details, i am not a financial advisor just as a reminder. I cannot provide financial advice to you and if you do need financial advice, please make sure you go and seek the help of a suitably qualified professional. Now, all three of the options in this list that we're going to be covering today are all tax advantaged accounts.

In fact, lisa is just a form of ice account, but when i do talk about isa accounts, i'm going to be specifically talking about the stocks and shares. I said not the other types, and this is because cash isis are currently paying such incredibly low rates. That you're actually going to be losing money, if you put it into one of those accounts, because inflation is higher than the interest that those types of accounts are paying and innovative finances are a whole different kind of conversation and topics. I'm not going to be covering them in this video either obvious things being obvious.

The big difference between these accounts is the point of taxation. Now all are tax advantage, ways of saving or investing your money with pensions, you're able to invest your money before you pay income tax or in some cases you are able to go and claw back the income tax, but with lisa and isa accounts you have to Invest after paying all these taxes, however, when you draw the money down from those, you will owe absolutely nothing with pensions. You can take 25 percent, complete your tax free, but the rest will be subject to tax, depending on the way that you choose to take. It.

Remember the pensions also have a maximum something many people do not know. There's a thing called the lifetime allowance. I made a special video about it just very recently, and the lounge currently said one million. Seventy three thousand one hundred pounds, and that seems like a crazy amount, but with the speed at which the pensions are changing and the customers are get able to get better results and the fact that you can now invest in sips and the fact that the minimum Contributions to these pensions have gone up so much, and the fact that the fine contribution schemes are now the default rather than some of the other options that were there in the past, a lot more people might be hitting those than they think.

When i made the video, a lot of people pointed out that that allowance will go up with inflation and therefore most people probably will never actually reach it. And yes, it will, but so will salaries, and so the mass in that video still in my opinion, applies really strongly. But just a few days after i made that video, the chancellor went and announced the budget and one really minor point in that budget. Most people didn't really care about is the fact that this allowance was actually frozen.

So there you go. If the government chooses to go and freeze it or reduce it like they already have done in the last few years as well. They can do so. So it's just really critical to be aware that you might fall into the trap of having to pay 55 tax.

If you go over that threshold make sure you go and check the details in the other video anyway. So what is the answer? So for me personally, the best answer is to start with talking about the lisa. Lisa accounts exist for people who are either buying their first homes or planning for retirement. The issue is that the providers of lisa accounts are either offering very low returns or high fees and in some cases they offer both.

So for me, even if you open the account before the age of 40, which is the maximum age sort of the cutoff at which you can't open it anymore. And even if you continue paying all the way until 49, which is the latest that you can contribute to it, i think for many people it probably won't be the optimal way of planning for your retirement, because there are potentially better investment opportunities elsewhere. Even with the bonus that i'm going to get in just a second, but if you're buying your first home soon, but not in the next 12 months, then the lisa account is great and is an absolutely super important thing for you to consider. You get an immediate 25 bonus from the government, so if you go and put up to the 4 000 pounds per year, maximum, which is what you were allowed to do, the government will then top it up with up to 1 000 pounds of money straight away.

If you're watching this in march 2021, which is when i'm recording this and you open the account, you can put 4 000 pounds into the account now and then, when the 6th of april happens in the next financial year starts, you can go and put another. Four thousand pounds then, and get a 2 000 bonus on those two contributions from the government. So that's a nifty 25 on return on your money before you even account for any kind of growth, so if you're planning, for example, to buy a house in summer 2022, this would be a really awesome way to go and save up for that deposit. Now, if i wasn't buying my first home within the lisa rules, then i'd ignore the lisa altogether, because well i already have a home.

So now, let's talk about pensions. The huge benefit with pensions is that workplace pensions are now compulsory and your employer is obligated to contribute to your pension on top of the money that you're putting in yourself and the minimum. The employer has to put in three percent, with your minimum being five percent. So if that is your setup, then essentially you're getting a 60 top up the moment you put your money into a pension, which is amazing.

Some employers will pay more than that and will have more generous schemes, and so, whichever scheme it is that you have, it is definitely something that you need to make sure you take advantage of just remember. You won't be able to access your pension for a long time and, if you're young, this is going to be decades and decades of not seeing your money. So, although it is a really good idea to make sure that you are making your employer contribute to your pension and getting that big bonus up front, consider that this money will not be available also, given the lifetime allowance cap, the ability of the government to change It at their will whenever they want, whenever they need to go and raise some taxes, just make sure that you're extra careful that you don't go and get anywhere near that threshold, because then you might be risking hitting it and then having to pay a huge amount Of any man over the threshold in taxes, so just make sure you plan for that. Because of these factors, i would personally make use of the employee contribution pensions, but not go over and then i'll take any money that is surplus and i would then go and take it and put it into a stocks and shares ice account.

But this is just my personal opinion. Don't take this as advice. This is just what i do, but you don't need to go and do the same thing. These have recently become really great these stocks and shares iso accounts.

There are lots of different companies that are beginning to offer better and better products, and i think this is only going to continue the next few years with even more competition. At the moment. Trading 212 and free trade offer probably the sort of the best ones in terms of pricing um. They both charge for an exchange fee.

So trading, one two just announced they're going to start charging 0.15 percent foreign exchange fee. Previously they didn't and free trade will charge. You from 0.45, but other than that both of them are pretty much free. Actually, free trade will charge you another three pounds per month for having that isa account now right now.

Trading 202 is temporarily not accepting new accounts, although i think that will change over the next few weeks. So if you're watching this a little bit later, you'll probably be able to open one of those accounts at that point, both of them allow you to invest in stocks, etfs and a bunch of other stuff commodities, etc, and if you like to actively manage your portfolio, This is a relatively easy way, although just beware of the forex fees, each single time when you buy stocks and when you sell stocks in any other currency, that is not the currency of your account. So, for example, in my case when i live in the uk and my account is in pounds if i go and invest money into anything that is priced in dollars, i will be losing 0.5 0.15 each single time i buy and each single time i sell, as With the lease account stocks and shares, isis are not liable for capital gains, tax and they're, not liable for dividend tax, which is really important. Although you still have to pay some taxes like, for example, you still have to pay the u.s dividend withholding tax and you still have to pay uk stamp duty.

When you buy uk stocks, there are zero bans available outside in isa, and some people say that that is probably enough for most people, because you can go and earn up to twelve thousand three hundred pounds in capital gains per year without having to pay any taxes. Might and up to two thousand pounds in dividends. However, those can go up and down depending on what the budget of the day feels like, and if you are not using your isa for any other purpose. There isn't really any downside to using it for your stocks and shares, because that means that your money will be protected from any changes in those tax brands over time, and you won't really care as to what happens in the future.

No matter how big your investments grow, so that's it. If you enjoyed this video, please make sure you smash the like button for the legible algorithm. I would really appreciate it. Thank you so much for watching and i'll see you guys later.

You.