Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Budget 2014 Cash ISA Allowance Near Tripled to £15,000, Current Best ISA

Personal_Finance / ISA's Mar 19, 2014 - 08:51 PM GMT

By: Nadeem_Walayat

Personal_Finance

The Coalition government has finally acted to correct a huge disparity in the ISA market of savers being forced to split their annual ISA allowances between Cash and Shares ISA's by allowing savers now to use the whole of their annual allowance towards a cash ISA rather than the existing 50/50 split between cash and shares, as investing in shares has never been suitable for the vast majority of savers given that they are a high risk asset class that certainly never deserved a 50/50 portfolio allocation. Even for highly experienced stocks investors such as myself tend to experience sleepless nights when portfolio allocations approach 30% of assets let alone 50%. Therefore for most investors the stock market and floating bonds should never really go above an approx 15% allocation (including pension funds) with the bulk of the rest made up by property and cash (including fixed bonds).


The further icing on the cake for savers is the boost in the cash ISA allowance to £15,000, which compares against the current cash ISA allowance of just £5,760, and total ISA allowance of £11,520 for 2013-14. Furthermore now savers can switch between shares and cash ISA's when in the past the switch was only one way from cash to shares.

The ISA 'improvements' are especially good news for those like myself who see the Cash ISA's in terms of being a very flexible pensions savings that is immune to the pensions industry vultures and their myriad of scams to steal ones pension fund that results in many disappointed retirees who receive a pittance of what they thought they would receive on retirement, at least cash ISA's have always been transparent.

Off course whilst cash ISA's may be bee deemed to be risk free, there is however the risk of a government Cyprus style theft, so whilst Cash ISA's are safe they are not entirely risk free.

The new ISA allowance and rules will be active from July 2014.

Current Best Cash ISA's for Least Stealth Inflation Theft

So whilst Britians' savers continue to face what amounts to a zero interest rate catastrophe as the Bank of England continues to get away with government debt monetization and support of the bankrupt banks (Co-op the current bank teetering on the brink of collapse) via unlimited funding scheme that is now approaching its 2nd full year of the collapse in savings interest rates that began in May 2012 and soon accelerated into sub inflation rates of systemic theft as illustrated by the table below which shows the cash ISA rates offered by apparently the often reported as best buy accounts of the Halifax mega-bank that in reality crashed in response to the Bank of England's Funding for Lending Scheme that started in July 2012, still a cash ISA does allow savers to avoid the double taxation theft i.e. savers are taxed on their earnings and then AGAIN on their interest earned on savings.

Halifax ISA's May 2012 Sept 2012 Nov 2012 Mar 2013 May 2013 July 2013 Mar 2014 % Cut
Instant Access
3%
2.75%
2.35%
1.75%
1.35% 1.35% 1.5% -50%
1 Year Fix
2.25%
2.05%
2.05%
1.75% 1.75% 1.65% -27%
2 Year Fix
4.00%
3.25%
2.25%
2.5%
2.10% 2.10% 2.05% -49%
3 Year Fix
4.25%
3.75%
2.35%
3.00%
2.25% 2.25% 2.25% -47%
4 Year Fix
4.35%
3.80%
2.40%
3.05%
2.30% 2.30% 2.40% -45%
5 Year Fix
4.50%
4.15%
2.60%
3.10%
2.35% 2.35% 2.5% -44%

The table illustrates that despite a minor up tick in rates, the tax payer bailed out Halifax continues to across the board pay abysmally poor rates of interest that are far below the official UK RPI Inflation rate of 2.8%.

Newcastle Building Society 2.9%, 5 Year Fixed Rate Cash ISA

Before you retch at the thoughts of being forced to lock away your hard earned savings for 5 years just to have a chance of beating official inflation. You need to consider the following points of the Newcastle ISA Account that literally get the heart racing for savings obsessive's such as myself.

  • Five year fixed rate of 2.9% per annum.
  • Withdrawals including transfers out are permitted subject to 120 days loss of interest ONLY on the monies withdrawn.
  • Fixed until March 2019
  • Allows deposits and transfers in as long as the issue remains current (open).

The key point is that the account allows withdrawals with the loss of 120 days interest, which changes the nature of the account as it is no longer behaves as a 5 year fixed rate account but instead a very high rate of interest paying instant access account that pays 2.9% with a withdrawal fee of 0.98%, that allows for capital to be transferred out at any point during the next 5 years when interest rates rise!

The following table better illustrates the actual average rate of interest that savers will achieve by the end of each year, that takes into account the 0.957% early withdrawal fee, as compared against similar term fixed rate accounts by the Halifax

Year Newcastle Effective rate Halifax Better off by per year
1
1.97%
1.65%
+0.32%
2
2.42%
2.05%
+0.37%
3
2.58%
2.25%
+0.33%
4
2.66%
2.40%
+0.26%
5
2.9%
2.5%
+0.4%

Therefore the Newcastle Cash ISA both pays a higher rate of interest (after the early exit charge) AND allows transfers out when interest rate actually do rise.

In my opinion this is by far the BEST cash ISA account to appear on the market for at least 18 months due to its flexible nature. Therefore I would not be surprised if high demand results in it soon disappearing from the market place which means it is better to act sooner rather than later.

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 2013-14 is £11,520, £5,760 for cash and £5,760 for shares ISA's or the whole £11,520 into a shares ISA.
  • 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 £5,760 limit refers to total deposited, and not maximum account balance. So if you deposit £5,760, and withdraw £1000, then you cannot re-deposit that £1000 in the same tax year as you have used up your £5,760 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 £85,000 (Euro 100,000) per person, per banking licence . Those with sizable savings that total more than £85,000 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 .
  • Next years Cash ISA allowance (2014-15) as mentioned earlier from July 2014 will be boosted to a massive £15,000, which compares to what it was scheduled to rise to inline with CPI inflation of £5,940. Additionally shares ISA's will be able to be converted into Cash ISA's.

UK House Prices Mega-trend Forecast 2014-2018 Ebook

The UK housing market ebook is due be completed by the end of this month (March 2014) that contains extensive analysis and detailed trend forecasts. The ebook also includes extensive guides on how to buy or sell properties, value increasing home improvements, how to maintain and save money on running costs and more - ALL for FREE.

Ensure you are subscribed to my always free newsletter for my latest analysis and to be able to download the ebook for FREE on release.

However, given the time critical nature of the content excerpted analysis including the detailed trend forecasts were posted online in 2 parts on the 30th of December 2013:

These articles were soon followed up by 2 concise youtube videos:

Source and Comments: http://www.marketoracle.co.uk/Article44887.html

Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2014 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 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 focuses on UK inflation, economy, stocks, housing market and interest rates. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 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

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

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