Help to buy ISA & Stocks and Shares ISA

MarkDG

Hi all
I am currently saving for a deposit on a house and have opened a Help to buy ISA, as you may well know you can only put a max of £200 a month in the ISA. I can afford to save at least another £400-£500 a month and have been advised to put it in a stock and shares ISA, my question is if this is a good idea??, I'm not after making loads of profit via stocks and shares I just want another ISA to put the rest of my savings in. If anybody has any good advice or experience of this and would like to pass it on i would be very grateful.
Thanks Mark

Flobberchops

This is a good tactic *if* you want to max out your yearly ISA sub *and* if investing is right for you. For the latter, usual disclaimers apply: the value of your investment may fall as well as rise, investing is not for everybody, think about your risk appetite and get independent financial advice if in doubt.

Alternatives? Well, if you have a partner who you trust with money you could put your extra savings in an ISA in their name (although presumably they'd prefer a HTB ISA too to save up for that deposit more quickly). Or, some current accounts have interest rates that beat ISA rates even after deducting tax - places like Santander if you've got megabucks, or Lloyds/Halifax/TSB if your savings are more like a couple of thousand. Perhaps look into regular savers accounts too if you don't mind tying money up for the short term.

in a nutshell: I wouldn't jump into share dealing just for the sake of "beating" the HTB ISA limit.

Aretnap

If you're saving for the deposit on a flat you presumably want to access the money reasonably quickly. That suggests that investing in stocks and shares might not be your best option, as while they tend to be the best way of making money in the long term, they come with a fairly high risk of losing money in the short term. They should really only be used for money you plan to lock away for long periods - at least 5 years, preferably 10 or more.

I'd suggest that you look at regular saver accounts for the extra money - rates of up to 6% are available, which is better than any cash ISA or "normal" savings account, even after tax (and as of April the first £1000 or £500 of interest you earn will be tax free anyway, even outside an ISA).

colsten

MarkDG wrote: »

my question is if this is a good idea??

Not really, unless you don't plan to buy in the next 5-10 years, which is the typical minimum time scale you should have in mind when investing. It is technically allowed but what would you do if the markets have tanked when you want your money for the deposit?

If you do insist on putting your money into an ISA alongside the HTB ISA, you could - technically speaking - use one of the split ISA providers such as Nationwide. They manage your HTB ISA and a cash ISA as one single ISA, which is allowed under the scheme rules. But this is also not a good idea since the rates you get on both are really bad.

Your best option by a long way is just an HTB ISA, and specifically the one at Halifax. The rest of your money should go into the best available current and Regular Saver accounts.

Sam_J12

It is a gamble to keep cash in a S&S ISA when you are looking to buy in the next few years. It is something I am currently pondering myself. Currently I do have significant amounts of cash invested in my S&S ISA and am looking to buy in the next few years - if there is a significant market dip in the near future I would either have to crystalise my losses or delay buying. In my case I have the security of having well in excess of the minimum deposit already, plus I have a mother in law who has offered to help out with significant amounts of money if needs be. Try to work out the various scenarios to decide if stocks are worth the risk in your case.

MarkDG

Thanks guys, all the info has helped me make my decision. Long term S&S ISA maybe a good idea but I'm looking too buy in the next 2 years max so a regular savers account is prob the best option.