To Fix or Stay Easy Access

Tom_Hendo

Hi All

With interest rates set to reduce over the foreseeable, what are your plans for any current ISA Renewals. 

Easy Access - 4.8%-5.1% Current rates but could reduce.
Fixed 1 year - 4.4%-4.61% fixed rate for 12 months.

My current plan would be to gamble that the easy access rates come down at a slower rate or not at all until April to try and claim some of that early pre tax year maturity cohorts, then drop (.25? higher?) in April. So leaning towards East Access. But what do others think?  

Mark_d

How much difference would it make in £ terms?  Personally I think that ISA allowance is wasted on cash ISAs because the growth you get from S&S is much greater.

Albermarle

Tom_Hendo said:

Hi All

With interest rates set to reduce over the foreseeable, what are your plans for any current ISA Renewals. 

Easy Access - 4.8%-5.1% Current rates but could reduce.
Fixed 1 year - 4.4%-4.61% fixed rate for 12 months.

My current plan would be to gamble that the easy access rates come down at a slower rate or not at all until April to try and claim some of that early pre tax year maturity cohorts, then drop (.25? higher?) in April. So leaning towards East Access. But what do others think?  

You might be right and you might not, nobody can tell the future.

It is worth noting though that with fixed rates normally you get a better rate , for tying your money up. 
The fact the rate is worse, is a strong indication of an expectation of lower rates generally over the next 12 months.

VNX

Mark_d said:

How much difference would it make in £ terms?  Personally I think that ISA allowance is wasted on cash ISAs because the growth you get from S&S is much greater

But isn’t guaranteed 

auser99

VNX said:

Mark_d said:

How much difference would it make in £ terms?  Personally I think that ISA allowance is wasted on cash ISAs because the growth you get from S&S is much greater

But isn’t guaranteed 

It's always interesting perusing these forums, as from what some people say it's an absolute certainty that S&S ISA or investing guarantees a higher return than cash. 
As if it's that simple and you can't go wrong.

Albermarle

auser99 said:

VNX said:

Mark_d said:

How much difference would it make in £ terms?  Personally I think that ISA allowance is wasted on cash ISAs because the growth you get from S&S is much greater

But isn’t guaranteed 

It's always interesting perusing these forums, as from what some people say it's an absolute certainty that S&S ISA or investing guarantees a higher return than cash. 
As if it's that simple and you can't go wrong.

It is not an absolute certainty, but from historical info you would not bet against it. Two caveats though:
1) It depends on what you invest in. Most of the data is based on the main indices. If you go and invest in specialised or unusual areas, all bets are off. 
2) There have been some prolonged poor periods. If you happen to invest at the start of one, then you might be one if the few unlucky ones who would have been better in cash, but the chances are quite low. 

jimjames

auser99 said:

VNX said:

Mark_d said:

How much difference would it make in £ terms?  Personally I think that ISA allowance is wasted on cash ISAs because the growth you get from S&S is much greater

But isn’t guaranteed 

It's always interesting perusing these forums, as from what some people say it's an absolute certainty that S&S ISA or investing guarantees a higher return than cash. 
As if it's that simple and you can't go wrong.

I don't think anyone (or at least anyone sensible/experienced) is saying that it's a certainty that S&S is guaranteed to return more than cash over a specific time period. You always need cash for your emergency fund too which could be in a cash ISA. But over the long term it is highly likely that shares will increase in value if businesses continue to make profits. As an investor for 30 years it's very easy to get caught in the short term noise or worry that investments might drop but from experience I am much, much better off than if I'd left all my money in cash.