Are cash ISAs worth it for 2014/2015 tax year?

jabbahut40

Hi,

In recognition that cash ISA interest rates remain pitifully low and unlikely to raise significantly in the next tax year are people still bothering with saving in cash ISAs? Rather than split 50/50 with a cash ISA and S&S ISA next tax year I was thinking on going all S&S ISA to see whether I can achieve better growth in my money. I already have five years of cash ISAs saved so have sufficient 'rainy day' savings.
Any thoughts on the above and what are you doing?

Thanks,

Jabba

jimjames

No, they are not worth it in my view.

I'm 100% S&S ISA and have been for a number of years. Minimal cash savings are in Flexdirect and mortgage overpayments.

If you already have sufficient rainy day funds then I can't see why you'd want to put more into cash at the moment.

Totton

They'll be worth it only when the next crash comes and folk are sitting on 40% losses. The serious point though is that Stocks & Shares ISA's are more likely to give you a much higher return but at significantly higher risk, if you are happy to take the risk then go for a Stocks & Shares ISA. The big problem for a Cash ISA is inflation. As an aside, I think last year saw us make about 3% on Cash and 26% on the S&S ISA's but with greater volatility.

innovate

One deciding factor could well be your age. It strikes me that a lot of the proponents of S&S ISAs on this board are people with a 20-30 year investment horizon but that some of the people asking for suggestions might well work to a lot shorter timescale where cash could be a better option for the investor.

DragonQ

My savings will be my house deposit. Not risking that on a stocks and shares ISA.

My money will be staying in Lloyds 3% for now.

ChopperST

Totton wrote: »

They'll be worth it only when the next crash comes and folk are sitting on 40% losses.

When will that be? This year, next year? 10 years?

A generic sweeping statement such as this is hardly useful advice.

As others have said investments will almost always beat cash over a 20 year timescale including stock market crashes, the great depression and world wars.

They would be "worth it" for the OP depending on their timescale and risk attitude...

OP - what are the funds for, do you have a purpose for them and what timescale are you happy to leave them for?

talexuser

Totton wrote: »

They'll be worth it only when the next crash comes and folk are sitting on 40% losses.

Dead right.

I'm not bothering at these rates because have enough cash set aside and can weather a stock market crash and wait for a recovery. In fact I've just transferred all previous cash ISAs over to the platform for re-investment since the reasonable bonus rates have all run out.

If you are in the same situation I see no point in a cash ISA until the rates are better than elsewhere (eg the various current accounts on offer) and at minimum with inflation.

If you are not in the same situation then that is an entirely different case and you have to think carefully about the risks of market volatility.

crumpetman

I am jumping into this thread with a question about S&S ISAs as I too have a number of years worth in a cash ISA and am not looking forward to the prospect of at best 3% locked in for 5 years.

But I have no idea where to start with a S&S ISA. I am a basic rate taxpayer and that is not likely to change. I can put in this years allowance (£5k ish) before the end of March and then probably the full allowance for 2014/2015. Possibly even transfer over my cash ISA as I do not need access to the money for at least 5 years.

So the question is what is the best S&S ISA for me?

droopsnoot

The key isn't "which ISA?" but "what investment wrapped in my ISA?" - think of the S&S ISA as a way of buying investments without having to pay the tax, not as a specific account like a Cash ISA where you might pick one over another for its interest rate. There are things to choose from to decide which ISA provider to use (management charges, range of investments available, probably more) but the investments you make inside the ISA are more important.

Quite a big thing, so probably best to open a new thread for it if you haven't already done, as it's quite a different question.

Archi_Bald

crumpetman, you need to learn about investments. Good thread about reading materials: https://forums.moneysavingexpert.com/discussion/4752194

Nick_C

I transferred my maturing cash ISAs into a S&S ISA between June and August last year. My £23220 is currently worth £27540, and giving me a net income of £1300 pa (5.5% net on the money invested).

I shan't be bothering with cash ISAs again unless things change dramatically. My cash is split between Santander's 123 current account (3% gross) and an old Yorkshire BS regular savings account (3.75% gross)