Cash mini ISA v. S&S?

frivolous_fay

My partner and I have a combined £16k in our A&L cash ISAs. (A few k more in mine than his)

We're looking into increasing our returns with a possible switch to stocks and shares ISA, bearing in mind...

- We can manage to save perhaps a little more than the £3k each we currently pay into our ISAs
- We may be cashing both accounts towards the end of the year, for a mortgage deposit (if there is a way to avoid this, I'm in favour, but I fear there may not be... bye-bye hard-earned tax allowance)
- I've been hesitant to get into investing (going down as well as up is a niggling concern)
- I'm pretty much an innocent when it comes to investing and I'm finding the terminology a bit baffling!

Bearing in mind the above... do I sound like the type of person who should be hanging around in this forum?

Any thoughts welcome!

dunstonh

If you are looking to withdraw the funds within the next 5 years then dont use a stocks and shares ISA.

Ian_W

But do hang around fay as there is a wealth of knowledge [none of it mine, I'm afraid] you can gain from for when you are in a position to look for longer term investments.

frivolous_fay

Ian_W wrote: »

But do hang around fay as there is a wealth of knowledge [none of it mine, I'm afraid] you can gain from for when you are in a position to look for longer term investments.

That's probably not me then, yet Mortgage + savings = silly, right?

O/H thought that as we're going to be sitting on our savings for a little while longer yet, we should look for a better rate... and obviously it'd be daft to pull them out of ISAs.

Thanks

straddie

Have you considered NS&I's index linked savings certificates?

http://www.nsandi.com/products/ilsc/index.jsp

They're tax free, and linked to inflation which is quiet high at the moment. The downside is if you don't hold them for a full 3 or 5 year term, you lose out on some of the benefits, but if there's any chance you may not need to access the money at the end of the year, they could be a good risk-free way to keep on saving without paying tax, if you've both used up your ISA allowances.

lisyloo

Mortgage + savings = silly, right?

Wrong.
I have a mortgage at 4.64% and an ISA at 5.93%.
Also the ISA is more liquid - I can draw money from it if I need to.
Makes perfect sense to me.
Of course it's different if you have any debt at an interest rate that exceeds the ISA rate.

frivolous_fay

You're right, lisy, and I'm being thick, as that's exactly the reason I haven't paid off my student loan. (More interest on ISA)

My REAL problem is that we need the cash from the ISAs to fund the mortgage deposit - and we'll be back to square one, with £3,000 tax allowance to pay in to an ISA with £0 balance, but less available cash to do it with!

stphnstevey

So I take it your saving for a deposit on a house? (you didn't say..)

Everyones situation is different (note my 'get out' clause there!), but if you need the money in the short term for a house deposit, then Share ISA's probaly are not the thing your looking for at the moment. They are more long term and tend to be after you have built up a substainable Cash ISA foundation.

Everyone doesn't like the jump from cash to S&S. Mainly because with S&S there is not the 100% garantee you'll get what you invested back. But once you build up a big enough pot that you can afford to 'play' with (so you can afford to lose here and there), the risk vs reward can be good.

Although your Cash ISA balance might be zeroing to pay a deposit, you can feel quite satisfied that the investment in a home and the equity you build up will probably be the best investment you ever make and reap more returns per £ invested than a S&S ISA anyway (others might disagree).

Strange to see a Maverick saying they are a novice investor. Where have you built up your 3000+ posts?

frivolous_fay

stphnstevey wrote: »

So I take it your saving for a deposit on a house? (you didn't say..)

Well, I mentioned I'd need the cash for a deposit, and we're still setting money aside, so I suppose I am Although we're first time buyers, we also have some money tied up in the flat we live in (ownership is complicated) and we're beginning to accept we can't think about moving until the flat is in a saleable state.

stphnstevey wrote: »

Strange to see a Maverick saying they are a novice investor. Where have you built up your 3000+ posts?

Ebay forum I'm also a part-time card tart As a rule I find the pure money forums a bit scary, although I've been dipping my toes in the mortgage forum of late

Madiba_2

OK, this my not be helpful, but what I do is I use the cash / SS split for my wife and myself.

Each year I put £3k x 2 into the top cash ISA, and £8k into a HArgreaves Landsdown Vantage ISA, across 6 to 8 funds. Quite high risk, but I "offset" this using the cash ISA.

You might not agree with this method, but it is just what I do.

stphnstevey

Of course ISA's are more benificial to higher rate tax payers as you get 40% tax relief compared to 20% (as I presume you are to be able to afford to put 14K per year into ISA's....)