Will existing ISA's become NISA's

WarriorPrincess

I'm really risk averse, so I've always saved the cash element of the ISA, not the shares part. If I put savings into a Shares ISA to use up that allocation as well this year, will I be able to convert the Shares ISA money into Cash NISA savings once ISAs become NISAs?

Or have I misunderstood this totally?!

Archi_Bald

WarriorPrincess wrote: »

If I put savings into a Shares ISA to use up that allocation as well this year, will I be able to convert the Shares ISA money into Cash NISA savings once ISAs become NISAs?

Yes, you will be able to transfer S&S ISAs into cash ISAs come April 6. But there might/will be costs involved, so you should do your homework before you commit to anything.

S&S ISAs are very different to cash ISAs. Many, if not all, come with charges, not only to have the accounts, but also to move money out of them, and/or to close them.

Bottom line is: you have an S&S ISA because you want to invest for the long term, 5 -10 years minimum. You don't have an S&S ISA to try and outsmart HMRC for the sake of a few pounds.

jimjames

Several threads already on this but yes you can.

However if you are risk averse why would you consider using a S&S ISA for a matter of months when it could drop 30% or more in that time. If you are prepared for the risk with a S&S ISA then why not take one out on it's own merits?

You can get far better rates outside an ISA anyway so trying to manipulate the rules to stash the maximum seems pointless to me anyway although others also have a similar idea.

Archi_Bald wrote: »

Bottom line is: you have an S&S ISA because you want to invest for the long term, 5 -10 years minimum. You don't have an S&S ISA to try and outsmart HMRC for the sake of a few pounds.

I do wonder sometimes - just because something is technically possible doesn't mean that it is a sensible option to do. I have to admit I just don't "get" cash ISAs when I can get so much better return outside. Maybe historic money may be worth keeping in but trying to bend rules to cram every last penny for a lower return doesn't make sense to me especially when you can fill them with £45,000 over the next 3 years anyway!

Archi_Bald

jimjames wrote: »

I do wonder sometimes - just because something is technically possible doesn't mean that it is a sensible option to do. I have to admit I just don't "get" cash ISAs when I can get so much better return outside. Maybe historic money may be worth keeping in but trying to bend rules to cram every last penny for a lower return doesn't make sense to me especially when you can fill them with £45,000 over the next 3 years anyway!

You and me both. There seems to be some sort of religion-like belief that filling your annual cash ISA allowance at all costs is a good thing, and worth busting a gut. This is fuelled by sites like MSE and Which? who oversimplify ISAs down to the lowest common denominator, i.e. cash.

The masses seem to be drawn to two main kinds of websites when it comes to S&S ISAs - those shying away from discussing them in a meaningful manner (MSE, Which? etc) and those offering packaged S&S ISAs (Virgin, Police Mutual etc). It will probably take decades before Joe Public will be literate about investments.

Jonbvn

Archi_Bald wrote: »

You and me both. There seems to be some sort of religion-like belief that filling your annual cash ISA allowance at all costs is a good thing, and worth busting a gut. This is fuelled by sites like MSE and Which? who oversimplify ISAs down to the lowest common denominator, i.e. cash.

The masses seem to be drawn to two main kinds of websites when it comes to S&S ISAs - those shying away from discussing them in a meaningful manner (MSE, Which? etc) and those offering packaged S&S ISAs (Virgin, Police Mutual etc). It will probably take decades before Joe Public will be literate about investments.

Excellent post. I really do not see the point of cash ISA's TBH, when I can more net interest via accounts like Vantage & Santander 123 etc.

Most people seem to forget the with most interest rates below inflation means that in the longer term, cash savings are not without rsik.

lisyloo

when I can more net interest via accounts like Vantage & Santander 123 etc.

Some people pay higher rates of income tax.

Most people seem to forget the with most interest rates below inflation means that in the longer term, cash savings are not without rsik.

Agreed but that doesn't mean that S&S is suitable for everyone.
My in laws are in their late 80's and have a small 5 figure sum in savings.
I won't suggest they invest, firstly because they don't have long enough, but also they might want the money to spend on trips, furniture or anything that might make their life a bit better.

I personally have a mortgage that's coming to the end of the term in less than 5 years. I won't invest that money because I don't want to take capital loss.
I agree it might depreciate in real terms, but it's purpose it to pay off a nominal mortgage so capital loss is a bigger risk for me.

I do agree with your point though :-)

Thrugelmir

May take time for some organisations to put the structure into place to offer NISA's. Some may just offer cash options for the entirety and vica versa.

Jonbvn

lisyloo wrote: »

Agreed but that doesn't mean that S&S is suitable for everyone.
My in laws are in their late 80's and have a small 5 figure sum in savings.
I won't suggest they invest, firstly because they don't have long enough, but also they might want the money to spend on trips, furniture or anything that might make their life a bit better.

The exception that proves the rule;)

Obviously there are always exceptions, depending on individual circumstances. However, it does seem that cash ISA's are promoted as a global panacea, when they clearly are not.

lisyloo

The exception that proves the rule

I don't think it's that exceptional though.
There are lots of elderly people within the last 5 years of their life (who knows?)
There are also lots of younger people saving for a deposit for a house.
These are common scenarios not exceptions.

I agree with your point that cash ISAs are not a panacea.
But neither are investments as there are very large groups of people (2 already mentioned) whose aims ar not met by taking the risk of capital loss.

For a lot of the elderly group the chances are that the income tax point in moot anyway :-)

System

WarriorPrincess wrote: »

I'm really risk averse, so I've always saved the cash element of the ISA, not the shares part. If I put savings into a Shares ISA to use up that allocation as well this year, will I be able to convert the Shares ISA money into Cash NISA savings once ISAs become NISAs?

Or have I misunderstood this totally?!

I don't see any reason why you couldn't open a S&S ISA and leave the money uninvested and then transfer across to a cash ISA in July if that is what you wanted to do. Of course you will be getting zero interest for a few months!!

lisyloo

Of course you will be getting zero interest for a few months!!

What's the point in doing that then?
May as well leave the money in a current account and get some interest, then move it in July.