ISAs - Leave in Cash? Or move to S&S?

What_time_is_it

My partner and I each have around £80k in cash ISAs. We also have around £200k each in savings accounts. We don’t pay tax on our interest as neither of us are working. So we are looking for a way to take a small income (£2k a month maybe) from our savings, but also put some money into investments for the longer term. We are both nearly 50, no kids, no dependents, own house with no mortgage, no debts. We have maxed out our pensions for 25/26, and combined our pensions are worth around £400k to 500k in today’s money (50% in DC, 50% in DB). 

We are thinking of moving our ISAs into S&S? Do you think that is a good move? Any tips?

And would you move any of our savings into investments?

I have a small pension with AJ Bell so will probably use them. Is that a good idea?

Basically, I’m looking for some basic advice and some encouragement as it’s a lot of money and our financial future depends on saving/investing/drawing down from the money we have in the bank. We are super fortunate and I don’t want to squander our good luck!

dunstonh

We are thinking of moving our ISAs into S&S? Do you think that is a good move? Any tips?

What best fits your objectives?
cash is generally for short term needs and a volatility reducer.  Equities for long term.

And would you move any of our savings into investments?

It isn't important what other people would do.  Its what you should or should not do that matters.

I have a small pension with AJ Bell so will probably use them. Is that a good idea?

Personal preference.   Whole of market platforms are similar in what they offer but the differences are cost, service and software functionality.

You say you are putting 100% of your salary/earned income into pensions (or 60k each if you earn more than that).   What pension are you using for that?

What_time_is_it

Thanks!

Objectives - to live off of savings and investments. We need an income of between £24-£36k a year, plus a fair bit extra for fun stuff and surprises!

Other people’s opinions - I like to hear what others are doing and/or would advise. It helps with my own decision making.

Pensions - my partner and I have both Sal sacked the max into our work pensions and will top up our SIPPs with the remaining allowance available up to our taxable earnings for 25/26. 

Keep_pedalling

Sorry to go off on a tangent here, but if by partner you mean you are not married or in a civil partnership, there is another consideration your should should be looking at and that is the potential for a hefty IHT bill is one of you met with an early demise. If that is the case then perhaps you should look at changing your marrital status, and if you don’t already have them in place wills and lasting powers of attorney. 

What_time_is_it

Good question! Thanks. Yes we are married. I should have said that!

where_are_we

Consider both of you putting £2880 grossed up £3600 each year into a SIPP. Each year you have no earned income, both you and your partner will get tax relief on such an investment. Probably invest this money, as you will not be able access it until at least 57. 
It looks like you have £280K in cash, so diversifying seems to make sense. Do not have all your eggs in one basket. Putting a little of this money into a S&S ISA seems appropriate, depending on your level for risk. 
Maximise your interest on cash savings by putting money into the many regular savers paying 5% and more. This does require some work but as there are two of you, you can double up each Regular Saver with very little extra work.

What_time_is_it

where_are_we said:

Consider both of you putting £2880 grossed up £3600 each year into a SIPP. Each year you have no earned income, both you and your partner will get tax relief on such an investment. Probably invest this money, as you will not be able access it until at least 57. 
It looks like you have £280K in cash, so diversifying seems to make sense. Do not have all your eggs in one basket. Putting a little of this money into a S&S ISA seems appropriate, depending on your level for risk. 
Maximise your interest on cash savings by putting money into the many regular savers paying 5% and more. This does require some work but as there are two of you, you can double up each Regular Saver with very little extra work.

Thanks so much. Yes, we intend to pay in the max (£2,880 or whatever it changes to in future years) in a SIPP each. And we already take advantage of regular savers.

if I was going to invest some of our savings into S&S do you think starting with the ISAs makes sense? Or would you leave to ISAs in cash and invest some of our other savings into an S&S product instead? Basically, which “pot” would you move into investments first?

af1963

If you transfer from the Cash ISA, you can move anything up to the total amount in the ISA, as long as you do it as a transfer ( i.e. NOT by withdrawing cash from the Cash ISA and then separately paying it in to another ISA)

If you want to move other savings into a shares ISA, you'd be limited by your annual total ISA allowances of £20k each.  And if you've already fully used those allowances this year for contributing to the cash ISA, you'd need to wait till next year before contributing to a S&S ISA.

af1963

In the longer term, getting a chunk of the £200k savings into some kind of ISA or SIPP would be helpful , for a later time when you're getting DB pension and state pension, so any interest is liable to be taxed.

Checked your state pension forecasts ?  Might need some topups if you are still under 50 and no longer working.

What_time_is_it

(Reply to AF1963)

Thanks. I probably confused things with my garbled terminology. What I meant was, which part of our savings should we move into an investment product first? Our Cash ISAs into Stocks and Shares ISAs? Or our “normal” savings into an investment product?

We have already used out £20k ISA allowance this year so could only transfer.

What_time_is_it

af1963 said:

In the longer term, getting a chunk of the £200k savings into some kind of ISA or SIPP would be helpful , for a later time when you're getting DB pension and state pension, so any interest is liable to be taxed.

Checked your state pension forecasts ?  Might need some topups if you are still under 50 and no longer working.

Thanks for the advice. 

Would you recommend transferring our cash ISAs into stocks and shares ISAs? Or would it better to leave them where they are and use some of our existing non-ISA savings to invest in some kind of investment product instead?

State pensions - we have checked and we are some years short. Part time work should sort us out. Or maybe we will have to buy extra years in the future. But for now, it’s ok.