Health is wealth
And the return of ISAs and pensions :)
I ran a workshop about money this week in Somers Town - the bit of London between Euston and King’s Cross. In its community centre. Where 60%1 of adults are long-term unemployed. In central London. In an area flanked by Google, The Frances Crick Institute and The British Library.
This is in the same week that the current (unelected, billionaire) Prime Minister decided to go after the millions of people who are unable to work due to illness. A number exacerbated by NHS waiting lists and an inability to access the healthcare required to get back to health, and therefore work. A problem caused by an underfunded NHS.
The benefits system is a minefield to navigate. I’ve spoken to someone who said that, compared with HMRC’s system for filing tax returns (a seamless experience, optimised for user needs), the system for getting Universal Credit seemed designed for the opposite of user’s needs.
Yes, there will be some people who cheat the system - but there are many more who genuinely want to improve their lives, but are trapped by a system that simply will not give them the opportunity to do this.
The welfare system is there to help people when they fall into trouble - very often due to health issues. I’m writing this after having spent time being very unwell this week (like bed-ridden unwell), feeling incredibly thankful to have been in that state for just a short period of time. I can’t imagine how trying life would be dealing with long-term sickness while also trying to do life.
It’s why, if you can afford to do so, it’s worth investing in income protection insurance, and critical illness cover. It provides you with a far more padded cushion than the State can - but, of course, at a premium.
A premium many can’t afford.
1. Which type of ISA is right for you now the new tax year has started? 🪜
This is a very handy guide - especially if you’re yet to get on the ISA bandwagon.
Cash ISAs
If you need to be able to access your money immediately, go for an ‘instant access’ product
This means you can take out money whenever you’d like
If you know you can leave the money for a fixed number of years, go for ‘fixed rate’
You typically get rewarded with higher rates of interest the longer you leave it there
But, since interest rates are high at the moment, there are better rates to be found in instant access products
However, the level of interest is fixed for the duration of the term, so even if interest rates were to drop, your product would still retain its ~4% rate
Stocks & Shares ISA
If you have money you are prepared to leave untouched for 5-10 years, and are OK with the potential to lose some (or all) of it, this is for you
The flip side of the risk is the potential reward; a growth on your investments!
Lifetime ISA (LISA)
You can put in up to £4,000 each year, until you are 50
The government will add a 25% bonus each year, up to £1,000 (akin to a 25% interest rate)
But you have to open it before you turn 40
The money can only be used to buy your first home, or when you turn 60
The money can be in cash or stocks and shares
First time ISA-ers, let me know how you get on! I’m actually going to look into Tembo’s LISA today, as it’s one of the best LISA interest rates around.
2. Call for pension switching initiatives to be banned
You may have seen the adverts around. They offer a simple way to switch your pension, in exchange for money. Do they work?
The answer is yes - but for the companies. Not you.
A recent study found that people were 20% more likely to switch their pension to another provider when offered £100.
This is despite the fact the higher fees charged by the new pension would have left them more than £1,000 worse off after just five years. And could lead to them losing out on tens of thousands of pounds in retirement.
We know that people don’t understand pensions, and messaging up until now has been laser-focused on getting people to put money into them. But how their fees and performance levels vary, as well as how accessing them works? That’s a whole other story.
It’s why it’s so important to consider lots of various factors whenever you’re making a decision about your own pensions. Be thoughtful. Ask questions. Talk to people. You can also access the brilliant and free Money Helper service and get some answers from an expert there.2
(PS Shout out to recent Money Brunch subscriber Ruth, from the team that ran this study! 👋)
3. Refunds for unused subscriptions may be easier than you think
I’ve said it before, and I’ll say it again - if you spot a subscription you didn’t know you were paying for, or thought you had cancelled, get in touch with the company!
They’ll cancel the subscription and - if you ask for a refund, they are quite likely to give you one too.3
Why not take 10 minutes today to scroll through your recent transactions and see if you spot any rogue payments? And handle them?
I promise you that the high is worth it.
Talk to me! ☎️
A friend (👋) mentioned that they occasionally don’t understand some of the stuff I talk about in this newsletter.
If this happens to you - however frequently or infrequently - please let me know!
Not only do I really want to help clarify things, but it will help me explain things more clearly in future newsletters.
You can either comment or, if you’d prefer, just send me an email: bhakti@getonyx.co.
Alternatively, you can hit reply to this email :)
Know someone who would enjoy this in their inbox on a Sunday morning?
It’s either 60% or 70% - a figure shared with me by an incredibly knowledgeable member of the team at the community centre.
They can’t offer advice specifically about your situation but you can ask them to explain what different things relating to your pension might mean, for example.
This actually reminded me to follow up on a cancellation request I’d put in 11 days ago - which I just did. And I’ve found them on LinkedIn, so if they don’t respond in the next few days, I’ll be DM-ing the company’s exec team 😒💪