To wonder what the point of trying to save is?

[CircusofPuffins]

Lots of reports today that Rachel Reeves is, as been rumoured for quite a while, due to announce plans to limit the amount that we can save in cash ISAs

https://www.ft.com/content/01371783-0399-412b-82be-c87f3a60ff8c

As someone who has the majority of my life savings in ISAs, I find this really objectionable. Apparently, this has lobbied for by people in the city, wanting more of us to invest in stocks and shares ISAs instead. Despite them ignoring the simple fact that most people won't understand stocks and shares ISAs, or have the necessary time/effort to get clued up on it.

I can't help but feel quite despondent about this, and wonder what really is the point of even bothering to save these days? The last few years I've been trying to be as careful as possible with money, limiting spending on luxuries and putting a decent chunk of my paycheque aside each month to hopefully, one day, be able to buy a house.

But now it seems like labour are targeting savers? And what really is the point of this massive house-building programme they supposedly want to accomplish if the vast majority of us will probably never be able to save enough to buy one in the first place?

What a depressing country this is increasingly becoming to live in...

You can put cash into a stocks and shares ISA and let it sit there uninvested. In many cases, you'll be paid interest on that cash, and quite possibly more interest than in a cash ISA!

This is such a non-story it's unbelievable.

If you opened a stocks and shares ISA and put in £2000 you could then leave £1000 as cash and put £1000 in an index fund and see which one does better. None of us know the future, so there's no guarantee, but the odds are something like 90% in favour of the invested money growing more than the cash over 5 years or more.

If you are under 40
Your house savings should be in a LISA, because the Government adds free money into these.

Do you have a LISA ?

No one is taking those savings away from you!

ISAs are just a tool to manipulate what the government of the day wants the populace to do.
Often these tools outlive their purpose but remain in place.

Unfortunately the reality is a bit worrying in times of economic hardship:

Lifetime ISAs leave some with less money than they put in

Some people who pay into a Lifetime Individual Savings Account (LISA) may end up getting less money out than they put in, MPs have warned, as they call for the product to be reformed.

www.bbc.co.uk/news/articles/c93kgye03j9o

This is such a non-story it's unbelievable

Completely disagree and if it's such a non-story, we therefore don't need explanations as it's all so simple...

Labour is for lobbyists, not ordinary people.

Also, saving for something, whether it's a house deposit when younger or a stair-lift in later life can mean the difference between successfully claiming Universal Credit (especially helpful re rent) and Pension Credit.

It's all a bit fucked up, really, especially for the huge swathe of people 'In The Middle'.

I suspect part of the issue is that people who were early in their careers during 2008 banking crisis are now the age where in previous generations they would have some savings built up to invest. In 2008 the stock market crashed and there were loads of redundancies. If you’re redundant you need to be able to access savings not wait for the value to go back up, so it makes sense there is reluctance to rely on S&S for savings.

I’m gutted. Just received my pension so now paying tax for the first time in 5 years. And now my savings aren’t safe.

In what way are your savings "not safe"??

Surely ther whole thing about ISAs is that it was to encourage savings rather than enhance the wealthy.

Couples who are putting 40k into ISAs at the start of every financial year aren't in need of tax free savings.

Honestly she’s disgusting. But that’s Labour.

I think it makes sense. The country is on its arse while people are hoarding fortunes. It makes sense to encourage people to invest and get the country moving again, rather than for the government to pay people for the benefit of effectively keeping their fortunes under the bed.

Lifetime ISAs leave some with less money than they put in can result in a withdrawal rate below the investment IF (and only if) withdrawals are made outside of the pre-agreed conditions (house purchase, retirement, terminal illness).

I am sick and tired of scaremongering around financial products. People need to do their own research and hold themselves responsible for their investment decisions.

The rumour is the announcement will be:

• revise the limit of how much you can put into a cash ISA to £10k per year but...
• keep the overall limit of £20k per year total into ISAs.

So you will be able to put £10k into a cash ISA and £10k into a S&S ISA.

Existing balances are completely unaffected.

The only people who will be affected by this are people who:

• have / can / want to put more than £10k a year into a CASH ISA

There are very few people who put more than £10k a year into their ISAs. Most who have that amount of money to put into an ISA every year will already know that S&S ISAs are a better investment than just cash earning interest.

In the UK we save quite a lot of money - great. But we save it as cash - not so great. That means we generally get lower returns, build less wealth, and make less money available for business investment which powers our whole economy. Compared to the US, which leads the world in investment in financial vehicles and huge proportion of the population invests in shares - and they reap the rewards from it. Wider ownership of shares and the increased capital available to businesses to invest is absolutely a good thing.

The fact you are financially positioned to be able to save is a luxury. There are literally millions of people in this country that go into debt before the end of the month let alone have enough to break even. It is absolutely the right thing to tax the 'rich'. You may not feel rich but it's all relative. Unless you are 100% happy with the quality of the NHS, care services, education system etc, stop moaning from your position of privilege, we have to fund our services somehow!

What is going to happen to them?

The tax exemption for savings interest is probably sufficient for a lot of people, and has eroded the value of the ISA for the small smaver they were originally designed to help.
The government doesn't need to incentivise people who can save £20k p.a. to save, they don't need a tax break, and they will save regardless.

You do realise we've already been taxed on that money when we earnt it??

I asked Google to compare 1) investment into cash ISA vs 2) investment into SS ISA using indexes only. Calculate for the period since ISA was launched, assuming the maximum annual allowance was made and assuming reinvestment.

A consistent investment of the maximum annual ISA allowance into a Cash ISA, with reinvested interest, would have resulted in a total pot of approximately £313,167 on total contributions of £263,020. This is based on historical average interest rates, which have varied significantly over the years. In contrast, an investment of the maximum Stocks & Shares ISA allowance into a FTSE All-Share Total Return Index tracker would have grown to around £442,109 on contributions of £302,560. However, the best performance would have come from a global investment, with a Stocks & Shares ISA tracking a World Equity index like the MSCI World Total Return Index reaching an estimated value of over £600,000, demonstrating the benefit of diversifying beyond the UK market and highlighting the significant long-term growth potential of equities compared to cash savings.

Eh? What's going to happen to them?

Yep. Simple. Open S&S ISA. Pay in money. Buy global tracker ETF. Nothing more to understand.

'Hording fortunes'? Utter nonsense. So you disagree with the principle of saving, then?

I’m well educated but I wouldn’t have the first clue where to start doing this. What to choose or which option to pick. I was early career in the 2008 crash and really got burned from it. I’d have to feel very brave to invest my savings into something where it might all disappear - which knowing my luck (and the luck of my generation when it comes to all things financial!), it would!

The issue is we are a nation of SAVERS
Saving does not support the economy and actually at an individual level is damaging as your savings do not keep pace with inflation.

Most other g7 have more of an INVESTING culture. Investing does not mean gambling. We need to improve financial literacy and also provide key mechanisms through which people make investments. Balance between cash and ss isas seems like a decent first step.

fwiw - lots of younger people are already getting some index and shares exposure through apps. By having it in a tax free wrapper this is a major boon to giving more people confidence in investing.

I don't disagree that I'm more fortunate thanothers, but I also don't agree with being punished for trying to be as careful as possible and saving money.

It seems to be the middle ground - the people who are neither really poor nor extremely wealthy - who get targeted the most by things like this. And I don't think it's fair, it just makes me wonder what the point of trying and being careful is when there's little reward or incentive for doing so.