Weekend reading: We need fewer ISAs

What caught my eye this week.

One of my least favourite articles on Monevator is the stab I had at explaining Lifetime ISAs.

In fact it was my second stab. I’d updated an even flimsier first effort just a couple of years later.

But I’d left a 2,500 word version 3.0 unpublished. Mostly because I felt it needed another 2,000 words to be comprehensive. And did anyone want to read that?

My published take is not a terrible article. But it doesn’t do a truly great job at explaining why the Lifetime ISA is a terribly confused addition to the ISA lineup.

And there are now better articles out there explaining exactly who might want to use a Lifetime ISA. Complete with the couple of dozen or more caveats and complications that such an article requires.

Fleas on fleas

My Lifetime ISA excursions triggered a bit of a crisis of confidence at Monevator Towers.

How comprehensive could or should we try to be?

We have perhaps the best reader comments on any financial site in the UK. And I knew that regulars would (constructively and rightly) point out the gaps in my explanation.

I didn’t mind that – indeed I welcomed it – but I also knew I’d be a bit miffed by some of them. That’s because it’s hard to explain how one-size-fits-nobody once you get beyond the basics of personal finance and investing to someone who hasn’t tried giving the complete picture themselves.

You need to write about something – whether ISAs or particle physics – to see that very often, the one thing you believe is of most importance is very often somebody else’s superfluous detail.

The Lifetime ISA experience ultimately nudged us towards doing fewer and deeper articles – especially for my co-blogger – and I feel we lost some of the breezy accessibility of an earlier Monevator in the transition.

But that’s the trouble with knowledge. The more you know about something, the more you’re aware of all the edge cases, contradictions – and everything you don’t know.

It was easier to write Monevator 15 years ago when we had less to share but didn’t really appreciate that. Knowledge is labyrinthine.

For whom the bell tolls

Anyway this isn’t all just me getting the tiny violins out about the hard lot of being a blogger.

It’s more a rambling Bank Holiday prelude to say I have sympathy with Andy Bell’s views on ISAs, which he’s been floating in the media recently.

Bell – the founder of the SIPP platform that carries his name – told the Financial Times this week that his company proposed:

…scrapping separate cash and stocks and shares Isas to create a single new offering.

It also wants to reform the Help to Buy and Lifetime Isas, which offer a tax-free bonus to people aged under 40 saving for a home. The platform is also urging the abolition of the Innovative Finance Isa, a type of peer-to-peer loan.

Bell said plans had been presented to chancellor Jeremy Hunt and reflected an ambition to simplify Isas to motivate savings and investment.

While he acknowledged the plans could narrow consumer choice, he insisted that the range of products currently on offer were too complicated.

“The proliferation of Isa products worries me. If you’ve got six Isa products to choose from, you almost give up,” said Bell. “If you were starting with a blank sheet of paper you wouldn’t design what we’ve got today.”

As somebody who did my time in the trenches on the ins and outs of various ISA products, I agree.

It’s true that a Monevator maven – someone who reads every article and pulls us up on our errors and omissions – no doubt enjoys nothing more than shifting from optimal savings product to tax-efficient vehicle to tax defusing like a freestyle skateboarder doing tricks.

I’m one of those too.

But in the profusion of ISA types, the average person just sees more jargon layered on top of the already murky world of saving and investing. And they have a point.

Ideally we’d have just one kind of savings account. Flat tax relief at 30%. With some curbs or outright restrictions on withdrawing and replacing all the money, to incentivize saving for old age. But those guardrails as clear as possible too.

The complexity we have today in ISAs and pensions1 is more a result of politicians looking for rabbits to whip out of hats – or sneaky opportunities to take back what they gave us before – rather than joined-up thinking.

True, simplified ISAs would do Monevator out of a few opportunities for articles. But after my experience with the myriad (don’t-) use cases for the Lifetime ISA, I’ll live with that.

Have a great long weekend!

From Monevator

How to think about Junior SIPP asset allocation – Monevator

The Warren Buffett hedge fund that wasn’t – Monevator

From the archive-ator: Holiday strategies to refresh a frugal soul – Monevator


Note: Some links are Google search results – in PC/desktop view click through to read the article. Try privacy/incognito mode to avoid cookies. Consider subscribing to sites you visit a lot.

Average monthly rent hits £2,500 in London and £1,190 in rest of UK – Guardian

73% surge in current account switching in 2023 – Independent

Just 800 of 4,000 laws to be scrapped in ‘Brexit bonfire’ – Sky News

SIPP operator Gaudi is in administration; no impact on clients – FCA

Thousands missing out on heat pump subsidies worth up to £6,000 – This Is Money

Plans approved for UK’s first women-only tower block – Guardian

‘Brushing’ scam: Amazon sellers sending stuff to random addresses – Which

Only 4% of 2m UK voters without Voter ID apply for ID through scheme – BBC

The UK faces a steep climb out of a deep hole – Spiegel International

Products and services

40-year mortgages on the rise, but what are the risks? – Which

£100 offer ends 1 May Last chance to claim an additional £100 bonus when you open an account with InvestEngine via our link and transfer an ISA valued at £10,000 or more. All new accounts also get a £25 bonus on investing at least £100 (T&Cs apply. Capital at risk) – InvestEngine

Nearly 5%… Al-Rayan touts 4.9% three-year fixed rate savings – This Is Money

A shed office adds £22,000 to your home’s value – This Is Money

Open a SIPP with Interactive Investor and pay no SIPP fee for six months. Terms apply – Interactive Investor

Should you share TV streaming accounts? – Be Clever With Your Cash

The UK’s best and worst seaside towns – Which

Will Apple take a big bite out of the banks? [Search result]FT

Homes to tempt British buyers this spring, in pictures – Guardian

Comment and opinion

The mortgage dilemma: to fix or not to fix [Search result]FT

Why the pensions Triple Lock has to go – Tom Jones via Twitter

Frugal man buys $52,000 car – Mr Money Mustache

You’re neither as smart – nor as dumb – as you think – Humble Dollar

How much of your salary is punitive damages? – Klement on Investing

You have to own – Dror Poleg

Discombobulated – Indeedably

Beware ETFs with a ‘new edge’ – Citywire RIA

Get ready for Retirement 3.0 – A Teachable Moment

Market cycles mini-special

Understanding the basics of market cycles – Darius Foroux

When market volatility creates opportunity – Janus Henderson

After a bad year in the market – A Wealth of Common Sense

When, where, and for how long? – The Big Picture

Naughty corner: Active antics

Buy Sweden – Verdad

Returns from the oldest investment trusts – IT Investor

Larry Swedroe: expenses matter with active funds – Advisor Perspectives

Is the Bitcoin comeback for real? – Institutional Investor

Downside betas vs downside correlations – Finominal

The sell-side is harder than the buy-side… – Behind the Balance Sheet

…or is the buy-side harder than the sell-side? – Klement on Investing

Kindle book bargains

Influence Empire: Tencent and China’s Tech Ambition by Lulu Yilun Chen – £0.99 on Kindle

The Missing Cryptoqueen by Jamie Bartlett – £0.99 on Kindle

The Nowhere Office: Reinventing Work and the Workplace by Julie Hobsbawm – £0.99 on Kindle

Cooking on a Bootstrap by Jack Monroe – £0.99 on Kindle

Environmental factors

‘Endless record heat’ in Asia – Guardian

Cities are reclaiming land at risk of extreme sea level rise – Hakai

How South East Asia is fighting back to save corals – Guardian

The flawed logic of extreme climate solutions – MIT Tech Review

Why cutting your personal carbon footprint matters – Semafor

Robot overlord roundup

Inside ‘the mind’ of ChatGPT, with Cal Newport – Range Widely

There’s a new AI unicorn that will make coders faster – Semafor

Welcome to the age of AI-assisted dating – Washington Post

Microsoft nearing a $1bn-a-year run-rate AI business – Tom Tunguz

AI is taking work from Kenyans who write essays for US students – RoW

Off our beat

Some things I think – Morgan Housel

How shady companies guess your religion, sexual orientation, and mental health – Slate

Pour one out for the notion of healthy alcoholic drinking – Slate

The underground city found in a man’s basement – Atlas Obscura

Magnus Carlsen: the winner’s edge – Farnam Street

Kevin Kelly on excellent advice for living, universal AI assistants, time machines, and the power of fully becoming yourself [Podcast] – Tim Ferris via Apple

And finally…

“Three things ruin people: drugs, liquor, and leverage.”
– Charlie Munger, Charlie Munger: The Complete Investor

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Especially with the recently abolished Lifetime Allowance.

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Should ISAs be simplified? Plus the rest of the week’s good reads…
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