Ignore Cash Isas

exel1966

patalford wrote: »

I am not playing.
Only way to send a message to these financial organizations.:(

I don't really care. Bye bye, run along now, be a good boy/girl/T

Martinslovechild

The banks have lowered rates on savings products since the introduction of the Bank Of England's "Funding For Lending" programme. Cash ISA rates are now much lower than this time last year as Banks don't need to rely on depositors' cash for lending to small businesses as they're able to obtain cheap finance directly from the BoE.

In any case, the intention of a Cash ISA is generally to keep money level in real-terms (i.e. after inflation). Savings products are not even currently providing this as there is an ongoing transfer of wealth from savers to borrowers. The Government wants people to spend to prop up the economy; if they don't spend then they will be penalised through below-inflation returns on their savings and their money will become worth constantly less in real-terms.

The only way around this issue is to open a Stocks & Shares ISA. Firstly, if double the allowance of a Cash ISA isn't enough incentive then the long-term gains for stocks & shares are historically better than any other asset class - including property.

Don't not take out a Cash ISA to simply get one back at the banks - they're in the rather incredible position of being pushed to lend more to small businesses while having to pump up their capital reserves - it doesn't take a rocket scientist to work out that they can't do both!!

The solution is to take out a Stocks & Shares ISA. At least your money's protected from the tax man and if stock markets turn negative you can always sell any funds within the ISA wrapper allowing your balance to sit in cash - still protected from the tax man - and reinvest when the markets move up again.

innovate

Martinslovechild wrote: »

The solution is to take out a Stocks & Shares ISA.

Only if you do not need your funds for the next 5-7 years, and only if you are comfortable with investing (as opposed to saving).

S&S ISAs are very different animals to cash ISAs. It would be immensely foolish to rush into an S&S ISA without having got at least a basic understanding of investing, the need for a portfolio, and how to determine the platform for the investment. This information is readily available on the internet (e.g. monevator.com, motley fool) or in books, and it's not difficult to understand - - just time consuming to get yourself up to speed.

MissyD_2

I agree S&S ISA's are not really for the majority of us that a) can barely fill ISA allowance, b) if like me your on a mission, then I max out my ISA ASAP, then leaves me looking anywhere and everywhere for a half decent recent.....as I am a first time buyer I need a 10% deposit minimum(.....how am I to do this if government want me to spend?! I can't afford to spend any more as the living costs have consistently risen at extortionate rates while my income has flatlined for the last 5 years) //sighs//
c) I need access to my money within the next 12-15 months as I will be buying my property then so S&S is not a risk I can or am willing to take!

innovate wrote: »

Only if you do not need your funds for the next 5-7 years, and only if you are comfortable with investing (as opposed to saving).

S&S ISAs are very different animals to cash ISAs. It would be immensely foolish to rush into an S&S ISA without having got at least a basic understanding of investing, the need for a portfolio, and how to determine the platform for the investment. This information is readily available on the internet (e.g. monevator.com, motley fool) or in books, and it's not difficult to understand - - just time consuming to get yourself up to speed.

Martinslovechild

MissyD wrote: »

I agree S&S ISA's are not really for the majority of us that a) can barely fill [our] ISA allowance

You would fill a S&S ISA with as much or as little as you can afford. In the future, when you can afford to make higher deposits, the S&S ISA allows you double the allowance of a Cash ISA.

MissyD wrote: »

b) if like me your [sic] on a mission, then I max out my ISA ASAP, then leaves me looking anywhere and everywhere for a half decent recent [sic]

I also like to max out my ISA ASAP but don't have to shop around or transfer every 12 months looking for a rate which is inevitably substantially less than inflation - equivalent to a wealth tax in real-terms.

MissyD wrote: »

As I am a first-time buyer I need a 10% deposit minimum (.....how am I to do this if government want me to spend?! I can't afford to spend any more as the living costs have consistently risen at extortionate rates while my income has flatlined for the last 5 years) //sighs//

The Government introduced a "Help-to-Buy" scheme in the recent budget which allows you to buy a house with a 5% deposit. The Government offers a 20% interest-free loan on the property for 5 years, repayable when you sell the property. They'll recover some of their money straightaway when you're charged for the SDLT upfront.

MissyD wrote: »

c) I need access to my money within the next 12-15 months as I will be buying my property then so S&S is not a risk I can or am willing to take!

Within a S&S ISA, there are literally hundreds of funds/OEICs/ETFs/Unit Trusts and thousands of shares to choose from. There are low-risk funds right up to high-risk funds. Just because you have a S&S ISA doesn't mean that your savings are likely to become instantly high-risk - you control when and how your money is invested.

innovate

Martinslovechild wrote: »

You would fill a S&S ISA with as much or as little as you can afford.

People who need their cash in the next 5 years will most likely be able to afford £0 for an S&S ISA.

Martinslovechild wrote: »

Within a S&S ISA, there are literally hundreds of funds/OEICs/ETFs/Unit Trusts and thousands of shares to choose from. There are low-risk funds right up to high-risk funds. Just because you have a S&S ISA doesn't mean that your savings are likely to become instantly high-risk - you control when and how your money is invested.

Precisely because there are literally hundreds of funds/OEICs/ETFs/Unit Trusts and thousands of shares to choose from, the risk is sky-high for those people who have not got at least a basic grasp on investments.

You are quite irresponsibly suggesting people should just pile into S&S ISAs, without giving them any pointers as to where they can inform themselves about investments, and what to look out for when making investments.

innovate

MissyD wrote: »

c) I need access to my money within the next 12-15 months as I will be buying my property then so S&S is not a risk I can or am willing to take!

And quite rightly you shouldn't, IMO. An S&S ISA might yield you more than a cash ISA over 12-15 months, but then it might not. If you budget with the cash ISA funds, you know exactly what money you have available in a year and a bit.

I am not advocating against S&S ISAs (got one, and a SIPP, myself) but as I said before, you need to have investment knowledge to do them - - not something that MSE is geared to equip you with.

Martinslovechild

innovate wrote: »

People who need their cash in the next 5 years will most likely be able to afford £0 for an S&S ISA.

That's a brave assumption. If somebody can afford to deposit up to £5640 in a Cash ISA then they can afford to deposit the same £5640 in a S&S ISA.

innovate wrote: »

Precisely because there are literally hundreds of funds/OEICs/ETFs/Unit Trusts and thousands of shares to choose from, the risk is sky-high for those people who have not got at least a basic grasp on investments.

The risk is as high or as low as the investor decides. If they deposit their money in a very low-risk fund where returns are extremely modest then this is clearly not "sky-high".

innovate wrote: »

You are quite irresponsibly suggesting people should just pile into S&S ISAs, without giving them any pointers as to where they can inform themselves about investments, and what to look out for when making investments.

So how does pointing out people's options make me irresponsible? If people reading this thread decide that a S&S ISA is something worth considering then I'm sure they'll ask more probing questions, but there's no point me laying it all out if people are not interested. That would simply be a waste of my time.

apt

innovate wrote: »

And quite rightly you shouldn't, IMO. An S&S ISA might yield you more than a cash ISA over 12-15 months, but then it might not. If you budget with the cash ISA funds, you know exactly what money you have available in a year and a bit.
.

If you are considering the next 12-15 months there's no point in sticking your money in an accessible cash ISA paying 2% when you can get taxable accounts paying 4%, 5% and 6%. I sympathise with the OP. For new money there is little point in rushing headlong into a cash ISA in April 2013 at current interest rates.

MissyD_2

Firstly love the name! (he's [ML] been my financial husband for sometime!)

Martinslovechild wrote: »

I also like to max out my ISA ASAP but don't have to shop around or transfer every 12 months looking for a rate which is inevitably substantially less than inflation - equivalent to a wealth tax in real-terms.

What do you mean don't have to shop around?

Martinslovechild wrote: »

The Government introduced a "Help-to-Buy" scheme in the recent budget which allows you to buy a house with a 5% deposit. The Government offers a 20% interest-free loan on the property for 5 years, repayable when you sell the property. They'll recover some of their money straightaway when you're charged for the SDLT upfront.

I did look into this when it came out, however as I have plans to buy a second property as an long term investment I didn't want to limit myself with their terms also, if I recall correctly this scheme is only for New Build Properties where the developers are participating, as a rule I don't like new builds.....I'm over 50% to my £20k goal which only took 12-18 months and I bought a £3k car up front cash as I started saving!:D

Martinslovechild wrote: »

Within a S&S ISA, there are literally hundreds of funds/OEICs/ETFs/Unit Trusts and thousands of shares to choose from. There are low-risk funds right up to high-risk funds. Just because you have a S&S ISA doesn't mean that your savings are likely to become instantly high-risk - you control when and how your money is invested.

This maybe some thing to look at later in the future, when I have put away the recommended 3-6 months expenses/income:eek: