Stocks and Shares ISA with monthly interest withdrawals

steviep43

I've got about £28,000 in two cash ISAs. I have them set to pay out the monthly interest into my bank account to supplement my income. They have matured now so I'm shopping around and was wondering if I could put them into a S&S ISA and get the monthly interest paid as per my cash ISAs as the rates seem higher. I'm happy to put them into a 3 or 5 year fix. TIA, Steve

EthicsGradient

I don't think any S&S ISA would have "a 3 or 5 year fix". Their rates on cash are just for the current balance, which they expect to vary. Note that from 6th April 2027, there will be a 22% "charge" on interest paid on cash in an S&S ISA, so even if you have found one with a better rate than you can find for the best cash ISA (in general, this is not the case), it won't be the best from April 2027 onwards.

And I've never seen an option for interest to be paid out monthly, though it's possible it exists somewhere. But the combination of interest paid out monthly and a rate that beats the best cash ISAs seems extremely unlikely to exist.

friolento

S&S ISAs don't really pay interest, unless you have uninvested cash and the provider pays - a usually pitiful - interest, or if you invest in a Money Market Fund. Your S&S investments can earn dividends or capital growth (or loss), and you are free to sell investments and withdraw funds as you like.

If you want to draw a fixed monthly income from an S&S ISA, this would usually come from uninvested cash, and you would have to sell investments yourself to make that uninvested cash available. There's one provider who would sell investments for you - though I would question whether this is sensible as they might have to sell at a loss.

Generally, I don't think S&S ISAs are suitable for automatically drawing regular income.


Out of interest (pun intended), which S&S ISA have you found which pays better interest than a cash ISA?

steviep43

Thanks all. I haven't really looked into it, I just noticed the current cash ISA rates are lower than my previous fix so wanted to consider my options. I think based on your information that I will invest in a normal cash ISA and continue to take a monthly income from the interest.

Thanks for your help

Steve

InvesterJones

You could buy T31 gilt, this matures in 5 years, with yield to maturity of 4.73% and paying a coupon of 4%, or TR30 pays 4.75% on coupon but is priced higher for a yield to maturity (in 4.5 years) of 4.583%

edit: but of course, not monthly, sorry, only bi-annual

PixelPound

What about dividend ETFs of even mutual funds. If you get 3 quarterly payers you can get all months covered.

If you need a specific income, the funds route is batter as they can keep 15% of income in good years to pay out in poor ones, where as ETFs have to pay everything out, so might fluctuate.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82078705#Comment_82078705

I think the OP does not even understand the fundamental difference between savings and investments, so probably has no idea what an ETF is.

( apologies to the OP if I have misread the situation)

DRS1

There are some funds which pay out monthly. Hopefully this is a list from HL

Fund Finder | Search & compare over 3,500 funds | Browse fund prices

The income may be dividends or interest depending on the fund. And the income may not be a regular amount each month.

Whether these are good funds to invest in is another question - you may find your capital value goes down which it wouldn't with a fixed rate savings account.

poseidon1

I have an investment trust and a couple of OEICs which both pay out monthly investment income, in S&S ISAs with HL and II.

Average yields on original amounts invested is 6.5%+, but capital values do noticeably fluctuate up and down so has indicated by @Albermarle not suitable for an OP who evidently has no understanding of stockmarket investments invested in equity assets and bonds.

Best they stick to the familiar terrain of fixed rate cash ISAs from the likes of Paragon , Charter Savings and Kent Reliance who all offer monthly interest options

OdiumChloride

There are S&S ISA providers who can automatically pay out income monthly. It is not a fixed amount, just the income that was generated over the month. The income is typically dividends, but could also be interest on cash.

I can't remember, but I think some of these accounts have online settings to request automatic monthly payouts and others you may need to call customer support to request it - I forget which is which.

These are the ones I know about. I use each of these myself:

AJBell: will automatically pay out dividends and interest, once a month, covering all dividends and interest for that month.

Hargreaves Lansdown: will pay out dividends once a month covering all dividends for that month. They do pay interest into the account but that is not automatically paid out.

Scottish Widows Sharedealing: They don't pay interest at all, but dividends can be paid out and that happens as soon as each dividend arrives, usually the next day.

PixelPound

https://forums.moneysavingexpert.com/discussion/comment/82078719#Comment_82078719

I which case OP should stick to cash ISA. Though actually, depending on their tax bracket, maybe they still have their interest tax allowance, and might get a better rate that way.

What we don't know is whether the £28k is being added to or not. Sounds like they are in de-accumulation stage