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Where Taxpayers and Advisers Meet

ISA strategy for a cash-rich young person

Matthew P
Posts:72
Joined:Thu Oct 30, 2008 12:46 pm
ISA strategy for a cash-rich young person

Postby Matthew P » Mon Mar 27, 2017 6:50 pm

ISAs now surely offer a non-trivial route to shielding investments from tax, since the maximum investment has risen to £15,205 this financial year, and £20,000 next.

My daughter has a cash pile of £130,000. Surely every year she should take maximum advantage of ISA platforms.

However, I think that a reasonable investor may think that stock markets are now toppish.

So would the following strategy work?
> Put £15,240 now and £20,000 after April 6 into a cash ISA. It won't earn much but that is not the point. The point is to build up a tax-sheltered sum.
> Wait for the stock market to crash. Then move the sum from cash to shares.

Questions:
[1] Do most platforms now offer both cash and shares ISAs?
[2] If not, is transfer from one type to another relatively painless?

section 44
Posts:4467
Joined:Thu Oct 30, 2008 12:47 pm

Re: ISA strategy for a cash-rich young person

Postby section 44 » Tue Mar 28, 2017 1:08 pm

Wait for the stock market to crash
t'is a strategy, buy low, sell high an' all that init

wildraid
Posts:14
Joined:Wed Mar 29, 2017 11:05 am

Re: ISA strategy for a cash-rich young person

Postby wildraid » Wed Mar 29, 2017 8:30 pm

If you believe in market crash, you may buy ETF \ ETC betting on this outcome.
For example, precious metals ETFs nominated in GBP: PHAU, PHAG, SGLN, SSLN.

It may show enormous gain during next financial crisis. Or not..

You're not limited to have only shares in your ISA. LondonExchange has a lot to offer 8-)

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: ISA strategy for a cash-rich young person

Postby AGoodman » Thu Apr 06, 2017 2:23 pm

Most (possibly all) share ISA platforms (where the whole portfolio is within a single ISA wrapper) do not pay interest on cash. This is mostly due to low bank rates but also because a share ISA is distinct from a cash ISA and you are supposed to invest, although I have never had any trouble running a cash balance < 20% from new funds, realisations and income.

You could use a share ISA and invest in a money market or short dated gilt fund but with the latter you are still running some capital risk.

It is not particularly difficult to close a cash ISA and move funds over to a share ISA with another provider but allow 3-8 weeks to move between providers as the quality of the admin teams varies and you sometimes get the impression the transfers are taking place by a combination of fax and carrier pigeon.


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