Cash NISA or Stocks and Shares NISA?

SpencerB_2

I am in the fortunate position of having around £30K to invest this year.

The question which has come to the fore in looking at the various options is which would be the best way to use as the tax free part.

I am not an expert investor, but have some existing stocks and shares ISA's which are doing ok, but it seems that the returns are so low for cash NISA's that they are hardly worth it, but I am not confident enough to deal shares directly and have only ever used my tax free allowance before, so not sure which way to jump.

If I put the additional 15k in a saving account it is going to lose value - I already have an additional current account and don't want to keep opening more!

I could use the NISA as a safe cash option and make some limited gain tax free and invest the remainder and pay tax on any gains, or do the opposite.

Any thoughts would be appreciated.

colsten

SpencerB wrote: »

I am not confident enough to deal shares directly

That shouldn't worry you - even, or especially, confident investors don't often buy individual shares. Look into buying funds. http://monevator.com/category/investing/passive-investing-investing/

SpencerB wrote: »

I could use the NISA as a safe cash option and make some limited gain tax free and invest the remainder and pay tax on any gains, or do the opposite.

It's tax free in a cash ISA but you won't make any gain at the present rates. In fact, you will most likely make a loss as the interest rates don't even cover inflation.

You haven't said for how long you can invest your money but assuming it is 7-10+ years, here's what I would do:

1. put £15K into an investment (S&S) ISA now. Spread the money between no more than 3 funds, or may be just settle for one fund now
2. put/leave the remaining £15K into good interest paying current accounts until next April
3. in April 2015, put the money into the investment ISA and put more money into the funds, or add one or two new funds

atush

If you have enough emergency cash elsewhere for 6 months expenses, i'd look to investing the 30K in isas. 15K now into a S&S in funds, I would not personally choose one fund unless it was a Global fund like Vanguard 100. i'd choose 3-5.

And the other 15K into the higherst interest rate acct you can find, ore premium bonds until you can get next year's allowance invested.

My only other point would be pension. If you dont have one, or have a small one, 15K into a pension would be better as the 15K would become over 18K immediately. And it can be invested in more or less the same way as you invest your S&S isa.