Which savings should I transfer into my cash ISA?

pinklady21

These are in my sole name - other half also has his own savings.
(I try to keep quiet each month when the Premium Bond prizes are announced, so far, my £50k seems to have come out "luckier" than his!)

O/H is a BR taxpayer though. Is your thinking that possibly I should consider transferring some of the savings to him instead?

Matthew2018

eskbanker wrote: »

While the headline of that page does indeed say that, it's actually quite deceptive - the page showing the full odds illustrates that with a £50K holding over a year, 87% should win at least £500 and 24.7% should win at least £750, from which they conclude that average luck should deliver £500, but only because they don't show the probabilities of winning at least £525, £550, etc!

The median (50% probability) will clearly be somewhere in between those rounded £500 and £750 points, probably round about the £600 mark (i.e. a 1.2% return), but fundamentally it is all about luck so as ever none of these figures are guaranteed....

There are lies damn lies and statistics. It clearly states on the site the following:

"With £50,000 in Premium Bonds, if you have average luck1
you would expect to win roughly £500 over 1 year"

That is clearly an average or mean to me. That's what I took. However you are probably correct this was meant to be the median value (middle value) since the site talks about median values the rest of the time.

Perhaps we could ask for more clarity on the site.

eskbanker

Matthew2018 wrote: »

There are lies damn lies and statistics. It clearly states on the site the following:

"With £50,000 in Premium Bonds, if you have average luck1
you would expect to win roughly £500 over 1 year"

That is clearly an average or mean to me. That's what I took. However you are probably correct this was meant to be the median value (middle value) since the site talks about median values the rest of the time.

Perhaps we could ask for more clarity on the site.

As per my earlier post, I agree that's what it says, and they do already clarify (in the footnote numbered 1) that they're referring to the median rather than the mean, as the mean would be the straight 1.4%, so would be £700 over the year with £50K.

However, the point I was making was that that quoted statement is factually incorrect - the 'average luck' median figure in this example will actually be higher than £500 and will be more like £600. They just happen to quote £500 because their calculator only considers a subset of all valid data points and in particular doesn't give probabilities for anything between £500 and £750, when there are nine possible returns between these figures, one of which will be the actual median average return for £50K over a year....

Matthew2018

eskbanker wrote: »

As per my earlier post, I agree that's what it says, and they do already clarify (in the footnote numbered 1) that they're referring to the median rather than the mean, as the mean would be the straight 1.4%, so would be £700 over the year with £50K.

However, the point I was making was that that quoted statement is factually incorrect - the 'average luck' median figure in this example will actually be higher than £500 and will be more like £600. They just happen to quote £500 because their calculator only considers a subset of all valid data points and in particular doesn't give probabilities for anything between £500 and £750, when there are nine possible returns between these figures, one of which will be the actual median average return for £50K over a year....

OK Thanks

JimmyTheWig

pinklady21 wrote: »

These are in my sole name - other half also has his own savings.
(I try to keep quiet each month when the Premium Bond prizes are announced, so far, my £50k seems to have come out "luckier" than his!)

O/H is a BR taxpayer though. Is your thinking that possibly I should consider transferring some of the savings to him instead?

Yes, that's my thinking.
The interest rate you get on the ISA is less than the interest rate on the savings accounts. It's only the tax that causes a problem.
If your OH hasn't used up all his interest tax-free allowance then it would make sense to put the money into his accounts paying a higher rate than the ISA.

NB1 - I'm assuming that you don't get tax credits.
NB2 - There is, in some circumstances, a long-term benefit to using your ISA allowance. In this case the money is earmarked for a house purchase and so this is of no consequence.

jimjames

pinklady21 wrote: »

Thanks all for taking the time to reply - much appreciated.
A couple of points:

Why so much cash?
- the cash is for a deposit on a house, which we expect to need over the next year or so. So needs to remain liquid.!

If the cash is needed in the next year or so then I wouldn't bother with cash ISAs unless the rates are better than you can get outside. Long term tax benefits are irrelevant for money you'll need soon. Make the most of all taxable accounts including regular savers in both your names to maximise the amount you can use

pinklady21

The issue is that as a higher rate taxpayer, I only have a PSA of £500. With this amount of cash even at low rates, I am likely to end up paying more tax.
Good idea about sharing the savings between me and OH. I will look at this as well. TY!