Sometimes plans change, especially when we aren’t expecting it! Over the past few months, a few things have come together to cause us to make a decision to move next year.
In short, we’ve always wanted to live further west (within England), further away from London. We only moved to our current area because I used to commute 4 days a week – now, and for the foreseeable future, I’m 100% working from home, with some international travel thrown in.
What was tying us to this location are the kids and school. However, we’ve slowly realized that their current school isn’t a good fit, and likely won’t get any better. Not that it’s a “bad” school – it’s OFSTED “good”, and I think it is a very good school for mainstream kids. But both our girls are, if not actually special needs, on the verge of it (no official labels yet, but possibly some elements of autism, certainly very introverted and socially anxious, etc.). The other big concern for us is the way Buckinghamshire schools work at age 11 – basically, if you don’t do well on the 11+ test, you’re not able to access the best education. Given their personalities, we both worry that a single test won’t be a good representation of our daughters’ abilities, and would be an extremely stressful experience for everybody.
Putting those two considerations together, my wife and I made a decision to move west next year (roughly Hampshire, Wiltshire, Dorset area), and enroll our daughters in the same private school my sister-in-law attended. Now, with all the financial (and political…) instability today, this isn’t exactly an ideal time. Interest rates soaring, lots of uncertainty about house prices, inflation rampant, and so on. But I think we’ll be ok – between our current equity and mortgage, plus cash, we should be able to port our mortgage without needing to borrow more, and still buy a house for the next 15+ years (if not forever). Our current house is “fine”, but we want a little more space, both inside and outside. Even further from London, that means more money.
That need for cash means I took a hard look at our investments to see where it can come from, and then moved funds to accounts that are appropriate for a purchase in less than a year, rather than 5+ years in the future. That included our ISA experiment, plus taxable accounts and Roth IRA contributions in the US. Over the past few months, that’s all been liquidated, and is in the process of being transferred into safe UK cash accounts (Premium Bonds and the best FSCS protected savings accounts I can find). That’s the best place for them to use next year, even with inflation. Who knows, might win big on the Premium Bonds, too!
We’re also planning ahead for the school fees. Certainly a big unexpected expense, and pushes back our FIRE timeline by a few years, but something we can accommodate with a corresponding reduction in investments. Effectively, we’ll be nearly CoastFIRE, with my pension contributions reduced to the minimum that gets a full employer match, and no other long-term new investments. But instead of downshifting or going part-time, I’ll use my existing job to pay school fees, as an investment in the girls’ future.
ISA Winding Down
I’m still waiting on the last of the dividends to come in, then I’ll do a writeup on the overall outcome of the ISA experiment. But at this point, I can say that it would have been better to stay in cash, but that’s only because the money wound up being needed on a much shorter time horizon than I was investing for. On balance, I don’t think it did too badly – the FTSE 100 has done comparatively ok, helped by the dramatic weakening of sterling. And I got lucky and sold in one of the dead cat bounces over the summer, so it wasn’t all that bad.
I’ll also take a look at the tax implications – probably minimal, due to taking some taxable losses vs some gains in other accounts. Likely some ordinary dividends, but nothing too worrying.
I don’t see the ISA experiment picking up again soon, if ever. If unexpected income becomes available, I’d increase pension contributions and resume Roth IRA contributions first. But never say never, we’ll see what the future holds.
All that said, I think the experiment showed me that individual stocks in an ISA is a valid way for US citizens in the UK to invest, and to get some tax advantage. I think you have to be a bit of a “financial enthusiast” to be willing to deal with the extra complications, so it’s not for everybody, but it also shouldn’t be dismissed entirely without some thought.
With the end of the ISA experiment, that ends one of my major recurring topics on this blog. I know I haven’t been great at working through the long list of other topics I’d like to research, but maybe I’ll find some time to work on those. My job has been unexpectedly busy this year, and there hasn’t been as much available time as there used to be, but I see some light on the horizon for it easing up a bit.
If there’s interest, I’m also happy to write about the house selling/buying process. I bought our current house before this blog, and have never sold a house in the UK before. It promises to be interesting, stressful, but hopefully ultimately rewarding, and I’m optimistic we find a new home that is our base for many years to come!
4 thoughts on “Life Changes & Winding Down the ISA Experiment”
Congrats on the potential move! I would love to move somewhere more rural in the U.K. but unfortunately work doesn’t allow it.
Definitely interested to hear about your house selling and buying experiences. Do you think you will owe much tax for phantom currency gains when you pay off the mortgage?
Also, tangential follow-up: do you have experience remortgaging in the U.K.? I’m trying to figure out if there is a way to remortgage without technically repaying to avoid the phantom currency gains tax.
I did remortgage a bit over a year ago, but the exchange rate between when I took the mortgage out and remortgaged didn’t change much, no phantom gains to worry about in that case. But with the recent major drop in sterling, it certainly is a consideration.
My (non-expert) understanding is that the best legitimate way around it is to stay with the same lender and merely re-fix the rate. I understand that doesn’t really count as a new mortgage, just a modification to the existing one, so there are no gains.
LikeLiked by 1 person
Thanks! We live in the country today (in the green belt around London), which is beautiful, but looking to be more “properly” rural – less of that near-London go-go-go vibe and more relaxed pace of life, along with more space.
Since I’m planning on porting the mortgage (same lender, same amount, same interest – same mortgage) I don’t expect to owe any phantom gains tax. Given the fall in sterling, certainly a consideration now, and when our fix expires in another 3.5 years, it may be a strong push to keep this mortgage, even if the rates are a bit higher, rather than remortgaging. Also a powerful incentive against trying to pay off the mortgage early – less than 22 years to go…
LikeLiked by 1 person