Are ISAs worth while?

[Coldicote]

I used to have a pep with HBOS which was converted to a shares ISA. Decided to sell up but lost about 80% of what I had originally saved. Never again! What experience do others have and are any ISAs worth while?

[m@d h@tter]

My stocks ISA with Scottish Widows is currently below the sum I initially invested. I'm waiting for it to recover and will probably cash it in when it's above what I put in.

Your best bet may be a cash ISA. I've one of those too with Lloyds TSB which is doing well, it has no risk and guaranteed interest in April.

[Coldicote]

Thanks for your replies. Perhaps HBOS was exceptional and my bad luck to be involved with it. I've no knowledge of cash ISAs except that I understand there is a limit per tax year. What does the bank do with the money you save in a cash ISA? If it is committed to stocks and shares isn't there the same risk of the value of savings going up or down?

[Rollo]

A cash ISA is just like putting money in a building society account. It just earns interest. But because it is an ISA it is tax free.

But the rates of interest are very low now.

If you invest in shares you have to be aware that the value can (and does) go down as well as up!!

It's a risk you take.

[factor-fiction]

With a CAsh ISa it doesn't matter what teh bank does with your money. What matters is the rate of interest that applies to the account. The cash limit is �3600 per tax year but you could out �3600 in now and then another �3600 in April as it's a new tax year.

[Whoever]

I don't think there's a person in the land who hasn't lost money on their ISAs as a result of the current financial crisis. If you sell now you will crystalise your loss and never have a chance for your equities to rise again. If you can mentally afford to write off this investment long term and leave it where it is, it will hopefully recover some or all of its value. If you're a taxpayer, it's worth hanging on to a tax free investment. unless you desperately need the money. Cash ISAs are less risky than equity ISAs but interest rates are very low at the moment. If you take out a Cash ISA it stays as cash. You have to make a formal application to transfer it to an equity ISA

[Coldicote]

Thank you all for your replies. It could take years for share ISAs to regain any worthwhile value - it depends how long one is prepared to wait. As I now understand from comments here, a cash ISA does not lose its original value, it's just that there's hardly any interest. Perhaps other types of savings account, even though not tax free, might be a better option.

[buildersmate]

Unlikely, because interest rates on ALL savings accounts are low right now. With a cash ISA, at least you don't get taxed at 20% (or higher) on the interest that you do earn. That's the one advantage of them over a conventional savings account. Just have to watch the interest rate paid - even between cash ISAs the rates vary a lot.

[gelda]

I put �1000 in a cash ISA 2 years ago and up to now I've made �224 in interest which I'm quite satisfied with, at least my money is safe.

[factor-fiction]

Err, are those figures right , Gelda?
�224 interest in two years on a cash ISA balance of �1000?
That's an interest rate of just over 10% per annum!

[Coldicote]

Interesting points for discussion here Gelda and Factor 30 and thank you. My main concern about cash ISAs is to know that the sum I originally put in does not diminish, whether or not it earns interest. If I'm wrong then please somebody correct me.

[mrs_overall]

A cash ISA does NOT diminish, However, as someone else has said, the interest rate you will get is very low, but your money is as safe as houses.

[Coldicote]

Thanks mrs_overall and to everyone else who has contributed to this debate

[factor-fiction]

Yes it's always been true Mrs O that cash ISAs don't diminish in value. But will the interest rate soon become zero or negative!

[J'Adore]

well, ive just told from my building society that my Cash ISA interest have dropped from 5.5% to 1.5% =(