Is there an ISA worth having right now?
Discussion
My Natwest ISA which has been brilliant for many years is all of a sudden rubbish. They've slashed the rates down to 0.5%. Therefore i'm contemplating moving it, but wondered whether there was really much point. It's not a huge amount (low 5 figures), and is primarily my backup fund (eg. if i lose my job, need a car, or house work, etc...). It seems the reality now is ISAs barely bring anything, maybe 1% if i'm lucky, and at that there's little point putting up with the hassle of moving the money, and the complication of it being away from my current account.
Maybe it's worth leaving it where it is, and starting a stocks and shares ISA that can take a few hundred pounds a month?
Seems even worse right now for savers!
Maybe it's worth leaving it where it is, and starting a stocks and shares ISA that can take a few hundred pounds a month?
Seems even worse right now for savers!
Leave the cash where it is so its there if you need it but start a Stocks and Shares ISA. I wouldn't risk moving the cash into a stocks and shares one just in case the shares perform poor for sometime and you see your initial capital fall in value
Drip feed into a Stocks and Share ISA from April and spend between now and then researching the funds and shares you would like to invest in
Drip feed into a Stocks and Share ISA from April and spend between now and then researching the funds and shares you would like to invest in
Edited by oldaudi on Tuesday 24th February 16:01
Matt.. said:
Who do you use for it? and is it worth having if only putting ~£100/month in?
I went with IWEB, which is a Halifax share dealing platform. It's £25 to open, £5 a trade, and no annual charge. I think it's the cheapest way of going about it, at least it was the last time I checked.The £5 a trade thing is a bit expensive for £100 a month, but if you do £200 every two months it works out a lot cheaper, and still helps you to spread the risk a bit. You might be able to find a lower per-trade charge, but that wasn't what I was looking for when I was investing.
Matt,
If it's your back up/emergency fund, do you really need to be exposing it to investment risk? Work out how much you need, siphon that off and keep it in cash. If you have a balance left over, take a view on starting to invest that. I'm sure that someone will come along with a recommendation, but make sure that you are ruthless on costs first and foremost - the best way to make money is not to lose money. If you're putting modest amounts in, you need to be paying as little as possible.
If it's your back up/emergency fund, do you really need to be exposing it to investment risk? Work out how much you need, siphon that off and keep it in cash. If you have a balance left over, take a view on starting to invest that. I'm sure that someone will come along with a recommendation, but make sure that you are ruthless on costs first and foremost - the best way to make money is not to lose money. If you're putting modest amounts in, you need to be paying as little as possible.
^^^ Sound guidance from Ginge R.
A couple of things about ISA with particular relevance to their "tax free" status.
1. Cash interest rates are very low these days. As such, any benefit from tax saving is only a percentage of a very small number.
2. Cash in an ISA just sits there generating a small income return. It will never have "capital growth".
3. Cash in an ISA has typically been going backwards, or at best standing still, in relation to inflation in recent years.
4. Stocks and shares in an ISA have the potential to deliver tax free capital growth as well as tax free income.
5. Stocks and shares do have the risk of losing value, although regular monthly contributions tend to suppress that risk over time.
6. Stocks and shares have generally performed very well throughout the last 100 years.
7. Stocks and shares tend to be carried along by inflation rather then eaten away by it.
If you have can cope with the investment risk of stocks and shares then IMO holding cash in an ISA could be seen as a waste of the potentially very beneficial tax free growth on stocks and shares (funds).
A couple of things about ISA with particular relevance to their "tax free" status.
1. Cash interest rates are very low these days. As such, any benefit from tax saving is only a percentage of a very small number.
2. Cash in an ISA just sits there generating a small income return. It will never have "capital growth".
3. Cash in an ISA has typically been going backwards, or at best standing still, in relation to inflation in recent years.
4. Stocks and shares in an ISA have the potential to deliver tax free capital growth as well as tax free income.
5. Stocks and shares do have the risk of losing value, although regular monthly contributions tend to suppress that risk over time.
6. Stocks and shares have generally performed very well throughout the last 100 years.
7. Stocks and shares tend to be carried along by inflation rather then eaten away by it.
If you have can cope with the investment risk of stocks and shares then IMO holding cash in an ISA could be seen as a waste of the potentially very beneficial tax free growth on stocks and shares (funds).
Claudia Skies said:
Good stuff
Indeed. When all is said and done, the stock market is only a little bit better than putting everything on red at Monte Carlo - you can't make the market yourself. If you can't afford to lose the money, don't put it somewhere that it can be lost. Diversification is the key. Being a know nothing simpleton I dabble badly so I worked to a system of the FTSE dogs for half my allowance and its been ok last few years beating an ISA easily, however the other half I decided to put into Woodford on a slight dip earlier this year, I have just cashed out at a shade under 10%.
As I said I know nothing but I cannot see how a fund can keep rising forever so this year I am poised and ready to buy back in on the Woodford dip assuming this happens between now and September - if it continues to rise I shall learn my lesson and drip into the fund forever more.
As I said I know nothing but I cannot see how a fund can keep rising forever so this year I am poised and ready to buy back in on the Woodford dip assuming this happens between now and September - if it continues to rise I shall learn my lesson and drip into the fund forever more.
DSLiverpool said:
DoubleSix said:
DSLiverpool said:
beating an ISA easily
Ok, stop it now. Please.
No skill involved as i have no skill - my ISA pays 1.5% this years dogs has beaten that already
You aren't "beating an ISA" you are choosing an alternative strategy within the ISA.
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