Will existing ISA's become NISA's

jimjames

WarriorPrincess wrote: »

Thanks for your answers everyone. I'm interested by the almost universal condemnation of cash ISAs here 'except in special situaitons'. I've used the cash ISA allowance regularly over the years and have a considerable sum earning 3.7%, and some earning 4.1% - all tax free. As I understand it, that's a rate comfortably ahead of inflation, with no risk at all. By contrast, the endowment mortgage & pension plan I took out many moons ago were serious mistakes and rather put me off 'financial advisors'. I'm happy to stick with what's worked & do more of it, so when there's an opportunity to shelter more savings in a tax-free cash ISA I'm interested even while the rates currently available are low.

If you're able to get between 3.7% and 4.1% for cash in an ISA then that's great.

Which provider will give you those rates on new money?

I think any condemnation is on using a cash ISA at the current rates and fiddling the rules to put more money in not actually using them at all. Re your previous experiences with advisers at least with DIY investments as many here do, the person making the decisions is the one who will benefit from them.

dunstonh

By contrast, the endowment mortgage & pension plan I took out many moons ago were serious mistakes and rather put me off 'financial advisors'.

Why are they mistakes?

The endowment may well have been with hindsight. However, most endowments still outperformed cash. Their biggest problem wasnt the rate of return they achieved but the target growth rate they needed was set too high. Endowment mortgages were frequently bought by people as they were £10-£30pm cheaper than a repayment mortgage. If we take £20pm as an average over 25 years then that saving is £6,000. So, someone with say a £4000 shortfall on their endowment is still £2000 better off by £2000 over the term. Not ideal but usually not as bad as people think. The important thing is not to mix up actual return with target return. A mortgage endowment with a 13% pa target return that made 8% p.a. would have given a shortfall. That return is good but the problem was it was set to need more. Cash may have only done 5%. Rejecting investments because someone used a silly target figure is not a sound reason. It is like chopping off your leg because you grazed your knee.

Even the most basic pension funds used by the majority (balanced managed - now referred to mixed fund equity 40-85%) have outperformed cash if you include the last two major downturns.

I have never met you. Nor have the 20,000 or so advisers out there. So, it would be wrong to make judgements on them. Also, note that the 20,000 that exist today are higher qualified and operate in a highly regulated environment. IFAs account for under 1% of complaints at the FOS and most of those are rejected. Yet they dominate the distribution in many areas. It is a different world from the days when there were over 100,000 insurance agents selling products that they were barely trained on.

Risk is not on/off. You are taking risks. Investment risk is not one risk level either. It is a sliding scale. You are taking risks which are actually potentially greater than having some of the money being subject to investment risk and appear to be basing it on incorrect assumptions (not uncommon assumptions but still incorrect).

kidmugsy

lisyloo wrote: »

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

I suspect you are using "moot" in the American sense. You need a way of writing it so that the rest of us can tell. I suggest MoOt.

kidmugsy

brewerdave wrote: »

I regard myself as moderately intelligent:o......but reading thru some of the threads over the past two months on the pros and cons of different platforms (HL,Charles Stanley,Cavendish etc etc) and their almost incomprehensible charging/rebating structures has made my ears bleed:eek(

Someone new to investing should perhaps consider an Investment Trust ISA with low charges. That would be very simple to use: once they had a bit of experience they might like to consider something else. RIT might be an attractive option for a beginner (p49).
http://www.theaic.co.uk/sites/default/files/statistics/attachment/AICStats28Feb14.pdf

Thrugelmir

jimjames wrote: »

I think another part of the problem is the media - there is always a focus on "the FTSE lost 2% today" and very little of "the FTSE gained 25% in the last year" as it doesn't make such a good headline. The net result is that the average person hears about all the falls and bad news not the positive side.

When the entire market swings by a significant margin in a single day. Then it is newsworthy as there is a cause. A reaction to something.
Maybe nothing. Every so often it is the trigger for a significant fall. Which happens more often than people appreciate,