"Temporary" S&S ISA for 13/14 and 14/15 50% allowance

intalex

I've been a cash-only ISA saver until now with the max 50% of the annual allowance invested over the last couple of years, but have never really had an interest in S&S ISAs or had a chance to understand how they work.

Given yesterday's news, I would like to invest my remaining 50% in a temporary S&S ISA, for both 13/14 (by 5th April) and 14/15 (after 6th April), so I can convert both of these on 1st July into whatever cash ISA I open for 14/15, along with the balance to max out the full 15k.

Anyone have suggestions for a low risk S&S ISA option which I could make use of to achieve this? Not bothered if the returns are tiny, as long as my principal investment is not eroded.

Thanks in advance!

innovate

Putting anything of the 2014-15 ISA allowance into S&S with the sole intention of transferring it to a cash ISA makes no sense at all since you gain nothing and potentially lose a lot by doing so. You got some 8 months to use up all of your 2014-15 allowance, straight into a cash ISA if that's where you want to put your money,

Actually investing any remaining 2013-14 allowance for just a few months would without doubt be a massively high risk. The fees will be steep, and the performance of the chosen investment might be negative rather than positive. Investments need a 7-10 year, not a 3-4 months horizon.

Even if you kept the extra 2013-14 money in cash in an S&S ISA, a temporary S&S ISA might make little sense. Most, if not all, S&S ISAs have charges attached, and there might also be exit charges.

Before you do anything, you should thoroughly inform yourself about how S&S ISAs work, what it costs to have one of them, and what it costs to get your money out of them.

bob_100

OP this is exactly what i am looking to do. Open a S&S ISA to fill up this years allowance and then move it in July to NISA.

However i am completely new to S&S ISA and i am not sure of what fees to look out for as all i want to do is store the cash and not invest in the markets

innovate

As I have tried to get over before, not investing your cash will not make you immune to charges, ranging from account fees to exit charges.

Ongoing charges, such as account opening and/or quarterly charges, are relatively easy to find. E.g. there is a summary of the cheapest discount brokers on monevator.com. http://monevator.com/compare-uk-cheapest-online-brokers/

Finding out about exit charges is a bit more difficult. You need to dive into the websites of the providers. You also need to be aware that some providers are still in the process of implementing major changes to their charges structure. For example. Hargreaves Lansdown do currently not have any exit charge for cash, but as if by magic, they will charge you for moving cash out come June.

Shark

I know with Hargreaves Lansdown you can open an S&S ISA and deposit cash into it, you are then free to buy stocks or funds. You can also just leave it in there as cash, then come July when ISAs change you can transfer it to your new provider.

There will be some costs, like £2 a month fee and perhaps a small fee for transferring to new provider, but small costs to pay.

intalex

Thanks all, anyone know if any of the high street banks have S&S ISA options with minimal maintenance/exit fees?

For me, I guess something like £20 in fees through to 1st July is worth getting 50% of the 13/14 allowance into an ISA wrapper.

As suggested by innovate, I can hold off depositing the 14/15 allowance until 1st July.

I_have_spoken

If there's demand, it's possible providers will create ISA vehicles for this purpose which satisfy the criteria for S&S ISA but downside risk is hedged.

intalex

I_have_spoken wrote: »

If there's demand, it's possible providers will create ISA vehicles for this purpose which satisfy the criteria for S&S ISA but downside risk is hedged.

I guess we have 2 weeks to find out if anything new comes up along these lines, but I thought it might be worth drawing up a few avenues from the current available options just in case nothing happens.

I'll obviously do some research and calling around over the next 2 weeks, but if we have any experienced S&S ISA savers with detailed knowledge of maintenance/exit fees (e.g. Shark), it would be good to know these and make comparisons.

bob_100

intalex wrote: »

I guess we have 2 weeks to find out if anything new comes up along these lines, but I thought it might be worth drawing up a few avenues from the current available options just in case nothing happens.

I'll obviously do some research and calling around over the next 2 weeks, but if we have any experienced S&S ISA savers with detailed knowledge of maintenance/exit fees (e.g. Shark), it would be good to know these and make comparisons.

Guess i'll bookmark this thread. Hopefully there is a low cost way of doing this

innovate

Shark wrote: »

I know with Hargreaves Lansdown you can open an S&S ISA and deposit cash into it, you are then free to buy stocks or funds. You can also just leave it in there as cash, then come July when ISAs change you can transfer it to your new provider.

There will be some costs, like £2 a month fee and perhaps a small fee for transferring to new provider, but small costs to pay.

HL will charge you £25 to take any cash out in July.

HL will charge you a further £25 for closing down the S&S ISA.

So you will be at least £25 down before you have even started.

I am not sure what the £2 a month fee would be.

innovate

I_have_spoken wrote: »

If there's demand, it's possible providers will create ISA vehicles for this purpose which satisfy the criteria for S&S ISA but downside risk is hedged.

You can bet your bottom dollar that no S&S ISA provider will create some special scheme so that people can park their cash with them for a few months.

Much more likely that the few fixed term cash ISA providers that exist will allow a further deposit in July. Lloyds, TSB and KRBS fixed term ISAs already allow this though their interest rates aren't of the more exciting type, if there is such a thing as an exciting cash ISA interest rate.

I am not sure why people are all rushing into fixed rate ISAs in April for their new money, anyway. Right now, every basic rate tax payer gets a lot more interest in current accounts, and interest rates are most likely to be no lower in April 2015 than they are now. So why not park your money in a current account instead of trying some unnatural acts with an investment tool that many people freely admit they know nothing about? You can use your 2014-15 allowance until midnight on April 5 2015.