Cash ISA Query...

Elephant08 :P · 6 Jan 2008 at 16:36

Hi there people!

Right then, decided I need to save money for the future just a quick question.

Say if I start with £3k, and I put this in the ISA, and put in £200 a month, will I really have a total of roughly £38k after 10 years. At 6.05%.

This is what the calculator at the bottom of the page on moneysavingexpert says. - Obviously at the rate of 6.05%.

Can I also start it up with £1, (on some i can), and put in the £200 a month for 10 years, and end up with roughly 32k as stated on the calculator. - This just seems to good to be true!

Link to calculator, bottom of the page :
http://www.moneysavingexpert.com/savings/best-cash-isa

James07 · 6 Jan 2008 at 16:39

If the calculator says it then its most likely true, but unless you get a fixed ISA the rate will change depending on the market quaterly/daily rates..

It will always change, lower/higher..

Fixed ISA means your rate will stay the same throughout your investment.

I think the Halifax had the highest rate aswel at something like 6.75 a few months ago, i looked at getting one to invest some dosh.

You cant really find a better site than money expert aswel, so use them for advice as much as you can, and remember, a bank will always try to perswade you they are better, so its one of the worst things asking a bank for advice.

Also, i aint no expert, so dont take my advice as the last advice you should take, financial advisors know more, actually, my rose at Abbey is "Advisor" but i work in the offices, so im not trained for that. Ask your local bank for outlines of different accounts and what they do, they have to by law provide you with what you want and not anything other unless you state your interested in other routes, some kind of legislation brought out by the FSA.

But still, all the info you need about this can be found on MoneyExpert and Experian.

Go onto the FSA website, they also have quite a lot of information which would be benificial.

Good luck dude.

Elephant08 :P · 6 Jan 2008 at 16:45

Nice one thank for the response, I understand on the higher regular saver accounts you have to give them a hefty warning/notice before you take it out, however I guess I can live with that. So, £200 a month, for 10 years = £30kish, or £28k with a fixed rate. Not bad at all. - Am I right on this one guys?

Guv · 6 Jan 2008 at 17:38

Sounds about right

Elephant08 :P · 6 Jan 2008 at 20:21

Good stuff, will open one ASAP...sounds great.

That calculator must be a little wrong though, half a million for 40 years

[TR]SweetSpotOz · 6 Jan 2008 at 20:31

If you start with £3k in an ISA you can't put £200 in a month though.

Elephant08 :P · 6 Jan 2008 at 20:32

I would end up starting with £1 tbh, so its gradual.

Starting with £1, £200 a month, = the figures shown above.

[TR]SweetSpotOz · 6 Jan 2008 at 20:33

That's fine. I thought you were wanting to put more than £3k in a mini-cash ISA in one year.

Elephant08 :P · 6 Jan 2008 at 20:35

Aaah, sorry didn't make it clear enough.

Do a lot of people here have one? - Best 'almost guaranteed' investment isn't it ?

[TR]SweetSpotOz · 6 Jan 2008 at 20:37

I have one. It was a lump sum though. It's fine for me as it is totally no hassle and nothing can go wrong.

Over the course of 10 years, I am not sure it is the best though:
Safe - sure
Return - not the best

Haircut · 6 Jan 2008 at 20:38

agony said:
Good stuff, will open one ASAP...sounds great.

That calculator must be a little wrong though, half a million for 40 years

No, that's perfectly correct.
You have to remember that half a million in 40 years time won't be worth as much as half a million today.

Even assuming only 2% inflation for the whole time it would be worth about 45% of its present day value.

Elephant08 :P · 6 Jan 2008 at 20:39

But in that case, wouldn't the allowance (£3k) at the moment, be able to go up? Surely?

Haircut · 6 Jan 2008 at 20:41

agony said:
But in that case, wouldn't the allowance (£3k) at the moment, be able to go up? Surely?

Probably, it's going up to £3,600 from next tax year anyway.
Still doesn't affect the premise that money in the future is generally worth less than money today.

Elephant08 :P · 6 Jan 2008 at 20:41

markyp23 said:
I have one. It was a lump sum though. It's fine for me as it is totally no hassle and nothing can go wrong.

Over the course of 10 years, I am not sure it is the best though:
Safe - sure
Return - not the best

Depends though, if you're putting 3k every year, or was it just one lot of 3k?

If it is a gradual 3k each year for 10 years, it looks pretty healthy.

Mark A · 6 Jan 2008 at 20:41

agony said:
Aaah, sorry didn't make it clear enough.

Do a lot of people here have one? - Best 'almost guaranteed' investment isn't it ?

I have one, great for putting a bit of unused cash to one side but your not going to reap that good a reward really. The numbers might look good but 10 years is a very long time. You also have to factor something like 3% inflation into that figure as well.

Saying that when i get the interest Ive made in march I'm going to build a new PC with it so its not all that bad

.

Elephant08 :P · 6 Jan 2008 at 20:42

Haircut said:
Probably, it's going up to £3,600 from next tax year anyway.
Still doesn't affect the premise that money in the future is generally worth less than money today.

Means it will be all relative, or am I speaking **** now ? lol :confused:

If inflation rises, obviously it will considerably, then this allowance will go up with an equal % relative to inflation? -

Haircut · 6 Jan 2008 at 20:48

agony said:
Means it will be all relative, or am I speaking **** now ? lol

If inflation rises, obviously it will considerably, then this allowance will go up with an equal % relative to inflation? -

Well, cash is only ever worth was you can buy with it.
The notion of £1,000 is meaningless unless you can quantify what that purchases.

It's up to the government to decide the limits.
IIRC the £3K limit was originally only intended to be temporary and was planned to go to £1K a few years after ISAs were introduced.
This doesn't seem to be the case anymore, but the government has no obligation to ever increase the amount you can put into a cash ISA.

csmager · 6 Jan 2008 at 21:08

Before seeing the final outcome and going 'wow!', remember that if you put £200/month under the mattress for 10 years, you'd have £24k. And a matress that was a long way off the ground!

Cash ISAs aren't bad - they're definitely one up from regular savings accounts, as you end up with a higher rate as you're not paying tax on the interest. They're as safe too - you're certainly not going to lose money.

There's always a balance between risk and reward - Share ISAs can net you a lot more, but there's the chance they might go down too.

Elephant08 :P · 6 Jan 2008 at 21:18

Share ISA's ...can you put in a regular amount still? - I find this easier you see. So can I still put in £200 a month, and they do the trades or do I have to put some input?

csmager · 6 Jan 2008 at 21:21

agony said:
Share ISA's ...can you put in a regular amount still? - I find this easier you see. So can I still put in £200 a month, and they do the trades or do I have to put some input?

You usually buy into a fund that's managed by someone else (e.g. Fidelity, Invesco).

I usually take the full £7k/year all in one go, so I'm not entirely sure if you can do it monthly. I'd assume you would be able to though.