5 Savings Myths Busted for Professionals in 2024

Savings Myths

If you are a newly self-employed entrepreneur or freelancer, then chances are you’ve not even had time to think about investing in your future, let alone actively review your investments.

You may even think that investing in the stock market is the actions of individuals way above your pay grade. Nevertheless, investing is more accessible than ever before, with millennials and Gen Z demographics now freely able to invest and secure their financial futures.

You may have been deterred from saving and investing by listening to incorrect advice too.

Below are five of the most common savings myths that we’re here to bust, giving you the confidence to optimize your personal wealth and make your hard-earned money work even harder for you in the years ahead.

1. Stocks and shares ISAs only allow you to invest in UK equities

A major misconception is that stocks and shares ISAs only allow you to buy and sell UK equities listed on the London Stock Exchange. While it’s true that you must be a UK resident and aged 18 or over to open a stocks and shares ISA – including Crown servants posted overseas – stocks and shares ISAs offer an abundance of investing opportunities.

You can invest in US stocks as well as UK stocks, as well as leading exchange-traded funds (ETFs), investment trusts, and real estate investment trusts (REITs) that allow you to add real estate assets to your portfolio.

2. You can’t have more than one ISA

According to ISA contribution rules, it is permissible to have more than one ISA. The main restriction here is that you can only open and invest money into one type of ISA in the same tax year.

This doesn’t stop you from opening multiple stocks and shares ISAs throughout your life, but you can only open and contribute funds into one account in that given tax year. Instead, you could look to invest in different ISA products.

For example, one lifetime ISA (LISA) and one stock and shares ISA in the same tax year.

3. You can’t touch any money you invest until your retirement

Many people incorrectly believe that when you invest money you won’t be able to access a penny until you near retirement age. Although that’s not strictly the case. There are cash ISAs that offer almost immediate access to your savings and with no penalties for selling off some of your investments – ideal for when you need a ‘rainy day fund.

It’s recommended that investors view their funds as medium-to-long-term commitments and look to hold their money for a minimum of five years. This is to ensure that you can ride out the peaks and troughs of the stock markets.

4. It’s not possible to withdraw money from an ISA and pay it back

Some people steer clear of investing in ISAs because they fear that it’s not allowed to take money out and pay it back in during the tax year, without it altering your annual ISA allowance. You can invest up to £20,000 a year into your ISAs tax-free – even if you take some of it out halfway through the tax year.

Let’s say you invested £12,000 and in October you opted to withdraw £5,000 to pay for a new car. Providing you pay the £5,000 back into your ISA later in the same tax year, you can still invest another £8,000 before the tax year ends.

This flexibility is only offered on certain ISAs though, so make sure it’s an option with your chosen ISA product before doing this.

5. You should only start saving when you don’t have credit

One final misconception that’s just as powerful as the rest relates to when you should consider saving for the future. Some wrongly believe that you need to be debt-free before you start investing money.

However, it’s possible to invest and pay off credit cards or loans simultaneously. Money is not binary. This means you can benefit from advantageous interest rates on credit or loans, whilst setting money aside to build a precious nest egg for the future.

Investing in the future is a sensible strategy. With people statistically living longer on average, it’s important that your money works as hard as possible for you now to give you the security you need tomorrow.