Shouldn't everyone who hasn't a clue receive 6 - 9% tax free on their investments ?

agarnett

jimjames wrote: »

Fund managers don't lend out cash ISA money.

Did you take me seriously ?

No of course they don't - I am sure they have much more profitable games in play with it :mad:

bowlhead99

agarnett wrote: »

So, amateurs 9%, me 12%. All at pretty low risk levels

Yes, and fund manager pros - one wonders what have they been doing with all that cash ISA money over the same period - lending it out at 0.45% over base, interest only I suppose :rotfl: ?

agarnett wrote: »

Fund managers don't lend out cash ISA money

Did you take me seriously ?

No of course they don't - I am sure they have much more profitable games in play with it :mad:

It is quite difficult to work out what the heck somebody is banging on about when they make throwaway statements littered with roll-on-floor faces, stick-out-tongue faces and then also rage faces. As someone who posts contrarian views on these boards, you are not so easy to second-guess, so we have no idea whether you are being serious or sarcastic from time to time.

If you put your money in a cash ISA account it is a savings account. The bank can't do much with it because he needs to return it to you intact and free of any investment risk, currency risk, operational risk, counterparty risk etc. On a collective basis he could combine it with other deposits and support some short term lending, but he will need to retain a lot of it for liquidity in case everyone wants their deposit back, and he has to guarantee no losses occur that prevent him paying everyone out.

So however he temporarily invests it less his own business operating costs less a profit margin, is unlikely to produce much more than the "base plus half a percent" even in a competitive account which he is pitching to not lose too much business to rival savings products.

Overnight LIBOR is half a percent and one year LIBOR is about a percent. If the cash ISA manager pays you "base plus 0.45%" on your ISA and offers you instant access, he is losing money hand over fist if he just puts the cash into the money market -so he will in reality use it to temporarily fund his wider banking business, taking the risk on his own shoulders and giving you the cast iron guarantee that you have zero investment risk for yourself.

You are unlikely to beat inflation long term with such accounts, for perfectly valid and understandable reasons. No real need for LOLs or grumpy/ angry faces.

By contrast if you accept investment risk with an S&S ISA manager, you might make annualised investment returns in the high single digit percentages, if you simply leave the balance to grow for multiple decades and don't panic about the temporary rises and falls in value.

Any idiot can achieve this, and perhaps the biggest idiots will achieve the best results- because they will just leave the money growing and growing because they don't know what it is supposed to be doing and whether they should check up on it, or what to do if they check up on it and the value has changed, because they don't know what an ISA is anyway, let alone a collective investment scheme or with-profits endowment fund which they bought by accident.

I am still not sure if you are serious about cash ISA managers and what returns they should be expected to obtain for you. The problem is that, generalizing, the average man on the street does not like investment risk, is not educated about investment, but would probably benefit over his lifetime from being convinced to put some assets into a long term investment program of some kind.

IMHO the solution is probably NOT to rig the market so that Cash ISA managers are forced to pay 6% to everyone who takes zero risk on an instant access savings account. It is more about general education provided by people without vested interests. This is hard to accomplish and implausible to reach some people who are disinterested. So, one way of trying to fix things is to enforce personal tax efficient investment through auto-opt-in workplace contributory pension schemes, as is now happening.

If they extended that program to medium-term investment via S&S ISAs it could be quite powerful for the economy and people's personal wealth. Unfortunately once you start looking at shorter term than a pension, folks have fewer years to ride out investment volatility, and clearly affordability and risk tolerance varies massively from person to person so it is not workable.

This means we end up with two general tiers of wealth - those who invest successfully by (1) either having or creating surplus income, then (2) educating themselves, then (3) being motivated to invest it ; and those who don't do that, and just "save" what they can, if they can. In your OP, you've identified a third group - those who didn't know !!!!!! they were doing, got sold a product they didn't understand, and ended up with the results the rest of us actively aim for, by happy accident.

:cool: :eek: