Cash ISA and NS index certificates at same time?

You can have up to £15,000 NSI Index linked per year, per issue, there are 3 and 5 year issues, so I assume up to £30000 of each annually.

They are also tax free

alastair_h is correct. But the £15,000 limit applied to new investments. There is no limit for subscriptions made by re-investing existing, matured certificates.

What's best, cheese or spaghetti bolognaise?

ally18 wrote: »

Thanks for that but what would you say is best between them, the ISA or the bond?

It depends how long you can afford to put away the £3000 you mentioned you'd like to save.

Index Linked Savings Certificates are available for three or five year terms. However, for both certificates, you can withdraw your money after one year with no penalty and still get interest paid on your capital. The interest ILSCs pay is currently 1% + RPI (a measure of inflation). Like ISAs, you pay no tax on these products.

Cash ISAs come in two varieties: fixed and variable rate. Fixed rates ISAs are products where you tie up your capital for a fixed number of years, or in some cases six months. In some cases it is literally not possible to withdraw the money until the end of the term, e.g three years, in others you can but with an interest penalty, e.g. you lose the last six months interest prior to the withdrawal.

Variable rate ISAs are products where you can withdraw your cash at any time, at no penalty. For that reason, they generally pay lower rates of interest than fixed rate ISAs. With fixed rate ISAs, the longer you are prepared to tie up your capital, the longer the interest rate.

However, we live in very uncertain times. The base interest rate set by the Bank of England is the lowest for two hundred years. There's recently been a spike in inflation which may continue. Since its likely interest rates and inflation will increase in the next 18 months, I wouldn't put any money in fixed rate ISAs. If I were you, I would put the £3000 you can afford to put away in an Index Linked Saving Certificate to protect yourself from inflation (as long as you don't need it for at least a year) and the remaining £1000 in a variable rate ISA. The interest rate on variable rate ISAs have the potential to adjusted upwards if the base interest rate increases, or you could simply transfer your money to another ISA later, or withdraw it if you need to spend it.