Are Cash ISAs a Waste of Money?

[@myfyrmadocjones]

7 million cash ISA with a total of £31 billion saved is an average of £4,429 not £7,750. Did you mean 4 million accounts for an average of £7,750?

[@TobyNewbatt]

There are 7 million Cash ISAs in total with a total value of £31bn...so you are correct I am not sure what the £7,750 was from I'll have to check my notes - I'm going to get so many of the same comments now :P (it might have been the total across all ISAs..) I hope the point still stands though - £4.4k average in a cash ISA is nowhere near a problem for anyone with a savings allowance of £1000 :)

[@dylaninho2500]

@@TobyNewbattis it the median?

[@laurentiu-alexandrucalin8451]

Toby, they did a lot since moneybox give a 1k from de Gov.

[@CobraTackle]

That's crazy. That's my block of flats in the intro, I'm sitting there right now watching this video!

[@showady]

I'm 45 and just paid off my mortgage. I plan to retire at 55, and am saving/investing 60% of my salary. I'm putting it into both cash and stocks & shares ISA, as if the stock market is having a bad few years around my planned retirement age, I can then use the funds in the cash ISA. I'm also looking at opening a SIPP. My reasoning behind this strategy is to have as many options of where to draw from at 55, and leave my 3 DB pensions till I'm 60-65.

[@showady]

Which do you recommend? I currently have CSH2 as part of my S&S ISA portfolio. Just opened a new cash ISA with trading 212.

[@Abdul_Rahman86]

I absolutely love hearing things like these! Well done. I’m 30 and I 100% invest into a SIPP and no ISA at all. My rationale is personal for me: it stops me from messing about with dabbling in and out. I can’t sell shares and buy on impulse. I also love the seeing immediate 25% government top up. And I believe in 27 years time I’d save a considerable chunk.

[@Mr.GeeKhan786]

I use a flexible cash ISA as my emergency fund.

[@HelplessHawk]

Im a little late to this party! Well done. In 27 yers you will be very flush!! Im 49 and just started a sipp as my workplace pension due at 60 isnt quite enough for a nice lifesyle. With the SIPP it will be but with only 10 yrs to go i gotta go all in with my money and if the markets see a big drop i dont have much recovery years to make it up. im praying thr market bust rumours in the next 10 years doesnt come to pass ​@Abdul_Rahman86

[@benjaminheginbotham7927]

I think Cash ISAs do offer good value if you're saving towards something where you need to eliminate risk and guarantee returns. e.g saving for a house or offsetting a fixed rate mortgage instead of overpaying (assuming your mortgage rate is lower than the cash ISA interest rate).

[@GregBrammah]

If you're in your 60's with over 50k in cash isa at 5.2%, wouldn't it make sense to sit on that to help mitigate risk from stock investments? You could always transfer to other cash instruments when interest rates fall.

[@Kazi2812]

Yes, all the way. Time horizon is too small, enjoy the 5%.

[@TobyNewbatt]

Of course, and this comes down to risk and timescales - cash is great for short term but terrible long term. You have to find a balance that works for you. That 5% wont be around forever, and it's all about real returns in the long run :)

[@bobster9549]

I fully agree!

[@johnB11ify]

​@@TobyNewbatt Probably longer than you think. It may well drop in the short term but we are heading into a higher for longer period. You are younger than me and have not lived through a downturn period. It's coming, will you still be pushing for Vanguard, well time will tell. I've known a lot of people lose or just got stuck when it comes to investing. The one major aspect you miss out on your investments is the risk category. To get what you claim in on average 10% which is not true you have to be in a high risk investment. Please make this much clearer when you are pumping up the market and in particular Vanguard

[@MrPurle]

Good stuff Toby :) I've got the 212 Cash ISA for the short term savings, and the 212 S+S ISA for the longer term... because they're both flexible ISAs I can almost use them like normal savings accounts - the general idea being i'll rebalance in favour of investments as the year progresses.

[@hariowen3840]

This is why, for the first time since Cash ISAs were introduced - that some Cash ISAs now pay better interest than non-ISA regular savings accounts.

[@davidbarclay54]

Higher rate tax threshold is lower in Scotland which can affect the PSA calculation. My cash ISA and some Premium Bonds are my emergency fund. Wouldn’t want to be a forced seller of shares during a downturn.

[@seanhunter1648]

The tax thresholds in Scotland for interest are the same as the rest of the UK. Only income through employment is taxed differently.

[@deantalksfootball]

I've got my money all in one standard current account so I'm accumulating no interest whatsoever with it all in there, I see the Trading 212 Cash ISA is currently 5.2% and it's FSCA covered so it would make sense to put deposit some of it into there wouldn't it ? And being flexi I can withdraw and put the same amounts back in as much as I want and in this tax year. I've just never used a savings accounts or cash ISA's before so that's why I have some trepidation about moving it.

[@Putinspurpleheaded]

212 bang on won't go wrong

[@quintonlee4107]

Don’t forget about Gilts which are tax free on the capital gain! In theory, it is risk free because it’s a government bond too. If you can find one paying a low coupon, that can be tax efficient to use to park some cash for the short term

[@TDGinge]

The majority of my emergency fund is in a Cash ISA. I have a 6% savings account with NatWest that only allows £150 per month deposited so I’m slowly drip feeding that from the emergency fund. I also have multiple savings accounts for Christmas, holidays, car repair and pet care. Personally I use the Cash ISA so the others can grow below the tax threshold. Great video though, like you said, I don’t think people realise how much their savings can grow without having to pay tax.

[@adamp6320]

Do you consider premium bonds? then your ISAs are free for the long term growth of shares? I suppose the ISA limits are so generous that (most) people don't need to worry about picking one over the other

[@TDGinge]

@@adamp6320 Having read an article from Money Saving Expert on how poor premium bonds are, I’ve avoided them.

[@ilikecopyright]

I use my own stocks&shares ISA to build long term retirement and a cash ISA to store my emergency fund which I’m building up to a couple months salary

[@KJ318.]

Thank you Toby, I wasn’t aware you could move funds between ISA accounts and not affect your current allowance, these videos are really helpful, much appreciated 👍

[@kingarthur7250]

I'm getting 5.9 on a 2 year fixed..so def worth it for me. Yes lm getting 11% on stocks and shares....BUT way world is with wars etc....u could end up at a loss. Looking backwards is not same world looking forward. We never been this close to a world war with Russia and allies. Inflation is not under control and we still to reliant on gas. 20% into stocks rest into bonds...savings works for me fine

[@220dpk]

One does not have to pay any Capital Gain until amount is withdrawn. It could be several decades later when retired. If annually taken out up to CG allowance, then there is no tax to pay. Also meanwhile one could also enjoy cash ISA savings currently with 5 pct interest at no risk too. So its not necessary that ISA best use is for stock and shares. It does depend on amounts one has to invest and risk appetite. I think it would help if you made a video using that scenario too. Thanks

[@richardwall2330]

Nice work Toby ! You seem to have covered the subject rather well I cam across a stat the other day that up to 95%of the UK population do not have an equity ISA !! Keep up the very clear and helpful output

[@steve6375]

What about the opposite way to save though? If someone is saving up over a period of 10 years for a deposit on a house say (but not in a LISA or maybe as well as a LISA?) they could save into a S&S ISA (say Global Index ETF) but when they are near their target, they could then transfer that S&S ISA balance over to a Cash ISA. That way they can protect all their gains, just in case the stock market has a correction before they can complete. Would this be sensible as the interest will continue to be tax free?

[@WatchTv-nl7ut]

Thats a very conservative strategy nothing wrong with that. As long your happy with the end amount. Probably a good idea to get paid financial advise that phase, to get the probability of running out of money simulator software.

[@YellowBlossom-zd4yk]

Wait which Cash ISA's have had 5% or more over the last 5 years?

[@clivewilliams5668]

If your a non taxpayer you can earn 6k on savings tax free...ie if your stategically taking your pension early...big point you missed

[@Pooter-it4yg]

I'm old enough to remember when ISAs were first introduced and the Cash option has always been a damn disgrace. The big hook for ISAs is tax exemption but it's negligible where passive savings are concerned. Simply put, cash can't increase in value, only yield through controlled and charged lending, and Cash ISAs are little more than savings accounts with marketing spin offering an extra little snack on top of inflation (when possible). Fair enough if you're terrified of investing, but even tame "granny" bond ETFs would trounce the Paddington pennies from Cash ISAs.

[@johntaylor8381]

I doubt most people are saving more than 20K a year - so they'll put it into whichever ISA account best suits their needs. If they're planning to use that money in the next few years then taking the lower risk Cash ISA option is reasonable.

[@WatchTv-nl7ut]

Depends on how you use it. If your not maxed out isa allowance in stocks n shares. While still wish have some short term flexibility. Cash ISA is like a free tool to carry forward last year ISA allowance.

[@MrKumarsaurabh123]

Once the money's in, it's tax-free year after year. However this is not the case with Saving account where Personal Allowance is only for one year. so first 20k into savings account and second one in Cash ISA. Is it like that we should do.

[@stockpistol]

Santander isa is offering 5% every year while while monzo fixed term isa are offering 4.10% every 6 months

[@SkarrGaming]

So essentially use your £20,000 ISA allowance on a Stocks and Shares account > use remaining money to put into Premium Bonds > if that is maxed out, any leftover money goes into a regular savings account. Unless ofcourse you can't risk losing money because you might need it soon or are on the older side, in which case you'd put that £20,000 into a Savings ISA insrtead of Stocks and Shares.

[@serif2happyhammer45]

I have 40000 invested in Cash ISA if I with draw the interest on each isa will I pay tax on it ?? I only work partime and earn £26700 per annum could you please advise me if you can

[@THIRV]

Google it. There’s a lot of guidance out there on this question. All the pointers suggest you can have multiple ISAs paying you interest, and they are all tax free. Don’t forget or course, you can only create up to 20k on New ISAs within a tax year.

[@triggercky9928]

Ive got some money locked in a fixed cash isa. Allot of it is simply education. I inherited a decent amount of money and i simply didnt know what i was doing..ive been learning so im ready to much better use of my money in the next tax year

[@TheSilvercue]

Unless you are close to drawing it down and have to reduce risk, I don’t understand why people use Cash ISAs. The average S&P fund return is 11%. Sure, occasionally the year is a loss, but the following year will be 20%.

[@renegade2853]

Yeah but the stock market will likely implode at some stage this year.

[@pataleno]

Easy access Cash ISA's are a good replacement for saving and emergency funds. Also can be used to draw down a SIPP into as your spending account,

[@TheSilvercue]

@@pataleno and all that applies to a S&S ISA that has a double the return

[@pataleno]

@@TheSilvercue the S&S ISA can also half in value. So you could get your fingers burnt with emergency cash in a S&S ISA.

[@TheSilvercue]

@@pataleno zoom out. It never halves in value and when I’d does have a dip it usually recovers very fast. It is just a line upwards most fo the time. Average return over last 30 years is almost 11%, that includes the big dips.

[@valerienewbatt9678]

Great video as always Toby.

[@guitarsandcheesecake1632]

Great video. I would not advise anyone to have an isa. I've had a cash isa and currently have a stocks and shares isa. Neither have done very well....... my pension on the other hand just keeps making money. The best thing I ever started

[@larsenb4803]

Stocks & shares ISA's and pensions are just empty buckets, it's what you put in them that counts. Whatever's made money in your pension you can invest in an S&S ISA.

[@guitarsandcheesecake1632]

​@@larsenb4803I'll blame my financial advisor and the fund manager then😂😂😂😂

[@nealeTH]

Having a cash isa is a good way of securing your annual allowance as you can easily shift it into (or out of) a stocks and shares isa all within the tax free wrapper. It can be a useful mechanism depending on your circumstances or appetite for risk. For many stock and shares isa providers, the interest on the cash portion can be poor - Vanguard for example. Trading 212 is bucking the trend by offering a higher interest rate, but it’s not fully transparent where the cash is being held (they choose between banks or ploughing it into money markets) and the protections around it vary.

[@agsotonukable]

Hi this is a good helpful video. What is that display on your wall in the background please?

[@Hmmmmmmm02]

hello, quick question. I am a dual American/british citizen with both passports. I have not lived a day of my life in the US, but I do have the passports. I did sixth form and university in the UK and have had a few internships where I've earned money that has been taxed in the UK. Am I allowed to open a Stocks and Shares ISA? I have never paid tax to the US before and to the best of my knowledge, many companies don't allow US citizens to open Stocks and Shares ISAs. Thanks a lot!

[@TobyNewbatt]

The UK isa rules just you must be a resident in the UK - I’m not aware of any restriction regarding citizenships. Check the rules on the HMRC website

[@dooooooo123]

Trading 212 cash ISA is holding my emergency fund/where I put funds that will eventually be moved over to my LISA for the 25% bonus as soon as the financial year rolls over. I've had decent returns on premium bonds over the last year but with the amount I had sat in there, the cash ISA probably would've been the better bet. Of course if you win 1 million suddenly in premium bonds...

[@danielbrown9634]

Toby, what are your thoughts on holding uninvested cash in the t212 cash isa then just moving it over to the s&s isa within the app when you’re ready to invest it? You get the fscs protection and the same rate of return currently? Love the channel by the way, keep up the good work

[@DartsDartsDarts180]

I do get confused with the amount. Say year 0 I enter 20k at 5% and earn 21k at the end of the terms. Year 1 I add 20k at 5% and earn 21k, my ISA is now 42k (probably more with the previous terms 21k). Through year 1 am I only getting interest on the year 0 20k or am I getting interest on the 40k?

[@lasse007]

Have the exact same question

[@kdhdgames1075]

Very good question

[@brandneu11Naija]

Can I transfer a junior cash isa to a shares and stock isa. Halifax says i can't.

[@TobyNewbatt]

Yes, you can transfer from one Junior ISA provider to another, as well as switch between a Cash Junior ISA and a Stocks and Shares Junior ISA. This means you can transfer a Cash Junior ISA held with one provider to a Stocks and Shares Junior ISA with another provider (Make sure you are asking the correct question, you want to move from a JUNIOR cash ISA to a JUNIOR stocks and shares ISA. if you just say the words Stocks and shares ISA they will assume an adult one) you cant get an adult ISA until you turn 18 Halifax are wrong :) or they have just misunderstood what you were saying.

[@samuelbloom2520]

Would you not need to consider the savers age and perceived future requirements.Their ability to accept risk etc.

[@TobyNewbatt]

@@samuelbloom2520 of course. Which is why in the video I say cash is great for short term and investing is best long term. It’s always up to the individual to determine their timescales 👍

[@samuelbloom2520]

@@TobyNewbatt Thanks.I did not mention that I am well into my eighties.

[@Maiiftl]

I'm saving up for a house deposit and am a higher rate earner, so I've opened up a Cash ISA for now with Zopa. I've been focusing more on the cash side right now but will end up probably doing a 50/50 split once the interest rates come down and I've got a decent chunk of cash in the next year. The only concern is that interest rates will drop at some point and I don't know how much these Cash ISAs will offer, as I think the rates were a fair bit lower before, but that might've been cos of the whole COVID situation.

[@TobyNewbatt]

Yep - we have to remember that cash savings rates are based on the base rate in the most part so we can't take this magical 5% right now and think it's all going to continue. Higher for longer maybe but they could stabilise around the 3-4% mark - which will only just about beat inflation! :)

[@boyasaka]

Toby I have a s and s isa with barclays i was invested in tui and iag , I've sold my iag shares for 20k but also have about 20k still invested with tui The money from iag shares sold is just sat there in my account Can i trsnsfer that 20k into vanguard and just leave my tui shares where tbey are ?

[@charlieboyvespa8610]

How much extra % will a stocks and shares isa get you over a set cash isa?? Is it worthwhile????? Be interesting to see some data.

[@stenard1000]

Largely fair points, although I always find it surprising that the annual savings allowance is consistently referred to as a negative for cash ISA's yet the annual allowance for dividends and CGT is not, as an equivalent element to a S&S isa. Clearly both have come down significantly over the past few years so less advantageous, but as they aren't restricted based on income like the savings allowance, then they're also a mechanism to invest for most people without ever suffering any tax either, even if not in the isa wrapper.

[@Lord_Whiteley]

Have you ever considered taking out a VCT?? As you get 30% off your tax in the first year and dividends are tax free. The downside is that you have to keep them for 5 years and as they are managed funds, their value can fall ( they are also harder to sell, but I have never had a problem selling them after the 5 years)

[@bigmanjack4297]

Hi Toby, how safe is the cash left in trading 212 if interested is enabled as i believe its not covered by the 85k fscs due to it being invested into QMMf? How would you compare this risk say to ERNS or CSH2 which currently holds my emergency money? Also do you think the erns and csh2 perform slightly better than the 5.2% from t212? thanks buddy

[@JackCoeCoe]

It’s a good point, I think if you are looking to make a big purchase in the next year the Cash ISA is still the best option however

[@MATIvmr]

T212 both ISAs are flexible now, so not really a bother if it’s GIA or cash ISA, you’re able to move it freely too

[@IwasBraveFor2WholeSeconds]

I've got just over 80,000 in 3 year fix at around 4%.

[@peterparker2068]

What the average UK citizen invest in when you say you get 10% return in the market? I'm form the US so I am curious. I know that foreign countries tend to invest in US markets too. A lot of financial advisors quote that same return rate in the US investing in the domestic market only: something like the S&P 500 index. I heard that the market in the UK might not have the same returns or am I incorrect?

[@jech4338]

It’s a tricky one because I have no idea when I’m going to buy a house. I would say it’s at least 2-3 years away, most of my money is in a cash isa earning 5.1% but I do have 1k in s&p500 up 8% as abit of fun. I feel like if i put all my money in S&P and possibly a ftse100 then it’s just going to collapse.

[@pataleno]

Drip feed (not Lump sum) your S&P then you won't care if it crashes.

[@antofempire]

Aside premium bonds, I have heard UK gilts is also a good vehicle to protect yourself from tax

[@uncountableuk]

I'm getting to the point soon where I'll have no new money to put into s&s. I suppose then I'll use my ISA allowance to stash the cash buffer

[@casiowatchers7511]

My Emergency Fund is in Premium Bonds (which takes the same amount of time to access as the new T212 cash ISA) so now I need to make the decision between going into a stocks & shares ISA with T212 or just going in on the cash ISA with T212. The stock market worries me at the moment though and I’m finding it hard to commit.

[@bionic909]

Are your interest figures including compound interest?

[@Norfolkpaul]

It’s good how you put it on video. I can see your point. Got to some homework. Well done 👍 😊

[@tom24057]

Depends on how much you have and when you want to use it. Eg if you have £60k cash but want it within the next 36-48 months for a house deposit it makes sense to bulk deposit £20k a year into your ISA which will avoid your tax liabilities as that sum would put you over the threshold.

[@adamp6320]

Why not premium bonds for £50k of it? Just seems a waste of ISA room to use cash if you've got lots of cash on hand. Premium bonds are risk free, liquid and tax free (just the interest is lumpy but should average a respectable amount).

[@tom24057]

@@adamp6320 no, cash ISA are around 5% at the moment

[@evilution_ltd]

You get taxed on the money you make, you get taxed on the money you spend and you pay tax on the money you save in a bank account. Brilliant. How did we get to this point!

[@jameshorn3691]

Toby, what's your thoughts on jp morgans active ETF's TIA

[@boyasaka]

I have maxed out my and my gf,s isa allowance for this year,( vanguard and AJ bell ) ive got 20k in premiim bonds dor emergency funds But also have 30k in my current account which i need to put somewhere until next april and get stick it in my s&s isa Anu ideas ?

[@ATA12354]

Great video as always! I’ve got cash in a T212 stock isa (uninvested), is this the same as the new T212 cash ISA? Should I move it across? Does it make a difference?

[@gireeshwaran]

Not exactly the same. One is FSCS protected and other one is not if the fund are are invested in QMMF

[@UndisturbedMonk]

Yeah, move it across. Only takes a couple of clicks and gives you the FSCS protection.

[@imbarmstrong]

I moved £2k of my emergency fund from 212 Stocks ISA into the 212 Cash ISA as soon as it was available. As I understand it the interest earned in the stocks is from MMF but the interest in the Cash ISA isn't, making it marginally less risky.

[@IAmebAdger]

Well, you have to park your rainy day fund of 6 month's expenses somewhere, so why not in a tax free account. That is assuming you don't need the ISA allowance for something else like investing.

[@DIOS10]

But as you stated you want to maximise your stock isa, ain’t you then risking your money in that area ?

[@TobyNewbatt]

I'm not sure I understand the question? It's not about risk for me, I'm just trying to highlight that cash ISAs are for short term needs, investing is for long term. There is risk in everything, including not doing anything.

[@happiness.felicidad2631]

Great video, thank you... you got + plus good carma points for sure 😊

[@mhoward181]

I thought about this the other day. CASH ISA £20,000 or normal Bank with 5% but you still don’t pay any tax as a basic rate tax payer. It’s the usual con you will be poor and they will make sure you stay poor.

[@davideyres955]

If you do a tax return HMRC will view the interest on your 20k s income. The first 1k is tax free. But after that you’ll be paying 20% of the interest to the tax man assuming the interest is currently untaxed at the moment.

[@craigschofield1354]

on trading 212 I have a stocks and shares isa that I cost average every month however I will only keep £20,000 in a cash isa because of the tax but I tend to use my cash when the markets drop so I get the stocks and shares at a discount

[@LSWUK]

Hi Toby, If a person has £20,000 interest from a Cash ISA being paid into their current account each year, would that affect the standard personal allowance (£12,570) or the (£5000) starting rate for savings? So could someone have an income of £12,000 (tax-free) with £5000 interest from a savings account (tax-free) plus access to £20,000 (tax-free) from Cash Isa Interest?

[@TobyNewbatt]

@@LSWUK any money made from ISA accounts attracts zero tax at all. So it’s not even counted. 👍 Therefore you are correct in theory you could earn £12k tax free and then also have the starting rate of savings if you somehow had huge amounts of cash saved giving you interest but a tiny income.

[@Abdul_Rahman86]

I think this is individual preference. For me I’d rather have my money in growth stocks and as I reach retirement age I’m going to invest in dividend stocks or index funds

[@simonebruschi9793]

Maximising SIPP first, then s&s lifetime isa , then a mix of s&s isa, cash isa and prem bonds

[@trebm]

Sorry if I missed this, but is a regular saver an ISA? And therefore takes away from your £20,000 ISA allowance?

[@UndisturbedMonk]

An ISA is a seperate product to a regular saver/savings account. A savings account that is not an ISA has no effect on your ISA(s) allowances.

[@thekesslerboy9337]

A regular saver is not an isa. It's a normal savings account (tax payable above your allowance). Only difference is, you can only pay in small regular monthly amounts, normally below £300.

[@hustlinhitch]

I have around £1k in a cash ISA with a pitiful 2.85% interest and am considering closing it and moving the money into my S&S ISA. I can then move around £15k into a savings account and use the interest from that to top up my S&S ISA.

[@Banthah]

Great video as always Toby. I think you summarised it perfectly. I think cash ISAs have their place for short term savings where you won’t reach your full allowance. It’s better in an ISA than out of an ISA. The challenge is of course when people are using their full allowance for long terms goals, then clearly cash is not the answer, and they should use their allowance on a S&S ISA - so they can index and chill 👍 Oh, edit: can you get yourself on Damien and T’s interview. Think you’d be great on that

[@kenroyforte6175]

The only thing here is if you plan to move the ISA around. So by putting cash in the ISA you protect the allowance and move the Cash ISA into a Stocks and share ISA at a later date and protect your previous years allowance.

[@TobyNewbatt]

Yes exactly what I say in the video :)

[@JoshDoughty-y8q]

My emergency fund is in the mattress.

[@amnaabid1580]

I open trading 212 account but they didn’t give shares to me

[@TobyNewbatt]

make sure you add money (at least £1) and you also sometimes need to add my code TOBY to the promo code section

[@Solihul886]

I do mostly cash isa and some in stixks and shares isa. Id have about 170k kept in the account which keeps the money fscs protected. After that id just boost more money in stocks

[@conorturton]

They're not a waste of money, they're merely another tool in the arsenal and like any tool it needs to be used properly in order to get the benefits of it. They're a much better option for any short term savings goals than a bank account simply due to the fact that once you get above a certain point you'll not pay tax on the interest unlike a bank account.

[@TobyNewbatt]

Exactly what I conclude in the video :) - as always it depends

[@Jas-sm9mc]

Is the 20k input limit on ISA for both Cash ISA and Stock ISA combined? Or can you invest 20k each? Total being 40k

[@TobyNewbatt]

£20k is the TOTAL in one tax year for ALL the ISA types combined. Do not go over £20k in total. For example. Lifetime ISA £4k Cash ISA £5k S&S ISA 11k Thats then your whole limit used up for this financial year - and then you have to wait for the next one.

[@michaellee1116]

I love your videos, but i am struggling to understand how you can be a basic rate earner and are able to max out your ISA every year AND have more money to save. What are you paying your bills with lol ??

[@TobyNewbatt]

I haven't maxed out things in the past :). And in the past, as I have said in previous videos, I've been a tax payer in every band throughout the years. the most important thing is my savings rate, I have no debt other than my mortgage :)

[@brianwillson9567]

Government approved debasement of the currency means that cash isas can only reduce in real value.

[@JamesWilliamson-w8y]

I prefer to buy gold Sovereigns or Britannias. Both are totally tax free and offer a better return than any ISA.

[@TobyNewbatt]

That's just not true at all in the long run James. Gold is not an investment, it's a wasting asset :) Well don if you're up and made a profit but it's been a lousy one if you compare it to even a boring stock market, using a stocks and shares ISA :)

[@beancount811]

Yep, savings and dividend allowance still exist; even better for couples with children. :) People shouldn't really panic if they have their emergency fund or small dividend paying holdings outside a wrapper. There's plenty of notice given before these allowances change. For larger sums and a more intermediate term, individual gilts would probably be more appropriate inside a pension or S&S ISA account. Either way, we are not in a deflationary environment, where cash would be a boon, very often!

[@filipidasilva3175]

Which isnthe best stock than?

[@TobyNewbatt]

you need to watch some more of my videos :)

[@mittensandsnowdrop]

This is a brilliant point I hadn't thought of. Not in any danger of maxing out my allowance at the moment but this is an essential insight for the future! Thanks buddy.

[@johnshepherd5673]

If you are a basic rate tax payer and earn less that £1000 p.a. interest from a bank account, then do you have to declare the actual amount of interest received in a self assessment tax return ? Tia.

[@TobyNewbatt]

No, you only need to declare once it is above your allowances and you can confirm this on the gov website :)

[@johnshepherd5673]

@@TobyNewbatt thank you, much appreciated.

[@jackumentory]

you only have the tax if you draw down on it, if you reinvest that £1000 you will avoid paying the tax.

[@bob1234881]

Haha. I invest in prity much everything I have. Doesn’t take long to take out if needed. 😀 Stopped over paying my mortgage.

[@pataleno]

I have 6 months emergency money in a Cash ISA paying 5.19%. I have 100K in a Stocks and shares ISA, the Other 500K is in my SIPP pension. Hope to double that in the next 5 years when I retire.

[@triggercky9928]

Great going 🎉

[@Petersworld77]

It’s important to use each type of isa for the purpose it was made. I’m sure not everyone is aware of the tax free allowances either as most people don’t do an annual tax return instead relying on PAYE. It’s always worth doing a tax return to make sure you don’t miss out.

[@TobyNewbatt]

Indeed I think a huger part of personally finance is just making people aware of allowances and tax free wrappers and I'll keep banging the drum :)

[@adamp6320]

My liquid cash goes to Premium Bonds for tax free interest. ISA is for shares. But then I'm an additional rate payer.

[@TobyNewbatt]

Worth sharing as this might help others who need some ideas for cash. Thanks as always Adam.

[@amitray6614]

I've had the same conversation with a friend about 5 years ago, when cash ISA was paying a very abysmal rate. He had a decent amount in it too. When I explained the issue he moved the money into the S&S ISA. Now the equity market was pretty volatile over the last 5 years, so it wasn't an easy ride. But he hung tight and now sitting pretty on a nice gain. I'm so glad I could help. But it shocks me how a lot of people, some even with good qualifications and high earnings, are so clueless about investment and taxes. They feel their cash is safe earning 1%, not realising that in 10 years time it is very likely the pot will not buy them what it can buy them today. Thanks Toby for making these very informative video. I'm sure it'll help many people.

[@Chasworth]

Why is there a £20,000 annual limit on isas?

[@kingarthur7250]

Because otherwise billionaires..millionaires...would pay less tax than do already...they would abuse system.

[@beancount811]

​@@kingarthur7250 Yep, if a cap is too big or removed, anyone with assets would very much jump on the chance to load up their government backed tax shelter with any qualifying assets they could dump in there. Not to mention that we'd likely become a tax haven for global HNIs overnight. It'd be a no brainer, even with the extra caveats of IHT and trusts at the end of life to consider. This is the same reason you have caps on pension lump sums, and limits on the amount you can contribute in any given year (though with pensions you can carry over the allowance from prior years up to a point).

[@dyztructive]

I consider being able to pay £20k a year into an ISA and earn any interest tax free quite the gift really, considering the government like to tax pretty much everything else

[@kinggeoffrey3801]

Most normal people won't get anywhere near to maxing out an ISA.

[@adamp6320]

It's a VERY generous and high limit relative to say, the Roth-IRA in the USA or the TFSA in Canada, both of which are about 1/4th the limit and the Roth IRA is also income tested (high income people can't use them easily). We are blessed in the UK in this respect.

[@seyiagboola]

If you're saving for a house, you can't really afford a bad year in the next 1-5 which is why Cash ISA would make sense. If it's longer than 10 years Stocks ISA, if it's longer than 20, you might as well max out your pension first since the goal is retirement

[@Dr.JubairsFinance]

Not quite a small channel 👀

[@TobyNewbatt]

I’m just a wee baby! 😉

[@gfdgdf28]

I know it’s speculative but if you have big chunk of cash it’s better to invest in cash isa imo now. The stock market being so extended is expected to generate less than 5% annually in the next decade.

[@TobyNewbatt]

I have no idea what the stock market is going to generate but be careful as people said the same predictions 10 and 20 years ago. Long term in cash is forever a losing game 👍

[@AzzieTheGamerr]

your telling me theres only 7 million cash isas with a country of 60 odd million.... thats terrible and shows how the education of finance in this country is badddd and barely anyone has money to save, sad sad sad

[@TobyNewbatt]

Indeed, it's not great. Even if you take out the children and just keep adults thats still more than 40 million people. It's even lower for Stocks and Shares ISA (less than 4 million)

[@NicolasVerschuerenvanRees]

Great video Toby! I subscribed to your channel recently and I really like your content. I appreciate your effort to explain as clear as possible. I'd love to see a video where you explain more about the different ETFs (their popularity and variables to consider when designing a portfolio). Also I could not find any video where you share your experience using trading 212.

[@uncountableuk]

Luckily Toby is also doing his bit to improve financial education in the UK

[@phyllischamberlain7467]

Can the tax man take money out your eyes then because all these Tax are gonna pay will they take it out? The ISA Do you have to pay tax on your ISA all those money off all the time? I’m not quite sure thank you. I’ll find out.

[@RonniePeterson]

Your wrong when you say there are NO GUARANTEES with investments! The worst result with a cash ISA is you get all of your investment back even if the interest rate is 0%, highly unlikely and has never happened in my lifetime. But with a stocks and shares ISA you might lose your entire investment. Your own FSTE index chart you showed makes clear this can and does happen. Worst still you might still have been or have to pay any fees due for the provider handling your account. So no guarantees whatsoever unless you have a crystal ball telling you when to get out or stay so speak.

[@billB101]

What about capital gains tax when you finally start to withdraw from stocks and shares ISA's that have built up into a nice pot somewhere down the line? I have a 212 cash ISA ( also trading ISA ) I've just opened too, seems like a good idea.

[@ricardo46]

No CGT on withdraw from ISAs

[@davidbutlin8271]

Its an ISA.... there is no CGT to pay

[@billB101]

@@ricardo46 Even if they've made a tidy sum down the line?

[@LawrenceTimme]

​@@billB101yes that's the whole point.....

[@billB101]

@@LawrenceTimme New to this, good to know.

[@might424]

I don’t know why I watched the whole video when I don’t even live in UK 😂

[@TobyNewbatt]

😂😂👍

[@Makalon102]

it’s all due to a massive ignorance of stocks and index’s in the uk, sap 500 fantastic for long term savings, all financial crashes and covid didn’t ruin the long term gain they have always recovered Just don’t panic and take stuff out when dips happen look at at lifespan and see that it’s always recovered it might just take a few years

[@LawrenceTimme]

If you are saving for a house and youve maxed out you lisa and tax free allowance then the cash isa makes the most sense. The stocks and shares isa is not as easy to take out when you need to buy.