Should I fix or not?

Reed_Richards

eskbanker wrote: »

Nobody was suggesting otherwise, but we're highlighting that cash ISAs are poor value for money and so cash holdings would typically be expected to earn more interest in taxable accounts (again assuming that uninvested cash is kept below levels where interest would exceed PSA).

Certainly this is well worth knowing but I feel it gets done to death on this forum. Almost to the point where someone might infer that there is no point in holding any long-term savings in cash.

eskbanker wrote: »

It was OP (Dave05) who was asking about cash ISAs and others who highlighted that there are potentially better solutions available....

My reply was directed to the OP. Admittedly the OPs question requires a working crystal ball to give an accurate answer but if you ask a question about apples then being told that bananas are better for you might not suit. And it seemed to me that a question about cash ISAs deserved an answer about cash ISAs.

masonic

Reed_Richards wrote: »

Certainly this is well worth knowing but I feel it gets done to death on this forum. Almost to the point where someone might infer that there is no point in holding any long-term savings in cash.

Another point that is done to death is that people should have at least 6 months spending saved in cash before considering putting money into investments, and that people should only invest money they won't need for at least 10 years, so it balances out.

eskbanker

Reed_Richards wrote: »

Certainly this is well worth knowing but I feel it gets done to death on this forum. Almost to the point where someone might infer that there is no point in holding any long-term savings in cash.

Just to reiterate, nobody is saying not to hold any cash, just that doing so for a long time risks loss of value to inflation, and therefore for those fortunate enough to have a decent pot, it makes sense to recognise the merit of using more suitable long-term vehicles for at least some of that pot.

Reed_Richards wrote: »

My reply was directed to the OP.

Your reply quoted a post from jimjames, and as such reference to 'your' will typically be read as relating to the person you're quoting!

Reed_Richards wrote: »

Admittedly the OPs question requires a working crystal ball to give an accurate answer but if you ask a question about apples then being told that bananas are better for you might not suit. And it seemed to me that a question about cash ISAs deserved an answer about cash ISAs.

Fair enough, but it doesn't seem unreasonable to me to observe that bananas may be better than apples when coupled with an explanation why, especially if the questioner may not have consciously considered the existence and benefits of bananas. You may feel that it gets done to death but that's from the perspective of someone who's been on here for many years rather than a newbie who may not have been aware of the choices he has....

AndyPK

I thought Aldermore 3 years @ 2% was very reasonable.


Considering hard brexit and all

AndyPK

good for an ISA

bowlhead99

AndyPK wrote: »

I thought Aldermore 3 years @ 2% was very reasonable.


Considering hard brexit and all

good for an ISA

I suppose yes, it's not unreasonable for them to offer those rates in the current market. But I wouldn't go for it myself as frankly nobody knows what the market rates will be doing by next summer.

Hard Brexit might see ongoing loose BoE policy for some time, depending what they want to do to steady the ship. But if there were to be a relatively mild Brexit or a Bremain instead, interest rates may tick up and it would be annoying to be locked into an uncompetitive product. To get out of it, half a year's loss of interest (ie all of the interest you might have earned between now and June) would seem a costly penalty when you could have been on instant access at 1.45%.

So personally my cash ISA is just on Virgin's "limited number of withdrawals" account. Not that the ISA is a particularly big one. Frankly if you only want to put £5-10k in the account, half a percent extra interest in exchange for a longer lock-in with the penalities for early exit is not a huge reward. If you had £50-100k and want it in cash rather than S&S, then the extra rate is a more meaningful amount of pounds. But I don't, so signing up to a long fix in a low interest rate environment is not very appealing.

masonic

AndyPK wrote: »

I thought Aldermore 3 years @ 2% was very reasonable.

Considering hard brexit and all

Not when you factor in the probable devaluation of the pound over that period should we face a hard brexit. I'm increasing my cash reserves at the moment, but I think hard brexit is less likely than remain.

AndyPK

3 years ago I signed up to a fixed 2.3% isa.

I thought it a lazy move and interest rates were bound to be higher come 3 years time.

Now it has matured I have been lucky to get 2% !

If rates increase massively you can always cancel them and move them.

masonic

AndyPK wrote: »

If rates increase massively you can always cancel them and move them.

Well yes this is an advantage of fixed rate ISAs over non-ISA FRBs. If only I didn't have a HTB ISA paying 2.5%