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

funnyguy

My wifes 3.3% ISA rate finishes 10th March,mine 6th April,and so it will be goodbye ISA,S as I put them into a 3% tax free [one of us doesnt pay tax] account I have until September[hopefully] and then its hello premium bonds.At least you can have a bit of hope with them.Mind you,with many more people having the same idea,wont their be less chance of winning?

michaels

Are we expecting to see an 'isa' season this year at all? Otherwise I have my eye on the firstdirect 3% rate but obviously with that one there is no certainty that it won't get reduced once they have sucked your money in.

jimjames

ColdIron wrote: »

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

This isnt necessarily true. Our cash savings are in our mortgage as overpayments. We can withdraw when we want and pay no tax on them. It means we can use whole of our ISA as S&S not cash.

lisyloo

Are we expecting to see an 'isa' season this year at all?

Not really.
Banks can borrow from the Bank of England at such low rates that they do not need to attract savings from conusmers, therefore I am afraid the thinking is that there won't be much this year.

michaels

lisyloo wrote: »

Not really.
Banks can borrow from the Bank of England at such low rates that they do not need to attract savings from conusmers, therefore I am afraid the thinking is that there won't be much this year.

I fear you may be right, with cross-selling also now frowned upon (see PPI reclaiming passim) there is not even any incentive for 'loss-leaders' to get punters through the door. I guess their may be sone marketing activity around 'regular savers' but these are worth peanuts in the scheme of things.

To get to 40k in First Direct I would need to put some of next years funds in leaving me very exposed if they then cut the rate sharply

lisyloo

You can always transfer somewhere else.
They are not a cynical bank. They are one of the best.

Desperate_Housewife_2-2

I think the government doesnt want people to save up, they want us to stimulate the economy by spending. trouble is I like to have some money put by for a rainy day and deplore debt. I also have a 5 year plan going as OH wants to retire so going into year 3 and will have 2 full isas for both of us by the end of next month. Its just that I want us to have a safety buffer of cash to fall back on when we retire as well as the pension.

I realise that the value is going down and doeant keep up with inflation due to poor interest rates. What can we do? I'm an old fashioned girl who feels safe with a bit of money put by. I think I will carry on in view of the short time span we have in our plan.Also got 2 teenagers who need help getting through uni so cash is handy.

lisyloo

What can we do?

You could look at inflation linked products if keeping the value up is important to you.
I don't think the rates are fantastic but it does at least guarantee that your money keeps it's value.

brasso

It's not for me to try to persuade people what to do with their money.

But I'm genuinely puzzled about the aversion to stocks & shares ISAs. It's not that they have no risk, obviously. But a cash ISA seems only to keep abreast of inflation (if you're lucky) which isn't good enough for me. If you start with a large cash sum and want to be certain that you will retain your capital, I can understand these 3% or 4% deals. But I need to make my money grow.

Moreover, you do hear some odd things, like this 5 year minimum. Why is there a 5 year minimum? A bog standard FTSE tracker bought at the beginning of last month (not last year) would currently be worth nearly 8% more than it was then. Of course, it could just as easily go the other way. But even if it had done, just hang on in there and historical precedent tells you that you are almost certain to recover -- and well within 5 years.

If you'd bought into the stock market in 2003 / 2004 you would have done extremely well over the following 4 years, and then seen your investments drop significantly in years 5 and 6. So much for the 5 year timescale.

marathonic

brasso wrote: »

It's not for me to try to persuade people what to do with their money.

But I'm genuinely puzzled about the aversion to stocks & shares ISAs. It's not that they have no risk, obviously. But a cash ISA seems only to keep abreast of inflation (if you're lucky) which isn't good enough for me.

Personally, I'm opening a Cash ISA for next year because I've just bought a house and want an emergency fund set aside.

My thoughts are that, if I can get 2.5% interest in a Cash ISA and inflation is 3%, I see that 0.5% difference as a kind of fee for the insurance provided by an emergency fund.

I intend to fund the emergency fund with £480 per month for the whole tax year to ensure that I take advantage of the full Cash ISA allowance - providing an emergency fund of £5,760 rising by a little below inflation through interest.

This fund will reduce in real terms by £28.80 per year - which I feel is a small price to pay.

You are correct though, after that, everything else will go to an S&S ISA.

I just don't like the idea of a boiler breaking down after markets dropping 20% and me having to liquidate shares to replace it.