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MSE News Comment - Martin Lewis: Will you really gain from the new NISAs?

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  • badger09
    badger09 Posts: 11,324 Forumite
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    deed02392 wrote: »
    But for those interested in getting a worthwhile rate on a shorter term, I've not yet found a more reliable and easy method than P2P lending. S&S rates but fees only if you get a return.

    I suspect you were not invested in P2P in 2008 and early 2009 ;)
  • deed02392
    deed02392 Posts: 76 Forumite
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    Archi_Bald wrote: »
    Nothing much to read about this yet since it isn't yet in consultation stage and won't be implemented for a long time. The budget report has made no provision for it before 2017.

    Yeah later went on to read that, that's a disappointing timescale.

    Archi_Bald wrote: »
    for most people it will be easier to just use multiple current accounts for short term savings. Until very recently, you could stick some £90K into such accounts, more than enough for most people saving up for a mortgage. No risk of defaults, instant access to money, and decent interest, if perhaps marginally less than what can nowadays be achieved in P2P after all costs.

    Hmm the best in credit rates on current accounts only apply on fairly low balance caps, Santander 123 being the exception but 3% after tax minus the £2 fee AND given I don't have any bills to warrant the cash-back because I'm not a home-owner makes the interest under 2.4% and only on the first £20k. I would love it if they were a competitive option but I'm referring to 'Best Bank Accounts' on this site for the above. The liquidity is appealing vs. P2P lending although I've found that not to be too bad either if you take the time to win the best rates at bidding.
    Archi_Bald wrote: »
    what are S&S rates?
    Stocks & shares.
  • Likestowrite
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    Does this new scheme mean I'd be better moving my premium bonds into an ISA?
  • Archi_Bald
    Archi_Bald Posts: 9,681 Forumite
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    It has probably always been a better idea to have your money in an ISA rather than in PBs. But if you want a gamble with some spare cash, PBs are probably a better idea than the lottery.
  • p00hsticks
    p00hsticks Posts: 13,169 Forumite
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    Archi_Bald wrote: »
    It has probably always been a better idea to have your money in an ISA rather than in PBs. But if you want a gamble with some spare cash, PBs are probably a better idea than the lottery.

    No, I think statistics show that, if you do want to gamble in this way, the best method is to put your capital into an ISA (assuming it will generate more interest tax free than an ordinary taxed savings account) and then withdraw the interest at regular intervals and spend it on lottery tickets.

    This way, your capital is gradually eroded by inflation over time in the same way as with premium bonds, but the lottery tickets apparently offer a better return on average than the chances of winning on the bonds.
  • zagfles
    zagfles Posts: 20,502 Forumite
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    p00hsticks wrote: »
    No, I think statistics show that, if you do want to gamble in this way, the best method is to put your capital into an ISA (assuming it will generate more interest tax free than an ordinary taxed savings account) and then withdraw the interest at regular intervals and spend it on lottery tickets.

    This way, your capital is gradually eroded by inflation over time in the same way as with premium bonds, but the lottery tickets apparently offer a better return on average than the chances of winning on the bonds.
    The current PB "interest rate" (ie prize fund) is 1.3%. The lottery pays back about 50% stakes in prizes, so if the ISA pays over 2.6% you're right.

    The big difference is in the chances of winning a big prize - the lottery payouts are skewed towards the big prizes whereas PB payouts are skewed towards smaller prizes. So you're chances of becoming a millionaire are higher with the lottery but the median return is lower.
  • Cashsaver1983
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    deed02392 wrote: »
    Yeah later went on to read that, that's a disappointing timescale.




    Hmm the best in credit rates on current accounts only apply on fairly low balance caps, Santander 123 being the exception but 3% after tax minus the £2 fee AND given I don't have any bills to warrant the cash-back because I'm not a home-owner makes the interest under 2.4% and only on the first £20k. I would love it if they were a competitive option but I'm referring to 'Best Bank Accounts' on this site for the above. The liquidity is appealing vs. P2P lending although I've found that not to be too bad either if you take the time to win the best rates at bidding.


    Stocks & shares.

    You don't have to be a homeowner to get cashback as long as your a bill payer of council tax, water, gas and electricity, contract mobile phone, sky/virgin etc, broadband, home phone. You can be a renter and get cash back. For example a combined gas and electricity bill of £100 would generate £2 a month in cashback so straight away you have paid for the fee for the account - any further cashback is a bonus and the 2.4% interest received (3% net of basic rate tax) would be completely yours and not needed to pay the £2 fee. A mobile phone bill of £66.67 would also repay the fee alone (myself and my partner have average mobile phone bills and pay £70pm) but remember you need 2 direct debits on the account to qualify.
  • tigerm25
    tigerm25 Posts: 25 Forumite
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    Will my current ISA that I opened in December 2013 automatically change to a NISA on July 1st? Or do I need to open a new ISA today to get the benefits of a NISA on July 1st?
  • Herbalus
    Herbalus Posts: 2,634 Forumite
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    edited 10 April 2014 at 9:18AM
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    tigerm25 wrote: »
    Will my current ISA that I opened in December 2013 automatically change to a NISA on July 1st?
    [STRIKE]No. It will stay the same product[/STRIKE]. Actually I think yes, it will become a new ISA, but obviously if it's a fixed term product or doesn't allow extra deposits then you won't be able to add money to it.
    tigerm25 wrote: »
    Or do I need to open a new ISA today to get the benefits of a NISA on July 1st?

    Depends what your ISA is. If you want to put £15,000 in it and your current ISA will allow you to do so, you don't need a new one.
  • innovate
    innovate Posts: 16,217 Forumite
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    The rules will apply to all existing ISAs. I.e. You will be able to transfer from S&S to cash ISAs, and you will be able to chose how much of the allowance you put into cash and how much into S&S. In addition, the total allowance for 2014-15 will be £15,000 from July 1.

    If your existing ISA still allows deposits, you can just continue as usual, and deposit up to new allowance after July 1.

    Why did you think you needed to open a new ISA today?
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