ISA: Fixed for 5 years or not??

Jock_Tight

bigfreddiel wrote: »

well i'm not so sure

is 4.5% for 5 years a good deal

look at it this way

if instead you think rates will be going up in a year then tuck your money away for a year at say 3%
then you WILL need 5% for the next 4 years to beat 4.5% over 5 years

if rates don't move for 2 years then you'll be needing 5.6% for years 3, 4 and 5

and if things don't move for 3 years you'll be looking for 7% to beat the 4.5% deal for 5 years available right now

hope that helps

I agree with your thinking.

If I was to stick my money in a 2 yr fix at 4% then for the next two years I WILL need a 2 yr fix at 4.8% and a further 1 yr fix at 5% to match. I cant see rates increasing that fast. A couple of years ago people were saying dont fix for longer than a year as rates will rise.....they didn't.

I'd rather lock away for longer and get a guaranteed rate now than HOPE for rates to rise. And even if they did start go up higher than I would need to match the 5 yr I still have each years allowance to play with.

JezR

In the early 2000s ISA fixed rates for two years were of the order of 4-4.5% when the base rate was 3.5%.

DreamerV

There's a middle ground now - 3.5% instant access with Cheshire, or 4% fixed rate for 18months.

PosterBoy77

It seems odd that 18 month and two year terms are now paying almost as much as 5 year ISAs. I'm still hoping a 5 year 5% fixed ISA will be launched by someone soon!

Lokolo_2

mikael wrote: »

It seems odd that 18 month and two year terms are now paying almost as much as 5 year ISAs. I'm still hoping a 5 year 5% fixed ISA will be launched by someone soon!

Me too, although I won't be waiting around long, once the new tax year has started I'll go with the best 5yr FRISA that's available!