What to do once you have over £120k in S&S ISA?

[Tiddlywinkly]

I'd appreciate some advice please. Also, please be gentle - I'm relatively new to investing. As FSCS only protects your money if a company fails up to £120k, do you set up a new ISA somewhere else at this point? Does doing this impact compounding? Many thanks

Are you talking about cash ISAs or stocks and shares? It’s not really relevant for stocks and shares.

I split mine equally between different banking groups. I found it easy enough to google.

It’s unlikely any of them will increase to £120k, as there will undoubtedly be rainy day withdrawals in the future.

A) the limit doesn't affect s&s, you would still own the funds or shares in the event of a bank collapse
B) compounding is unaffected by how many separate pots of money you hold (whether cash or s&s)

With S&S … If the platform fails, your investments should generally remain yours and be transferred to another provider.

This.

The risks of S&S are very different from the risks of cash. The platform holds your funds but doesn't own them. If it goes under the risk isn't that you lose the assets - just that it might be difficult to access them until a new holder takes over.

Great, thank you all 🙂. I wasn't aware that it didn't impact S&S ISAs, so you have reassured me. Thanks for taking the time to respond.

I thought the FSCS cover was £120k per organisation?

If you go over that limit with your S&S ISA are you still protected he or would it be better to start a new one with different financial institution?

I see a few posters have said it doesn’t
matter for s&s Isa’s …you can go over that limit and still be protected.

Your shares can still lose value though. They are more risky than cash precisely because their value can collapse. That’s why you need to understand a bit about your risk appetite, and which shares (or products) are more or less risky, before you start to invest.

The £120k protection only applies to cash deposits. Not shares.

Cash can (and does) lose value too, thanks to inflation. S&S nearly always gains value, cash always (over literally every period in UK history) loses it.

The FSCS coverage for shares is up to £85k.

So what happens if you might go above that at some point?
Should you start a new ISA with a different provider?

There is no "should". You decide what you're comfortable with.

If you want the protection because you believe your provider might go bust and not be able to give you your shares - a new account with a new provider makes sense. (Remembering that hopefully, your portfolio will increase in value so you won't stay withint the limit for long!)

I don't think many people do that.

I don’t think the provider will go bust it’s one of the longest standing.

What is your source of information on that?

The £85k is correct - I checked on the FSCS site. But it applies only in extremely limited and unlikely circumstances. It's more likely to be useful for the costs of transferring to a new platform than for actualy reimbursing lost holdings.

The FSCS. Why would I use another source? 🙄

The have a website detailing all their coverage, with things to think about when making financial decisions like whether to open a new account.

This is all on their website and would take approx 3 mins or less to look up.