Should I move some of my Cash ISA into a Stocks and Shares ISA?
15 July 2021
Question by Barry
Hi, I've a Cash ISA with about £80k in it, only earning 0.85%. So I'm considering moving £50k into a Stocks & Shares ISA. I'm 73, retired, married, a house-owner and have about £1k spare per month after living expenses, so I don't often need extra money, but I would like to utilise my savings better. What would you advise?
Answered by Helena Wardle
I can understand with the low interest rates why you are looking into this and I would be happy to give you some direction and things to consider. However, at this stage I don’t know enough about you to give you any specific advice on whether investing in a Stocks and Shares ISA is the best option for you.
If you have a longer amount of time available to invest, historically stocks and shares have done better over time than deposit savings.
But due to ups and downs in the market, there will be times when it falls below what you put into the investment, so you need to think about how you would feel about it when this happens. Research has shown that most investors notice their losses more than their gains, and it is important to consider this and prepare yourself for it.
Only invest money that you know you can leave invested long term, and understand that at times the value of your investments will fall below what you initially invested, and when this happens it’s likely that the best thing to do is to ‘sit on your hands’, rather than react and sell.
It may also take some time for you to see the value of investing, and this can be disheartening in the early years particularly if you see the value rising and falling regularly, as most investments have in the last few years. If you invest in a Stocks and Shares investment, you need to take a longer term view and give the investment time.
Consider the level of risk you are comfortable to take with the money, and diversify the money by not investing it all in one area. This doesn’t necessarily mean choosing multiple investments, as you can achieve this through mixed investment funds and think about getting help selecting this if you have never invested before.
Review and consider the charges of the investment - the more expensive the investment solution, the more the investment needs to return to help your money grow! There will always be charges with Stocks and Shares investments, so make sure you understand these charges so you know what you are paying for.
You can transfer some of your Cash ISA to a Stocks and Shares ISA if you decide to invest, so please make sure you don’t lose the ISA status of your savings, as it is tax free.
Lastly, if you decide to invest some of your savings, you need to consider how to select a suitable provider and investment funds. You can use Boring Money's Best Buys page if you feel confident enough to select your own investments and do your own research. However if you are unsure and need advice, using a regulated financial adviser may be an option worth exploring.
I hope this helps.