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answering questions: ISAs, Zopa, expat money and other things
WSA adsense code -->To celebrate a whole year of plonkee money, I asked if you had any questions. Apparently, some of you do and here are the answers so far. If you want to ask me a question, head over to the birthday post and add it to the comments by Friday 29th February.
on chartership
Chief Family Officer said:
I have a question - can you more thoroughly explain what chartership is? I’ve inferred the basic gist but am curious since it’s one of your big goals and I’m rooting for you.
Well, a Royal Charter is the original way of incorporating a body in the UK. The monarch grants the organisation the right to sue and be sued in it’s own name (rather than the members). Originally charters were granted to towns, universities, guilds, and other organisations, but now they are almost always professional organisations - such as the Chartered Institute of Library and Information Professionals, or the Chartered Insurance Institute.
For an organisation to gain a charter, the majority of it’s corporate members must have a first degree, and it must be in the public interest for it to be regulated, as getting a charter means that the organisation gives up some internal powers to Parliament. It also gives the organisation the right to grant chartered status to it’s members. This usually involves both academic qualifications and some years work experience - typically a first or second (masters) degree is required plus three or more years relevant experience.
To give you some ideas of the level of competency that it requires, in the US, the equivalent of a Chartered Accountant would be a CPA and the equivalent of a Chartered Engineer, would be a licensed Professional Engineer. Traditionally applications from individuals seeking chartership are assessed either by exams or via a portfolio and a panel interview.
on ISAs
no more spending wrote:
I do have a question about ISA’s. If you currently have a cash ISA and want to open a new one at one of these advertised better rates do you have to close the old one and transfer the money out, or do you leave the money in the old one and open a new one in April (?) as I know you can’t have 2 in the same year.
Whatever you do, do not close the old ISA - if you do, it will instantly lose its tax-free status and you won’t be able to put it back in.
To transfer your existing ISA to a new provider with a better rate, first check to see whether the provider you have in mind accepts transfers (at the time of writing, the current top rate from Alliance and Leicester at 6.25% does accept transfers). If they do, ask them for the right application form to transfer from your old ISA to your new ISA - they should then take care of the rest.
When I transferred my old ISA money from Cheltenham and Gloucester to Kent Reliance a few months ago, I sent the application to open an ISA and the ISA transfer form in the same envelope, and it all went without a hitch.
In any year you’ll have “this year’s ISA money” and “previous year’s ISA money”. Previous year’s ISA money can be split among many different accounts but you can’t add to it. This year’s ISA money can only be in one ISA account at a time.
on expat money
Looby said:
if you have any great ideas on the best way an expat can save, when they hope to move back in a few years and don’t want to get dinged by lots of charges moving money, I’d love to hear it!
Of course, the most important thing is to save and invest money now, even if you will be movin back in a few years. The biggest problems with investing generally tend to be tax related, any money that’s tax advantaged in one country is likely to be taxed in the other, so you might want to look into taxable accounts for investing, or schemes where you can withdraw your money without penalty (like Stocks and Shares ISAs in the UK) so that when you move back you can take the money out and reinvest in your home country’s tax advantaged scheme (minimising time spent out of the market).
The other big cost is of course relates to currency exchange. If you’ve got a big enough portfolio look carefully at hedging against the movement of the two currencies - that is, invest in funds/stocks/whatever that cover both the country you’re currently living in, and the one you plan to return to (not necessarily in the same fund). The cheapest ways that I’ve heard of to move money between currencies are using paypal, or if it’s a large sum of money find a specialist foreign exchange trader - you can usually get the best rates there, but it’s only cost effective with more money to move.
on zopa and p2p lending
Llama for brains said:
What is with the ZOPA? You use it? Any details? You have the link on this page!
Zopa is a UK based peer to peer lending company. It matches lenders with borrowers, both from the general public, so you can lend money to people, or borrow from them. It’s easy to use and return can be reasonable (depending on the market). I have lent a small sum of money through Zopa, it’s what I’m doing with my experimental investing money at the moment and I’m getting something like 7%.
I wrote a review of my experiences for rateladder a month or so ago, overall I think you’re more likely to make money if you spend some time investigating and experimenting with it. For more information on P2P lending in general, check out the carnival of P2P lending.
on truth
Lisa said:
Tell us one truth about yourself that you haven’t told your fellow bloggers yet.
Well, I haven’t told anyone, but I’m a big fan of children’s books - in particular girl’s school stories from between the wars, and into the mid-20th century. I have a huge collection of Chalet School books, and also a number of others including Enid Blyton, Angela Brazil, and even less well known authors. I still read these books.
I’ll go and stand in the special geek corner now.
If you’ve got a question you want answered, go to this post and add yours there. If you want to chime in and improve on my answers, please do so in the comments below.
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8 comments for “answering questions: ISAs, Zopa, expat money and other things”
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Thanks for the response about Zopa plonkee!
And thanks for the link to your earlier guest post.
I do have one more question about it. How does it work in terms of tax status?
Thanks in advance!
Thanks Plonkee! I hadn’t thought of Paypal, this was helpful.
Thanks plonkee. As my current ISA is with A&L anyway that should be quite an easy process if I go with them.
@no more spending
I think that A&L do not allow you to open one of their new ISAs by transferring in your old one. At least that was my reading of it. I was hoping to do that my self. I guess I will have to wait until next financial year.
Thanks, Plonkee! I get it now - the analogy to CPA made a lot of sense. I can also see why it’s kind of hard building momentum toward it. But like I said, I’m rooting for you! I look forward to reading about you hitting all the milestones along the way.
@Llama for brains and no more spending
The Direct ISA issue 4 from Alliance and Leicester definitely does allow you to transfer funds in - it’s well worth doing if you aren’t earning a high interest on them already.
@plonkee
Yes you can transfer in previous years, but I do not think you can transfer in the current year.
@Llama for brains:
Interesting. I’ve not heard of that before.