MSE News: Martin Lewis suggests alternative to cutting cash ISA limit – a 'starter investment ISA'

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MoneySavingExpert.com founder Martin Lewis has made a suggestion on how to get young people investing WITHOUT cutting the £20,000 tax-free cash ISA limit...

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'Martin Lewis suggests alternative to cutting cash ISA limit – a 'starter investment ISA''

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masonic

Sorry to be a party pooper, but the last thing we need is yet another type of ISA.

How about tacking the root cause, which is poor understanding of investing?

dunstonh

Launch a new 'starter investment ISA'. You can put, say, up to £1,000 in (whether lump sum or dripped in monthly) and, as well as it being tax-free, you'll get, for example, a 5% boost on contributions from the state (with the cost split between investment providers and the state) as long as the money is kept in investments for a set time (for example, one year).

Most platforms are loss-making.  Only the established ones are profitable but the margins are small.    1 year tie in would be financial suicide unless you allow the charges to increase in the first year to cover it.   

friolento

 

I don't believe that the real motivation for the rumoured cut is to drive people towards investments. IMO, it's a convenient excuse for the real agenda, which is additional money for the Treasury. Another stealth tax, really.

clairec666

masonic said:

Sorry to be a party pooper, but the last thing we need is yet another type of ISA.

My thoughts exactly - we don't need the system to become any more complicated

Kim_13

It’s hardly a new type of ISA, just a sweetener attached to a S&S ISA for qualifying investors. And judging by the take up of free cashback offers here, it’d probably work - maybe the bonus should be staggered to avoid people transferring out after six months, a year or whatever. 

Can’t see it happening - even if the government’s intention wasn’t to raise money in the beginning, it must have become one in the meantime.

mebu60

friolento said:

 

I don't believe that the real motivation for the rumoured cut is to drive people towards investments. IMO, it's a convenient excuse for the real agenda, which is additional money for the Treasury. Another stealth tax, really.

Exactly. They know the vast majority of money above any new Cash ISA limit will go into taxable savings accounts. 

masonic

Kim_13 said:

It’s hardly a new type of ISA, just a sweetener attached to a S&S ISA for qualifying investors. And judging by the take up of free cashback offers here, it’d probably work - maybe the bonus should be staggered to avoid people transferring out after six months, a year or whatever. 

That doesn't seem to be what Martin is suggesting, but I like the idea better the first £1k invested in a new S&S ISA would attract a 5% bonus (£50), with half of that being funded by the Treasury. But how different is that than the well known offers from the likes of InvestEngine, CMC Invest, &me, Wahed, and others than many of us took advantage of? I even went Halal for one of those

They didn't seem to move the needle with the general public though.

bjorn_toby_wilde

friolento said:

 

I don't believe that the real motivation for the rumoured cut is to drive people towards investments. IMO, it's a convenient excuse for the real agenda, which is additional money for the Treasury. Another stealth tax, really.

I’m sceptical too, but for different reasons.

We’re being told that the proposed tinkering is to drive investment in UK companies but most people investing in S&S ISAs would, I suppose, choose a global tracker for their equity investments. That won’t boost investment in the UK.

Home bias over recent years has resulted in lower returns and nobody has mentioned the real drag on British investment and growth - Brexit.

If you want more investment in the UK then more carrot and less stick might be an idea. What about raising the threshold for CGT for a start off?

InvesterJones

bjorn_toby_wilde said:

If you want more investment in the UK then more carrot and less stick might be an idea. What about raising the threshold for CGT for a start off?

Or better, dividend allowance - that might encourage people to invest in dividend paying stocks.. which co-incidentally make up a large proportion of UK listed stocks compared to say the US..

wmb194

bjorn_toby_wilde said:

friolento said:

 

I don't believe that the real motivation for the rumoured cut is to drive people towards investments. IMO, it's a convenient excuse for the real agenda, which is additional money for the Treasury. Another stealth tax, really.

If you want more investment in the UK then more carrot and less stick might be an idea. What about raising the threshold for CGT for a start off?

Given it was only recently reduced I’d say there’s next to no chance and anyway, did it make any difference when it was c.£12k?