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Value of ISAs.
3 Answers
Are ISAs the best way to save money ? After investing in them for c.10 years, they seem to be performing very poorly, compared with say, Premium Bonds. Would I be wise to cash in these ISAs and reinvest the cash elsewhere?
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Eh/ What type of ISA do you have. Share ISAs can be a bit risky but good cash ISAs typically give tax free returns of around 6% p.a.
Premium bonds get no interest although the money goes into pot; around 4% interest on the pot is then put into a prize fund and if you are lucky you will win some of this. But overall the payout is less than an ISA. Furthermore, for the first few months your bonds don't go in the draw whereas your ISA gets interest from day 1.
For bigger potential returns try pensions, shares, unit trsusts or property- but be prepared to see your funds fall if you are unlucky.
Premium bonds get no interest although the money goes into pot; around 4% interest on the pot is then put into a prize fund and if you are lucky you will win some of this. But overall the payout is less than an ISA. Furthermore, for the first few months your bonds don't go in the draw whereas your ISA gets interest from day 1.
For bigger potential returns try pensions, shares, unit trsusts or property- but be prepared to see your funds fall if you are unlucky.
Shares have taken a rocky ride for the last few years which is why your shares ISA is not performing well. 'Tax free' is a bit of an illusion when the value goes down and taking charges into account. I am looking to switch some spare cash and have been looking these current accounts which offer 8% or 10% but they all seem to have quite onerous conditions. Even the Alliance and Leicester 8.5% current accounts have a monthly fee, effectively reducing the interest to 3.7% (dishonest if you ask me). I have �15k in premium bonds and win �50 most months but the return is around 4%, effectivley the same as a high paying current account like A&L. I'm hoping for a big win and the odd prize just cushions the investment.. I'm am therefore going to quickly put my spare cash into my cash ISA which give a better return than any current account. My wife also has one, effectivley doubling the investment.
Thank you both for the responses above.
Averaged out, my Premium Bonds return about �150
per month, whilst my ISAs just sit around twiddling
their thumbs. I'm thinking that if Mrs.S and I invest
in P.Bs. to the limit, then to hell with ISAs. Ernie seems
to be more user-friendly.
Originally, the advice given was that ISAs were a good
medium-to-long term investment, but after 10 years
they remain stagnant, and the cost-of-living erodes
them further. Not do they offer even the remote chance
of a monthly �1m. win.
Decision made. Come on in,Ernie.....
Averaged out, my Premium Bonds return about �150
per month, whilst my ISAs just sit around twiddling
their thumbs. I'm thinking that if Mrs.S and I invest
in P.Bs. to the limit, then to hell with ISAs. Ernie seems
to be more user-friendly.
Originally, the advice given was that ISAs were a good
medium-to-long term investment, but after 10 years
they remain stagnant, and the cost-of-living erodes
them further. Not do they offer even the remote chance
of a monthly �1m. win.
Decision made. Come on in,Ernie.....
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