MoneyMagpie

Mar 16

We’re going to keep saying this until you do it – put your money in Equities ISAs!

I feel like a cracked record, but I’m going to keep on at you until you crack and take the plunge with stocks and shares ISAs!

Seriously, you are MUUUUUCH better off, long-term, putting your money into stocks and shares (equities) ISAs than you are with Cash ISAs.

So why aren’t you doing this?

It’s because you get scared.

Everyone gets scared.

People want to get their money working for them but they’re too scared to put it where it will work.

But – get this – rich people don’t get scared about this.

This is the difference between rich thinking and poor thinking:

So, do you want to be rich or poor?

I’m guessing rich!

In that case, you need to start thinking like a rich person.

Here’s why you should put your money in stocks and shares ISAs and how to do it the easy way!

 

Why we MUST not be scared of the stock market

On a daily basis the stock market goes up and down faster than Russell Brand’s underpants.

But that’s not of interest to us if we invest for the long-term.

For you and me, that’s the best way to invest.

In the long-term these stomach-churning ups and downs smooth out and, on the whole, the general trend is upwards.

We don’t hear about the stock market when it’s quietly climbing (which, by the way, it has been doing in the last few years).equities ISAS

But rich people know that even when the stock market is crashing, it’s not forever and if they hold on, it will come up again.

In fact, REALLY rich people like multi-billionaire Warren Buffett tend to see stock market crashes as an opportunity to buy more because shares are cheap!

 

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So if you’re putting money away for the long-term…

……and that’s the way you should view your ISA investments…as a long-term investment to form part of your retirement fund…

 

…then you need to put it into stocks and shares, not into savings accounts.

 

Savings accounts (including Cash ISAs) are for the short-term and they’re very useful for short-term saving and to be used as an essential buffer for day-to-day living.

However, they are USELESS for long-term investing because they don’t keep up with inflation – the returns, on average, are too low. For the long-term you need to invest in equities (stocks and shares).

Personally I have never invested in a cash ISA because I see it as a waste of a tax savings vehicle (any money you put in a cash ISA you can’t put in a stocks and shares ISA).

Here’s a video I did on that very subject a couple of years ago and I haven’t changed my view since.

 

 

How do I invest in equities ISAs?

It’s really easy if you just invest in a stocks and shares fund. I invest in index-tracking funds which are nice and easy, cheap and can come ‘ready-wrapped’ in an ISA too!

Here’s how stocks and shares beat cash ISAs and how to invest in them. In fact we have quite a few articles on investing in stocks and shares – and we will be doing more.

You can invest in individual shares too within a ISA. You get what is called a Self-select ISA, a type of investing ‘platform’ through which you can buy and sell shares within a ISA ‘wrapper’.

We’ve got an article here about how to buy and sell shares so that will help if you would like to go this route.

 

But, if you’re just starting even to think about investing in an equities ISA you’re probably best going for an easy fund first and then move on to individual shares later when you’re happier about the whole process. Let me know how you get on!

 

Still not convinced? Check out these stats…

Wealth managers Nutmeg are just one of the investment companies that has come out with yet more statistics on why stocks and shares ISAs do better than Cash ISAs.

Firstly, though, they’ve found (again) that Brits REALLY don’t trust anything but Cash. They say

  • Cash still rules for the nation’s ISA holders with 52% preferring cash vs 17% opting for stocks & shares
  • Over a third (37%) of cash ISA holders believe the “risk” involved in a stocks and shares ISA is too high
  • One in five (19%) believe that stocks and shares ISAs are too complicated
  • They say they found that just under 21 million people have opted to remain in cash despite the low interest rates on offer.
  • But they point out that even the small amount of interest that many cash ISA savers have been receiving in recent years has been cancelled out by inflation, meaning that the value of those savings has been actually falling, in real terms.
  • In other words, you’ve actually LOST money by putting it in a Cash ISA!

 

For Example

If people had put in the maximum amount to a cash ISA each year for the past five years, the value of their money would actually have dropped by £1,323 in today’s money. Doing the same over the past 15 years would have accumulated a £4,218 loss of value.

On the other hand…(according to Nutmeg)…

  • Of the 7 million who had invested in a stocks and shares ISA before 2014, one in five (19%) believe they achieved over 3% returns.
  • In actual fact, returns can be even more fruitful.

 

For Example

In 2014 the average market return for a medium-risk portfolio (before fees) was between 8.5% and 9.4%. Even the most risk-cautious portfolios would have achieved around 3.4%.

 

So, grab the bull by the horns and be one of the rich thinkers.

Put your money in a stocks and shares ISA and LEAVE IT THERE for years until you retire or well beyond that point.

You will thank me!

 

the moneymagpie savings accounts comparison tool

 

Want to know more about what I think about shares? Follow me on Twitter for all sorts of facts and opinions!

 

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