Thoughts on Cash ISA transfer to S&S ISA?

Newbie2saving

Hi all,

Cash ISA is due to mature this month - ~£10,500. It is in a HSBC fixed rate ISA at 3.25%aer. I have other cash ISAs maturing at different times next year and already used up 50% S&S allowance for this financial year (other 50% went in cash ISA). I can't decide whether to transfer this money to a S&S ISA. In these difficult times (%aer wise), not really getting a lot, but then again I think once interest rates do pick up at least this money will be safe! Can you tell I am confused?!?!? Basically wondered if I can transfer part of the lump sum to S&S and leave rest as cash to 'hedge my bets'?

Any other thoughts??? TIA.

lisyloo

I have recently had the same dilemma.
My cash is getting 2.8% which is below CPI, whereas S&S is giving about 10%.
I recently moved £20K to S&S but I am very aware it's a one-way thing, you cannot move it back to cash again.

I suggest you put up figures as to how much cash and how much S&S you have and that will enable people to give you better advice.

Another option - should you consider putting more into your pension? especially if you pay 40% tax.
What tax rate do you pay?

Newbie2saving

lisyloo wrote: »

I have recently had the same dilemma.
My cash is getting 2.8% which is below CPI, whereas S&S is giving about 10%.
I recently moved £20K to S&S but I am very aware it's a one-way thing, you cannot move it back to cash again.

I suggest you put up figures as to how much cash and how much S&S you have and that will enable people to give you better advice.

Another option - should you consider putting more into your pension? especially if you pay 40% tax.
What tax rate do you pay?

Thanks for the speedy response. I am in the 20% tax bracket, so that's not an issue. Pension is a company pension, don't have a private one.

I have about £10k in S&S ISA and £15k in cash ISAs.

I have rainy day money saved so this this money doesn't need to be accessed short or medium term, it's for the long term.

Thanks again.

mac2008

From the information you've given (and if I were in your situation), I'd definately shift a chunk (50%) of your Cash to S&S as I believe it'll outperform cash in the long term. As to what S&S - depends on what your portfolio looks like a present. Could you give us a rough idea of your current holdings and the rationale for them? If you're relatively high risk, you could use the new money to lower the risk, or improve diversification.

good luck!

lisyloo

I'd say xfer to S&S providing you are confident (as much as one can be) that you have decent funds and advisors.

Newbie2saving

mac2008 wrote: »

From the information you've given (and if I were in your situation), I'd definately shift a chunk (50%) of your Cash to S&S as I believe it'll outperform cash in the long term. As to what S&S - depends on what your portfolio looks like a present. Could you give us a rough idea of your current holdings and the rationale for them? If you're relatively high risk, you could use the new money to lower the risk, or improve diversification.

good luck!

Thanks for the response. Overall I'm a balanced investor in terms of risk. Having said that my ISA portfolio is more high risk as I felt that the amount I had in I could afford to be. Part of my portfolio is a tracker - fidelity moneybuilder. I adopted this blend to measure how well a tracker did versus funds as a newbie to investing. If I'm adding more money to S&S ISA I was looking towards european emerging markets, a fund such as Fidelity EMEA. I have nothing in the USA / Canada or South America so any suggestions welcome. I've got Neptune Latin America in my H-L virtual portfolio.

Thanks

Mikeyorks

Newbie2saving wrote: »

Basically wondered if I can transfer part of the lump sum to S&S and leave rest as cash .

You can do that as it's 'old year' ISA money. If it was the current year you would have to transfer all / or none of it

I've got Neptune Latin America in my H-L virtual portfolio

I added the Invesco Perpetual Latin America as the (excellent last year) growth on my Scottish Widows Latin America has slowed + I had too much in that single fund. It looks promising. But if you graph the Neptune / Invesco together .... there's little difference on recent performance.
In the same vein, as you mention emerging markets, I've just taken a chunk out of Allianz RCM BRICS (slowed + too much in the single fund) and put some into the Aberdeen Emerging Markets. Again - early days - it looks quite promising.

Newbie2saving

Mikeyorks wrote: »

You can do that as it's 'old year' ISA money. If it was the current year you would have to transfer all / or none of it


I added the Invesco Perpetual Latin America as the (excellent last year) growth on my Scottish Widows Latin America has slowed + I had too much in that single fund. It looks promising. But if you graph the Neptune / Invesco together .... there's little difference on recent performance.
In the same vein, as you mention emerging markets, I've just taken a chunk out of Allianz RCM BRICS (slowed + too much in the single fund) and put some into the Aberdeen Emerging Markets. Again - early days - it looks quite promising.

Thanks for the feedback. If I invest 50% of my lump sum from the cash ISA I currently hold into a S&S ISA, then I can cover both Latin America and emerging markets. I suppose with £5k I could have 3 funds added to the ISA portfolio. I like the idea of natural resources, but maybe that's one step too far at the moment!

mac2008

I think the post by Mikeyorks above has some good pointers. I also hold Aberdeen EM, but current holdings are only 17.2% Brazil & 7.5% Mexico, so there might be better for Latin America. Can't give any suggestions on USA/Canada, sorry.

jimjames

USA you'll probably find it hard to match the HSBC US tracker as their charges are low and supposedly in efficient markets managed funds are less likely to beat the index.

Newbie2saving

I'm really pleased I asked the question initially, thank you all for the feedback. I have decided to take 50% of the cash ISA maturing in a week and transfer it over to H-L to my Vantage S&S ISA. I'm not going to add anymore money to the current funds I hold, but add another 3 to diversify and cover more markets / regions. I haven't fully decided on which funds as yet as I want to do a little more research.

Thanks again.