MoneyTalk

 

Four Weeks Left To Fill Your ISA!

04 March 2013
In this week’s episode:

Attention Fools! You've just four weeks left to use this year's ISA allowance, give or take a day, and time and HMRC waits for no one. To help and encourage any tardy ISA waverers out there, Owain Bennallack has invited two Motley Fool chums -- Nate Weisshaar and Stuart Watson -- into the studio to run through the ISA basics before getting onto the tougher choice of how to invest your money. ISAs are notoriously complicated, but the trio made it through the entire podcast without nodding off, and we hope you do too. A transcript of this podcast is also available.

 

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Nate Weisshaar, Owain Bennallack and Stuart Watson
Nate Weisshaar, Owain Bennallack and Stuart Watson

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Comments

The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

ANuvver 04 Mar 2013 , 1:24pm

Couple of points on cash balances that may be useful.

The subject of market timing is an emotive one among Fools, but if you were of the opinion that things are looking a bit pricy at the moment and due a correction, there's nothing to stop you contributing up to your 2012-13 limit to an SS ISA and just leaving it there for the short term as a cash balance.

Cash in SS ISAs earns next to nothing in interest (and the interest isn't tax exempt), but you would have that extra money in the ISA wrapper ready for when prices seem more attractive to you.

SS ISAs are not really supposed to contain significant cash balances for long periods (but there's no incentive to do this anyway). I believe the loosely defined official position is that cash is supposed to be there "with the intention of investing" (I paraphrase).

In short, don't think that because you have to contribute before the April deadline, you have to actually invest by then too.

Oh, and SS ISAs aren't really appropriate for assets that pay dividends or income in foreign currencies. This is because cash balances have to be in sterling, so income received will be automatically converted at the broker's usually unattractive rate.

AleisterCrowley 04 Mar 2013 , 4:18pm

I've never heard of anyone being asked to 'buy something' with their SS ISA cash balance - the rule is so vague as to be pointless. As you say the interest rates are ~ zero anyway.
I suppose you could put half this year's allowance in a Cash ISA and transfer to SS ISA in 2013/2014 - you'd at least get 2% rather than nowt. But given universally low rates (due to FLS) it's probably not worth the hassle.

ANuvver 04 Mar 2013 , 5:56pm

Neither have I - has anyone ever heard of someone being contacted by their broker and told they "probably should" do something about an SS ISA cash balance?

Fair point about the cash-into-shares ISA conversion tactic. Don't see much point in cash ISAs myself (at best running hard to stand still against inflation) - I suspect you're not too keen either...

I personally do think things are squeaky at the moment, so took the view that it's best to fund the rest of the '12-'13 ISA allowance but not put it to work just yet. The "ISA season" effect isn't expected to be as marked this year (for obvious reasons), but we're still probably looking at the usual underlying end-of-quarter window dressing - and at the end of a particularly strong quarter.

This podcast was good and covered a lot of ground in a short package, but I don't think they made the point that you can take advantage of the wrapper without having to go shopping just yet if you don't want to.

goodlifer 06 Mar 2013 , 10:34pm

And many thanks for the transcrpt

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MoneyTalk is a podcast from The Motley Fool (UK). Hosted by David Kuo, it’s a lively roundtable discussion where Fool writers and guests from the world of money thrash out the financial issues of the day.

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David Kuo is The Motley Fool’s media personality. He can be heard on BBC London’s (94.9FM) Breakfast Show where he arouses listeners every weekday morning with his unique brand of financial news. He is also a regular commentator on national news programmes including CNBC, BBC News, and Sky News.

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