Call Richard Cook: 07770 575 122

email: richard@theinvestmentandretirementcoach.co.uk

ISA or Pension? Learn which is right for you!

Find out why Steve decided that an ISA was the right answer for him, at least for the time being.entrepreneur-696976_1280

Steve is in his late 20’s running a reasonably successful Social Media consultancy which he expects to grow. He came to me and said “I think I need to start a pension – can you give me some guidance?”

Where to start?

Well he was already doing quite well because in addition to his personal and business current bank accounts he had separate “emergency” and “tax” savings accounts. Without those I would have suggested that he was not yet ready to start building an “investment” account.

What is an investment account he said?  An account which:-

  • You will feed regularly from gross turnover.
  • You will only invest in something which is likely to grow in value – never in depreciating assets such as a new car.
  • You will pop lump sums into whenever you are satisfied that they are available for medium/long term investing.
  • You will be disciplined enough not to dip into the account when things start to go wrong.

If that’s agreed the next consideration is – ISA, pension or something else?

Steve convinced me that he had the discipline to leave his fund alone and not dip into it as soon as things went wrong. He may be forced to reduce or suspend his contributions from time to time but, generally, he expects to keep them up. If he hadn’t convinced me, I would have suggested that he needed a pension plan that he could not touch until 10 years before State Pension age.

How disciplined are you?

calculator-385506_1280Steve is not yet a 40% tax payer but expects to be in the future. Once he becomes a 40% tax payer the tax benefits (current rules) probably outweigh the inflexibility of pension plans and become the right answer.

For now an ISA fits the bill well.  Yes there is no tax relief but there is tax free growth and the ability to make withdrawals.

Once the ISA fund has grown there is no limit to the alternative investment opportunities Steve might find. Buy to let, commercial property, business opportunities etc.  Never forgetting the overriding principle that the funds are to be invested not spent!!

What Steve needed was an Investment Fund. How it is packaged will change over the years. He decided that the ISA was the best starting point.  He is intending to contribute 10% of gross turnover (note – turnover not profit) on a monthly basis.  He will look again at a pension plan when he starts to pay tax at 40%.

There are two types of people in this world.  Those who save first and spend what’s left and those who spend first and save what’s left.  Guess who the winners will be.

Steve also decided he didn’t need to pay large fees to a regulated financial adviser but would use the “no advice” Hargreaves Lansdown platform. By paying attention and using their online services he will be growing his investment knowledge and experience rather than paying someone else to look after his money.

The help and guidance of The Investment and Retirement Coach Programme was invaluable in setting him on the right lines. He understood and accepted that the service was “guidance” and not personal “advice”.

If you would like to know how we can help you and the costs involved click the box on the right to arrange a complimentary chat.  Also don’t forget to click the box below to get valuable blog updates.

Finally we will shortly be building on our blog series with some online Financial Planning webinars. These will be free for anyone who pre-registers their interest.  All you need to do is fill in our contact form and put “PRE-REGISTER FOR FINANCIAL PLANNING WEBINAR” in the message box.


This document and our on going services are not personal advice. We'll give you all the help and guidance you need to make your investment and retirement decisions, but we can't advise you. If you're not sure whether you need regulated financial advice we can put you in touch with a suitably qualified and experienced regulated adviser. Because we are not regulated by the Financial Conduct Authority you will not have access to the Financial Ombudsman Service in respect of any complaints. If you use one of the "no advice" on line services to handle investment transactions they will be Regulated and you will have access to the Ombudsman and The Financial Compensation Scheme in respect of their services. The value of investments/pension plans can fall or rise depending on market performance. The Retirement Team and The Investment and Retirement Coach are trading names of Capture Success Ltd Reg No 01825075 Tel 07770575122

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