£120k in Cash ISAs - thinking of moving to S&S ISA

andy1100xx

Hi All
I've had a look through the forum but not really been able to find info that relates to my circumstances so hoping to get some advice.
A bit of background...
I'm 57, my wife is 62. we both gave up work 2 years ago and have been living off cash savings and a £30k lump sum from my pension. We currently have £60k each in NW triple access ISA's paying 1% which ends on April 21. As with most, I'm despairing at the low rates that are now being offered on cash ISA's so considering moving some or all of these into S&S ISA's. Given our ages, I'm really looking at a 5 year timeline and lowish risk so not expecting huge returns but I'm still hoping for better than the current Cash ISA rates - is this realistic?
TIA
Andy

eskbanker

When you say you've "been living off cash savings and a £30k lump sum from my pension" but that you're "really looking at a 5 year timeline", do you mean that you have separate savings that'll mean you won't need to access this £120K ISA pot for at least five years?  Five years isn't a long time in investment terms but you're presumably not anticipating needing access to all of it in one lump in five years' time - when do your pensions start and how much of a shortfall do they leave that this £120K is earmarked for?

dunstonh

. Given our ages, I'm really looking at a 5 year timeline 

What is happening in 5 years that requires you to draw all of your money?   

Modern investing doesnt mean putting your money away for chunks of time.  It is open ended.  

Why are you focusing on the ISA tax wrapper and not the pension tax wrapper?

Eyeful

Currently the best low risk savings, 5 year fixed cash ISA = 1.15%.

Currently the yield on the FTSE 100 = 3%. This is an investment, so you will be putting your money at risk. 

If you invest, it should be for a minimum of 10 years, not the 5 years that you mention.

 " The higher the return, the higher the risk". Still holds true.

Expecting higher returns with lowish risk, is unrealistic. This is the bait, coupled with the word bond, that many scammers use to "hook" their victims. Be careful you are not one.

eskbanker

Eyeful said:

Currently the best low risk savings, 5 year fixed cash ISA = 1.15%.

Currently the yield on the FTSE 100 = 3%. This is an investment, so you will be putting your money at risk. 

If you invest, it should be for a minimum of 10 years, not the 5 years that you mention.

 " The higher the return, the higher the risk". Still holds true.

Expecting higher returns with lowish risk, is unrealistic. This is the bait, coupled with the word bond, that many scammers use to "hook" their victims. Be careful you are not one.

Why focus on the yield of the FTSE100 - it's hardly representative of what most investors would be aiming for or investing in?  Most of the clichés you posted have at least some truth in them but I interpreted OP's reference to 'lowish risk' as being specifically in the context of investment, rather than in comparison to savings as such - investing inherently entails risks, but so does holding money in cash deposit form, i.e. it's simplistic to paint it in such binary terms, and of course within the investing universe there is a wide variety of risk....

Eyeful

I consider the FTSE 100 to be an average investment risk. To many times on this site I have seen the result where scammers take advantage of those that are either greedy, desperate for income or lack knowledge. I hope my posts will provide a guide to what to take notice of. That is why I "paint it in such binary terms"
Hopefully when some one sees that low risk guaranteed "bond" paying 4.5% they will see it is no such thing.
Not so long ago I saw someone enquirer about a share offering 26%.  

andy1100xx

Thanks for the feedback. For some my responses using quotes are failing so I'll just try and respond generally here...
I've around £60k in cash other than the ISA's, plus £260k is some long-standing, medium risk investments, and around £850k in a pension pot (which I may start drawing down this year) so I've got a fair bit to play around with and a fair spread of risk already. I've been using the ISA's just as an ultra low-risk, easy access savings option but with the rates as they are now it's just not worth it so looking at taking a little bit more risk for a little bit more reward but not expecting huge returns, say 2%? The 5 years is just a period that I think I'd be able to commit to without having to dip into it but still with the ability to liquidate if something unexpected turns up.

Albermarle

I'm despairing at the low rates that are now being offered on cash ISA's 

Although I am sure you would like to see some better growth , this will not come with low risk . The risk can be managed /reduced but not eliminated . The time spent invested dilutes the risk a lot , hence the comment about investing for at least 10 years.

Just to go to your comment above . Normally the main issue with safe savings is that the value of your money slowly gets eroded with inflation . However at the moment inflation is very low as well as interest rates so you are not really losing .

A second point is that non ISA savings rates are usually a little better than cash ISA saving rates . For a basic rate ( or non ) taxpayer you can both earn up to £1000 in interest tax free, so ISA's are redundant for a lot of people.

Alternatively you can put £50K each in Premium bonds that pay around 0.8%/0.9% on average .

Putting some of your cash in investments long term is probably a good idea but I would not go from zero to the whole £120K 

eskbanker

Eyeful said:

I consider the FTSE 100 to be an average investment risk.

It depends exactly what you mean by that, but investing wholly in equities is very much towards the top of a conventional risk scale where cash is at the other end, and investing in one index would also be riskier than a more balanced approach.  That index in particular isn't renowned for its performance, although is relatively high yield - however, investing for total return is a more typical approach than seeking high yields.

Eyeful said:

To many times on this site I have seen the result where scammers take advantage of those that are either greedy, desperate for income or lack knowledge. I hope my posts will provide a guide to what to take notice of. That is why I "paint it in such binary terms"
Hopefully when some one sees that low risk guaranteed "bond" paying 4.5% they will see it is no such thing.
Not so long ago I saw someone enquirer about a share offering 26%.  

If you meant that real investing in mainstream products and markets is less risky than unregulated get-rich-quick scams promising the earth then yes, that's undoubtedly true, but that's not a particularly realistic way of evaluating investment options!  My point was that conventional investing involves a risk scale and isn't an on or off binary choice, but this exchange has effectively been rendered superfluous anyway, in that OP has since clarified that they already have medium risk investments, so clearly understands this principle....

grumiofoundation

Eyeful said:

I consider the FTSE 100 to be an average investment risk. 

Unless your personal risk scale is available to peruse is this statement helpful to the OP (or anyone else)? 

As mentioned above it seem like you are claiming this as average risk because you are including scams at one of the the risk scale. Is this a valid or useful scale? 

I just purchased some ground coffee in Sainsbury’s (other supermarkets available*) that had a strength rating of 1-5, so I would view the average strength at 3. Applying your logic maybe I should have included cocaine in my scale and therefore should reconsider my average? 

*edit - other, probably better, analogies are also available 

eskbanker

grumiofoundation said:

I just purchased some ground coffee in Sainsbury’s (other supermarkets available) that had a strength rating of 1-5, so I would view the average strength at 3. Applying your logic maybe I should have included cocaine in my scale and therefore should reconsider my average? 

Either way, you'll be full of beans....