Where should I take money from my current account or a S&S ISA

Susan1942

I am wondering if anyone can give me any advice here.  It is my intention to renew my lounge, dining room, and hall carpet.  I also intend to by two new sofa's and new curtains. I also want to have the hall redecorated.
I am wondering whether it is best to take the money from a S&S Isa or to use money I have in my current account.  I reckon it will cost around £14,000 or so maybe a bit more.  I have got well over this in my current account.  However with the way things are going for investments I am wondering if  the ISA might be the sensible choice.   I would appreciate views on this  Thank you Sue

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masonic

Most investments have now recovered from the recent Covid crash and are at or near all time highs, the UK being a bit of an exception. Your cash buffer is there to prevent you being a forced seller during a crash, but we are not currently in that scenario, so funding the expenditure using investments and preserving the cash for future short-term needs might make sense. However, withdrawing from the ISA may leave you short of ISA allowance in the future if you are growing your investments and want to replace the funds too.

Using the cash instead might be the better option if it does not leave you short and/or you can replenish the funds in the short term. There's a bit more risk that this would lead to a worse outcome if investments perform particularly poorly in the coming months, but the odds are slightly in your favour that they will not.

Susan1942

I have got several investment bonds who despite the current situation are doing OK.  One of them took a £7000 hit but it has regained almost all of that now.  The others have not been effected at all.  I did ask the question some months ago not long just as Covid hit and the advice was to leave the money where it was.  That advice was correct in fact and I am marginally in a better position than I was at that time.  I will give the matter some more thought.  Right now as the stores are closed and I am isolating my hands are tied.  Should I take it from my current account it would still leave me in an OK position cash wise/   Thank you so much for your advice.  I do appreciate it 

threlkeld53

Use your cash from the current account which isn't earning any interest. The S&S ISA is an investment for the medium to long term. It's unwise to use that now, best to keep it invested with the idea that it should (probably will) grow in time. What is your ISA invested in, by the way?

masonic

Susan1942 said:

I have got several investment bonds who despite the current situation are doing OK.  One of them took a £7000 hit but it has regained almost all of that now.  The others have not been effected at all.  I did ask the question some months ago not long just as Covid hit and the advice was to leave the money where it was.  That advice was correct in fact and I am marginally in a better position than I was at that time.  I will give the matter some more thought.  Right now as the stores are closed and I am isolating my hands are tied.  Should I take it from my current account it would still leave me in an OK position cash wise/   Thank you so much for your advice.  I do appreciate it 

If it would leave you with a sufficient emergency fund, you don't have any other large expenses coming up, and your income is fairly secure, then yes I'd lean towards the current account.

dunroving

I think it depends somewhat on your disposable income, also. Are you likely to generate £12,000 in disposable income over the next 12 months, for example?

If so, it makes less sense to withdraw money from an ISA, thereby losing the beneficial tax-free status. If you use cash funds, you will refill the gap within a fairly short period of time.

If not, then as others have said, I'd be reluctant to spend a chunk of your emergency funds.

It sounds as if your cash and income are fairly healthy, in which case it's probably better to leave your ISA holdings where they are. 

NottinghamKnight

There's obviously  no particular reason why all of these things need to be done at the same time, and doing the decorating first might be wise given the risk of damage or spillage. Staggering the works may allow them t be financed out of other income and avoid the number for one or more large withdrawal.

Albermarle

£14K + is a lot to keep in a current account - if it was in an easy access savings account or premium bonds at least it would be earning something .
However with the way things are going for investments
Up and down as usual - but in the long run more up than down .

Susan1942

Thank you all for your advice.  My current account if with Santander 123 so I get a tiny bit of interest up to £20,000 and nothing above that.  I do get some cash back on certain bills.  I don't have a mortgage and my monthly income is such that I do have a pretty healthy excess each month.  That said I have been helping my Grandchildren whilst they were at University.  The reason I have done so it to help my Daughter and her family.My Grandson I paid his rent for the 12 months while he was doing his Masters.  He has now got a very good job.  My Granddaughter is between her studies. She spent a year at a University in the USA 2018-2019 and I paid for her dorm fees for that year. She completed her studies in the UK but taking a year out where she had a gap year and intended to travel but Covid hit that on the head.  She is going to do her Teacher training Sept 2021 so this year I am not funding any of them,.  I do have 3 other Grandchildren who are younger and still at  school. On doing things gradually I don't really want to do that.  The furniture choice will dictate will determine the carpet and curtain choice and of course the decor will also depend on that too.  I just want it done and have been intending to do it for about a year.  I probably would have made some decisions by now but lock down put paid to all that.  I have been isolating for the 3 months and now again with the latest lock down 
Thinking about the advice here I think that I will use the money from my current account.  There is little or no tax on anything these days to make me even think of opening new accounts etc.  

dunstonh

I have got several investment bonds who despite the current situation are doing OK. 

Why are you making it a choice between current account or ISA when you also have an investment bond? (which is less tax-efficient than an ISA internally).   There may be a viable reason but just wondering if you had considered it.

Susan1942

Thanks again. I just thought of the ISA as I got a statement yesterday and the thought just occurred to me.  Not sure which is why as until yesterday I was intending to use my current account money.