Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
SPX/Gold, Long-term Yields & Yield Curve 3 Amigos Update - 22nd Jun 18
Gold - How Long Can This Last? - 22nd Jun 18
Dow Has Fallen 8 days in a Row. Medium-long Term Bullish for Stocks - 22nd Jun 18
Trouble Spotting Market Trends? This Can Help - 22nd Jun 18
Financial Markets Analysis and Trend Forecasts 2018 - A Message from Nadeem Walayat - 21st Jun 18
SPX Bouncing Above Support - 21st Jun 18
Things You Need To Know If You Want To Invest In Bitcoin Now - 21st Jun 18
The NASDAQ’s Outperformance vs. the Dow is Very Bullish - 21st Jun 18
Warning All Investors: Global Stock Market Are Shifting Away From US Price Correlation - 20th Jun 18
Gold GLD ETF Update… Breakdown ? - 20th Jun 18
Short-term Turnaround in Bitcoin Might Not Be What You Think - 19th Jun 18
Stock Market’s Short Term Downside Will be Limited - 19th Jun 18
Natural Gas Setup for 32% Move in UGAZ Fund - 19th Jun 18
Magnus Collective To Empower Automation And Artificial Intelligence - 19th Jun 18
Trump A Bull in a China Shop - 19th Jun 18
Minor Car Accident! What Happens After You Report Your Accident to Your Insurer - 19th Jun 18
US Majors Flush Out A Major Pivot Low and What’s Next - 18th Jun 18
Cocoa Commodities Trading Analysis - 18th Jun 18
Stock Market Consolidating in an Uptrend - 18th Jun 18
Russell Has Gone Up 7 Weeks in a Row. EXTREMELY Bullish for Stocks - 18th Jun 18
What Happens Next to Stocks when Tech Massively Outperforms Utilities and Consumer Staples - 18th Jun 18
The Trillion Dollar Market You’ve Never Heard Of - 18th Jun 18
The Corruption of Capitalism - 17th Jun 18
North Korea, Trade Wars, Precious Metals and Bitcoin - 17th Jun 18
Climate Change and Fish Stocks – Burning Oxygen! - 17th Jun 18
A $1,180 Ticket to NEW Trading Opportunities, FREE! - 16th Jun 18
Gold Bullish on Fed Interest Rate Hike - 16th Jun 18
Respite for Bitcoin Traders Might Be Deceptive - 16th Jun 18
The Euro Crashed Yesterday. Bearish for Euro and Bullish for USD - 15th Jun 18
Inflation Trade, in Progress Since Gold Kicked it Off - 15th Jun 18
Can Saudi Arabia Prevent The Next Oil Shock? - 15th Jun 18
The Biggest Online Gambling Companies - 15th Jun 18
Powell's Excess Reserve Change and Gold - 15th Jun 18
Is This a Big Sign of a Big Stock Market Turn? - 15th Jun 18
Will Italy Sink the EU and Boost Gold? - 15th Jun 18
Bumper Crash! Land Rover Discovery Sport vs Audi - 15th Jun 18
Stock Market Topping Pattern or Just Pause Before Going Higher? - 14th Jun 18
Is the ECB Ending QE a Good Thing? Markets Think So - 14th Jun 18
Yield Curve Continues to Flatten. A Bullish Sign for the Stock Market - 14th Jun 18
How Online Gambling has Impacted the Economy - 14th Jun 18
Crude Oil Price Targeting $58 ppb Before Finding Support - 14th Jun 18
Stock Market Near Another Top? - 14th Jun 18
Thorpe Park REAL Walking Dead Living Nightmare Zombie Car Park Ride Experience! - 14th Jun 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

Tax Free Cash ISA Deadline, Best Savings Account Pays 3.5% Interest Rate

Personal_Finance / ISA's Mar 09, 2010 - 01:00 AM GMT

By: Nadeem_Walayat

Personal_Finance

Best Financial Markets Analysis ArticleJust four weeks remain for savers to fully utilise at least the £3,600 cash element of their annual £7,200 ISA allowance. Even if you have already utilised this years allowance, savers need to ensure that they check the interest rates being paid on a regular basis, especially for those accounts that have matured as the banks and building societies are notorious for cutting rates on existing accounts and dumping matured accounts into pittance paying cash ISA accounts, paying as little as 0.1%. i.e. 1/30th the rate of a top current instant access account which on an ISA account balance of £3,600 means the difference between receiving £3.60 or £108 in interest per annum.


Interest rates will rise during 2010.

Contrary to the widespread consensus of rates on hold into 2011, interest rates will rise during the second half of 2009 as inflation fails to fall towards the Bank of England's 2% target.

The market will force the Bank of England to raise rates which suggests savers should be careful not to be tempted into fixes of longer than 1 year, as it is highly probable that savings interest rates will be significantly higher by the end of 2010 despite the fact that the tax payer bailed out banks continue to rip off ISA savers i.e. similar accounts with the same provider without the ISA label tends to pay more than the ISA version therefore negating much of the aspects of the tax free savings element for basic rate tax payers.

Best Current Variable Rate ISA's

Financial Institution Interest Rate Minimum £ Comments
A&L / Santandar Flexible ISA 3.5% £1 This account offers a guaranteed rate of 3% above the base rate for 1 year. So the account tracks the UK base rate with a 3% bonus for the first year only. An excellent 1 year hedge against future interest rate hikes. No Transfers in.
Barclays Golden ISA 2 3.1% £1 Includes a 1% bonus. Barclays mortgage holders can offset their mortgage balance against their ISA balance and hence boost their effective return on ISA savings.
First Direct 2.75% £1 Offers a fixed rate of 2.75% until August 2011. Allows transfers in.
Newcastle BS 2%-3% £500 120 day notice - Pays 2%, or 3% on whether funds are held until anniversary
Standard life 2.65% £1 Taken over by Barclays. Postal / Online, allows transfers in.

 

Best Current Fixed Rate ISA's (1 Year Max)

Financial Institution Interest Rate Fixed Period Minimum £ Comments
Aldermore 2.9% 1 Year £3,600 Previously Ruffler Bank, accepts transfers in.
Northern Rock 2.75% 15/11/11 £500 Fixed until March 2011. Tax Payer owned Bank - On maturity converted to a 30 day notice ISA paying a pittance.

 

The clear winner is the A&L / Santandar 3.5% Tracker Cash ISA that tracks the Base UK Interest rate +3%. The forecast for 2010 is for UK interest rates to rise to between 1.5% and 2%, which converts into a rate of 4.5% to 5%. This ISA beats any of the fixed rate ISA's on the market, I would not be surprised if this ISA is soon withdrawn. Though remember that the 3% tracking is only for 1 year after which the rate drops to a pittance of just 0.5%, so remember to switch on anniversary.

Self Select Shares ISA's

The stock market bottomed in March 2009 with recent analysis concluding that the bull market in stocks and commodities could continue for many more years, which opens the doors towards utilisation of the shares part of the annual ISA allowance.

The full implications of the unfolding Inflation Mega-Trend including forecasts trends for major markets for many years are contained within the NEW Inflation Mega-trend ebook that I am making available for FREE, which includes analysis and precise forecasts for:
  • Interest Rates
  • Economy
  • Inflation
  • Gold & Silver
  • Emerging Markets
  • Stock Markets
  • Stock Market Sectors and Stocks, including ETF's
  • Natural Gas
  • Agricultural Commodities
  • House Prices
  • Currencies
  • Crude Oil

The 109 page ebook is being made available for FREE, the only requirement for which is a valid email address.

Self select ISA's are part of the UK annual tax free ISA allowance of £7,100 which comprises two components, the Cash ISA and the Shares ISA, which for the current tax year for most people is £3,600 in each part, rising to £5,100 each from 6th April 2010 (total £10,200).

Self select ISA's as the name suggests allow investors to select their own stocks and bonds i.e. they are basically ordinary share dealing accounts encased in an ISA wrapper.

All capital and income gains accrued within a self select ISA are tax free (dividends are still taxed at 10% at source).

For those that want to invest more than the component part i.e. £3,600 then if you do not open a cash ISA you can utilise the full annual allowance of £7,200 towards a shares self select ISA.

Virtually all self select ISA providers charge a small annual fee, usually a fixed amount in the range of £30 - £50 on top of dealing costs.

Summary of ISA Rules & Benefits

  • The ISA accounts are TAX FREE, and do not have to be entered onto any tax returns. The equivalent taxable return on a 3% cash ISA for standard rate tax payers is 3.6%. For higher rate tax payers it is 4.2%.
  • The income from tax ISA's does not count against many mean tested benefits such as Tax Credits.
  • The Allowance for 2009-10 is £7,200, £3600 for cash and £3,600 for shares ISA's or £7,200 in a shares ISA. For over 50's the allowance as of 1st October is £10,200 at £5,100 for cash and shares. The new allowance will apply for all savers from 6th April 2010.
  • You can only open ONE New cash ISA per tax year, and you can add new monies to One Cash ISA per tax year (see transfers). Similarly you can open only one new Shares ISA per tax year.
  • You do not have to open a Cash ISA with your existing provider, i.e. you can open an account at different providers every year.
  • Most providers allow for transfers in. And ALL should allow you to transfer out.
  • Once you withdraw from a Cash ISA you cannot then then re-deposit into. The £3600 limit refers to total deposited, and not maximum account balance. So if you deposit £3600, and withdraw £1000, then you cannot re-deposit that £1000 in the same tax year as you have used up your £3600 deposit limit.
  • To maximize your tax free interest, it is best to open your account at the start of the tax year.
  • The Financial Services Compensation Scheme (FSCS) guarantees the first £50,000 per person, per institution. Those with sizable savings that total more than £50,000 should ensure that their institutions really are separate, especially given the banking crisis forced mergers.
  • There is the facility to transfer Cash ISA monies into Shares ISA's but NOT from Shares ISA's to Cash ISA's .

Source: http://www.marketoracle.co.uk/Article17758.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market and he is the author of the NEW Inflation Mega-Trend ebook that can be downloaded for Free. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 500 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

jeff
30 Apr 10, 06:42
Compare ISAs

hi all,

i like your article,

thanks for view this article.

*******************************

Jeff


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules