TIME ISA MONEY

In the words of that money saving guru, Martin Lewis, it’s crunch time.

The tax year ends on Thursday and if you haven’t used up your ISA allowance, quite frankly, you’re a bit of a mug. There are currently twenty-three million ISA accounts held in the UK. If you have savings you should consider joining them, before the shutters come down at midnight on April 5^th. 

Use it or lose it - there's still time to use your ISA allowance

Essentially, if you're getting a paltry rate of interest on your savings, the tax man will still want a slice of that interest. But stash that money away in an ISA and not only could you earn more interest (rates of up to 3.5% are on offer) but the tax man can’t get his grubby mitts on it. You, however still have access to the money because it needn’t be tied up for years. Seems a no-brainer to me. Little wonder that many people are treating ISAs as their new pensions.

Confession time. I realised today I hadn’t used my full ISA allowance for 2011/12. Everyone can invest £5340 in a cash ISA (that’s like a savings account with a set rate of tax-free interest) and £5340 in a stocks and shares ISA (where interest rates vary along with the vagaries of the stock market). I’d got the cash version but not the stocks and shares one. I asked myself why and had to admit it was probably because I understood the cash ISA more than the stocks and shares ISA.

Yes, I know I’ve written a book called Sheconomics. But I still have the same old blockers as most of you out there. And, as our behavioural change work shows, inertia is a very powerful force….

So I pulled out Sheconomics and re-read the bits about ISAs and, although the annual limits have gone up since we published in 2009, the same old advice holds true. It’s madness not to take advantage of this way of saving, to miss out on earning tax free interest. And you don’t even have to declare the interest on your tax return, making that onerous task easier too.

There's lots of free, useful and easy-to-understand info on-line

Next I set to and did a bit of internet research (bearing in mind advice in a previous blog from rplan to watch out for charges) and, with some help from Martin’s website above, found a Hargreaves Lansdown product that seemed to fit the bill. The HL form only took about 5 minutes to fill in and the information was easy to understand. Selecting a fund was a bit like sticking the tail on the donkey but their intro material had already provided some good guidance about safer and riskier options. 

My next step is to remind my husband to use up his allowance before midnight on Thursday. I’ve done the research for him so he’s got no excuses.

Then from Friday onwards, when the new tax year kicks off I can set up a regular ISA savings plan - most financial groups that run stocks and shares ISAs offer them. They allow you to smooth out the impact of fluctuations in share prices. The 2012/13 allowance goes up to £11,280 per person (all of which can go into a stocks and shares ISA or half into a cash ISA) meaning couples can save £22,560 and all the interest is theirs to keep.

Important ISA actions:

•     *  There’s still time to make the most of this year’s allowance - if you don’t USE IT you LOSE IT. 
•     *  You can open an ISA online or on the phone and most providers are open all weekend. 
•      *  Make sure you have your ID ready, know your National Insurance number and have access to the money you're investing (e.g. your debit card).
•      *  Don’t over-agonise about  your choice of cash ISA, just get one open. As long it doesn’t have transfer penalties you can always change later.

STOP PRESS: Check out Simonne's video on how to compare different cash ISAs.

The Psychology of...the Handbag!

'No, Alan, not like that, hook the handbag over your wrist and keep your palm turned upwards.'

Of all the directions I thought my career might take me, teaching Alan Titchmarsh to carry a handbag was not one I had imagined.
But I found myself doing just that recently, when recording a piece about handbags for the Alan Titchmarsh show (on ITV today, 3pm). 
Alan was such a good sport and minced onto the set carrying a gorgeous little snakeskin number, one of many designer and vintage handbags featured whose extortionate prices raised a few 'ooohs' from the studio audience.


We live in a time when the handbag has become the ultimate statement piece for women. And even in these days of austerity many women seem reluctant to ditch the designer bag. In fact for many, a touch of regulated self-indulgence feels more necessary than ever.

Why? 
Here are a few of my theories. Or what I call my 'handbagology':

Status symbols

“I loved all the admiring glances I got from my friends when I walked in with it.”

It used to be men who advertised their status,  with the flash car or expensive watch. Now women are earning more and competing at the top they too are signalling their status to others. They choose a bag  - usually a huge in-your-face tote - that says, I’m successful, I’m expensive, I’m chic. Many women at the top assess their own and other women’s status by the handbags they use.

Rule No 1: Your bag shouldn't weight more than you do.

Compensatory consumption

My research has shown that women spend more when depressed, believing a purchase will cheer them up. They might get a brain ‘buzz’ from buying it, but it may be short-lived and will not eliminate the cause of their negative emotions. Ironically, the harder the times the more women will seek solace in this way. And probably the bigger the bag the greater the void in their lives.  But beware. In the words of my friend Jessica Chivers, ‘Happiness is NOT a handbag!’

Celebrity worship

“I saw Beyonce with it in a magazine and so I had to have it.”

We’ve seen a huge rise in the cult of the celebrity and in the desire of women to emulate them. You may not be able to get the Beckham figure, millions or footballer husband, but you can get the bag. Or one like it. Some designers are cashing in on this and using celebrities to advertise their handbags, like Coach using Gwyneth Paltrow.

Rule No 2: Don't believe if you buy the bag you'll look this good

Believing a bag is an ‘investment’

I once heard a fashionista on Woman’s Hour declaring that she ‘invests in a designer handbag each season'. We delude ourselves if we view high-priced fashion items as an ‘investment’. Most aren’t. (Just to be safe, in case the bottom drops out of the handbag market or there’s a world clutch-bag crash, I’d recommend an ISA.)

Identity

“It’s a kind of passport into the business world. It says, ‘I’m worthy of a job in fashion’”

Humans have evolved to belong to a group, we crave to be seen by others and feel part of something. An expressive wardrobe is a way of signalling not just which group you belong to (teenage groups have their own cool trends which distinguishes them from others) but which you aspire to. Many feel a designer bag makes them seen and sends a message to others: I want to be one of the Gucci crowd, I’m a Prada girl. There’s even an optimal way of carrying it to show it off to the max. The logo is always displayed, the bag hooked over the wrist, palm held upwards.

Feeling fat? The bag always fits…

If women feel the urge to shop but are feeling fat they can buy a bag and it will always fit, whereas clothes are very figure-dependent. The same goes for shoes.

The power  - and cost - of the brand

"I know a lot of women who will starve to get a handbag. I’ve got a lot of friends like that.”

I came across the comment above on an online site (theartofthebag.org). Millions of pounds of clever marketing go into promoting and advertising designer handbags, and some women will even go into debt to have their bag of desire.

Creating scarcity

Luxury brand items are now more available – at airports, on the high street, online. So the marketers create a sense of scarcity by limiting the availability of certain items. This stimulates even more desire. Brain research shows we get huge pleasure not just from getting something but from anticipating having it. The luxury brands cash in on this by creating waiting lists, making women want it more and obliterating the difference between want and need.


All goes to show that a bag is so much more than somewhere to keep your purse and your keys!

Your clothes influence how you think and feel.

I never cease to be amazed at the myriad of tiny things that can influence our personal psychology. 

Like my recent finding that women who wear jeans are more likely to be depressed.

Or the finding that women do worse on a maths test when wearing a bikini. No kidding.

Or that sports teams who wear black behave more aggressively.

Or that wearing a lab coat makes you more conscientious.

The clothes you wear have the power, literally, to change your mood or change your mind. 

That’s pretty amazing if you ask me. Psychologists even have a name for this, they call it enclothed cogition. It all goes to show that we should think very carefully about what we pull out of the wardrobe in the morning.

Sad? Jeans can be a giveaway. Photo credit Daily Mirror.

I asked 100 women what they wore when feeling depressed. More than half of them said jeans (that’s almost double the number who would wear jeans when feeling happy).

Also 57% of the women said they would wear a baggy top when depressed, yet a mere 2% would wear one when feeling happy.

The women also revealed they would be ten times more likely to put on a favourite dress when happy (62%) than when depressed (6%).

Accessories can make a difference too. My study found that:

·      Twice as many women said they would wear a hat when happy than when depressed.

·      Five times as many women said they would wear their favourite shoes when happy (31%) than when depressed (6%).

It seems that ‘happy’ clothes - ones that make women feel good - are well-cut, figure enhancing, and made from bright and beautiful fabrics. The opposite of most jeans in fact.

Since clothes can exert an influence over our psychological processes pulling on a pair of jeans and a baggy top because you’re feeling a bit low could actually make you feel more depressed.  

So the recipe for happiness? 

Well, as we say in our behavioural change work, it helps to act the opposite of how you feel. To do something different. 

So if you're a bit blue, put on a happy dress!

Do you know how much you are paying for your ISA investments?

(SPONSORED POST)

We (rplan) did some research and found that 89% of people had no idea how much they were paying for their ISA investments (and that's excluding the 30% who thought it was free.) 
In reality, you are most likely paying two sets of charges: when you buy the investment (the initial charge), and then on an ongoing basis (usually calculated annually.)
Why is this important? The charges can have quite an impact on your investment. 

ISA charges can seriously affect your investment

For instance, the initial charge can be up to 5% of your investment; the ongoing charge is usually around 1.5% for funds, and less for passive funds or ETFs. Over 10 years, these charges add up.
We found that the difference between the most expensive and a cheaper option could be up to £6,300 if you invest the full ISA amount each year. That's a big difference.
This is why we created a tool to see how much you could save on your investments by switching service provider. 

The tool is available here - it is free and easy to use. 

Simply enter how much you have invested currently and your current provider, and see how much you could save.
The charges you pay go to the fund manager (you are paying them for performance) and to the service provider (you are paying them for service.) Your service provider could be a financial adviser (IFA or bank), a broker, or an online service. In the case of a financial adviser, you are paying for the quality and frequency of the advice; in the case of a broker or online service, for their tools and customer service.
The key to understanding whether you are getting good value for money is understanding how much you are paying. Armed with that knowledge, you can then decide whether you are truly spending with power; and the savings could be significant.


Blog post by rplan.co.uk