tennaval Posted February 2, 2010 Share Posted February 2, 2010 whats the point of cash isas? when you can and have been able to get better rates net of tax elsewhere for quite a while now? Certainly the case on the shorter term products anyway, Is it just the magical notion of "tax free" that is the pull or am i missing something, do people hope that when interest rates rise isa rates will somehow adjust more favourably with taxable products....? Quote Link to comment Share on other sites More sharing options...
Little Professor Posted February 2, 2010 Share Posted February 2, 2010 whats the point of cash isas? when you can and have been able to get better rates net of tax elsewhere for quite a while now? Certainly the case on the shorter term products anyway I'd argue with the contention that you can get significantly better rates net of tax elsewhere, but that's irrelevant really. When interest rates go up, if you've managed to bank several year's worth of cash ISAs, you will certainly feel the benefit of the tax free status. If you raid your cash ISAs now in the hope of ekeing out an extra 0.1% somewhere, you will never be able to reclaim those lost years tax-free allowances. Quote Link to comment Share on other sites More sharing options...
Mixle Posted February 2, 2010 Share Posted February 2, 2010 whats the point of cash isas? when you can and have been able to get better rates net of tax elsewhere for quite a while now? Certainly the case on the shorter term products anyway, Is it just the magical notion of "tax free" that is the pull or am i missing something, do people hope that when interest rates rise isa rates will somehow adjust more favourably with taxable products....? They are mainly beneficial to higher rate taxpayers. Quote Link to comment Share on other sites More sharing options...
okaycuckoo Posted February 2, 2010 Share Posted February 2, 2010 I'd argue with the contention that you can get significantly better rates net of tax elsewhere, but that's irrelevant really. When interest rates go up, if you've managed to bank several year's worth of cash ISAs, you will certainly feel the benefit of the tax free status. If you raid your cash ISAs now in the hope of ekeing out an extra 0.1% somewhere, you will never be able to reclaim those lost years tax-free allowances. Yes, unless the gubmint does a U-turn and decides to tax the whole lot. What would that mean, I wonder? Not just the stroke of a pen. Hmmm. Or maybe mandatory investment in state bonds to avoid tax? Quote Link to comment Share on other sites More sharing options...
tennaval Posted February 3, 2010 Author Share Posted February 3, 2010 I'd argue with the contention that you can get significantly better rates net of tax elsewhere, but that's irrelevant really. When interest rates go up, if you've managed to bank several year's worth of cash ISAs, you will certainly feel the benefit of the tax free status. If you raid your cash ISAs now in the hope of ekeing out an extra 0.1% somewhere, you will never be able to reclaim those lost years tax-free allowances. Point taken, also the benefit to higher rate tax payers. I must admit it was my game plan to do exactly this, however, I just doubt whether salting away good money year on year into a cash isa pot will be as good a protection from inflation as say a basket of blue chips that will preserve their margins over the longer term no matter what. I guess the obvious answer is to spread it around......? Quote Link to comment Share on other sites More sharing options...
guitarman001 Posted February 3, 2010 Share Posted February 3, 2010 I always try to squirrel away the max amount into my ISA every year. As I understand it, the government can tax you in retirement on any other savings you have? Please confirm! I must find out how a stocks/shares ISA works... Can you still put in £5100 each year (starting from this April) and also add.... £7200 capital in the form of stocks? What if you make money on the shares? That can't get added to the ISA pot...? Quote Link to comment Share on other sites More sharing options...
tennaval Posted February 3, 2010 Author Share Posted February 3, 2010 I always try to squirrel away the max amount into my ISA every year. As I understand it, the government can tax you in retirement on any other savings you have? Please confirm! I must find out how a stocks/shares ISA works... Can you still put in £5100 each year (starting from this April) and also add.... £7200 capital in the form of stocks? What if you make money on the shares? That can't get added to the ISA pot...? No they cant tax your isa pot. But my point is how much is that pot going to be worth, it will be seriously eroded over a period of years from inflation, even with the tax wrapper and maybe the smarter option is to put into a blue chip fund or an income and growth fund, because we are entering a highly inflationary period, and in my opinion central banks will manipulate and skew rates to erode debt whereas, big companies will ultimately always find a way to keep their margins. None of us know but this is my instinct. Quote Link to comment Share on other sites More sharing options...
guitarman001 Posted February 3, 2010 Share Posted February 3, 2010 I know ISA pot can't be taxed... I was referring to other savings. Say you have £100k in an ordinary savings account.. that CAN be taxed after retirement, yes? Or no? I agree though - ISA rates are poor right now. Reluctant to withdraw mine... Quote Link to comment Share on other sites More sharing options...
tennaval Posted February 3, 2010 Author Share Posted February 3, 2010 yes? Or no? yes Quote Link to comment Share on other sites More sharing options...
Prof Posted February 3, 2010 Share Posted February 3, 2010 (edited) I`m currently getting 3.1% tax free, last year i got 6.5%, is my answer to the question. While it is true that you can sometimes get better rates of return on some "normal" savings accounts than on some Cash ISAs, a little bit of research before investing in or switching a Cash ISA will usually result in the ISA being the best choice. I`ll add that I`m not a higher rate tax payer, but I still reckon ISAs are a financial benefit to myself (as opposed to normal savings accounts) Edited February 3, 2010 by Prof Quote Link to comment Share on other sites More sharing options...
Little Professor Posted February 4, 2010 Share Posted February 4, 2010 the smarter option is to put into a blue chip fund or an income and growth fund Yeah, cos the stock market never goes down, does it Quote Link to comment Share on other sites More sharing options...
Guest absolutezero Posted February 4, 2010 Share Posted February 4, 2010 Yeah, cos the stock market never goes down, does it That depends on whether you want growth or dividends. Quote Link to comment Share on other sites More sharing options...
tennaval Posted February 5, 2010 Author Share Posted February 5, 2010 Yeah, cos the stock market never goes down, does it like many i am just trying to work out how best to protect hard earned cash for retirement, im not an expert, i'm 52 with zero pension and my instinct tells me over a 15-20 yr period a basket of blue chips which as AZ points can comfortably provide 4.5% div and historically (over 15-20yrs) outperform cash is preferable to plumping ONLY for cash in an inflationary environment. Does that really make no sense to you? Quote Link to comment Share on other sites More sharing options...
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