Do You Have The Resources To Invest 20,000 Per Year Into An ISA?

masonic

FWIW, I opened an funded a cash ISA at the start of this tax year. It is the first I've held for over a decade and represents about 5% of my ISA holdings. I probably would have just added to my existing S&S ISA and invested in a money market fund had it not been for this speculation.

Albermarle

nubian said:

You

masonic said:

There are no plans to roll back the £20k p.a. ISA allowance (that limit has been frozen), only limit how much can be put in the cash component.

It probably is insulting to those living pay cheque to pay cheque that a tiny fraction are being given this tax break, but the reason for reducing the amount that can be saved into a cash ISA is that "the city" wants more people to invest alongside saving.

Your poll says "do you or anyone you know...", while the options relate only to the voter, so which do you want? Bearing in mind the results here are likely to be highly skewed.

You are of course correct and I have adjusted the headline question. It was meant to be a light hearted poll, though albeit a serious topic. I see little benefit for us ordinary savers just exposure to more risk, is this an additional price the chancellor wants us to bear on top of being amongst the most taxed workforce on the planet relative to what we as a society get back. I would also hate to go down the route of 401k's that so many Americans have. It seems to me Rachel Reeves is trying to force more of us even those with meagre savings to entrust this to the money men who really don't have our interests at heart.

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Beddie

I don't have £20k of "new" money, but I have savings elsewhere that I am able to move into an ISA each tax year. It's not as straightforward as the poll implies. Other people might get an inheritance and want to move that into ISAs as much as possible.

Kim_13

I put about £4K in an ISA last tax year so I went for the £5K option, however I would suggest there’s a lot in between I can save/invest £5K and I can save/invest £20K. I do fund Regular Savers on top as they offer a better return, and only those paying tax on those returns are getting the full benefits of an ISA.

Not all of those using the full allowance are putting it aside from new money - for instance, there were forumites planning to withdraw £20K from their Premium Bond holding and put it in an ISA at the beginning of the tax year. The speculation as well as disappointing returns may have been a factor, as they can always start to top up their holding again if they want to keep more in cash than whatever the cash component may be reformed to in future tax years.

nubian

Exodi said:

nubian said:

With the possibility of the chancellors roll back of the £20,000 p.a ISA allowance, It crossed my mind that this would affect only a tiny fraction of the working population of the UK. So what could she gain by doing this and isnt it an insulting irrelevance to the vast majoirty of Nritish people who at best are living pay cheque to pay cheque. What do you think?

This is riddled with issues...

Firstly, you're on a financial forum, which specialises in savings. It is obvious that forumgoers will not be representative of the wider general public, many of whom will have no ability, or desire, to save.

E.g. As of the time of writing this, of the 15 respondents so far, 80% suggest being able to save £5k-£20k p/a.

I expect if you ask 15 people on the street, you would struggle to get a similar ratio (unless you were asking around Mayfair, I expect). You acknowledge this where you mention 'the vast majority of British people who at best are living pay cheque to pay cheque", so I'm not sure what purpose the poll serves.

Secondly, it's a bit of tipsy turvy logic to suggest "it doesn't affect the majority of people" therefore they shouldn't care? By this logic, why not remove all taxes on billionaires, they shouldn't care as it doesn't affect the majority of people, right? In complete contrast to your suggestion that it's 'an insulting irrelevance' (which to be honest makes absolutely no sense to me) I'd go as far as suggesting the British public are typically in strong support of measures that don't affect them (of course, part of this is for selfish reasons).

Thirdly, unless I'm mistaken, the speculation was around reducing the amount that can be deposited into a Cash ISA to £4k (rather than the wider ISA allowance, I've seen nothing to suggest you wouldn't still be able to hit £20k with a S&S ISA). The logic is that why should the government (and by extension the taxpayer) allow tax free and relatively risk free interest to those with relatively considerable disposable income. I refute that the general public does not care as it does not affect them - you only need to look at the non-dom stuff of yesteryear.

Firstly, you're on a financial forum, which specialises in savings. It is obvious that forumgoers will not be representative of the wider general public, many of whom will have no ability, or desire, to save.

I was directed to ISA area as the appropriate place to post this so I apologize if you think its not appropriate but I do think it’s a tad arrogant to believe that just because someone is not able to save at the moment or in their current circumstances that they don’t want to save/invest or that they don’t join this type of forum.

E.g. As of the time of writing this, of the 15 respondents so far, 80% suggest being able to save £5k-£20k p/a.

Well I am learning and I must say somewhat surprised that many more at least say they can save/invest 20k every year, it kind of answers the query as to why the chancellor may want to get people to move to stocks and shares ISA’s or the share market more generally

I expect if you ask 15 people on the street, you would struggle to get a similar ratio (unless you were asking around Mayfair, I expect). You acknowledge this where you mention 'the vast majority of British people who at best are living pay cheque to pay cheque", so I'm not sure what purpose the poll serves.

I just wanted to understand where the decisions of the chancellor are arrived at as they don’t appear to have relevance in the everyday experience of most ordinary folks. I also seriously doubt there are many people with “Mayfair” affluence if that is what the inference is, pay much attention to Martin’s site let alone this forum. Please correct me if I’m wrong but wasn’t this site set up originally for ordinary people to better understand the complexities of Finance/Tax/ Mortgages/ Benefits etc..

Secondly, it's a bit of tipsy turvy logic to suggest "it doesn't affect the majority of people" therefore they shouldn't care? By this logic, why not remove all taxes on billionaires, they shouldn't care as it doesn't affect the majority of people, right? In complete contrast to your suggestion that it's 'an insulting irrelevance' (which to be honest makes absolutely no sense to me) I'd go as far as suggesting the British public are typically in strong support of measures that don't affect them (of course, part of this is for selfish reasons).

I don’t think at any point I said the majority of people don’t care, I did say it was an insulting irrelevance which for me has quite a different meaning. (So, I am to be honest unsure of what point you are trying to make). I am not a Finance expert you may be, I was simply responding to Martin raising this removal of this type of ISA Allowance and why the chancellor would be interested in implementing such a change.
Thirdly, unless I'm mistaken, the speculation was around reducing the amount that can be deposited into a Cash ISA to £4k (rather than the wider ISA allowance, I've seen nothing to suggest you wouldn't still be able to hit £20k with a S&S ISA). The logic is that why should the government (and by extension the taxpayer) allow tax free and relatively risk free interest to those with relatively considerable disposable income. I refute that the general public does not care as it does not affect them - you only need to look at the non-dom stuff of yesteryear.

Again, I neither said nor intimated that the “general public” does not care. I was suggesting that we and I include myself here, were not as finance savvy to know what the £20k allowance meant as we would generally never get near that level of investing/saving. Surely not many would know for instance that they can save small regular amounts i.e. drip-feeding or pound-cost averaging into a S&S ISA, so were disconnected from the benefits of such a scheme. The cash ISA was for most people a more transparent, easier and relatively efficient way to regularly save and more relevant to ordinary people who could not. As to the interest we have in how rich people manipulate and maximize their wealth, all people really want is a road map to addressing the bigger problem which is wealth inequality. So it brings me to my original motivation for posting, if the chancellor want us the masses to be able to invest in the market and its potentially a great idea, she really should address our inability to afford to save/invest.

 

Bobblehat

Just to clarify a possible misunderstanding on my part .... are you conducting a survey purely about "investing" £20K or other amount (i.e. S&S ISA) or "saving"  £20K or other amount (i.e. Cash ISA) ..... or about a possible combination of the two?

Given that we have had several discussions/posts about the loose use of the word "invest" on this forum and that your survey could be about either S&S or Cash ISA's (or both?), it might be helpful to specify which rather than just say "ISA" as the last word of your question title.

As seen above, there are those that might be willing to save £20K in an ISA and have the resources to do so, but not be willing to invest £20K in an ISA. I'm not sure if your survey statistics would show you people in that category?

jimexbox

I know loads of people on normal wages dropping 20k in a cash ISA regularly. Money from redundancy, inheritance and drip feeding 25% tax free pension are the main sources. 

My pension is currently in 100% equities, I don't want a ss ISA. 

Exodi

nubian said:
So it brings me to my original motivation for posting, if the chancellor want us the masses to be able to invest in the market and its potentially a great idea, she really should address our inability to afford to save/invest.

I read your whole response and to be honest, I feel I came across a bit strong in my original reply so I'd like to apologise. I understand the question, I just didn't understand the point of the poll, but it's not important.

jimexbox said:

I know loads of people on normal wages dropping 20k in a cash ISA regularly. Money from redundancy, inheritance and drip feeding 25% tax free pension are the main sources. 

My pension is currently in 100% equities, I don't want a ss ISA. 

I've no doubt there will be many like you, but I'm sure if the reduction in the Cash ISA allowance ever did go through, it wouldn't take long for people to turn to MMF's.

For example: VASTMGA which is effectively returning a consistent 5%.

https://www.vanguardinvestor.co.uk/investments/vanguard-sterling-short-term-money-market-fund-a-gbp-accumulation/overview

The government must realise if they force people out of Cash ISA's who don't want to take risk, that the money will just end up in S&S's ISA's 'invested' in money market funds like this.

boingy

For me it depends which year(s) you are talking about. In the past I've had an inheritance that took several years to get into ISAs at £20K per year. And at present I'm pulling tax-free cash out of my pension and sticking it in an ISA invested in pretty much the same stuff as it was in the pension (it reduces the SIPP fees, gives me more control and protects against the pension rules changing).

So there have been many years where I couldn't get anywhere near £20K but also quite a few where I did.

As for reducing the cash ISA limits to force people to invest in S&S ISA, it simply will not work in most cases. They are completely different products with completely different risk profiles. People will just put the money in normal savings accounts or premium bonds. 

TheQuaker

mostilts said:

Relatively new here. I am trying to beat the Chancellor’s possible reduction in annual cash isa allowance soon, but don’t have £20K ready cash to use but will have in due course this year. But I already hold a substantial funds in a Flexible Cash ISA, so I will temporarily transfer £20K from my existing Flexible Cash ISA to my current account, then open a new Flexible Cash ISA to use this year’s full allowance before the Chancellor acts. As funds become available over the year I’ll replace the funds in my original Flexible Cash ISA.

Can you do this? I was under the impression once you've withdrawn money from a previous year's cash ISA, you couldn't then put money back in, as that year was in the past.