Is it worth getting an ISA

brin_2

Hi all,

I have 2 savings accounts which are still paying 2.8% and 3% respectively, both have around 5-6K in them, all i ever hear is "always have a cash isa" which in the main i agree with but with rates like the above until sep 2013 would i gain anything ?

Thanks in advance for the advice

psychic_teabag

It depends on your tax situation - if you're a non-taxpayer (and will be for the forseeable future), ISA may be irrelevant. If you're a higher-rate taxpayer, you're only getting 1.8% after tax, and an ISA can probably beat it.

I also still have a couple of instant-access accounts at 2.8% and above, but their bonuses will be ending soon. It's true that at the moment, ISA rates are bad, but so are non-ISA accounts. At the time you opened those savings accounts, ISA rates would have been comparable.

At the moment, current accounts seem to be the new high-interest savings accounts. There are several paying 3%, and one paying 5% (on smaller balances). Right now, you may as well put the money whereever it gets the highest net rate. Reconsider in March, just before the annual allowance is renewed, whether to move the money into an ISA for the longer term tax benefits.

p00hsticks

brin wrote: »

Hi all,

I have 2 savings accounts which are still paying 2.8% and 3% respectively,

Are those rates you quote gross (i.e. before tax is deducted) or net (after tax is deducted) ? Chances are they're gross, so if you are a basic rate tax payer then you should be viewing the rates as 20% less - i.e. as 2.24% and 2.4% respectively. If you can find an ISA paying more than this then you'd be better off moving.

brin_2

Thanks for replys...i'm standard rate tax payer so advantages of moving are negligable until the bonus finishes

Thanks again

bigfreddiel

brin wrote: »

Thanks for replys...i'm standard rate tax payer so advantages of moving are negligable until the bonus finishes

Thanks again

at first an isa seems to be waste of time and effort, but 10yrs on you could have £100k+ sheltered from tax - still think its not worthwhile?

and when you become a pensioner it will be advantageous not having to declare the income from your isa portfolio - yes i know its a long time ahead but its all down to planning - the time will just go like that

cheers

fj

MoneySaverLog

bigfreddiel wrote: »

when you become a pensioner it will be advantageous not having to declare the income from your isa portfolio

Good point, did not think of that :T

noh

bigfreddiel wrote: »

at first an isa seems to be waste of time and effort, but 10yrs on you could have £100k+ sheltered from tax - still think its not worthwhile?

and when you become a pensioner it will be advantageous not having to declare the income from your isa portfolio - yes i know its a long time ahead but its all down to planning - the time will just go like that

cheers

fj

Not just when you become a pensioner.
My ISA income would push me into 40% tax if it was not sheltered.

atush

So the OP can move into an ISa in sept perhaps?

What is this money for? after a cash emergency buffer, if it is for 5-10 years or more, you might be better off investing it. So could look at S&S isas instead for part?

brin_2

Hi

Money is just savings me and my wife have and not for anything inparticular, we already have 1 isa with a larger amount in paying 2.5%. i have not used this years allowance yet for either of us yet.

Thanks for every ones point of view