ISA Saving

frank_bough

Can someone please help with my understanding of ISAs?

In year 1 I want to invest an inital £20,000 (total £20,000) and recieve ~£1,000 interest.
In year 2 I want to invest another £20,000 (total £40,000) and receive ~£2,000 interest.
In year 3 I want to invest another £20,000 (total £60,000) and receive ~£3,000 interest.

So after three years the ISA would be worth £66,000 in total.  Is this possible/how it works?  Or can I only effectively do year 1 each year?

eskbanker

Assuming it's a product that allows ongoing funding, then it's possible to add £20K each year, and the interest will be based on the growing balance, but there are no guarantees that it'll be at 5%.

If you use products that can only be funded for an initial short window, such as most fixed term/rate ones, then you'd be able to achieve the same end result but only by transferring and/or using multiple ISAs.

slinger2

Open a 3 year fixed rate ISA with £20k. Next year open a 2 year fix with another £20k. Year 3 open a 1 year fix with the other £20k. They all mature at the same time (near enough) and you end up with roughly 23+22+21 = £66k. Assuming that you'll get 5% in a year or twos time.

friolento

The rates for 3 year ISAs are already well below 5%

https://moneyfactscompare.co.uk/isa/

slinger2

True, but compound interest helps a bit.

frank_bough

So, I can't just open an ISA and pay £20K into it each year?  So it grows by capital amount each year plius interest?  

eskbanker

frank_bough said:

So, I can't just open an ISA and pay £20K into it each year?  So it grows by capital amount each year plius interest?  

Yes, you can, see earlier reply!

Albermarle

There is a sub forum for ISA's where there are lots of similar questions and answers, so worth a read through.

ISAs & tax-free savings — MoneySavingExpert Forum

frank_bough

Ah, ok.  Can you suggest a product that allows this so I can look at it.  As you say most do not seem to allow this.

eskbanker

frank_bough said:

Ah, ok.  Can you suggest a product that allows this so I can look at it.  As you say most do not seem to allow this.

Any easy access one will allow ongoing funding.

friolento

There are also a few 2 or even 3 year ones which allow further deposits for as long as the product remains marketed. Shawbrook Bank usually do but you might find some others. In any case, you need to read the T&Cs thoroughly, to ensure that the product does indeed meet all your requirements.

https://moneyfactscompare.co.uk/isa/fixed-rate-isas/?quick-links-first=false