Is anyone bothering with a cash ISA in 13/14?

Looter

The last few years I've worked hard and saved hard to make sure I've got the maximum allowance available to open a cash ISA each 6 Apr. This year I'm not sure if I should bother to open one, given that the interest rate offered probably won't even beat inflation!

Is anyone else in the same boat and wondering what to do instead? I have thought about an S&S ISA but I personally don't want any "risk" with my money and I don't want to tie up my money for 5+ years anyway.

I'm considering putting the money instead into premium bonds and withdrawing it towards the end of the tax year and opening a cash ISA just before the tax year ends so I've still used my allowance which will help when interest rates finally go up.

Any better ideas out there?:)

grey_gym_sock

if you want the low-risk of cash (for < 5 years, it is the low risk option; in the longer term, that may not be true, due to the cumulative effect of inflation), there's not a lot of choice.

premium bonds would typically pay about 1.3%, so surely a cash ISA would do better.

i'm not up with the details of them, but maybe a regular saver account would do better even after paying tax. and then follow the same plan of filling the cash ISA near the end of the tax year.

chucknorris

Absolutely! Rates are low now but you get to capture the ISA status and when rates go back up you have a healthy total in your ISA's attarctibg a decent rate.

juanmanuelmarquez

The OP has taken the words right out of my mouth, as i was going to ask the same thing...I think all the savings are !!!!!!ed with really low rates so its not worth it to be honest.

Im waiting until the end of this tax year and then i will see what the rates are going to be, most likely around 3%, or 3.5% on fixed. Thinking of investing in gold aswell, but just playing the waiting game til a few weeks...

innovate

I definitely will, for 2 reasons. One, I have access the 4.25% Nationwide Flexclusive ISA, and two, I am at an age now where I like to have a big wad in cash at my fingertips. I might change my mind when the 4.25% comes to an end in October.

kidmugsy

Has everyone given up hope of ns&i issuing their ILSCs again?

jimjames

Nope. And I haven't done since around 2002.

You are right about the risk with a S&S ISA and planning for 5 years plus but there is no absolute 5 year tie in and you could withdraw at any time so if it jumps a lot you can move to cash for a period of time.

benalder284

"Has everyone given up hope of ns&i issuing their ILSCs again?"

If you mean anytime soon - YES.

NS&I have targets not to raise too much finance in 13-14, BoE and Govt are content to let inflation remain above target (helps reduce the real value of UK govt and personal debt) and simply don't want or need to offer inflation linked retail products.

Martinslovechild

Cash ISAs have historically tended to offer a rate comparable with inflation (though not in the past year or so). This means that the balance in a year 's time is worth exactly the same in real-terms as it was when it was deposited. I don't know about you but I don't want to stand still. Additionally, the annual allowance is half that of a Stocks & Shares ISA.

Since I realised the above, I've always invested in stocks & shares. My pension's invested in stocks & shares. Yours more than likely is too (I'd be worried if it wasn't!). So why not an ISA?

The "risk" argument is a difficult to counter. You either fear it or embrace it. I have friends who simply will not consider stocks & shares because of perceived risk, even when I show them charts of how my ISA has performed - even during the dotcom crash, the crash of 2007/08 and more than likely crashes to come too..

Shares have been moving upwards since 2009. That's four years of gains. Don't just take my word for it - look at a chart of the FTSE or the DOW on a website. "Risk" can be tamed if you invest on a regular basis (similar to making monthly payments into a pension).

The other thing which generally puts people off stocks & shares is that they many people say that they don't know what they should do, they don't know how to buy shares, which shares to buy etc. The simple answer is to learn. There are stacks of free websites offering information (not MoneySavingExpert.com as Martin doesn't cover investments) - the Motley Fool UK site is a great start. If you're still unsure, then funds (often called Unit Trusts) are a great option - these are managed baskets of shares which invest in different geographical areas (e.g. UK/America/Asia/Latin America etc) or functions (e.g. technology/natural resources/gold etc).

I implore you to check it out - if you're still not convinced, set up a 'virtual portfolio' on a website which allows you to add funds and/or shares into a fictitious portfolio to monitor how they would perform from that date if you had purchased £xxxx.

Good luck.

BLB53

I gave up on cash isas in 2008 when interest rates fell and currently only invest in S&S isas - I have a porfolio of higher yielding shares and a 'basket' of investment trusts.

BS rates are falling (again) and as inflation is stubbornly around the 3% mark you are not even getting a positive return.

I think for the foreseeable, I will stick with equities (and pibs and preference shares)

ColdIron

If you have savings and work, especially if you pay higher rate, tax you want as much of your cash in an ISA as you can manage otherwise you are just giving it up to HMRC