I prefer to do my banking over the internet. I check my accounts very often - at least once a day. Every year around this time, I get a shock from my internet banking aggregator. The money in my tax-free savings accounts disappears. That's always my wake-up call. It means it's that time of year to plan ahead. It means it's that time to look at cash-efficient savings vehicles and plan an allotment strategy.
Even though this "disappearance" of funds happens annually whilst interest is calculated and paid, I get a jolt everytime and quickly make a mental note to research my options. I'm not saving so much annually now that I go over the tax-free limit so my consideration doesn't include non-tax sheltered savings.
Like most people, my tax-free saving vehicle of choice is an ISA. The government recently overhauled ISAs. The new limit is £7200 in cash, stocks and shares. The maximum cash ISA holding is £3600 per year. Last year I had both a cash ISA and a stocks and shares ISA. The interest rate on my cash ISA was okay, but it wasn't as good as past years. This year, I'm ditching the cash ISA.
Why?
Well, because the interest rate is piss poor. It can't even preserve my money's buying power. The best cash ISA interest rate for 2011/2012 is 2.50%*. Inflation currently sits at 3.6%. The SkyNews finance segment says money must grow at at least 4.4% whilst invested.
So, no I'm not willing to watch inflation kick my money's ass.
* This is based on the amount I am able to put away and a maximum investment term of 12 months with no early withdrawals.
Friday, 19 March 2010
Marchin' into April without CashISA
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2 comments:
Seriously, be my financial advisor!
So just stocks and bonds this year?
Yup only stocks and bonds this year.
Hopefully, in 2011, cash ISA rates will become competitive again.
Though I've had my misgivings in the past, I'm thinking about joining ther company pension. I need to get some figures first though.
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