ISA Advice

[J4CKO]

I have opened a Natwest ISA which says it pays 4 percent, but cane help thinking this is a bit of cop out option and not sure whether to transfer cash to it now.

Would I be better opening a Vanguard S and S one or similar ?

[bitchstewie]

A cash ISA is typically going to be a very different risk profile to a S&S ISA.

Start with basics.

What led you to open the cash ISA?

[J4CKO]

bhstewie said:

A cash ISA is typically going to be a very different risk profile to a S&S ISA.

Start with basics.

What led you to open the cash ISA?

Had some money, had bank account and want some better interest than the 0.0000000000004 percent or whatever Natwest Savings accounts pay.

[bitchstewie]

J4CKO said:

Had some money, had bank account and want some better interest than the 0.0000000000004 percent or whatever Natwest Savings accounts pay.

Broadly speaking the first thing I would do is think about timescales and your appetite for risk.

The cash ISA is cash i.e. it won't shoot the lights out and it'll be a bit less than BoE base rate is now but you always know how much will be there if you need the money tomorrow.

There's a whole spectrum of risk with what you can hold a S&S ISA so IMO it very much depends on what the money means to you as there's a spectrum from "bit of fun" to "irreplaceable life savings" and what your timescales are for needing it and simply how jumpy you are seeing a balance go down if you've only ever held cash and seen the balance go up (at 0.0000000000004 percent ).

[Huzzah]

Why not have both? One now and a new one in April.

[J4CKO]

bhstewie said:

J4CKO said:

Had some money, had bank account and want some better interest than the 0.0000000000004 percent or whatever Natwest Savings accounts pay.

Broadly speaking the first thing I would do is think about timescales and your appetite for risk.

The cash ISA is cash i.e. it won't shoot the lights out and it'll be a bit less than BoE base rate is now but you always know how much will be there if you need the money tomorrow.

There's a whole spectrum of risk with what you can hold a S&S ISA so IMO it very much depends on what the money means to you as there's a spectrum from "bit of fun" to "irreplaceable life savings" and what your timescales are for needing it and simply how jumpy you are seeing a balance go down if you've only ever held cash and seen the balance go up (at 0.0000000000004 percent ).

Basically, dont need to be hugely conservative, not playing fast and loose but equally, can take a bit of risk.

Timescales, just going to leave it in there indefinitely, got ten and a bit years until retirement.

[OIC]

Nothing wrong with having some of your money in a cash ISA as long as you are getting more interest than the inflation figure monthly.

All tax free and all compounding.

There may be trouble ahead though, as it's pretty likely UK inflation is going to increase (possibly explode) over the next couple of years.

Cash ISA rates will probably lag behind that curve so you may need to do a few transfers, which are usually slow to complete.

Better than just chucking the money in premium bonds and letting inflation munch away at it.

I know some people who have had £50,000 in PB for 10 or more years.

Now probably worth around £40,000 at best.

[bitchstewie]

J4CKO said:

Basically, dont need to be hugely conservative, not playing fast and loose but equally, can take a bit of risk.

Timescales, just going to leave it in there indefinitely, got ten and a bit years until retirement.

A quick simple cheap option could be to chuck the lot in something like Vanguard LS60 or LS80.

You might prefer to open an ISA and drip feed the money in though i.e. if you have £10K drop it in monthly over 10 months or whatever you feel comfortable with.

It's easy to say put it all in a global tracker but "not playing fast and loose but equally, can take a bit of risk" suggests that may not be the level of risk/volatility you're looking for.

Or you could put 50% in a tracker and 50% in cash - there is no right answer and there are infinite options.

It depends how much time you want to put into it and how sure you are that you really will just leave it in there.

Time Hale's Smarter Investing is worth a read - again some of it depends if this is pocket money or a good chunk of your life savings.

I don't work in finance so take everything I just said as just a random opinion

[C69]

If you decide to keep this money in cash, do you actually need the ISA wrapper? If you haven't already got other non-ISA savings that are using up your Personal Savings Allowance, then the answer might be "no".

It's worth checking, because rates offered on non-ISA savings are usually better than those for ISAs. For instance, the best non-ISA one-year fixes are currently around 4.75%, while the ISA equivalents are 4.50%.

[J4CKO]

C69 said:

If you decide to keep this money in cash, do you actually need the ISA wrapper? If you haven't already got other non-ISA savings that are using up your Personal Savings Allowance, then the answer might be "no".

It's worth checking, because rates offered on non-ISA savings are usually better than those for ISAs. For instance, the best non-ISA one-year fixes are currently around 4.75%, while the ISA equivalents are 4.50%.

Good call but its £500 and doesnt go very far before you are over it.

[Somebody]

How old are you OP? Do you have any immediate need to access the cash?

One thing I regret is splitting my annual ISA subscriptions in favour of cash ISAs when I was younger instead of putting a higher proportion into S&S. Time in the market not timing the market as they say.

[ro250]

C69 said:

If you decide to keep this money in cash, do you actually need the ISA wrapper? If you haven't already got other non-ISA savings that are using up your Personal Savings Allowance, then the answer might be "no".

It's worth checking, because rates offered on non-ISA savings are usually better than those for ISAs. For instance, the best non-ISA one-year fixes are currently around 4.75%, while the ISA equivalents are 4.50%.

Whilst it's not fixed, Trading212 cash ISA pays 4.9%.

[ro250]

Somebody said:

One thing I regret is splitting my annual ISA subscriptions in favour of cash ISAs when I was younger instead of putting a higher proportion into S&S. Time in the market not timing the market as they say.

Same here. Only in the last few months have I started using my S&S ISA. Still reasonably conservatively in a global index, but longer term I believe it makes sense.

[J4CKO]

Somebody said:

How old are you OP? Do you have any immediate need to access the cash?

One thing I regret is splitting my annual ISA subscriptions in favour of cash ISAs when I was younger instead of putting a higher proportion into S&S. Time in the market not timing the market as they say.

54, no immediate access required.