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  • FIRST POST
    • kaz13
    • By kaz13 16th Mar 17, 3:10 PM
    • 26Posts
    • 70Thanks
    kaz13
    Isa in 10 years time !
    • #1
    • 16th Mar 17, 3:10 PM
    Isa in 10 years time ! 16th Mar 17 at 3:10 PM
    i hope someone can give me a bit of advice please, i am married, we own my own home,no outstanding debts, mortgage etc.
    we would like to put aprox: £15,000.00 into a cash isa each every year for the next ten years, for both my husband and i, We do not have an isa at the moment, so would be starting off fresh, we would like to just pay the money each month and not have to think about it again, for the ten years or a bit longer .

    if we start an isa in a higher rate (like virgin money or the ATOM BANK)i know it will give a better return, but you can only be protected up to the £85,000 as, we want to save, with the interest, will be more than that, if we put the money into a N.S.& I. isa then we know the interest rate is lower, but you are protected, whatever we have in there. If we end up keeping the money saved in there, or most of it, for longer, it will gain more interest.
    i have looked at different options, but the N.S & I. dont allow you to transfer in, from another isa into theirs.

    am i better off, opening a higher rate isa for say - 5 years, then moving it along to the next deal and carry on doing that, and when i reach the £85,000. open a new isa, somewhere else and start again ? or would it earn more interest by, leaving it in a lower rate account for the full time ? I am 54 & my husband is 66
    i feel very confused with the accounts.
Page 1
    • pmjenkins
    • By pmjenkins 16th Mar 17, 3:28 PM
    • 95 Posts
    • 31 Thanks
    pmjenkins
    • #2
    • 16th Mar 17, 3:28 PM
    • #2
    • 16th Mar 17, 3:28 PM
    To answer some of your points:-

    1. You can have multiple ISA accounts with different organisations (although you can only open one new one each tax year). There's no need to keep all your savings in the same account.

    2. The £85,000 limit applies to a specific person at a specific banking group. So *you* could have £50k with Virgin and another £50k with Atom. Your *husband* could do the same. A total of £200k fully protected.
    • jamei305
    • By jamei305 16th Mar 17, 3:32 PM
    • 182 Posts
    • 230 Thanks
    jamei305
    • #3
    • 16th Mar 17, 3:32 PM
    • #3
    • 16th Mar 17, 3:32 PM
    To answer some of your points:-

    1. You can have multiple ISA accounts with different organisations (although you can only open one new one each tax year). There's no need to keep all your savings in the same account.
    Originally posted by pmjenkins
    I hope I am correct in this because I did it yesterday - you can only put funds into one new one each year, you can open other ones to transfer previous years ISAs into, as long as you don't use any of our current year's ISA allowance in doing so.
    • Alice Holt
    • By Alice Holt 16th Mar 17, 4:14 PM
    • 1,228 Posts
    • 1,312 Thanks
    Alice Holt
    • #4
    • 16th Mar 17, 4:14 PM
    • #4
    • 16th Mar 17, 4:14 PM
    As you are looking at a 10 years or longer time span, it may be also worth considering a S & S ISA for a percentage of this money.
    Current cash ISA interest rates won't keep pace with inflation. So by placing all your savings in cash you are exposing yourself to inflation risk.
    http://www.which.co.uk/money/investing/how-investing-works/guides/investment-risks--the-basics/inflation-risk-explained

    As you are 54, have you considered putting money into a pension / SIPP?
    Even if you are not working you can contribute £3,600 gross pa (at a cost to you of £2,880).
    There are lots of threads on the Pension board which you may find informative.

    See also https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension
    • jimjames
    • By jimjames 16th Mar 17, 5:00 PM
    • 11,906 Posts
    • 10,284 Thanks
    jimjames
    • #5
    • 16th Mar 17, 5:00 PM
    • #5
    • 16th Mar 17, 5:00 PM
    we would like to put aprox: £15,000.00 into a cash isa each every year for the next ten years, for both my husband and i, We do not have an isa at the moment, so would be starting off fresh, we would like to just pay the money each month and not have to think about it again, for the ten years or a bit longer .
    Originally posted by kaz13
    If you are looking to put money away for 10 years and not think about it then a S&S ISA would be absolutely ideal. The worst you can do is being constantly checking so leaving it for that length of time or longer is perfect.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • ermine
    • By ermine 16th Mar 17, 5:45 PM
    • 542 Posts
    • 771 Thanks
    ermine
    • #6
    • 16th Mar 17, 5:45 PM
    • #6
    • 16th Mar 17, 5:45 PM
    we would like to put aprox: £15,000.00 into a cash isa each every year for the next ten years, for both my husband and i,
    Originally posted by kaz13
    Why on earth would you do such a thing? For starters you each have £1000 of interest p.a. you can earn before paying tax on it (if you are basic rate taxpayers) and the best cash ISA you can get now is 1.75% (at the time of writing). If you can find a normal cash interest account bearing 1.75% you could each stick 57 grand in it before you get to pay tax, and MSE says you can get 2.25% fixed non-ISA so you are ahead of the game without an ISA. Plus you get to open a bazillion accounts to get your FSCS compensation.

    A wider question you need to ask yourself if why on earth you would do such a thing? Over the last 10 years inflation averaged 2.9% so you're probably going to be losing the fight.

    There's no point in a cash ISA these day IMO - an ISA is for stocks and shares, where over 10 years you stand a decent chance of ending up with more in real terms (ie inflation-adjusted) than you put in. There's no point in tax-sheltering depreciating assets like cash in the post-financial crisis world. There's only any point in sheltering appreciating assets If you are going to defer all this consumption, then at least learn about the difference between investing and saving. Saving is a mug's game at the moment, because we needed to whistle up a load of money that didn't exist to pay for the financial crisis. And now we need to dream a load more to pay for the coming crisis due to Brexit. Savers are where some of the money is coming from.
    • kaz13
    • By kaz13 16th Mar 17, 7:28 PM
    • 26 Posts
    • 70 Thanks
    kaz13
    • #7
    • 16th Mar 17, 7:28 PM
    • #7
    • 16th Mar 17, 7:28 PM
    Thank you for all the replies - in answer to some, We are both self employed and pay into a pension, enough, both my husband and I are working and will carry on for another 5/6 years, we both have money in a high interest account, which will cover the £1000 interest each of us are allowed.
    • Fatbritabroad
    • By Fatbritabroad 16th Mar 17, 7:59 PM
    • 149 Posts
    • 67 Thanks
    Fatbritabroad
    • #8
    • 16th Mar 17, 7:59 PM
    • #8
    • 16th Mar 17, 7:59 PM
    I'd agree with others on here. Time for stocks and shares. If you're nervous consider the fact that you are already investing in shares via your pension. All this is is a pension paid out of taxed income that you can take any funds out of tax free in the future (and at any time in the meantime if you absolutely have to though not recommended) effectively the opposite of a pension which is paid out of untaxed income and taxed on the way out. A very simple concept that seemed to escape me for years and I work in financial services!
    • Alice Holt
    • By Alice Holt 16th Mar 17, 8:09 PM
    • 1,228 Posts
    • 1,312 Thanks
    Alice Holt
    • #9
    • 16th Mar 17, 8:09 PM
    • #9
    • 16th Mar 17, 8:09 PM
    we both have money in a high interest account, which will cover the £1000 interest each of us are allowed.
    Originally posted by kaz13
    In which case, it is even more important to consider an S & S ISA, rather than having all your investment eggs in a cash basket that depreciates in real terms.

    What are your pension fund projections when you finish working?
    For, say, a joint income gross of £30k (assuming maximum state pension provision for the both of you, and a 4% drawdown) total pension funds of c.£350k on retirement would be required.
    Last edited by Alice Holt; 16-03-2017 at 8:16 PM.
    • kaz13
    • By kaz13 17th Mar 17, 1:19 PM
    • 26 Posts
    • 70 Thanks
    kaz13
    Thankyou, for all - if We. Oth open an isa and pay in for say three years with one bank, then open another one in another bank the next year and pay into that - I presume that We still get interest on the first accounts as well as the second account ?
    Thank you in advance.
    • jimjames
    • By jimjames 17th Mar 17, 1:25 PM
    • 11,906 Posts
    • 10,284 Thanks
    jimjames
    Thankyou, for all - if We. Oth open an isa and pay in for say three years with one bank, then open another one in another bank the next year and pay into that - I presume that We still get interest on the first accounts as well as the second account ?
    Thank you in advance.
    Originally posted by kaz13
    Yes. But the majority of views here are saying that you shouldn't be touching a bank for this money.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • ermine
    • By ermine 17th Mar 17, 2:44 PM
    • 542 Posts
    • 771 Thanks
    ermine
    and pay in for say three years with one bank, then open another one in another bank the next year and pay into that - I presume that We still get interest on the first accounts as well as the second account ?
    Originally posted by kaz13
    Yes, although you will find that the interest on the older account tends to fall. The bank is only (sort of) interested in getting people to open new accounts, so they tend to save money by dropping the interest paid on accounts that have been open for a while. You will get to eat the loss of interest due to this charming practice. There's nothing stopping you moving your Cash ISA to one with a better rate, should you be able to find one, and provided you can retain your FSCS compensation, if that's a requirement for you. Doing the latter will restrict your choice even more.

    In practice you'll get hammered on the interest rate you will get for the total. But at least the number will never go down. Just what you can buy with it will fall, due to inflation. But you don't seem concerned with that, so you should be able to achieve your aims, although you will lose money in real terms.
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