Non tax payers - still get a cash ISA?

TCA

Thanks Ciaran. The unpredictability of inflation may be an issue, although I spend the majority of my time (and money) outside of the UK, so am not really influenced by it much. But my cash is in sterling though, so how the inflation rate translates into FX rates, I'm not sure, which is why I'm tending to look at absolute rates (or estimates of) as opposed to any measure of spending power. It's a bit of a headspinner.

kidmugsy

Inflation in the UK will tend to rise as the currency sinks. So you could look on ILSCs as a sort of indirect way of guarding against currency depreciation.

MoneySaverLog

Who is to say inflation will remain high, yes some investment in ILSC will guard against this but if inflation falls and rates increase they may not be so attractive then.

Only time will tell I guess.

dtsazza

MoneySaverLog wrote: »

Who is to say inflation will remain high, yes some investment in ILSC will guard against this but if inflation falls and rates increase they may not be so attractive then.

The attraction isn't so much the nominal rate that one might get, but the fact that it guarantees a small amount of growth in real terms.

Generally speaking I wouldn't expect cash to outpace inflation in the long-run, and if I could take an "inflation + 0.5%" return for life I'd consider that an excellent deal (modulo a sensible, i.e. applicable to me, definition of inflation).

It's true that you might get a better overall return with unlinked savings accounts. But with that potential for gain comes the potential for losses; and as we're thinking in the context of a five-year product, if you're happy to have some volatility and uncertainty in returns then why not invest defensively in equities for even greater expected returns?

In my own opinion, preserving the purchasing power of money I hold as an emergency fund is more important than trying to get a better return at the risk of it declining in value. The ILSCs are incomparably superior in this regard to any other options.