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...

@Theyreeatingthedogs I’ll be taxed on the interest. Which makes a big difference.

I’ve been burnt twice with Stock & Shares investments and at my age I don’t want to take the risk anymore.

Oh wow, this is a complete revelation! 🙄 It doesn't matter whether you're taxed once, twice or 16 times a year every year for the rest of your life on the same pot of money, the mere fact we have savings to be taxed on still makes us more privileged than many people. Try thinking of others before yourself.

How much are you saving in cash per year at present?

What are your savings goals / timeframe?

Truthfully unless it’s an emergency fund or you are elderly, understanding how to invest your money vs just keeping it in cash will enable far greater growth of that capital ahead of inflation.

I think people misunderstand how an S&S works and think they’re going to be having to trade individual stocks.

If this gets more people to go "hmmm, maybe it's time I learned some really basic things about investing" then it'll be a job well done.

I expect the ISA providers will make these options as simple as possible.

Generally most of us are not big individual stock pickers - that involves time, effort and energy to do, and even then there are no guarantees. So indexes like the ftse, s&p500 etc give you a broad and diversified market exposure. Tracker funds or ETFs are quite cheap ways of accessing markets efficiently and reducing decision-fatigue.

As a rule of thumb the market generally rises, but can fall, so if you think you might need a particular balance then keep some of your holdings in cash (or try NS&I bonds, etc) if you care about timing.

You can perhaps start small too - apps like Moneybox (that’s just what I use, others are available, but they have a few pretty good guides too) can give you some easy ways of making small and regular investments into markets so you get a real sense of how they perform. Indeed little and often is important - as it’s impossible to time the market.

PS - I graduated 2008 too, and had no family exposure to any of this. I’m not an expert but I do see the value of learning about some of this and trying it within my means.

LISAs are pretty useless if you live in some parts of the country as you only get the bonus if the property you buy costs less than £450k. That figure hasn’t increased since they introduced the scheme in 2017 despite rises in property prices.

For those who really don’t want to invest in even the least risky money market funds the T212 stocks and shares ISA pays a higher interest on cash than their cash ISA does. This really is a none issue we just need to educate ourselves a bit better and that is the whole point of the proposed change.

People need to stop giving aggressively opinionated financial advice, it's bloody stupid.

I've had a stocks and shares ISA and over about 5 years it's consistently had a return lower than my cash ISA. I appreciate stocks & shares are for the very long term but by definition there is no guarantee that you'll make money - and if you're saving for the shorter term (house deposit) then it's not necessarily your best option. If Labour do cap cash ISA deposits I'd be more inclined to buy premium bonds - not a high rate of return but tax free

Why is it stupid for people to share their opinion about what to do with your money?

@OldLondonDad I invest I have a stocks and shares isa but I also have a cash one and pb because... I don't want to rely soley on having to draw on my stocks when the markets go down.

Education is needed not this

@CinnamonCinnabar what funds are you in?
My dc have had one about that time and up 30%

Yes, exactly this, you've summed it up very well.

I have started moving more money into premium bonds in anticipation of this move, given it has been rumoured for quite a while.

Imagine if it was a Conservative government that were responsible for this, people would probably be saying it was all about making the fat cats in the city even fatter!

Depends on where the money is invested. I'd suspect it will end up in the hedge fund pockets as it will be used to buy shares in existing huge companies already partly owned by billionaires etc.

We can be pretty sure it won't be invested in Mrs Miggans setting up a new cafe or small business start ups on the local industrial estate.

So basically, even more money for the owners of chain stores and huge businesses and still no support for struggling start ups or independents on the High Street.

How much have you put into premium bonds ‘in advance of this announcement’, and why in anticipation of it?

Your cash ISA allowance for 2025-6 is £20,000, and until early April you had another £20,000 you could put in for 2024-5 too.

If you have north of £20k a year to save (assuming you are maxing out those ISAs and then using premium bonds),
you can definitely make it work a bit harder for you.

Dont forget you also have a £1k/ year interest allowance too .

It IS about making the city fat cats richer!!

Are you moving cash out of existing ISA’s? If so that doesn’t make sense as any changes will most likely only affect future savings. If I were you I would use up ISA allowances whilst they are still available.

@BusyBeeBoard sorry had meant to tag in above.

Most likely they will just reduce the amount you can save in an ISA each year, currently £20k, perhaps reduced to £10k. They think the limit is too high and 'ordinary' people can't make use of it all anyway. They may also put a lifetime maximum on ISAs, not sure how that will work if you are already over the limit.

If you are unsure of S&S ISAs, just go for a tracker, everyone tells me a global tracker fund is best, so that you don't lose out because one area goes down.

I graduated in 1974! If we are talking about not knowing anything about finance, ISAs etc...

You do realise you are taxed on the interest not on the money you've already paid tax on

And you aren’t going to be taxed on it again - just on the interest, which is classed as unearned income

It's concerning me that some people think that being in a position to save any money at all mean you are 'privileged'. This is not a race to the bottom.

As of September, DH and I will finally be in a position where we can start saving a large proportion of our salary each month for a house deposit. We want to give our baby a stable family home and get out of rented accommodation. We want to not have to put up with the landlord refusing to replace our smoking boiler for a month, or our washing machine for 6 weeks, or worrying constantly we'llbe evicted on a whim. We want to provide a safe stable home for child.
As far as I can see, a Cash ISA is our best way of getting to this point as quickly as possible- S&S ISA would only be suitable for far longer term returns and wealth-building, which is way beyond the aspirations we can dream about now. So lowering the tax free threshold just feels like another kick in the teeth to this generation struggling to achieve home ownership, or create an easy-access rainy day fund.

If you’re planning to buy a house with your savings then you won’t have this dilemma much longer as you’ll need your start ploughing money into paying off your mortgage each month. You won’t have a spare £20k to save in an ISA anymore.