ISA over £75K limit

colsten

Keep some in cash to help with planned as well as unforeseen requirements, and put some in investments.

eskbanker

dave_hendy wrote: »

My wife is mid 40's so probably has more than 10 years to go. I would not risk a stocks and shares ISa again as we lost money once before when we had to take the money out at the wrong time when we needed it.

Your call of course but it seems odd to dismiss investment as a principle on the basis of having done it wrongly/badly before, i.e. it's never recommended for money that may be required in the short term for exactly the reason you mention, whereas pension planning is an entirely different scenario.

As per colsten's post though, it's not either/or - having some cash is always a good idea, but if she has 'quite a bit' over £75K, much of which won't be needed for 10+ years then prudent investing should certainly be considered for at least some of that....

xylophone

Your wife does not work/has never worked so that there is no occupational pension?

Has she checked her position re new state pension?

pjread

£75k+ in cash as the only provision for retirement almost sounds as risky as punting it all into emerging markets, biotech and small cap if you ask me. I'd be amazed if you're beating inflation with a cash ISA, meaning you're effectively losing money every day.

If either of you are higher rate taxpayers, pension (before they pull HR relief...) sounds a no-brainer, even if you still insist on sticking it in something really conservative. If not, S&S ISA is probably the way to go.

Unless the cash is earmarked for something, do you really need more than 20k as an emergency fund/buffer?

I think the best thing you could do is take some of that cash, pay an IFA to give you some advice, and listen to it. (I'm not an IFA by the way, and nobody paid me to say that )

dave_hendy

My wife is in full time employment but has a lot of jobs for short periods. She has several very small company pensions in firms where she was there 1-3 years. She started a new job last April she has hoped was a bit more long term but they are moving into London which she won't do, so she will be looking for another job again soon.

Because of this she is using her ISA as her main pension and as such we will not take any big risks.

eskbanker

dave_hendy wrote: »

Because of this she is using her ISA as her main pension and as such we will not take any big risks.

Without wishing to labour the point, keeping long-term money in cash ISA form is taking big risks!

It may not be investment risk but it's inflation risk and shortfall risk, see threads like this one for some informative reading....

jimjames

dave_hendy wrote: »

Because of this she is using her ISA as her main pension and as such we will not take any big risks.

A pension in cash growing at 1% per year compared to 5%+ with investments is a huge risk long term. Do you understand compounding and the difference that will make over 20 years?

As an example with £10k, after 20 years you'd have £12k cash or could have over £25k with average investment returns. Obviously neither are guaranteed other than cash you've got your £10k but long term investment returns have beaten cash. Even crashes like 1987 or 2008 recovered within a couple of years.

kidmugsy

When she retires she'll have Personal Allowance (versus income tax) going to waste if she has no taxable income. Get some of that money into pensions. She'll get tax relief on the way in and, if she gets her sums right, she'll have no tax to pay on the way out. And since pensions are long term things, they are a good place to hold her share investments. At the moment the best place for cash investments ("savings" as we call them) is in current accounts and regular savers.

What's the interest rate on this Cash ISA; what are the penalties for removing money early?

System

Move it to the governments Ns&I bank? fully protected

Pincher

If memory serves, it was down to around £30k before the credit crunch, with a bit more protected at a discount. You don't stop saving just because nobody promises to pay you back if the bank folds.


2017 is only a year away. What could happen? You will get £75k back, even if the bank does collapse.