Fill my cash ISA or lock more into an e-bond

hannahm2000

Hi all,

This is my first thread and I am just beginning to get to grips with how to best invest and save my money. I have an amount of money which I could take £5,340 out of an put it into my Cash ISA allowance for this year OR I could just put it all into an ebond OR this online saver I found nationwide.co.uk - mysaveonlineplus (sorry I cant post a link to it)

I don't know whats best to do? Any advice?

Just_landed

hannahm2000 wrote: »

Hi all,

This is my first thread and I am just beginning to get to grips with how to best invest and save my money. I have an amount of money which I could take £5,340 out of an put it into my Cash ISA allowance for this year OR I could just put it all into an ebond OR this online saver I found nationwide.co.uk - mysaveonlineplus (sorry I cant post a link to it)

I don't know whats best to do? Any advice?

---

Use it or loose it springs to mind, you seem to understand the basics of Isa's. If you do not use this financial years allowance IE £5340 you will have lost the chance to use it for ever, but there is always next years allowance.

hannahm2000

Just_landed wrote: »

---

Use it or loose it springs to mind, you seem to understand the basics of Isa's. If you do not use this financial years allowance IE £5340 you will have lost the chance to use it for ever, but there is always next years allowance.

Thanks for your reply - that was my thinking too. But I had read that having full ISA's everywhere isnt a good idea?

Also Im confused what I should do with my ISA from last year, should I leave it where it is because on alot of ISA's I see "no transfers".

calypso_rhapsody

If you are a tax payer, opening an ISA should be a no-brainer. If you are not, it's a little more complicated but probably still a good idea if you expect to pay tax before you will need to draw on this money

atush

When will you need the money, and do you pay tax? If you pay tax, then ISA first, other cash savings after.

anamenottaken

hannahm2000 wrote: »

Thanks for your reply - that was my thinking too. But I had read that (1) having full ISA's everywhere isnt a good idea?

Also Im confused what I should do with my ISA from last year, (2) should I leave it where it is because on alot of ISA's I see "no transfers".

(1) Does anyone say why they say this? This might be true is if you have real difficulty in tracking where your money is or leave it in low-paying accounts but otherwise I do not see a real reason for having everything in one account. I don't see a reason for having ISAs which are not "full".

(2) Depends what rate of interest it is receiving now. Halifax, for one, have decent rate ISA this year which allow transfers in.

Loughton_Monkey

Individuals can, of course, do what they please, but there is usually some consensus with the following:

Pensions and Stocks & Shares ISA's are used for very long [at least 10+ years] periods - typically for retirement planning.

Cash ISA's are used for long term provisioning either for medium term (such as saving for car) or as an adjunct to pensions for those who want safer 'cash' as well as equities.

Instant (and current) accounts are used for day to day cash flow/spending and short term savings (such as holidays/Christmas).

For those who generally use this model, they find themselves building up a significant value from past ISA's, with a new £5K+ allowance each April. In this situation, it is usually an extremely simple piece of research to 'optimise' where to put it. The vast majority of ISA rates these days last for only 12 months, which generally implies moving them every year as a matter of course. Hence the 'normal' maximum requirement of only 2 ISA's being 'live'. One would be for the entire previous years' savings, and another would be for this year's contribution. Often it is only one account for both.

If we were in more 'traditional' times, then we might get a situation in which, say, almost every bank was paying 3.2% for cash ISA money, in which case if I had 12 little £5K+ accounts - all at 3.2% - in different banks, I would simply leave them there. Not worth the hassle to transfer them and potentially lose interest for a couple of weeks.

My own choice (this year) was to opt for Halifax's 2 year 3.65% 'fix'. Next April, I will put my new money in the highest rate I can find for 12 months - and then probably transfer both to yet a new one the year after.