Money wasted in Cash ISA, any suggestions?
Discussion
With the new tax year looming, I'm trying to decide what to do with my existing Cash ISA. I've paid the maximum in to it each year since it originally began, but interest rates are so low these days, that for the first time, I'm thinking whether it is worth changing direction.
Has anyone else had similar thoughts recently and can offer some suggestions of what to do? Will interest rates come back to ISA's, at which point I'll be kicking myself for withdrawing it, or are there better long term options for money?
For info, if you know Cash ISA's, you'll know roughly how much I'm talking. It isn't money I need to touch; I don't have debts, credit card bills or mortgages to worry about.
Other options also welcome for funds in Premium Bonds and general saver accounts!
Has anyone else had similar thoughts recently and can offer some suggestions of what to do? Will interest rates come back to ISA's, at which point I'll be kicking myself for withdrawing it, or are there better long term options for money?
For info, if you know Cash ISA's, you'll know roughly how much I'm talking. It isn't money I need to touch; I don't have debts, credit card bills or mortgages to worry about.
Other options also welcome for funds in Premium Bonds and general saver accounts!
An ISA is just a tax wrapper around an investment.
Are you happy increasing your risk by putting your savings into equities or other investments, in return for a higher return?
Or do you want the low-risk but low-return of cash in a bank account?
So long as the money stays within ISAs, you can move it between providers and types of ISA, no problem.
Are you happy increasing your risk by putting your savings into equities or other investments, in return for a higher return?
Or do you want the low-risk but low-return of cash in a bank account?
So long as the money stays within ISAs, you can move it between providers and types of ISA, no problem.
TooMany2cvs said:
An ISA is just a tax wrapper around an investment.
Are you happy increasing your risk by putting your savings into equities or other investments, in return for a higher return?
Or do you want the low-risk but low-return of cash in a bank account?
So long as the money stays within ISAs, you can move it between providers and types of ISA, no problem.
I'm probably looking to increase my risk a little to hopefully benefit from a better return than the poultry 0.5% offers with cash ISA's these days. Do investment ISA's typically yield reasonable results, even at the moment (I've seen some negative rates in the last month or two), and are most banks much the same as each other in terms of risk/reward?Are you happy increasing your risk by putting your savings into equities or other investments, in return for a higher return?
Or do you want the low-risk but low-return of cash in a bank account?
So long as the money stays within ISAs, you can move it between providers and types of ISA, no problem.
mdianuk said:
I'm probably looking to increase my risk a little to hopefully benefit from a better return than the poultry 0.5% offers with cash ISA's these days.
A quick look at a typical comparison site shows cash ISAs available paying 1.95% for a five-year tie, or 1.05% for instant-access.mdianuk said:
Do investment ISA's typically yield reasonable results
Hold on, I'll polish my crystal ball... You can look at past returns, but the future is a bit less predictable...mdianuk said:
and are most banks much the same as each other in terms of risk/reward?
Risk? Yes - within the FSCS limits.Return? No.
- maximise your risk and reward!hehe, thanks Nick.
So to all, am I right in thinking that providing you tick the box, you can use up your ISA allowance in any which way that offers it, so for example, could use £10k with fiveraday and £10k with nutmeg during 2017/18 (just examples). I cannot find a way however of transferring existing ISA's into them for past years.
I guess funds in those sort of platforms are not protected under FSCS guidelines?
So to all, am I right in thinking that providing you tick the box, you can use up your ISA allowance in any which way that offers it, so for example, could use £10k with fiveraday and £10k with nutmeg during 2017/18 (just examples). I cannot find a way however of transferring existing ISA's into them for past years.
I guess funds in those sort of platforms are not protected under FSCS guidelines?
Edited by mdianuk on Wednesday 5th April 16:30
mdianuk said:
hehe, thanks Nick.
So to all, am I right in thinking that providing you tick the box, you can use up your ISA allowance in any which way that offers it, so for example, could use £10k with fiveraday and £10k with nutmeg during 2017/18 (just examples). I cannot find a way however of transferring existing ISA's into them for past years.
I guess funds in those sort of platforms are not protected under FSCS guidelines?
The experts will be along to confirm, but i think:So to all, am I right in thinking that providing you tick the box, you can use up your ISA allowance in any which way that offers it, so for example, could use £10k with fiveraday and £10k with nutmeg during 2017/18 (just examples). I cannot find a way however of transferring existing ISA's into them for past years.
I guess funds in those sort of platforms are not protected under FSCS guidelines?
1) you can't split investments between different ISA providers in the same tax year
2) Most providers allow transfers in
3) Those platforms should provide the normal FSCS protections
Thank you, yes, both nutmeg and fiveraday replied promptly to confirm you can transfer in, in full or part (with caution of whether it is the right thing to do), and also that they are protected under FSCS rules, albeit to £50k, not £80k because of the investment factor. Very happy with both their replies, but if I'm limited to using just one, I'll have to dig deeper into their projections.
If anyone has used both nutmeg and fiveraday and is willing to offer an opinion, please do.
So, I now have to make decisions over next steps. I don't want to transfer a 6 figure ISA into these investment companies, as that would be too risky when I'm not familiar, so I might have to use a mainstream bank for their investment/S&S ISA, maybe split the funds up into a couple.
I know it is all personal, but does that sound like a viable approach, or am I missing a key point?
If anyone has used both nutmeg and fiveraday and is willing to offer an opinion, please do.
So, I now have to make decisions over next steps. I don't want to transfer a 6 figure ISA into these investment companies, as that would be too risky when I'm not familiar, so I might have to use a mainstream bank for their investment/S&S ISA, maybe split the funds up into a couple.
I know it is all personal, but does that sound like a viable approach, or am I missing a key point?
mdianuk said:
Thank you, yes, both nutmeg and fiveraday replied promptly to confirm you can transfer in, in full or part (with caution of whether it is the right thing to do), and also that they are protected under FSCS rules, albeit to £50k, not £80k because of the investment factor. Very happy with both their replies, but if I'm limited to using just one, I'll have to dig deeper into their projections.
If anyone has used both nutmeg and fiveraday and is willing to offer an opinion, please do.
So, I now have to make decisions over next steps. I don't want to transfer a 6 figure ISA into these investment companies, as that would be too risky when I'm not familiar, so I might have to use a mainstream bank for their investment/S&S ISA, maybe split the funds up into a couple.
I know it is all personal, but does that sound like a viable approach, or am I missing a key point?
The risk is primarily driven by the investment strategy underlying the ISA, not the provider of the ISA.If anyone has used both nutmeg and fiveraday and is willing to offer an opinion, please do.
So, I now have to make decisions over next steps. I don't want to transfer a 6 figure ISA into these investment companies, as that would be too risky when I'm not familiar, so I might have to use a mainstream bank for their investment/S&S ISA, maybe split the funds up into a couple.
I know it is all personal, but does that sound like a viable approach, or am I missing a key point?
mdianuk said:
Thank you, yes, both nutmeg and fiveraday replied promptly to confirm you can transfer in, in full or part (with caution of whether it is the right thing to do), and also that they are protected under FSCS rules, albeit to £50k, not £80k because of the investment factor. Very happy with both their replies, but if I'm limited to using just one, I'll have to dig deeper into their projections.
If anyone has used both nutmeg and fiveraday and is willing to offer an opinion, please do.
So, I now have to make decisions over next steps. I don't want to transfer a 6 figure ISA into these investment companies, as that would be too risky when I'm not familiar, so I might have to use a mainstream bank for their investment/S&S ISA, maybe split the funds up into a couple.
I know it is all personal, but does that sound like a viable approach, or am I missing a key point?
A few points to consider:If anyone has used both nutmeg and fiveraday and is willing to offer an opinion, please do.
So, I now have to make decisions over next steps. I don't want to transfer a 6 figure ISA into these investment companies, as that would be too risky when I'm not familiar, so I might have to use a mainstream bank for their investment/S&S ISA, maybe split the funds up into a couple.
I know it is all personal, but does that sound like a viable approach, or am I missing a key point?
1. FSCS "protection" may not be relevant in the way you imagine. It's not a guarantee that you won't/can't lose money...! It won't cover losses from investment performance.
2. I wouldn't waste too much time digging into projections (more accurately illustrations). They are largely driven by assumptions determined by the regulator, so will likely reflect only differences in charging structures. Important but perhaps not what most people hope/believe/expect.
3. You wouldn't be transferring your ISA "into" one of these companies. Unlike banks, your money isn't held by the investment company itself. Securities (shares etc) will be held for your benefit by a trustee/nominee in one form or another, and any cash will be in a similarly segregated client account.
In practical terms your exposure to companies like Nutmeg and Fiveraday is limited to how well the models and algorithms they employ perform over the extended time period contemplated by products of this nature.
Before becoming too forensic about the details of FSCS "cover", illustration methodologies and sponsor risk, make sure that you don't lose sight of the bigger picture. By far the biggest risk taken by many people with surplus capital is to leave it uninvested, or invested in cash/cash equivalent products that expose it to inflation. By investing some of your surplus capital in an equity exposed product you may well be reducing the financial risks you are taking.
A good financial adviser could help you understand all of this.
Edited by WindyCommon on Thursday 6th April 09:47
Edited by WindyCommon on Thursday 6th April 09:48
Ok so for now, I've decided to transfer 25% of my Cash ISA into a S&S ISA on a medium risk, thereby minimising my exposure and not throwing too large a lump in at any given time. If it appears to operate well (and by that, I mean anything more than 1% being a bonus) then I'll consider another part transfer up to a level I'm comfortable with, or put into another pot at a different risk level.
I'm going to use the bank operated S&S ISA, rather than another platform, just for convenience and my own peace of mind.
I know no one can know my own personal circumstances, but does that sound sensible for someone starting out with this?
It does say in the terms that by subscribing to an S&S ISA that I cannot use another platform in the same financial year, but given this is transferring in old funds and no new funds, I think it should be ok if I look to try another platform too? Not sure spreading investments actually has its benefits though.
I'm going to use the bank operated S&S ISA, rather than another platform, just for convenience and my own peace of mind.
I know no one can know my own personal circumstances, but does that sound sensible for someone starting out with this?
It does say in the terms that by subscribing to an S&S ISA that I cannot use another platform in the same financial year, but given this is transferring in old funds and no new funds, I think it should be ok if I look to try another platform too? Not sure spreading investments actually has its benefits though.
I'm playing around with Funding Circle and getting good results
https://www.fundingcircle.com
Gross yield: 8.3%
Annualised return (after fees and bad debts): 10.9 %
Estimated fully diversified return (after fees and bad debts): 6.2%
https://www.fundingcircle.com
Gross yield: 8.3%
Annualised return (after fees and bad debts): 10.9 %
Estimated fully diversified return (after fees and bad debts): 6.2%
I chucked a modest amount into a new fund Hargreaves Lansdown set up at the start of November last year via a S&S ISA. To today it's increased in value by 13.66%
Obviously it could have potentially decreased in value but I would never put money in a cash ISA, how many years would it take to make what that has in less than 6 months?
Obviously it could have potentially decreased in value but I would never put money in a cash ISA, how many years would it take to make what that has in less than 6 months?
Cotty said:
I'm playing around with Funding Circle and getting good results
https://www.fundingcircle.com
Gross yield: 8.3%
Annualised return (after fees and bad debts): 10.9 %
Estimated fully diversified return (after fees and bad debts): 6.2%
Couple of times I've suggested P2P here, I've been shot down in flames... <shrug> I'm happy.https://www.fundingcircle.com
Gross yield: 8.3%
Annualised return (after fees and bad debts): 10.9 %
Estimated fully diversified return (after fees and bad debts): 6.2%
But within P2P, I'm not sure I'd point my worst enemy at FC. I had good results there for a while (XIRR of about 7%, even with a big property loan that's currently flagged as default, but should pay back in full sooner or later), but I'm now waiting for my last massively overdue loans to sort themselves out, and then I'm clear.
I presume you're aware of www.p2pindependentforum.com ?
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