ISA - Mini and Maxi?

Wild_Rover_4

Hi guys,

I'm a newbie here and as my name might suggest have recently returned from the wild and woolly world of self inflicted debt and recently set up a mini cash ISA with the ns&i.

I've also heard of Maxi ISAs which I understand are somehow linked to shares but being a total novice to this game this is where my understanding ends.

Does anyone out there know if these things exist (or have I have just imagined them), how much you can save in them and if I can have one alongside my mini cash ISA.

Many thanks in advance for any help that you can offer,



Wild Rover

jem16

A Maxi ISA allows you to invest £7000 in stocks and shares. A Mini ISA has two parts, one cash and one stocks and shares. The cash part is £3000 and the stocks and shares part is £4000. If you already have a mini cash ISA then you cannot have a Maxi ISA. However you can use the other part of your mini allowance and also have £4000 in stocks and shares.

After April 2008, the Mini and Maxi labels disappear and you will have an allowance of £7200 with up to £3600 being allowed in cash.

Wild_Rover_4

Thanks Jem - your help is appreciated!

Wild_Rover_4

jem16 wrote: »

After April 2008, the Mini and Maxi labels disappear and you will have an allowance of £7200 with up to £3600 being allowed in cash.

Me again - sorry!

Do you know how this will work? Would you specify whether or not you want your saving to go into the stocks/shares portion of your ISA or is it all effectively just lumped in together and if not (and this will probably sound a very silly question) but is the money that is in stocks/shares be at risk of going down as well as up

jem16

I should think it will work pretty much as it does just now except that your cash ISA will now be able to take £3600 instead of £3000. Instead of having Mini & Maxi ISA you will just have S&S ISA or Cash ISA.

As to the S&S ISA. Yes your investment can go down as well as up.

Wild_Rover_4

jem16 wrote: »

I should think it will work pretty much as it does just now except that your cash ISA will now be able to take £3600 instead of £3000. Instead of having Mini & Maxi ISA you will just have S&S ISA or Cash ISA.

As to the S&S ISA. Yes your investment can go down as well as up.

Great - thanks again Jem for a very clear and succint answer!

Wild_Rover_4

Sorry to bring this one top the top of the pile again but I have another question.

I've made enquiries as to whether I can transfer the funds that I have saved in my (NS&I) mini cash ISA into a Direct ISA (being an idiot I didn't investigate all my options beforehand!) and have been told that I can't do this as my mini cash ISA was opened after April 2006.

I've been advised that the best thing to do would be to wait until April 2008 and apply for a Direct ISA then perhaps using some of the funds (which I hope will equate to £3,000) to do so. I'm wondering if there is a formula which will help me work out the most cost effective way of doing this i.e. if I transfer the whole £3,000 that'll earn me the Direct ISA rate straight of the bat but I'll immediately loose the potential mini cash interest and will only be able to invest a further £600 where as if I drip feed the Direct ISA (after making an initial deposit of £1,000) I won't be earning the Direct ISA interest on the full amount until about six months into the tax year (when I'd hope) to have the Direct ISA fillled up but by this point will have £6,600 earning interest.

Can someone please help this confused newbie or shout if I've made things less clear than an unclear thing!

jem16

So are you planning on putting £3600 into the direct ISA as well as leaving £3k in the other ISA?

If so this will be better in the long run than taking out the £3k from the original ISA and putting it into a direct ISA.

In one you have £6600 earning tax-free interest. In the other you only have £3600.

Wild_Rover_4

This was my plan Jem as I would like to in the long run be earning tax free interest on as much of my money as possible - it just struck me that as the Direct ISA pays a higher rate of interest there might be an "optimum" amount that I could take out to start the Direct ISA with but thinking about I'm probably over complicating things for myself...which is never a good idea.

I think that I'll start the Direct ISA of with fresh cash and though I might loose out on some Direct ISA interest initially as you say in the long run I'll be earning interest on £6,600 rather than just £3,600.

Thanks for helping me clarify my thinking...not a task that is easily accomplished I assure you!