Savings: the ISA rates about to plummet

What I think is more relevant is that if you invested in any one of the accounts named above this time last year, you are now poorer than you were last year. How many cash savers miss this point completely?

Once you take into account inflation you'd be worse off, would have been more sensible investing in a stocks and shares ISA.

I dont think ANY of the rates, bonus or not, can be described as 'juicy'.

What everyone forgets is that if most people did switch at the end of the guaranteed period, bonuses would disappear altogether as the banks would not be able to take the hit. it's only the inertia of the majority that enables the minority who do move to get any kind of decent return on their investment.

If you invest in stocks and shares you take the risk of losing lots rather than nearly keeping up with inflation.

So, if you want some 'security' it's a 'savings' account..

So can someone explain why the savings rates offered by almost all banks (etc.) for the government 'approved' ISA accounts are less than the rates being offered for non ISA accounts

Last year I had to move a '1 year regular-saver' ISA from it's after the anniversary 0.6% , and the best I could find was a non ISA 4% = 3% after tax.

Daniel Bell's gone into the casino, don't....repeat DON'T follow him!

Bonus rates are a nonsense - we had a product from a UK sub of a foreign bank that promised a rate including a fixed rate bonus. We understood that to be a fixed rate. They said they meant that the basic rate could be reduced -only the bonus was fixed rate. Deliberate deception. I should have taken them to the ombudsman, but didn't.

Unless your cash ISA pays more than the inflation rate (which none do), you are making a gift to the country to help it to reduce the deficit at the expense of your own hard earned cash.

I prefer not to be that generous.

Get a Stocks and Shares ISA save tax and loss your capital.

Well said Rustie they are all financial advisors looking for their 1.5%

All these accounts should have the current interest rate and its expiry date in a prominent header on the statement.

It is unacceptable that you have you to trawl through lots of web pages and similar account names to get such information.

Whilst I don't agree with bonus rates, I don't understand what the problem is. The banks notify you when the bonus is due to come to an end as well as it being stated in the original information when you take on the account so its in general only if you're too lazy to do something about it that it hurts.

The only exception to this that I have found is ING. There are accounts with ING that require you to have one of their Direct Saver Accounts to be able to have them and the Direct Savings Account runs on a bonus so you can't close the account and get rubbish interest.

"The banks notify you when the bonus is due to come to an end"

No they don't (or maybe some do, but mine do not)

Nice photo of someone tombstoning

Obfuscation is the deadliest weapon of the financial services armoury.

Clarity would kill the golden goose.

A pointless article stupidly written

Jolly well said Franco!

Rustie and bb 42, put your toys away and get to your beds.

Rustie and bb42 - So you would put your money in a cash ISA giving less than the rate of inflation. That is not what I call an investment. That is a loss.

I have a shares ISA and went back into the market on 12th August. Since then it has risen in value by 13.7%. That is an investment. Yes, you have to monitor it frequently. You don't get anything for nothing.

You can do what you like. I know what I'll be doing.

Maverick - what did you buy on 12th August that has risen by 13.7%?

Probably be something that lost 30% the previous 6 months.

Rusti and bb 42

You guys need a wider perspective for long-term savings. If you look at the short and longterm performance of a "boring" income trust like Neil Woodford's Invesco Perpetual income it not only has given you a 4% and rising income keeping up with inflation, but a very useful capital gain as well.

I suggest you also look up the performance of the Aberdeen investment trusts.

For short-term savings all of us have to do the best we can with these poor bank accounts, at least CitiWire are helping us with their best buy tool and making us aware of some of the tricks of the trade.

John Osborne: I stick with my original comment - in today's volatile, irrational and unpredictable climate it is impossible to view equity based "investments" as anything other than roulette. To continue the analogy, Invesco Perpetual landed on 25 black.....one winner in a sea of losers.

Rustie,

I think you have a basic confusion between speculating and investment.

Investment is buying shares in good quality companies which are well run, growing and contributing to the economy. I admit all shares suffer from short-term sentifment and market noise but in the longterm will reflect the value of the company and economy.

If more people were prepared to back Companies then our productive economy would be better financed and more successful. As far as I am concerned putting all savings in bankrupt banks supportingtheir greedy bonuses is morally indefensible.

The FSA could do something useful and make rules about dropping interest rates like this. Or make rules about it being incredibly easy to switch - which it is not currently!

Rustie - The ISA portfolio is mainly invested in good-quality FTSE250 companies - the stars are NCC Group, Oxford Instruments, Rotork, Melrose, Croda International, DS Smith and Aggreko.

bb42 - It's irrelevant what those shares did in the month before I bought them. I didn't have them then. I don't believe in buy-and-hold - if one of my shares doesn't perform for 4 months I chuck it out and buy something that is performing.

Maverick/Rustie etc

You are having a pointless discussion based on diametrically opposed views about risk and reward. Its not even as though facts can change entrenched feelings about security viz a viz opportunity.

Maverick good Quality companies don't perform every 4 months. A fool and his money are easily parted

John Osborne I take it you are talking about ,Aberdeen technology the darling of the nineties Henderson Global another darling after their manager s got 50 milliion bonus the market collapsed and investors were left pennies.

The cry then was from ifas everybody should be in technology.

Why don't we have no gain no fee.?

Read Bernard Cornfield and IOS 1971.

How investors get fleeced in a speculative bubble and how it is repeated on each generation as soon as the follies of the past are forgotten.

It is a fact that bush removed regulation put in place in the thirties because it had no relevance to present day and any regulation decided on to day will meet the same end it is a joke the Conservative party talking about regulation they have opposed it all my life

As far as I know banks now have to send you yearly statement.

bb 42 and Morlando

Both wrong.

Moylando - IP Income gives consistent and rising income, why should that be any more risky than a devious bank reducing its interest rates, it is just the distorted view of risk that is current thinking.

bb 42. No I am not talking about Aberdeen technology. You know perfectly well that was flavour of the month 12 years ago, and are only using this discredited specialist fund to support your argument.

I loathe bonuses; they force you to move money around all over the place and keep opening new accounts when they plummet. Would like to see an article about 'old stalwarts' (some exist!) who may not pay the top rate but don't do bonuses and keep the rate as decent as possible for long periods. Over the longer term you can stop thinking about a consistent account like this and still do as well as can be expected, maybe even better.

Moylando:

Quote: " Its not even as though facts can change entrenched feelings about security viz a viz opportunity"

Of course facts can change views!!.....why the hell do you think most of the world sees equity bases investments currently as a shot in the dark.........because the markets are volatile, irrational and rudderless!

Maverick: I asked you for the NAME of the ISA.....you've selected a number of companies that have, in the roulettte of equity performance, made gains. I want the name of the ISA that you purchased and that you claim has increased in value by 13.7% in one year

bb42 - So you'd hold on to Carphone Warehouse (down 58% on the year), Tesco (down 21%) and XP Power (down 35%) just because they're good companies?

Like I said, you do what you like. I know what I'm doing . . . . .

John Osborne:

Trite semantics John, you read Investors Chronicle no doubt.

Simply investing in solid companies, as you would describe them, offers no real protection against the market moving antics of hedge funders, takeovers, mergers and insider trading. Your naivety, however, is touching - and will warm the hearts of the sharks in the city who rub their hands in anticipation of more ready cash from clueless retail "investors"

Rustie - My ISA is a self-select shares ISA operated by TD Direct. I choose the shares, I buy and sell them online, and I have only myself to blame if I get it wrong.

maverick

No I bought rbs at 18 sold at 28 and I am going to sleep happily for the rest of this year.

I don't want to be out on the golf course worrying about the next greek bailout

Maverick:

Hmmm, mused Rustie rhetorically............do I believe he self-selected all those "winners" among an ocean of losers?...frankly, no.

Isn't it funny we are told of the repercussions for Europe if the Greeks don't meet the bail conditions and while the negotiations are going on the ftse is racing to the 6000 mark.

Then lo and behold the bail out is agreed next day the market drops must be manipulation.

I can understand some of the banks, due to their own self-inflicted financial mis-management and predicament offering low rates and no dividends but what I cannot fathom is why, apart from grossly inflated bonuses just like banks, Building Societies who constantly imply they have no shareholders, cannot offer more realistic basic rates without all this bonus nonsense. Surely the public deserve better. After all, when ISA (and previous Tessas were introduced, the whole idea was to give Joe Public a tax break to encourage savings. It looks to me as if the building Societies and, of course, the banks are the one's benefiting from the tax break, not the account holder.

Of course the Government isn't too keen on savings at the moment as they want us to spend our cash to help economic growth. However, many have realised that getting things on credit (cards,loans etc) is costly and are trying to reduce their former borrowings and at least you could say for them, at least it could be regarded as reverse interest.

Rustie - The system is : you pick a shortlist of companies you trust - that is, that you've done your research on. You put them in a virtual portfolio (I use Moneyextra, but there are lots of others). Every day, if you can, identify the ones above average since the start of the period, and score them : 1 on a day when the FTSE250 is rising, 2 on a day when it's static, and 3 when it's falling. At the end of the period you choose, say 3 months, buy the ones with the highest scores. Then re-base your virtual portfolio and start again.

I fully accept it's a load of work, but it works. Just a tad better than putting your money in a cash ISA.

Maverick: Jackanory, jackanory, jackanory.

There is no system on God's earth that guarantees results in the way you describe. You're in denial Maverick, please don't start to believe your own hyperbole....this above all, to thine own self be true!

smoking gun

All tax breaks end up in the trousers of the financial services industry, not poor old Joe Punter. The whole system of tax breaks on pension savings and ISAs is a link between the money shufflers and the government as corrupt as anything between tabloids and cops.

Rustie - Your first post on 21st seemed to indicate that you don't think shares ISAs are a good thing. So you put your ISA money in a cash ISA, and I'll do what I've been doing.

I don't believe my own hyperbole. What I do believe is the figure at the bottom of my ISA page on TD Direct.

Nil sine labore.

Rustie,

Results speak for themselves over many years including both ups and downs in the economy and stockmarkets both UK and overseas.

You are naive in believing that investing in a spread of well run companies and countries with stronger currencies is like a casino.

You seem to be unable to distinguish between investing in well-researched Companies and just gambling on newspaper or magasine tips, or are just trolling.

Just keeping all savings in your local bank or building society will:-

a) erode capital in the long-term, particularly now as the government is trying to inflate debt away and devaluing the currency.

b) give a fixed income, as you know Inflation will quickly erode this income and give poverty in old age for many people.

The best income trusts have a very long history of increasing dividends (e.g IP Income, City of London, etc..).

John Osborne,

Name a fund which gaurantees an income and no risk to capital

if it is so good. The proof of the pudding is in the eating

Millions of investors including clever dicks have lost money in the market on the premise don't pay the tax man pay the ifas' and fund managers to loss your money.

.

Read Bernard Cornfield 1971 and tell me that it has't happened twice in the last ten years.

Ifas say you have got to be in it for long term after a year you get a statement telling you you have to get rid of the dogs.

Maverick use svs securities

bb 42,

You are right, no conventional fund will guarantee an income but trusts and funds as named above have very respectable track records of rising income payouts virtually every year. I prefer Investment Trusts as they have lower fees, a board accountable to shareholders and better transparency.

My point really was about the perception of the risk of a bank savings account. Your money is guaranteed safe by the Govt. whilst they are busy devaluing sterling, lowering interest rates and managing inflation higher. I do not call that risk free, but am not suggesting everyone puts all their savings in trusts either, only to keep a balanced view.