How to split money between between Stocks & Shares ISA and Cash ISA.

[newbieinvestor]

Quick background info. 33 years old. Female. No kids but would like one in the future. I have both a cash ISA and a S&S ISA.

I have recently paid off my mortgage on a house that I own by myself. I know there's a huge debate about whether overpaying your mortgage is the "right" thing to do but it was right for me and it's done now and I am very pleased!

That means I now have a total of around £1500 a month that I can save. My question is, what's the best way to split this between stocks/shares ISA and my cash ISA.

My initial thought was a 50/50 split. £750 into S&S, £750 into cash ISA. My reasoning behind this is that it means I have one ISA pot (my cash ISA) that I can dip into now and then if needs be for a luxury holiday or unexpected big repair. At the same time, in all my years of saving, I have only ever dipped in twice so do I really need to be saving that much into my cash ISA? Should the split weigh heavier on S&S?

With thoughts of a future baby as well, I feel like I should have money in a cash ISA as the whole point of a Stocks & Shares ISA is to let it increase over decades.

Any thoughts or advice welcome.

Wait a minute, you can pay into more than one ISA each year ?

@tanstaafl Yes, providing they are different types of ISA. Although I believe the rules may be changing in April so that you can pay into more than one of the same type as well, although that is not what I am doing.

Start with 50/50 until you've built a decent enough cash pot in your cash isa and revisit in a year?

Yes but I believe the total contributions still have to be no more than 20k total
annually.

I have a stocks and shares isa that let's me get my money back in 10 days. In reality it has always been in my current account in 3 or 4 days.

Current rules are one of each type (1 stocks & shares, 1 cash, 1 LISA), with a total limit of £20k. From April that limit is abolished and at some point there may be an additional £5k allowance for the 'British ISA'.

OP, stocks and shares ISAs let you withdraw money almost as fast as a cash one, but there's a risk an unplanned withdrawal would happen when the market is down. So anything you might want to take out in the next 5 years is best in cash. The rest usually does better in S&S, but at the moment cash rates are very good so there's less difference.

I'd work out how big an emergency cash float I want and put at least half the ISA contributions into cash now, then switch all contributions to the S&S once you have filled your emergency cash amount.

I'd also consider whether additional pension contributions would be worthwhile as well.

Also watch the rates for cash ISAs compared to non ISA savings, sometimes the ISA rates are so poor even with the tax advantage you are worse off. Might be better to put it all in S&S and other savings in highest rate cash.

Do you need to put money in a cash ISA because you've gone over the £1000 interest limit in a year? As the rates on normal savings accounts are usually better if not.