Isas

Liz65

Hi can anyone tell me what is the best ISA to start saving in please?

We have little cash left over at the end of each month but would like to start and ISA.

Are cash ISAs better or stocks and shares ISAs?

Many thanks

p00hsticks

Liz65 said:

Hi can anyone tell me what is the best ISA to start saving in please?

We have little cash left over at the end of each month but would like to start and ISA.

Are cash ISAs better or stocks and shares ISAs?

Many thanks

Neither is 'better' than the other - it will depend on what you are saving for and your attitude to risk. 

With cash ISAs you'll never lose what you put in, although if the interest that is paid is less than the rate of inflation it will lose value over time. And there are easy access cash ISAs that let you withdraw your money at any time if you need it. 

Stocks and Shares Isas are for the longer term - typically people say 5-10 years minimum. Depending on which funds you choose to invest in and how risky they are there is a chance that you could lose some of what you put in, but on the other hand the gains over a long term are likely to be greater than with a cash ISA. 

Albermarle

It is not just cash ISA vs S&S ISA, there are also LISA's and of course pensions.

Which is best depends a lot on you and your personal circumstances, of which you have supplied no details at all. 

jimjames

Liz65 said:

Hi can anyone tell me what is the best ISA to start saving in please?
We have little cash left over at the end of each month but would like to start and ISA.
Are cash ISAs better or stocks and shares ISAs?

A few thoughts. If you are only just starting saving then that would suggest you have no savings currently and therefore no emergency fund. If that's the case then building up some money to cover 3-6 months of expenses would be a good starting point and that should be easy access in cash ISA or instant savings account. Cash ISA pays more than savings at the moment. S&S ISA would be a bad move if you have no emergency fund already built up as it could be worth less than the money you put in when you come to need it. Once you have other savings built up then S&S ISA or pension are worth looking into.

Beddie

Liz65 said:

Hi can anyone tell me what is the best ISA to start saving in please?

We have little cash left over at the end of each month but would like to start and ISA.

Are cash ISAs better or stocks and shares ISAs?

Many thanks

Here's a list: https://moneyfactscompare.co.uk/isa/easy-access-cash-isas/?quick-links-first=false

Don't use Plum, too much hassle, but Chip and Charter are both good. Charter better for beginners, I'd say.

These are cash ISAs, which are more suitable for someone starting their savings journey.

mhcks

The whole ISA thing is a bit of a con really:  If I put £20k into a cash ISA returning 4%: I get £800... TAX free.

For a normal taxpayer that cash, if not in an ISA  may not get taxed anyway... But if the individual had exceeded  their allowance it would be taxed at 20%:  so the saver loses £160 in tax to HMRC... .so for allowing Joe Public to put £20k into an ISA, the Government loses £160;   the difference between £800 and £640.  £10 a month . 

The allowance is pathetic:  the ISA allowance should be increased to £50000 PA at the very least.  UK Gov should make this a real incentive:  encourage savers with a real carrot... not this nonsense that we are all being conned with.

And yes I appreciate Stocks and Shares ISAS may return more....  And yes its better than nothing ... 

slinger2

mhcks said:

The whole ISA thing is a bit of a con really:  If I put £20k into a cash ISA returning 4%: I get £800... TAX free.

For a normal taxpayer that cash, if not in an ISA  may not get taxed anyway... But if the individual had exceeded  their allowance it would be taxed at 20%:  so the saver loses £160 in tax to HMRC... .so for allowing Joe Public to put £20k into an ISA, the Government loses £160;   the difference between £800 and £640.  £10 a month . 

The allowance is pathetic:  the ISA allowance should be increased to £50000 PA at the very least.  UK Gov should make this a real incentive:  encourage savers with a real carrot... not this nonsense that we are all being conned with.

And yes I appreciate Stocks and Shares ISAS may return more....  And yes its better than nothing ... 

You're missing the point that the £20k is year after year. So after 10 years you could have £200k+ in Cash ISAs, giving you £10k interest and saving £2k in tax year after year (depending on your tax situation). It's a long term thing.

ColdIron

Liz65 said:

We have little cash left over at the end of each month but would like to start and ISA.

Do you pay tax on your savings interest? This would suggest not, so an ISA may not benefit you much. Have you looked at Regular Savers? For £25 - £400 a month you could get 5% to 7%

friolento

There is an extensive MSE article for savings beginners https://www.moneysavingexpert.com/savings/which-saving-account/

Ayr_Rage

mhcks said:

The whole ISA thing is a bit of a con really:  If I put £20k into a cash ISA returning 4%: I get £800... TAX free.

For a normal taxpayer that cash, if not in an ISA  may not get taxed anyway... But if the individual had exceeded  their allowance it would be taxed at 20%:  so the saver loses £160 in tax to HMRC... .so for allowing Joe Public to put £20k into an ISA, the Government loses £160;   the difference between £800 and £640.  £10 a month . 

The allowance is pathetic:  the ISA allowance should be increased to £50000 PA at the very least.  UK Gov should make this a real incentive:  encourage savers with a real carrot... not this nonsense that we are all being conned with.

And yes I appreciate Stocks and Shares ISAS may return more....  And yes its better than nothing ... 

I disagree completely.

Having been a higher rate tax payer for the last 30+ years therefore ISAs have been an excellent way to avoid tax on savings and investments.

There's nowhere else where Joe Bloggs can have millions invested and take the capital gains, dividends and interest tax free.

However, as we do not know the OP's personal tax situation, age and goals, offering advice becomes somewhat difficult.

ISAs may not be their best option.

eskbanker

mhcks said:

The whole ISA thing is a bit of a con really:  If I put £20k into a cash ISA returning 4%: I get £800... TAX free.

For a normal taxpayer that cash, if not in an ISA  may not get taxed anyway... But if the individual had exceeded  their allowance it would be taxed at 20%:  so the saver loses £160 in tax to HMRC... .so for allowing Joe Public to put £20k into an ISA, the Government loses £160;   the difference between £800 and £640.  £10 a month . 

The allowance is pathetic:  the ISA allowance should be increased to £50000 PA at the very least.  UK Gov should make this a real incentive:  encourage savers with a real carrot... not this nonsense that we are all being conned with.

And yes I appreciate Stocks and Shares ISAS may return more....  And yes its better than nothing ... 

'Con' seems to be one of those trigger words on this forum, much like 'scam' or 'rip-off', where those using it rarely seem to do so with any accuracy or relevance!  It was widely discussed in 2016, when the personal savings allowance was introduced, that this made cash ISAs less appealing for some, but they continue to be useful for many, especially during the heightened interest rates of the past couple of years, so there's no need for any Kwarteng-style fiscal self-harm....