Cash ISA vs Stocks and Shares ISA in late 2023

BattyJ

Just wondering on people’s thoughts re fixed rate 1 year Cash ISA and Stocks and shares ISA in 2023.

My investment literature says that it generally looks for a return of approx 6% pa in the long term, and that is with a medium 5 out of 7 risk. I can however take out a fixed rate 1yr Cash ISA at zero risk at 5.78%. 

What are your thoughts about transferring some of my previous years Stocks and Shares ISA’s to a 1 yr fixed. By my mind the stock market is in for a rough ride and fixed guaranteed Cash ISA at 5.78% for a year vs an average of 6% over the long term Stocks and Shares ISA seems logical, for at least part of my savings……ideas???

NannaH

It depends on your plans for the money.
I use S+S ISA for long term savings,with cash drip fed in monthly,  this year is at 7.1% currently with the Fidelity Index world fund. 

For the short term, I have a cash ISA paying 5.75% with Nat west, not sure if it’s existing customers only.  

I’ve also got a maturing investec bond due this month and will be putting it in NS&I. 

Long term, 10 years +,   investment should always beat savings.  

Exodi

I invest money with the long term expectation that it beats out inflation, which holding money in cash will almost certainly not.

I try to avoid worrying about short term opportunities, in that way I don't need to worry or feel guilty about whether I made the right decision or not.

Unfortunately no-one can tell you for certain if your S&S portfolio will return >5.78% over the next year.

Albermarle

BattyJ said:

Just wondering on people’s thoughts re fixed rate 1 year Cash ISA and Stocks and shares ISA in 2023.

My investment literature says that it generally looks for a return of approx 6% pa in the long term, and that is with a medium 5 out of 7 risk. I can however take out a fixed rate 1yr Cash ISA at zero risk at 5.78%. 

What are your thoughts about transferring some of my previous years Stocks and Shares ISA’s to a 1 yr fixed. By my mind the stock market is in for a rough ride and fixed guaranteed Cash ISA at 5.78% for a year vs an average of 6% over the long term Stocks and Shares ISA seems logical, for at least part of my savings……ideas???

This is a common question on the forum recently.
A stocks and shares ISA should be a long term investment, so if you bought the it on this basis, nothing has really changed. The returns have been a bit depressed for a couple of years, but that is why you hold them long term to ride out the ups and downs.
Of course a one year safe fix is tempting but what if at the end of the year, the best available fix then is only say 4% and in the meantime you S&S ISA has gone up 10%. So in fact there is no such thing as zero risk.
Personally if I was going to go down this route I would go for a minimum 3 year fix, maybe 5.

 By my mind the stock market is in for a rough ride

Do not base any decision on this. You can not predict the future anymore than anyone else can.

MX5huggy

You’re trying to time the market which is doomed to failure (or spectacular success). Look at this chart can you tell when there’s going to be a red year or green year or a supergreen year with 20% plus. https://www.google.co.uk/amp/s/themeasureofaplan.com/us-stock-market-returns-1870s-to-present/amp/

If you miss a 20% year your average returns will be down for many years.