I’ve always felt slightly annoyed by the fact that finding a decent savings rate is like trying to run a marathon in flip-flops through water! I’m trying not to be one of those savers who’ve have been lulled into apathy and despair by banks that see no contradiction in charging us 23% interest on our credit card bill yet think they are doing us a massive favour by paying us 1.2% on our savings – all done with a straight face.
So as the ISA frenzy gets whipped up I turned to Anna Sofat, a finance expert who runs Addidi Wealth for advice on whether they’re still a good way to save, which ones are worth getting – and what should you do about the one you bought last year.
Anna is very pro ISAs but very anti hype. Rather than getting caught up in the race to beat the ISA deadline, especially as the Budget means that by July you will be able to invest up to £15,000 a year in one, her advice is to keep calm and start saving, but take the time to shop around. Unless you are in a position to invest the maximum amount (currently £11,520 but only £5,760 in cash) by April 5 you won’t really gain anything by rushing to meet a deadline. The important thing is to give yourself time to think about what you can afford to save regularly without finding you’re trapped into using money for savings you may need to spend on your day-to-day budget later.
Anna recommends you…
1. Set up a cash ISA now, to get yourself into the habit of saving regularly.
2. If you have a sum of money you want to lock away for a few years start looking around for an investment ISA (stocks and shares).
3. If you have money you would like to save but worry you may need to dip into it to replace the roof or repair the car, put it somewhere you can get in to either instantly or with 60 days’ notice.
4. If you are fortunate enough to have the means to do both then divide your money between the two – then try to do the impossible: remember to keep an eye on it without dipping into it! Think of it as the ISAing on your cake – you can look, you can move it to a safer place, but try not to stick your fingers into it.