Found a brilliant return on an ISA... but why wasn't it on MSE?

discopatrick

I've been consulting this website for over a year now as I'm starting to take saving seriously. I've always felt reassured by the sound advice and unbiased approach, and the articles are very easy to follow. Great stuff.

However, lately something has happened to make me wonder whether the site is really showing us the best deals on ISAs.

For quite a while I have been under the impression that the best return I would get on an ISA was around the 3% mark. Slightly more for long term regular investments, which are around 4-5%.

Then last weekend I had an appointment with a financial advisor at Santander. They showed me that by opening both a cash ISA and an investments ISA together, I can get a whopping 6.5% on the cash, and depending on what type of investments I choose (bonds, stocks, etc) between 10-20% on the investments. And I don't have to take a huge risk on the investments either - I can invest as little as £25 per month, and still get 6.5% on the £5100 cash.

Obviously this is brilliant news. I'm just very surprised that I didn't read about it on MSE first.

Why could this be? Did I just miss it on the website? Is it a brand new deal? Perhaps there is a reasonable explanation for not showing it here. I have just realised that I can't see anything on the website about investments at all - is this for legal reasons? Perhaps that would explain why it's not on the site.

I will continue to use this site for info and advice... but I think from now on I'll be using it as guidance rather than taking it as gospel. But then I suppose that's what everybody should be doing anyway: don't accept everything you read, go out and research it yourself too!

Baldur

You won't have seen Santander's 'Super ISA', or whatever they are calling the current flavour of this dire account, because it's basically designed to lure the unsuspecting with the 'sprat' of a high interest rate on the Cash ISA part in order to catch the 'mackerel' of an equal deposit in a pretty awful and expensive investment product.

You'll find lots of posts about this type of Santander/A&L/Abbey marketing ploy if you search these forums.

hethmar

Several banks offer a similar product.

pressuredrop_2

I thought you had to put at least the same amount in the qualifying investment to receive the higher interest rate on the Cash ISA.

If you only had to invest £25 per month in the qualifying investment wouldn't everyone have a Cash ISA with Santander?

Sceptic001

discopatrick wrote: »

I can invest as little as £25 per month, and still get 6.5% on the £5100 cash.

If it is their "Super Flexible ISA" :rotfl: I think you will find that you only get the juicy interest rate (for 12 months only) "when you pay the same amount or more into a separate qualifying investment product from Santander" http://www.santander.co.uk/csgs/Satellite?appID=abbey.internet.Abbeycom&canal=CABBEYCOM&cid=1210607931656&empr=Abbeycom&leng=en_GB&pagename=Abbeycom/Page/WC_ACOM_TemplateA2

adindas

Dear discopatrick

What you see in MSE here
http://www.moneysavingexpert.com/banking/

is cash ISA. What you are advising is S&S (investment ISA) or Cash ISA with condition to buy investment.

I think the reason why Martin and MSE did not put S&S ISA because it is very difficult to see whether this is worthy or not.
Cash ISA is very easy to be compared with other cash ISA as the interest rate is the only variable to be considered.

I remember a few years ago before the credit crunch I was also offered a very high interest rate with for cash ISA with condition to also put Investment ISA. I am lucky I did not take that offer as a few year the credit crunch hot UK.

ADINDAS

discopatrick wrote: »

I've been consulting this website for over a year now as I'm starting to take saving seriously. I've always felt reassured by the sound advice and unbiased approach, and the articles are very easy to follow. Great stuff.

However, lately something has happened to make me wonder whether the site is really showing us the best deals on ISAs.

For quite a while I have been under the impression that the best return I would get on an ISA was around the 3% mark. Slightly more for long term regular investments, which are around 4-5%.

Then last weekend I had an appointment with a financial advisor at Santander. They showed me that by opening both a cash ISA and an investments ISA together, I can get a whopping 6.5% on the cash, and depending on what type of investments I choose (bonds, stocks, etc) between 10-20% on the investments. And I don't have to take a huge risk on the investments either - I can invest as little as £25 per month, and still get 6.5% on the £5100 cash.

Obviously this is brilliant news. I'm just very surprised that I didn't read about it on MSE first.

Why could this be? Did I just miss it on the website? Is it a brand new deal? Perhaps there is a reasonable explanation for not showing it here. I have just realised that I can't see anything on the website about investments at all - is this for legal reasons? Perhaps that would explain why it's not on the site.

I will continue to use this site for info and advice... but I think from now on I'll be using it as guidance rather than taking it as gospel. But then I suppose that's what everybody should be doing anyway: don't accept everything you read, go out and research it yourself too!

sheslookinhot

Some people would be better spending time understanding the terms of investments products rather than posting about lack of perceived good advice on this forum.

There have been many posts about the disadvantages of being tied into a perceived good Cash ISA rate which must be taken alongside very poor investment products.

Simple-the higher cash isa rate/tied investment product is NOT a good savings strategy.

dunstonh

I will continue to use this site for info and advice... but I think from now on I'll be using it as guidance rather than taking it as gospel. But then I suppose that's what everybody should be doing anyway: don't accept everything you read, go out and research it yourself too!

If you had read this site more closely you would know that the Super ISA is regularly written off as unsuitable as it requires you to buy either a poor quality structured product or a low quality and expensive investment product. They are using the commission on the investment side to cross subsidise the rate on the cash ISA side.

Obviously this is brilliant news. I'm just very surprised that I didn't read about it on MSE first.

Its not brilliant news. They are using a short term headline rate to make you buy substandard investment products which are charged at full commission rate.

Why could this be? Did I just miss it on the website? Is it a brand new deal? Perhaps there is a reasonable explanation for not showing it here. I have just realised that I can't see anything on the website about investments at all - is this for legal reasons? Perhaps that would explain why it's not on the site.

Its a fairly frequent topic in this forum. Just do a search and look at the responses.

However, there is another reason. Martin has frequently said that he does not get involved with investments and many higher regulated products. You have bought an investment product. Not a savings product.

I've always felt reassured by the sound advice and unbiased approach
<snip>
Then last weekend I had an appointment with a financial advisor at Santander.

A sales rep at Santander is about as far as you can get from unbiased. Did they tell you that santander investment products are poor quality and expensive?

One hopes that you are still within the cancellation rights period now that you must realise your mistake.

jamesd

You could also usefully have a look at this list of unit trusts in yield (similar to interest rate) order. Most can be held within a S&S ISA and pay out with no more tax to pay if you choose income versions, or add to the amount invested if you choose accumulation versions.

Capital value will vary but it's unlikely to vary by more than 10-20% for most of them. Vary means both up and down.

dunstonh

Any follow up to the comments made discopatrick?

jimjames

discopatrick wrote: »

They showed me that by opening both a cash ISA and an investments ISA together, I can get a whopping 6.5% on the cash, and depending on what type of investments I choose (bonds, stocks, etc) between 10-20% on the investments. And I don't have to take a huge risk on the investments either - I can invest as little as £25 per month, and still get 6.5% on the £5100 cash.

Unless it is a guaranteed investment product the figures they are quoting for the investment ISA are total guesses. No-one can predict what any investment will do over the next week or month let alone year or two. If its a guaranteed product then you will get back the money at the end of the term but with many caveats and restrictions such as only being able to withdraw at certain points to get all your capital back.

If their adviser is stating these numbers as fact then you should run as fast as possible. If you are still interested then check what their charges are. Chances are it will be nowhere near the best on the market with 0.25% annual fees and no initial charge.

discopatrick wrote: »

don't accept everything you read, go out and research it yourself too!

Definitely good advice but equally when doing your research make sure you understand what you are being told/sold. If you don't understand something then here is a very good place to ask as hopefully this thread will have shown. Hopefully you haven't yet handed over your money and will be able to consider the views here.

Andy