Cash ISA's and savings account

joroda777

I/we have £80000 to invest. The plan is to open a Cash ISA each and put the balance into a savings account. Each year after that we would open two new Cash ISA's and put the interest saved into the savings account. Is this possible and are there possible pitfalls? This is how we are hoping to stretch our retirement fund!

FrugaiMacDugal

Yes, but why put interest into savings account, when you can leave it in ISA tax free?

mebu60

ISAs (currently) £20k of new money per tax year. Interest received doesn't count. You do not need to take it out.

Remember too that basic rate taxpayers have (currently) £1k tax free allowance for interest earned, £500 for higher rate, for funds not in the ISAs. 

Albermarle

I/we have £80000 to invest

Just to be clear 'invest' means buying investments like stocks and shares.
What you want to do is save the money.
If you say one when you mean the other , it can cause confusion.

Having said that, have you thought about investing some of it? Normally for money you do not need for a few years it is a better option than saving. You could look at a Stocks and shares ISA rather than a cash one.
Saving is better for money you might need in the next few years.

Robin9

@joroda777

Are you looking for monthly income ? or prepared to sit tight for 18 months   - look at the Nationwide £10000 5% bond  which would pay out in December 2026

joroda777

Thank you everyone. Albermarle - I meant to save. I am in the process of setting up the Nationwide £10000 5%
offer. I am looking to keep the cash ISA for this year and then open another for the new year using the interest and further money that I will have to save

eskbanker

joroda777 said:

I/we have £80000 to invest. The plan is to open a Cash ISA each and put the balance into a savings account. Each year after that we would open two new Cash ISA's and put the interest saved into the savings account. Is this possible and are there possible pitfalls? This is how we are hoping to stretch our retirement fund!

Have you considered using (or making more use of) pensions for this?

jimjames

joroda777 said:

I am looking to keep the cash ISA for this year and then open another for the new year using the interest and further money that I will have to save

As above, it's a waste of your ISA allowance to withdraw interest and then use it to reduce the allowance available the next year. Say you get £1000 interest and take it out for a new ISA, that means you only can add £19k of new money. Keep it in the ISA and you'll still have the full £20k available.