20 Year ISA Planning, Don't understand

prodigalson

I was considering opening a new ISA and maxing out the limit of 20,000 every year for the next 20 years.
I had a question in regards to what happens once the ISA matures, can the money to gain interest in it?
e.g. Year 1 - £20,000 (Cash ISA) Interest 1.5%
Year 2 - £20,000 (Stocks and shares ISA) Interest 5%
Year 3 - £20,000 (Stocks and shares ISA) Interest 5%

So question really is will I keep gaining interest from my Cash ISA in year 3 if I do not move it from the ISA. Do I gain interest at the end of year 3 for the Stocks and shares ISA that I opened in year 2, I wanted to know really if I can just leave the ISAs in their respective accounts over time to gain interest without moving the funds.

So if I kept a cash ISA without the rate of interest changing above for 20 years will the funds compound

Linton

S&S ISAs dont pay interest. They hold investments which may provide capital gains, dividends and/or interest depending on the nature and performance of the investments. The % return can be highly variable with no guarantees. In general the time period is unlimited.



Cash ISAs may be linked to a particular fixed rate/fixed term account. Fixed term accounts are normally limited to 5 years or less. Just like a non-ISA fixed term account when the term expires the interest rates will probably drop to some minimal amount at which point you would normally transfer elsewhere. You would need to look at the Ts&Cs of your chosen cash ISA. Note that the tax benefit of a cash ISA may be significantly countered by the lower interest rates that tend to be offered for cash ISAs.

prodigalson

Linton wrote: »

S&S ISAs dont pay interest. They hold investments which may provide capital gains, dividends and/or interest depending on the nature and performance of the investments. The % return can be highly variable with no guarantees. In general the time period is unlimited.



Cash ISAs may be linked to a particular fixed rate/fixed term account. Fixed term accounts are normally limited to 5 years or less. Just like a non-ISA fixed term account when the term expires the interest rates will probably drop to some minimal amount at which point you would normally transfer elsewhere. You would need to look at the Ts&Cs of your chosen cash ISA. Note that the tax benefit of a cash ISA may be significantly countered by the lower interest rates that tend to be offered for cash ISAs.

I know that S&S ISAs dont pay interest was giving an example. Lets say I open an ISA in year 1 and hold it that account, will I keep gaining interest each year for the next 20 years, without my yearly ISA limit being affected

Linton

prodigalson wrote: »

I know that S&S ISAs dont pay interest was giving an example. Lets say I open an ISA in year 1 and hold it that account, will I keep gaining interest each year for the next 20 years, without my yearly ISA limit being affected

Any gains made by an ISA stay within the protection of the ISA. They do not affect the annual limit which only controls new money paid in from outside the ISA environment.