What to do with cash ISA?

JV_21

Hi, my fixed rate cash ISA is due to mature soon. With rates now so low, it seems a S&S ISA might be a better option and I currently have one with Nutmeg although I haven't used my full allowance yet this year.

My questions are :

1) Is it generally a good idea to move away from cash isas given the low returns? 

2) Should I transfer the entire balance from my cash isa or is it better to move smaller amounts each month until I reach the annual allowance in the s&s isa?

Thank you

eskbanker

You're certainly not the first to see investing as an alternative to saving, given low cash rates and favourable market conditions, but they are quite different beasts really, so even if investing is right for you, doing so because of low interest rates isn't the best of justifications.

So, it would make more sense to look at the fundamentals of your financial circumstances, i.e. what is this savings pot earmarked for, how much access do you envisage needing and over what timescale?  What's your risk tolerance like?  What other assets do you have?  etc....

JGB1955

There's nothing to stop you transferring all of your existing cash ISAs into a S&S ISA now.  Individual Savings Accounts (ISAs): Transferring your ISA - GOV.UK (www.gov.uk)  Could be £20K, could be £200K.

JV_21

Thanks for your replies. It's certainly for the long term, 5-10 years or more and I wouldn't need to access it. I suppose what I'm trying to understand is if it's better to drip feed into it rather making large contributions right from the start. 

eskbanker

Statistically it's better to invest a lump sum at the earliest opportunity rather than drip-feeding it, as the reason you're investing is that markets generally rise and therefore on average you'd miss out on growth by delaying, although obviously there are no guarantees at any given point in time!

Albermarle

Statistically it is better to make one big lump sum contribution now, rather than drip feeding. However you have to think also how would you feel if you did that and it dropped 30 % next week. 
Probably for most people it is best to compromise and split it into say 3 payments a couple of months apart .

Andy7856

Definitely as above, 1st question you need to ask yourself is what is that money for? was there a saving goal you had in mind?
For example if saving to buy a house within say 12 months then I would transfer to better account as cash ISA to squeeze that extra interest out.   I am in the process of drip feeding my Cash ISA into a S&S ISA  as the plans for the CASH ISA have now changed (thanks COVID!) and I dont need that money in the short term.