If you have a cash ISA - why don't you

[Swedes]

transfer it to a stocks and shares ISA?

Interest rates are likely to remain low for some time, so cash ISAs are a bit erm rubbish. As we emerge from recession, the value of shares is rising fast.

[LadyMuck]

Well the main issues would be the length of time you were looking to invest over and the amount of risk that you were willing to take. Stocks and shares are considered a reasonable strategy over at least a 5 year period, but to be honest if you were saving to say put down a house deposit in 2 or 3 years time you would be taking a risk by choosing shares.

With a cash ISA the risk of you losing your capital is limited to the erosion caused by inflation being higher than the interest rate.

With a stocks and share ISA you run the risk of losing some of your capital.

The risk profiles of the investments are very different - some people really don't want to run additional risk.

[Swedes]

LadyMuck - In a stocks and shares ISA, you are only allowed to invest in FTSE 250 companies. You aren't allowed to invest in AIM (alternative investment market) shares. This substantially reduces the risk.

I get really cross when people present investing in shares as high risk and requiring a high degree of expertise. It's rubbish and means the stockmarket remains the preserve of the already wealthy.

[MaryBS]

We have a stocks and shares ISA. Its value has plummeted in recent years, the latest statement says we've paid out more in the past year than has gone in. On the other hand, with things on the up, I'm hoping (and praying) it'll improve.

We also have a cash ISA though, and like the flexibility that entails - its a darn sight easier to get at the money!

[foxinsocks]

switch off your television set and go outside and do something less boring instead

I could not have this thread up the whole day without writing what I was thinking

I am tempted by the self select stocks and shares ISAs but I am still not sure we can afford to put any money aside tbh!

[LadyMuck]

Yes, I know that, but nevertheless you can lose your capital, especially over the short term. Our share ISAs, built up over many years, have dropped significantly. Not an issue for us as we have a balanced portfolio and these ISAs are expected to continue for at least another 10-15 years, so we anticipate that by the time we actually need to realise these investments the markets will have recovered. That said, in any event in the 5 years or so before we want to realise the investments we will start transferring our of shares and into something lower risk.

I see what you mean in terms of shares remaining open to the relatively wealthy, but isn't that in part due to the fact that the less-well-off cannot afford to take risks?

Both of our parents have lost a significant percentage (over 50%) of their ISAs, though these were always riskier as they had invested shares in various demutualisations or other public offerings. For one set of parents it hasn't been an issue - they were investing an inheritance and were willing to take the increased risk. The other set weren't that financially literate, did what their papers money pages told them and lost money that they couldn't really afford to. It had affected their retirement plans significantly.

i think that you also need to think about the difference between savings and investments. The Cash ISA is a good savings tool, but a poor investment one. Share ISA is a poor savings tool but a good investment one. Horses for courses and all that.

[KingCanuteIAm]

I am pretty sure that a more useful and morally sensible post would have been "If you have a cash ISA why don't you - go and talk to a decent financial adviser and see if that is indeed the best option for you in the current climate".

Advising people to do something in a blanket fashion like this when you have no idea of their situation, needs, wants, risk profiles or anything else is irresponsible and a bit silly.

[QuintessentialShadows]

Swedes - just bookmarking this so I can find it later.

[ChasingSquirrels]

why? Because I have a very risk-adverse investment profile.
And share ARE more inherently risky than cash deposits - hence the better return.

[QuintessentialShadows]

My father always said "Never invest more than you can afford to lose".
I think that is sensible.

[Mousey84]

Like leningrad, my isa is for short-medium term savings. (Deposit for a house, so may need to withdraw at short notice, and need to know how much is in there)

Once Im in the position to save for long term (pension etc) I will then look at investing in a shares isa.

[SomeGuy]

I did transfer my cash ISA to stocks and shares.

But it's not suitable for everyone.

For one thing cash ISAs save pretty much everyone tax. Share ISAs - not so much. This is why the government wants you to transfer - because cash ISAs cost more in lost tax.

Gordon Brown fucked over non-taxpayers, pensioners, etc. back in 1997, when he scrapped Advance Corporation Tax relief, meaning that you could no longer get dividend tax relief (on the tax paid on the underlying earnings).

So for Joe Average, shares typically don't have any tax payable at all - no income tax on dividends (unless you are a higher rate tax payer, and even then many shares are non income generating), and the capital gains tax allowance is, rather absurdly, higher than the personal allowance, so you really need to have a decent sized portfolio to have to worry about CGT.

Personally I use my share ISA for high yield investments, such as bonds. I bought Invesco Perpetual Monthly Income Plus in February, and they've since risen by 30% (increase in my capital value - basically due to improved sentiment about the risk of default by the bond issuers), and I'm still holding them, because they're still giving 8.16% yield, which does indeed piss all over anything you'd get from the bank.

It's not true BTW to say that you can only invest in FTSE250 companies, you can invest in pretty much any worldwide equity, property funds, whatever, some of which are very high risk. I invested in Russia in December 2007, they are down 39% since purchase, and this after rising 50% in the last six months!

It's best to avoid withdrawing from ISAs, because you lose the allowance forever. As a tax shelter, ISAs are potentially very valuable. Assuming a relatively low return of 4% per annum, and 40% tax, a single year's ISA allowance (£3600) is worth £57.60.

If you consider that 4% yield to gross up the £57.60, then withdrawing £3600 from your cash ISA (or equally, failing to use your allowance), costs you £57.60/.04 = £1440, as a higher rate tax payer, or as a basic rate payer £720. So best to treat all ISAs as long-term savings - cash ISA or not

[Swedes]

SomeGUy I note on another thread you said you use HL and Selftrade. I pay £29.95 to trade inside my HL ISA and I trade a lot but I love HL's brilliant user interface -- it's so beautifully clear and simpl. I also have a First Direct Shares account for which I only pay £10 flat rate per deal but the user interface is terrible. I loathe it. And it prevents me from using it.

What is Selftrade like?

I know it would be cheaper for me to switch to someone like Selftrade or TD Waterhouse as HL is more expensive, but I know I would regret switching if the user interface was as cumbersome as First Direct.

[SomeGuy]

Are you sure it's £29.95? I thought they had a staggered fee depending on trade size.

I don't have any problems with selftrade's UI.

[Swedes]

SomeGuy - Yes, you are right. HL charges are staggered from £9.95 up to £29.95. I tend to be only invested in about 2 -3 shares at any one time. And sometimes I have all my ISA money invested in one share . I find my investments easier to look after that way. But it means I pay the top end dealing charge for each trade.

[SomeGuy]

I think selftrade's charging structure means you get 3 free trades each August, so good time to switch now.

[Kevlarhead]

I have a cash ISA.

I've been somewhat risk averse since handling letters (while in a temp job at uni) which basically said:

'Dear Mr X.

You invested 10k in one of our ISAs. Since then the Asian economies have gone completely tits up, and your ISA is now worth 6K. As stated in the small print, this is totally not our fault, and all we can say is that it certainly sucks to be you.

Tara!

FIS'

[pipWereRabbit]

Because the shares ISA I have got has lost me money every year for the last 8 years. I'm not putting any more in - and it's not even worthwhile closing the thing at the mo.

[NancyBotwin]

Can I hijack and ask if I am right in thinking a stocks and shares ISA is only suitable for medium/long-term purposes? Have found out that an elderly (possibly senile) relative has been sold one by her bank and am a bit that they would stoop so low to reach their sales targets... given that she is very unlikely to still be alive to see the value of shares increase by that much...

[Quattrofangs]

I do have a stocks and shares ISA, Swedes. They're not mutually exclusive, are they? Mine's done remarkably well.

[amidaiwish]

Kevlarhead, you forgot the bit that says "but our fees remain"

[Whippet]

mumadoo
Do you work for/ own www.investment-advice-online.com by any chance?

You have posted on multiple threads today about how wonderful it is...

It's all a bit obvious IMHO.

Did you know that advertisers have to pay a fee?

[mumadoo]

actually Whippet no i don't.

I had just used it recently and found it really useful and so I thought I would post it on the investment threads where I thought it might be helpful to others.

Nice to know there's are trusting nature amongst fellow Mums though.... perhaps you should spend more time caring for your children than taking on a self appointed vetting role for new mums on mumsnet

perhaps you should keep your "humble opinion" to yourself in future

[Whippet]

So as a new poster you felt the need to post the link to this website on 13 (many old) threads all within the 'Investment' topic as your first ever post?

No other posts.
No other topics.

Sorry. Don't buy it.

(P.S. Crap site anyway folks - I did check!)