#11 - Finance Fridays - Financial Experts, Maximising your ISA Portfolio and Side Hustling on Medium

Disclaimer: This is not financial advice, I’m just brainstorming ideas related to money.

Contents:

• 💡 Idea of the Week - Financial experts won’t make you rich.

• 💹Investing - Maximising ISAs as UK Citizen

• 🥗Side Hustle of the Week - Writing on Medium

💡 Financial experts won’t make you rich.

Most people don’t know that their favourite financial influencers are not certified.

For example, if you were to ask Dave Ramsey directly, he’ll probably say he’s a financial coach. And coaches do not sell financial products—they help people with their day-to-day money problems. Which allows Dave Ramsay to sell a financial coach programme which looks like a pyramid scheme.

Recently I’ve started seeing fast growing finance influencers who have featured on the BBC/Good Morning Show, written books - announcing their recent Financial Adviser qualifications. As if they haven’t been providing advice unqualified for all these years.

Clearly they’ve been providing financial advice to more people than all the certified financial advisors combined. But this doesn’t mean they’ve been offering bad advice, it’s just not been regulated. 

And once you're regulated, you can only provide general guidance which is not targeted. This explains why most advice online is so generic that it’s useless.

This won’t stop people being misled because experts in this space have been having a pretty poor time recently. Here are some examples:

• YouTubers famed for their personal finance expertise are being chased for more than $1 billion by victims who lost their fortunes in Sam Bankman-Fried's FTX scandal.

• In 2024, a financial-advice writer went viral for putting $50,000 in cash in a box and handing it to a stranger. Do as I say, not as I do.

• Kevin O'Leary - The Shark Tank judge received $15 million from SBF as payment for promoting the fraudulent crypto exchange.

So….Let me get this straight. These so-called experts:

• Can't beat the market.

• Just as likely to get scammed.

• Just as likely to promote scams.

• Can't give advice (just guidance).

• The most famous ones aren't certified.

• And the most honest ones admit they don’t know anything.

At this point, this supports my theory (subject to change) that most financial advice is overrated.

So what do financial experts even do? 

Financial experts stop you losing money. Nice one Geoff.

I mean, that's pretty important but in a cost of living crisis, we need to make money first before we worry about losing it.

💹Investing (Maximising ISAs as UK Citizen)

Recently I learned that I can only earn £500 in interest per year without being taxed. This means I’m being taxed on my interest payments right now - great timing with the new tax year round the corner. 

And if you have anything over £20,000 in a high rate savings account, you might be too.

I’m saving for a house deposit and it doesn’t make sense to stick that money into the stock market and risk my house deposit funds dropping in value when I need it the most.

One scenario is if you have over £20000, at 5% Interest Rate in your savings account, you'll be taxed up to 40% on interest payments once you’ve exceeded £500. That's £40 for every £100. 

The worst part is that the bank will pay you your full interest savings without telling you when you've reached your limit. Whilst at the time, telling HMRC they are sending you interest payments.

So like a thief in the night, HMRC will make changes to your tax code or deduct the amount you owe via your personal allowance.

So how do I ensure I get taxed the minimum on interest from my savings?

There are many people holding off buying a house, saving large amounts in high yield saving accounts unaware that they are going to get taxed out of nowhere due to their bank's laziness and HMRC's Sleight of Hand tax code changes.

So here's how I'm going to save for my house whilst minimising the tax I’m paying on my interest payments. Spoiler alert: Maxing out my ISA accounts (these are tax free savings accounts in the UK)

1. Calculate how much over the ISA limit I am

 (Total Amount * Interest Rate - £500)

2. Check my ISA portfolio

This would including reviewing:

• Which ISAs I have

• How many additional ISAs I can open this tax year (before April 1) 

• How close to the ISA limit I am aka how much I have left to invest

Upon reviewing my ISA portfolio, these were my main considerations:

• I emailed Moneybox and can confirm both Simple Saver and 95 Day Notice Accounts are not tax free. So, I will need to use ISAs to get the tax benefits.

• Right now I'm reluctant to put any more money into my lifetime ISA due to the 450k price limit. So I'm going to open a Cash ISA and also increase my investment in my Stocks and Shares ISA.

• I can move up to £20,000 per year into my ISAs so I’ll max out my Cash ISA first then continue to dollar cost average into my Stock and Shares ISA.

• Even though I'm 10% up on my Stocks and Shares ISA, those gains can easily be lost over time. This money's for a house deposit in the next 2-5 years so I can't afford a 10% drop on money on a bad year.

• If I ever hit the ISA limit, I’ll probably use my 95 Day Notice Savings Account which is currently offering the best Interest rate at 4.96% (120 days is lower… is that a typo by Moneybox? 😀). I don't think I'll ever need shorter than a 95 Day notice on any big withdrawals. Plus my money is protected by the FSCS.

3. Max out my tax-free ISAs as best as I can before April 1

4. Recalculate my taxable allowance for the next tax year post-April 1

5. Set a reminder in my calendar to check my tax code (via payslips) in first month of April and May 

6. Keep an eye out for any new ISAs in 2024/25 since there are some new changes - like the British ISA (lol).

The biggest change is that from 6 April 2024, new ISA rules mean you’ll be able to open and pay into multiple ISAs of the same type, within the same tax year.

Can I emphasise the “same type” part please? 

Because I’ve got spooked that I was paying into both my Cash and Stocks ISAs in the same tax year which is completely allowed. So don’t be scared to have separate ISAs. We could already pay into two ISAs in the same tax year provided they are different types of ISA. So this small change in 2024 and the total ISA limit remaining unchanged isn’t that big of a change - if you think about it.

This is a good video for understanding British ISAs - Optimising Your Stocks & Shares ISA

🥗Side Hustle of the Week (Writing on Medium)

Inspired by: How Much I Made after Writing 50 Medium Articles 

1. Hours per week ⭐️ - Maybe AI will make this easier but blogging is a game of quantity. And given the rates Medium pays out, you’ll need to produce 00s of articles to make a living

2. Skill required ⭐️⭐️⭐️ - Writing isn’t a hard skill to learn, if you're literate you can already write and there’s pretty much no barrier to entry when it comes to writing online

3. Up front cost ⭐️⭐️⭐️ - Writing on Medium is free

4. Market saturation ⭐️ - The market for blogging has been saturated for years and Medium’s relevancy declining means the market of Medium readers creates an ever shrinking pool of potential returns

5. Timeline to reach success ⭐️⭐️ - Medium’s algorithm rewards consistency more than longevity so you can quickly become successful if you can outwrite your competition. The CEO himself has said that “30% of our recommendations are higher quality articles that have been vetted for substance over clickbait”.

6. Income potential ⭐️⭐️- Medium payouts are frankly just poor and they do not like affiliate links on their articles (but are allowed if disclosed).

Writing on Medium is a great way to learn about writing searchable content online. The real value of Medium is as a starter platform for early-stage creators. Once you’ve established your niche and branding, you can use Medium as a way to funnel leads to other channels that you can easily monetise.

✍🏿Quote of the Week 

“Most of the world’s knowledge has already been written somewhere, you just need to read the right books”

― Bill Ackman