Incoming Cash ISA rules and de-risking

brickleseabaz

Hi, my wife and I have set an ambitious but realistic goal of clearing our mortgage when our 10r fixed rate finishes in Nov-32. As we were lucky enough to lock in a low rate (and could foresee the pending rise) we know that its worth investing a set amount each month rather than overpaying. I have modelled that a growth of 4% plus consistent monthly saving/investment at the current rate should get us there.

I have an amount equivalent to about 50% of my monthly mortgage going into a S&S ISA, and currently we are 50% of the way to our target total. Around two-thirds of this is currently tucked into S&S ISA, with the other third mainly in Cash ISA (all held with Hargreaves L). A small amount is in non-ISA savings trying to make best use of regular saving beneficial rates tied to current accounts.

My plan, was to gradually de-risk as I near the total/Nov-32 by moving from the S&S ISA to Fixed rate Cash ISA. However, as I see it the new Govt rules will not make this possible.

Can anyone confirm this and make any suggestion as to where to look in order to safely de-risk. Of course if interest rates hit near 6% before April (unlikely )- I'll just transfer my S&S to cash ISA and the annual limit wont trouble us.

Lastly just to add, I'm 49 - so too old for a LISA and but too young to co-incide a SIPP maturity with the mortgage fixed rate end.

TIA

Woodstok2000

Have you considered money market funds? Low risk, so consequently low return, but you can hold them in an s&s isa as long as they don't make up your whole portfolio. Per MSE there is no set minimum, so you could in theory have 1p invested elsewhere and everything else in the money fund.

brickleseabaz

https://forums.moneysavingexpert.com/discussion/comment/82148230#Comment_82148230

Thanks - yes this seems to be an option that I will explore. I'll have other equities still in S&S, so the minimum amount wont be an issue. It seems a shame that money invested pre-this change cant be t/f to cash ISA after April.

masonic

Another option is an individual gilt maturing a short while before the money is needed. For example, TR32 would currently return 5%pa if held to maturity. But a money market fund will react immediately to any forthcoming base rate increases, so provides a lazy option to get a decent rate without fixing or continually switching.

You do still have the option to utilise any unused annual ISA allowance (up to £12k) to self-transfer to a cash ISA from your S&S ISA. I presume you will already prioritise pushing new money into the cash ISA.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82148274#Comment_82148274

. It seems a shame that money invested pre-this change cant be t/f to cash ISA after April.

Report

Unless the policy is ditched in the budget. Probably will not be, but you never know.

InvesterJones

6 years is a bit on the short time scale for equities anyway, so if you've got a 2032 spend date you might consider transferring out of the S&S ISA before April anyway.