Isa help

dtsazza

Excellent explanation Stochasticity. I would have thought that almost everyone who's signed up to MSE would be in favour of these practices for that reason - I know I prefer investing an hour or two of my time every year to get 3.4% returns instead of 1.75%.

OneADay wrote: »

I gave Santander the boot

That seems like an emotionally-driven decision rather than a financially-driven one. Santander have the highest-paying ISA for new money (3.5% in the OP's case as he's a current account holder). Given their customer service woes, I can understand not using them as a current account, due to the chances of messing up something that impacts on day-to-day banking. But even with their reputation, I trust them to operate a savings account like a cash ISA without any major troubles.

I suppose at the end of the day it's £16.02/year more interest than you'd get with Halifax (on £5,340). Perhaps you do feel that Halifax's customer service is better to the extent that it's worth paying sixteen pounds for.

Thrugelmir

OneADay wrote: »

and had I not got the letter from them in the 11th month

This at the recommendation of the FSA.

We were informed by the Halifax recently that this is their policy from now on.

So the onus falls back on the saver to be pro-active. By investing in a diary perhaps.

spikyone

OneADay wrote: »

Maybe but Santander are consistent in this policy and I am fed up with it. Invest 5k first year and that 5k gets the 3.5% say - come the next year they drop it to 0.5% and at the same time advertise a new isa for new funds only at 3.3%. That practice bothers me.

I had only one option and to move last years allowance (not something I wanted to be wasting time but I was forced into doing that). There were few options to stick that money away and best for me was halifax at 3.2%. But I have not invested a penny for current year and do not intend to till I see some improvement in rates.

3 things.

First, the Halifax account does the same thing. So you'll be, as you say, "wasting time" switching in 12 months, unless you want 0.5% again.

Second, the Santander account tracks base rate, whilst the Halifax account doesn't. So there's a far better chance that rates will rise for the Santander account than for the Halifax one. And there's no reason to expect that other providers will launch new accounts at rates above Santander's "base rate +3%"

Third:

OneADay wrote: »

I have not invested a penny for current year and do not intend to till I see some improvement in rates.

So, where is your money right now? Because if it's readily accessible I guarantee it is earning less than it would in one of those ISAs. I can't for the life of me understand why you aren't paying into them now if you can afford to and intend to this year - you do realise that you can transfer again later in the year if higher rate accounts are launched? How much more than base rate do you expect? Following on from Stochasticity's comments, it rather seems like you want something for nothing...

spikyone

alanewing1 wrote: »

Thanks for the help so far. :T

Is ISA the best way forward however, would investing be worth while?

This will depend on your circumstances. I would always recommend making sure that you have enough in an accessible savings account (such as a cash ISA) that you can support yourself for a few months if you have some kind of financial disaster. You can never know, and it's not good to run on empty!
There are a couple of options for making your money go further, such as taking out a fixed rate ISA. Unfortunately short term (2-3 year fixes) are unlikely to beat the Santander instant access ISA, given that rates are likely to rise. Longer term fixes may be better, but I wouldn't lock my money into a 5-year fix at 5% AER - I'd rather take a little more risk for a bigger likely reward.

Assuming you already have enough savings, then investing could provide that bigger reward, but you must remember with an investment you can lose as well as win! The simplest place to start is a S&S ISA. You can pay up to £10680 a year into one of these, although this reduces by however much you pay into a cash ISA (eg pay your full allowance of £5340 into a cash ISA and you can only pay £5340 into a S&S ISA).
As far as the best way to get started in investing, there's a really useful thread already going here...