NISAs - tax free savings or big mistake

[Lighttouch]

Well I know it's a luxury to have some savings and I'm luckily in a position where I an put a bit away for a rainy day.

Being very careful and not adventurous I've always preferred the safe option of cash ISAS despite the poor returns.

Well 6 months ago I decided to dabble online through an 'investment supermarket' in a few companies that were considered boring but safe bets.

The trouble is I should have stopped with the likes of the National Grid instead of mrs risky speculative shares. Three months ago I was in pocket by nearly four figures - now the stock market has crashed and I'm now in a negative profit situation that will get worst through the day.

Be warned - there are traders out there who control the market and 'short' or pull the rug on companies.

It's supposed to be a long term investment as shares are very volatile and the market is right at the top awaiting a 'correction' or plunge.

In retrospect, I think I prefer to be a boring cash ISA saver where you earn a small amount of interest instead of losing capital that can't readily be returned.

Guess you learn from your mistakes!

NISAs - not so nice in the stock market whatever spin they put on it.

[stree]

I looked at these too, already having a unit linked ISA that is doing well, slow but steady gains over the years, but its long term for me so I can wait.
The current ISA/NISA offers are miserable, 1.75% tops. Not for me. Better off opening two TSB accounts @ 3%. These require £500 per month going in, so put it an account1 and then direct debit it to account 2 , then back. Just rotate the same £500 and its £250 PA combined accounts. Tax on it, but still worth doing.

[Lighttouch]

Hi stree, well I took drastic action this afternoon and sold the shares in a loss making share but also the shares n a proftable company too.

I'm very green behind the ears dealing on the stock excange - things happen so quick.

My strategy was to buy 'defensive' stocks of blue chip companies tat paid a dividend or yield. The plan was to reinvest the yield into more shares in the company which gives compound interest.

What I wasn't aware of is that as soon as the day arrives where a yield is announced but not paid brokers withdraw millions from the accounts and the share price goes into freefall for 20 points or more. The stock price is then known as ex-dividened. Typically I got caught out not knowing the ropes. I've left my withdrawn pot in the investment supermarkets ISA wrapper ready for the next opportunity if I have the guts. It's a learning curve.

Thanks for the tip about TSB I'll look into taking out two bank accounts and swop money from one to the other to gain 5% gross interest in both - nice one.http://www.tsb.co.uk/current_account...PC-A3-7414-BAN

I'm with Santander 123 and they pay 3% on savings but also 3% on credit card sales and utility bills.

I think interest rates will rise in December 2014 so I don't want to fix in at an interest rate yet.

There's something big happening tonight in America that will affect all Equities in stocks and shares in London in the morning - it's 50/50 whether it's good or bad news for savers.

[Paul]

I'm in a credit union which (last year) 4.6% after tax.

I'm also in the company's share scheme were I invest £100 per month (pre tax, so around £63 after tax) and they match my investment up to £75, that's £175 of shares purchased monthly. Then after 5 years I can cash in the shares Tax and NI free!

We also receive shares when we get a bonus and shares are given instead of dividends - will be quite a good income in a few years time when the first lot matures - straight into a cash ISA.

Hopefully we'll get to a point when the credit union balance pays for Christmas and the yearly share selling gets us a family holiday / pays for erroneous house repairs / finally pays for the restoration of my classic mini (that's been sat on my garage not moving for 3 years).

[Lighttouch]

Hi Paul, sounds like a great scheme - never come across it before. Just checked to see if my area or former employer might be of use - no luck!

You've reminded me - I read somewhere that Peer to Peer saving/lending is coming next! P2P loans will hit the high street in about 2 weeks sounds great! Might offer the loanee a great return on their investment over a few years.

Great idea!

[Paul]

There's already a few peer-to-peer lending companies in the UK, Money Saving Expert have done a good article about them.
http://www.moneysavingexpert.com/sav...o-peer-lending

[Paul]

Another interesting article about the demise of peer-to-peer - http://www.thelondoneconomic.com/201...-peer-lending/

2.5% base rate over the next 3 years will definitely push up my mortgage, a high base rate is good for savers but those young un's like me who have years left on a mortgage are going to struggle, especially as our salaries won't be increased by the same amount!

[Lighttouch]

Thanks for the links. Soon P2P lending will be available through the tax efficient NISA.

Mortgage rates are at a historical low level as the economy is still fragile.

Interest rates will need to go up - but slowly over five years. Best to pay off some of the loan through over payments.

I doubt mortgage rates will ever return to 15%. A £52k interest only mortgage would have cost £570 a month.

[Flymo]

What I wasn't aware of is that as soon as the day arrives where a yield is announced but not paid brokers withdraw millions from the accounts and the share price goes into freefall for 20 points or more. The stock price is then known as ex-dividened.

The move to ex dividend prices are because, at that point, the dividend is the property of the seller no matter what. The price drop is typically the amount of the dividend, though there may then be a price correction based on the performance of the company.

Depending on the arrangements of the ISA wrapper, I'd expect you to get the dividend when it is paid.

[Lighttouch]

The move to ex dividend prices are because, at that point, the dividend is the property of the seller no matter what. The price drop is typically the amount of the dividend, though there may then be a price correction based on the performance of the company.

Depending on the arrangements of the ISA wrapper, I'd expect you to get the dividend when it is paid.

I will be paid a dividend in the shape of extra shares. I won't bore you with the details but it's a bit of a shock to see your share price drop off a cliff when a ex-dividend is taken. The share price will take 3 or 4 months to get back to where it was. Patience is the name of the game. The drop s compounded by short-term gain investors who take profits in a very tight timeframe aided by technology.