Are Cash ISAs a Waste of Money?

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[myfyrmadocjones]

7 million cash ISA with a total of £31 billion saved is an average of £4, 429 not £7, 750. Did you mean 4 million accounts for an average of £7, 750?

[showady]

I'm 45 and just paid off my mortgage. I plan to retire at 55, and am saving/investing 60% of my salary. I'm putting it into both cash and stocks & shares ISA, as if the stock market is having a bad few years around my planned retirement age, I can then use the funds in the cash ISA. I'm also looking at opening a SIPP. My reasoning behind this strategy is to have as many options of where to draw from at 55, and leave my 3 DB pensions till I'm 60-65.

[benjaminheginbotham]

I think Cash ISAs do offer good value if you're saving towards something where you need to eliminate risk and guarantee returns. e.g saving for a house or offsetting a fixed rate mortgage instead of overpaying (assuming your mortgage rate is lower than the cash ISA interest rate).

[davidbarclay]

Higher rate tax threshold is lower in Scotland which can affect the PSA calculation. My cash ISA and some Premium Bonds are my emergency fund. Wouldn’t want to be a forced seller of shares during a downturn.

[MrPurle]

Good stuff Toby :) I've got the 212 Cash ISA for the short term savings, and the 212 S+S ISA for the longer term... because they're both flexible ISAs I can almost use them like normal savings accounts - the general idea being i'll rebalance in favour of investments as the year progresses.

[hariowen]

This is why, for the first time since Cash ISAs were introduced - that some Cash ISAs now pay better interest than non-ISA regular savings accounts.

[GregBrammah]

If you're in your 60's with over 50k in cash isa at 5.2%, wouldn't it make sense to sit on that to help mitigate risk from stock investments? You could always transfer to other cash instruments when interest rates fall.

[CobraTackle]

That's crazy. That's my block of flats in the intro, I'm sitting there right now watching this video!

[kingarthur]

I'm getting 5.9 on a 2 year fixed..so def worth it for me. Yes lm getting 11% on stocks and shares....BUT way world is with wars etc....u could end up at a loss. Looking backwards is not same world looking forward. We never been this close to a world war with Russia and allies. Inflation is not under control and we still to reliant on gas. 20% into stocks rest into bonds...savings works for me fine

[quintonlee]

Don’t forget about Gilts which are tax free on the capital gain! In theory, it is risk free because it’s a government bond too.

If you can find one paying a low coupon, that can be tax efficient to use to park some cash for the short term

[TDGinge]

The majority of my emergency fund is in a Cash ISA.
I have a 6% savings account with NatWest that only allows £150 per month deposited so I’m slowly drip feeding that from the emergency fund.
I also have multiple savings accounts for Christmas, holidays, car repair and pet care.

Personally I use the Cash ISA so the others can grow below the tax threshold.

Great video though, like you said, I don’t think people realise how much their savings can grow without having to pay tax.

[KJ.]

Thank you Toby, I wasn’t aware you could move funds between ISA accounts and not affect your current allowance, these videos are really helpful, much appreciated 👍

[ilikecopyright]

I use my own stocks&shares ISA to build long term retirement and a cash ISA to store my emergency fund which I’m building up to a couple months salary

[pataleno]

I have 6 months emergency money in a Cash ISA paying 5.19%. I have 100K in a Stocks and shares ISA, the Other 500K is in my SIPP pension. Hope to double that in the next 5 years when I retire.

[dpk]

One does not have to pay any Capital Gain until amount is withdrawn. It could be several decades later when retired. If annually taken out up to CG allowance, then there is no tax to pay. Also meanwhile one could also enjoy cash ISA savings currently with 5 pct interest at no risk too. So its not necessary that ISA best use is for stock and shares. It does depend on amounts one has to invest and risk appetite. I think it would help if you made a video using that scenario too. Thanks

[richardwall]

Nice work Toby !
You seem to have covered the subject rather well
I cam across a stat the other day that up to 95%of the UK population do not have an equity ISA !!
Keep up the very clear and helpful output

[WatchTv-nlut]

Depends on how you use it. If your not maxed out isa allowance in stocks n shares. While still wish have some short term flexibility.
Cash ISA is like a free tool to carry forward last year ISA allowance.

[johntaylor]

I doubt most people are saving more than 20K a year - so they'll put it into whichever ISA account best suits their needs. If they're planning to use that money in the next few years then taking the lower risk Cash ISA option is reasonable.

[Pooter-ityg]

I'm old enough to remember when ISAs were first introduced and the Cash option has always been a damn disgrace.
The big hook for ISAs is tax exemption but it's negligible where passive savings are concerned. Simply put, cash can't increase in value, only yield through controlled and charged lending, and Cash ISAs are little more than savings accounts with marketing spin offering an extra little snack on top of inflation (when possible).
Fair enough if you're terrified of investing, but even tame "granny" bond ETFs would trounce the Paddington pennies from Cash ISAs.

[deantalksfootball]

I've got my money all in one standard current account so I'm accumulating no interest whatsoever with it all in there, I see the Trading 212 Cash ISA is currently 5.2% and it's FSCA covered so it would make sense to put deposit some of it into there wouldn't it ? And being flexi I can withdraw and put the same amounts back in as much as I want and in this tax year.
I've just never used a savings accounts or cash ISA's before so that's why I have some trepidation about moving it.