Ignore Cash Isas

innovate

Martinslovechild wrote: »

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.

seems you are quite deliberately missing the point

Martinslovechild wrote: »

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".

Ah right, you are beginning to acknowledge that there is an investor, and the investor has to make decisions about the risks they are taking. But you are still giving absolutely zero indication as to how an investor would identify a "very low risk fund". And, crucially, you have as yet not acknowledged that there might be negative returns, and that the risk of negative returns is statistically higher with shorter investment periods

Martinslovechild wrote: »

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.

I only picked up on your thread because you made a sweeping statement, with absolutely zero qualification:

Martinslovechild wrote: »

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

I maintain that such a sweeping statement is irresponsible, particularly from a longstanding MSEer.

Worth remembering, it is Money Saving Expert, not Money Investing Expert. Nobody should rely on MSE for investing information, they should always consult other sites and media for this subject.

MissyD_2

apt wrote: »

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.

ISA rates for 2013 tax year are not and are unlikely to be available until 6th April when new tax year begins..... Furthermore, I would rather have the 2% tax free first and foremost, before I start paying tax @ 20% on any interest I earn, most ISA rates (even when they were better in the past) always dropped after the 1st 12 months or so/bonus intro rate stops being paid, so most likely s switch after 12+ months is required to ensure your not earning as little as 0.01% tax free interest!

innovate

apt wrote: »

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.

Point taken, there is one current account, and a couple of Regular Savings accounts that pay (net) more than an ISA.
But, for tax payers, there is nothing out there that pays more than the best-paying ISA above £2.5K on lump sums, and £3.6K for Regular Savers (which, of course, have limits on the monthly contributions).
Anyone saving for a house deposit will need a heck of a lot more than £2.5K/£3.6K, and they might already have a substantial amount in cash ISAs. For them, a cash ISA [with 'decent' interest rate] is still the best way to save up, by a long way.

Martinslovechild

MissyD wrote: »

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

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

Thanks . All I mean is that the annual process which people who have Cash ISAs tend to go through involves finding a provider offering a decent interest rate and transfer their existing ISA balance across to them - as many Cash ISA rates drop to a much lower level after 12 months, people tend to "shop around" for a new provider who offers a higher rate.

With a S&S ISA, there's no need to shop around as you're not chasing an interest rate. Your money is invested with fund providers or in individual stocks or ETFs. The only reason for transferring would be if another provider's ISA product is less expensive (e.g. refunds fees, loyalty bonus, no quarterly admin charge etc).

MissyD wrote: »

I did look into this when it came out, however as I have plans to buy a second property as a 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

Excellent. The finer details of this scheme haven't yet been announced so it might be worth keeping an eye on.

Martinslovechild

innovate wrote: »

Worth remembering, it is Money Saving Expert, not Money Investing Expert. Nobody should rely on MSE for investing information, they should always consult other sites and media for this subject.

Maybe S&S ISAs should be ignored completely on MSE. Let's pretend that they don't exist and that way everybody can go on losing money in real-terms in Cash ISAs.

There's nothing "money saving" about a Cash ISA which has an interest rate which is less than inflation. That's equivalent to losing money in real-terms. You give me £1 today and I'll give you 98p worth of spending power in 12 months' time - or 95p in 2 years' time. Where's the money saving in that?

The_Enforcer

I've drafted a savings plan for 13/14 for our household, which in many ways is short-term damage limitation with respect to inflation, but still counts as a form of money saving in my book. All %'s are net:

1. x2 First Direct Regular Savers £300/month each - 6.4% converting into 4.8%
2. x2 Nationwide Flexdirect Current Accounts £2,500 each - 4%
3. x1 Nottingham BS Starter Regular Saver ISA Issue 3 £480/month - 4% *not yet released
4. x1 Santander Direct ISA Saver Issue 1 'for old money' - 2.5%
5. x1 Santander 123 Current Account £3k+ - 2.4%

This is all about chasing the highest net rates, of which ISAs form only part. The arguments about retaining the tax-free status of ISA funds year on year are understood. However, in our situation the savings are not so large (slow accruement vs continual depletion) that it wouldn't take long to move the bulk of these funds back into tax free accounts, should those yield the best net returns in the future.

The old ISA money prior to 12/13 would predominantly fund the current accounts, with 12/13 money helping to drip feed the regular savers. Taking money out of that ISA doesn't lower the interest rate below 2.5% and keeping the '123' above £3k retains its 2.4%.

I Hope this particular approach makes sense.

MissyD_2

The_Enforcer wrote: »

I've drafted a savings plan for 13/14 for our household, which in many ways is short-term damage limitation with respect to inflation, but still counts as a form of money saving in my book. All %'s are net:
1. x2 First Direct Regular Savers £300/month each - 6.4% converting into 4.8%
2. x2 Nationwide Flexdirect Current Accounts £2,500 each - 4%
3. x1 Nottingham BS Starter Regular Saver ISA Issue 3 £480/month - 4% *not yet released
4. x1 Santander Direct ISA Saver Issue 1 'for old money' - 2.5%
5. x1 Santander 123 Current Account £3k+ - 2.4%

Hey, nice to see someone else is as methodical & forward planning as far as ahead as me too!

I did have a query though, if you don't mind.
I just wondered how much you knew about the Nottingham BS Starter Regular Saver ISA Issue 3 @ 4% *not yet released?
I know their website doesn't show any details about it but it also seems from their site that one can only open an account in branch......which is 240+ mile round trip for me.....me thinks the interest - fuel cost = not worth it!:mad:

The_Enforcer

I know about it as I have been in touch with Nottingham BS by email and they told me that a new issue at 4% was planned for 13/14. I went into a branch to open mine last year as I happened to be in that part of the country during April, but others were successful in getting one opened by post. Online operation not possible, but you can make payments by standing order and therefore it is possible to vary the amounts. They also let you top up to the full amount at the end of the tax year, if you've only been making smaller payments up to that point. There are some more details in this thread: https://forums.moneysavingexpert.com/discussion/3893373

MissyD_2

Hmmmm ok, thanks.
Note: This account is also in results on moneysupermarket.com http://www.moneysupermarket.com/savings/details/693/?enquiryId=6176903&lumpsum=2200&rowPosition=4
I sent them an email earlier asking if I could do it by post/phone, I'll have to see what they reply with, hopefully before 6th April!
Standing order is my plan I already have some of funds below for this year's allowance.....my fingers, toes & all else is crossed they will allow me to do this without visiting one of their 120+ miles away branch!

finally that link doesn't seem to work:mad:

The_Enforcer wrote: »

I know about it as I have been in touch with Nottingham BS by email and they told me that a new issue at 4% was planned for 13/14. I went into a branch to open mine last year as I happened to be in that part of the country during April, but others were successful in getting one opened by post. Online operation not possible, but you can make payments by standing order and therefore it is possible to vary the amounts. They also let you top up to the full amount at the end of the tax year, if you've only been making smaller payments up to that point. There are some more details in this thread: http://forums.moneysavingexpert.com/...ght=nottingham

The_Enforcer

MissyD wrote: »

finally that link doesn't seem to work:mad:

Fixed the link to that old thread!

I don't have enough funds to be able to subscribe to the N&P account as well, but it's a useful online regular saving option at 3.2% net, as recommended by MSE: http://www.moneysavingexpert.com/savings/best-regular-savings-accounts#top.