Martin Lewis: Cash ISA limit could be cut – this is 'p*ss people off economics'

Grumpy_chap

Section62 said:

Is there any evidence for that assertion?  Anecdotal, but in my experience people with little tend towards spending more (at least proportionally).  One of the possible reasons why they have little savings in the first place.  And often there is no option but to spend what you have.

There is an economic theory that covers this, called "Marginal Propensity to Consume".
In very brief terms, it is that an extra £ given to a rich person will not be spent, or only a very small proportion will be spent whereas an extra £ given to a poor person will all be spent, or the very large proportion will be spent.  
This means that, for short term economic growth, if there is a spare £, give that £ to the poor person.
Obviously, short term economic growth is not the only driver that influences macro-economic policy.

Shylock_249

Whatever decision Rachel Reeves makes on 15th of July I think it very unlikely that she'll change her mind and reverse the decision. There's only so many U-Turns a government can do and I don't think this would be one of them.

Middle_of_the_Road

Shylock_249 said:

Whatever decision Rachel Reeves makes on 15th of July I think it very unlikely that she'll change her mind and reverse the decision. There's only so many U-Turns a government can do and I don't think this would be one of them.

You're obviously not a betting individual 😄

Jonesy214eva

So, I do a little bit of investing in stocks and shares with cash i can afford to lose. I put my savings in to a cash ISA. If i put my savings in to a S&S ISA, will my savings value go down? Or is just the rate of return/interest that fluctuates?

mebu60

GazzaBloom said:

If the cash ISA limits are reduced it's easy enough to use a stocks and shares ISA and buy a short term money market fund, which is typically viewed as “cash like” and elevate the 2 finger royal salute to Rachel from accounts. STMMFs are typically going to pay interest closer to BOE base rate than high street bank cash ISAs anyway.

Unless they are made ineligible to be held in an ISA. Which then raises the question of whether that is applied retrospectively to previous years' holdings. 

Shylock_249

Middle_of_the_Road said:

Shylock_249 said:

Whatever decision Rachel Reeves makes on 15th of July I think it very unlikely that she'll change her mind and reverse the decision. There's only so many U-Turns a government can do and I don't think this would be one of them.

You're obviously not a betting individual 😄

Agreed, but I bet there won't be a lot of investors voting Labour at the next election who have put the remainder of their ISA allowance (expecting it to be 16k) into S&S for the next 4 years when their individual valuation is much less than the 64k they invested.  Yes, I do realise the value could go up BUT 4 years isn't a long time in investment terms.

kimwp

Jonesy214eva said:

So, I do a little bit of investing in stocks and shares with cash i can afford to lose. I put my savings in to a cash ISA. If i put my savings in to a S&S ISA, will my savings value go down? Or is just the rate of return/interest that fluctuates?

You could lose your entire savings. 

mebu60

Shylock_249 said:

Middle_of_the_Road said:

Shylock_249 said:

Whatever decision Rachel Reeves makes on 15th of July I think it very unlikely that she'll change her mind and reverse the decision. There's only so many U-Turns a government can do and I don't think this would be one of them.

You're obviously not a betting individual 😄

Agreed, but I bet there won't be a lot of investors voting Labour at the next election who have put the remainder of their ISA allowance (expecting it to be 16k) into S&S for the next 4 years when their individual valuation is much less than the 64k they invested.  Yes, I do realise the value could go up BUT 4 years isn't a long time in investment terms.

I was just thinking the same thing, if folk are 'nudged' into investing what they would have placed into a Cash ISA and there's a stock market crash just prior to the next election . . . . . . . . 

Except I don't think many folk will be nudged, especially if STMMFs are made ineligible, and the funds will be just be placed in taxable savings accounts - maybe that's the cunning plan behind all this!! 

Middle_of_the_Road

Shylock_249 said:

Middle_of_the_Road said:

Shylock_249 said:

Whatever decision Rachel Reeves makes on 15th of July I think it very unlikely that she'll change her mind and reverse the decision. There's only so many U-Turns a government can do and I don't think this would be one of them.

You're obviously not a betting individual 😄

Agreed, but I bet there won't be a lot of investors voting Labour at the next election who have put the remainder of their ISA allowance (expecting it to be 16k) into S&S for the next 4 years when their individual valuation is much less than the 64k they invested.  Yes, I do realise the value could go up BUT 4 years isn't a long time in investment terms.

Is that not even more reason to reverse the reduction, if they want to retain votes?

Farway

kimwp said:

Jonesy214eva said:

So, I do a little bit of investing in stocks and shares with cash i can afford to lose. I put my savings in to a cash ISA. If i put my savings in to a S&S ISA, will my savings value go down? Or is just the rate of return/interest that fluctuates?

You could lose your entire savings. 

You are correct, and the unfortunate thing is many who may be tempted with S & S ISA will be blissfully unaware of this & just see the glossy returns

A disaster in the making as newbies loose it all to those who will certainly be after cash ISA money