Cash, S&S, HTB.

TooPoor

Hello,

I have read through the guides, stickies etc - before anyone suggests I should! I am just looking for some advice/clarification.

- I want to maximise my £20,000 limit for ISAs.
- My original plan is to invest £17,000 in a cash ISA then a further £3000 in a stocks and shares ISA.
- However I would move £200 per month from the Cash ISA into stock's and shares ISA
- I have no interest in investing £15,000 immediately into a stocks and shares ISA, as I would like to have quick access to this money if needed.
- I have no immediate plans to buy a house outright and live in it, however I would consider renting.

My questions are:
As H2B is considered a Cash ISA, I cannot have a Cash ISA, H2B and stocks and shares ISA at once?
If a H2B ISA earns 2.5%, can I withraw this early and still redeem the interest whilst sacrificing the bonus?
Are there any glaringly obvious mistakes in what I originally wanted to do?

Many thanks,
TooPoor.

eskbanker

TooPoor wrote: »

As H2B is considered a Cash ISA, I cannot have a Cash ISA, H2B and stocks and shares ISA at once?

It doesn't really matter what you have but the rule is that you can only pay into one ISA of each type in any given tax year. As you say, HTB is a subset of cash ISAs but a quirk of the regulations means that it's possible to pay into multiple cash ISAs with certain providers who bundle these together as if they were one, known as 'split ISAs', as covered at https://www.moneysavingexpert.com/savings/best-cash-isa/#accordion-content-0334234523-3. Regardless of what you do with cash/HTB ISAs, you can also pay into a S&S ISA.

TooPoor wrote: »

If a H2B ISA earns 2.5%, can I withraw this early and still redeem the interest whilst sacrificing the bonus?

You could do, but it would generally only make sense to do this if you weren't going to be buying your first property within the next eleven years.

TooPoor wrote: »

Are there any glaringly obvious mistakes in what I originally wanted to do?

Not necessarily mistakes as such but IMHO it would be better to have a clearer plan about what money you feel you'll need when and what for, so as to arrange your saving and investing appropriately, in that you seem to be trying hedge your bets at the moment. The fact that you specifically refer to trying to maximise your ISA allowance suggests that you have more than £20K available - where's the rest?

Finally, cash ISAs are generally pretty poor value these days when you have a personal savings allowance that's eroded their one-time advantage over taxable accounts, so don't be swayed by the notion that (non-HTB) cash ISAs are worth having: https://www.moneysavingexpert.com/savings/best-cash-isa/#accordion-content-620297425-0

https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

TooPoor

Thanks for the comprehensive reply, eskbanker.

eskbanker wrote: »

Not necessarily mistakes as such but IMHO it would be better to have a clearer plan about what money you feel you'll need when and what for, so as to arrange your saving and investing appropriately, in that you seem to be trying hedge your bets at the moment. The fact that you specifically refer to trying to maximise your ISA allowance suggests that you have more than £20K available - where's the rest?

I thought it best to respond to this first. I understand the hedge your bets analogy and I agree - I haven't got a strict plan at the moment of where I feel I'll need it and what for.

The best description I can give is that I feel I will need withdrawal access to £15k of my savings for the next two years. I am willing to put £200 (or £400 incl H2B) a month in a long-term savings/stocks and shares ISA (including a £3k initial deposit).

I dont currently have any further savings than the £20k.

eskbanker wrote: »

It doesn't really matter what you have but the rule is that you can only pay into one ISA of each type in any given tax year. As you say, HTB is a subset of cash ISAs but a quirk of the regulations means that it's possible to pay into multiple cash ISAs with certain providers who bundle these together as if they were one, known as 'split ISAs', as covered at [Regardless of what you do with cash/HTB ISAs, you can also pay into a S&S ISA.

Thanks for clarifying that.

eskbanker wrote: »

You could do, but it would generally only make sense to do this if you weren't going to be buying your first property within the next eleven years.

The issue is I'm not sure where I want to buy my first property, whether in the UK or Europe (back to your point about hedging bets!).

eskbanker wrote: »

Finally, cash ISAs are generally pretty poor value these days when you have a personal savings allowance that's eroded their one-time advantage over taxable accounts, so don't be swayed by the notion that (non-HTB) cash ISAs are worth having:

And thank you for awaring me - it seems for this amount of money I would be best with a S&S ISA, H2B and an easy access savings account - however if I had a higher amount I would be better to maximise a split cash ISA to make best use of tax free interest.

eskbanker

TooPoor wrote: »

it seems for this amount of money I would be best with a S&S ISA, H2B and an easy access savings account - however if I had a higher amount I would be better to maximise a split cash ISA to make best use of tax free interest.

To be honest, in your shoes I'd steer clear of the S&S ISA at this stage - £20K in cash deposit form is a handy position to be in (albeit not exactly untold riches) but if you haven't yet bought a property or even decided where to live, I'd humbly suggest that it wouldn't be prudent to effectively lock any money away in an environment that's really best suited to genuinely long-term money (because of the potential for losses in the short to medium term).

If you haven't already opened the HTB ISA, you now have less than four hours in which to do so, so best step on it - using one of the providers offering split ISAs does keep your options open but, as above, I'd think carefully about whether any non-HTB cash ISA is really worth it anyway, so would be tempted to go with best HTB and best easy access (notionally taxable) savings....

TooPoor

eskbanker wrote: »

To be honest, in your shoes I'd steer clear of the S&S ISA at this stage - £20K in cash deposit form is a handy position to be in (albeit not exactly untold riches) but if you haven't yet bought a property or even decided where to live, I'd humbly suggest that it wouldn't be prudent to effectively lock any money away in an environment that's really best suited to genuinely long-term money (because of the potential for losses in the short to medium term).

If you haven't already opened the HTB ISA, you now have less than four hours in which to do so, so best step on it - using one of the providers offering split ISAs does keep your options open but, as above, I'd think carefully about whether any non-HTB cash ISA is really worth it anyway, so would be tempted to go with best HTB and best easy access (notionally taxable) savings....

Thanks once again.

I have opened a HTB ISA with Nationwide, as they do offer a split ISA also.

Interesting point about the S&S ISA, moneysavingexpert suggests a minimum of 5 years - would you agree with this figure? My rate of saving is now increasing a lot as I have entered full time employment for the first time, so I expect I can put away a small sum for a fairly long period.

masonic

TooPoor wrote: »

Interesting point about the S&S ISA, moneysavingexpert suggests a minimum of 5 years - would you agree with this figure? My rate of saving is now increasing a lot as I have entered full time employment for the first time, so I expect I can put away a small sum for a fairly long period.

5 years is a minimum timeframe for very low risk investments, but really >10 years is the standard recommendation here, and ideally quite a bit longer than that. If your intention is to buy a home in the next few years, you'll probably want to focus on that objective and leave the S&S ISA for now.