Halifax 5 year fixed rate ISA 5.8%

porthenys

Reference Halifax 5 year fixed rate isa paying 5.8% availabe in 2004 does anyone have any proof as to whether this investment is compound or simple interest?

Market_Oracle

I have one of these

Last year i got a statement showing gross interest earned todate, which is not added to the account.

This years is due in a few weeks time so will update you on whether it has been compounded, which given that its 5.8% AER it should be.

meanmachine_2

deemy2004 wrote:

So its not as good as it looks on face value, still 5.2% is not bad if as expected rates decline during the 2nd part of 2005 well into 2006 and maybe a little beyond.

In hindsight not such a great deal if IRs go to 5% and beyond in the coming months.

I'd expect to see 6% ISAs very shortly, no?

Still, it's a reminder that none fo us can predict anything these days.

RayWolfe

Well, you can't expect to win them all.
It's always a good idea to put SOME of your money into fixed rate bonds rather than all. That way you can follow the rates upwards and take out new ones when better rates are offered. That way you have a spread of rates and will not miss out when they change.
When you THINK rates are going down, the same applies because you don't KNOW what rates are going to do.
Ray

Market_Oracle

I see the orignal post is from 2004, so you also have to factor in that for 2 years interest rates were lower

So the return going forward 3 more years NEEDS to be higher than 6% just to EQUAL 5.8% over the term, throw in compounding and the gap perhaps requires an forward ISa rate of 6.5%

I.e. for 2 years interest rates have been well below 5.8% and only now the rates are approaching 5.8%, I say approaching as the market Cash ISA rates have so far NOT passed 5.8%.

It therefore presented an excellant invesment 2 years ago, and unless cash isa's rise to above 6.5%, it still stands as an excellant cash isa investment.

Market_Oracle

Hello again

I can confirm that the Halifax Fixed Rate ISA interest IS compounded annually, as per my 2nd year statement recieved today.