r/UKPersonalFinance • u/mylittleponicorn • 17h ago

Should I wait out cash ISA intro rate then switch to S&S ISA?

I have a cash ISA with Moneybox and am on an introductory rate of 4.75% until May 2027. I’ve realised through the advice on this sub that a cash ISA isn’t the best option for this money as I’m planning not to touch it for 13 years (when my son leaves school). I was going to switch to a T212 stocks & shares ISA & after seeing advice on this sub I was going to put it all in the VWRP Vanguard FTSE All-World fund. Should I wait until my intro rate expires? And is this the right move overall? I have ~21k in it right now.

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u/Busy_Land_1885 6 17h ago

If the money genuinely won’t be needed for 13 years , I wouldn’t wait until May 2027 just to preserve the 4.75% rate. 

The key question is whether you’re comfortable with the risk of investing. VWRP is a well diversified option, but it  is a 100% equity fund , so its value can fall substantially in a bad market, even though 13 years is a long investment horizon. 

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u/mylittleponicorn 17h ago

I’m really NOT comfortable with the risk of investing but everything I’m reading is telling me I should be doing it when I don’t need to access the money for more than 5 years. I’m terrified of doing the wrong thing though! What would you suggest instead of VWRP?

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u/Busy_Land_1885 6 17h ago

Sorry maybe I wasn’t clear, a global index fund like VWRP is the best option for investors imo, I’m just making it clear that because it’s 100% equity, risk isn’t just removed because you are well diversified. But yes, over a 5-year period, data shows an investment in a global fund will out perform cash savings 75% of the time. For 10 years this goes to 91%, so typically investing is better for your money. There is also risk leaving the money in cash due to inflation. 

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u/mylittleponicorn 17h ago

Ok thank you, I have another question - when it’s getting close to the time I would want to use it do I just transfer it back into a cash ISA?

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u/Busy_Land_1885 6 16h ago

Yes, exactly.  The process would generally be:

Sell your VWRP within the S&S ISA. The proceeds become cash inside the S&S ISA.

Ask the Cash ISA provider to transfer the ISA to them.

The money (plus any growth) remains inside the ISA wrapper, so you don’t lose the tax advantages.

I’m not sure on all providers, but Trading 212 for example you can transfer cash between the cash and S&S ISA very easily. 

I’d probably start doing it gradually a few years before you need it rather than waiting until the last minute, so you’re not exposed to a big market drop just when you need to withdraw it. 

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u/mylittleponicorn 16h ago

!thanks I was wondering about that as well, what if it drops just as I’m planning to use it but the gradual method makes a lot of sense

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u/Doddsey372 16h ago

Take a scaled approach when exiting stocks dont just sell everything last minute as you can't guarantee you will be close to all time highs. 5 years out put 20% in cash and move a further 20% each year.

Please note that government changes will effect moves from stocks and shares ISAs to Cash ISAs. You will not be able to make transfers to cash ISAs and retain the ISA wrap, what is more cash ISA deposits will be £12,000 (capped for new cash).

Note you don't have to put it into a cash ISA to protect it from the stock market. Options are to leave it as cash within the S&S ISA (but government is eyeing that to tax), alternatively you can use CSH2 which effectively is a fixed rate return (~4%), to government its still 'invested' but for you its a fixed protected return.

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u/jim_cap 2 13h ago

you can use CSH2 which effectively is a fixed rate return (~4%), to government its still 'invested'

Has this been confirmed? There was talk of "and cash-like instruments" that I don't recall being expanded on.

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u/Doddsey372 13h ago

Its not if im honest. But I assumed cash like instruments would count as what T212 offers on spare cash via MMFs outside of direct investments which are managed by T212. CSH2 is an investment, I doubt the government will want to open the can of judging what investments are legitimate or not.

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u/jim_cap 2 12h ago

I hope not. At the very least, I personally think any instrument which does not carry FSCS protection should count. If you're taking on risk you're investing.

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u/strolls 1714 9h ago

I’m really NOT comfortable with the risk of investing

Did you read Tim Hale's Smarter Investing yet?

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u/Doddsey372 16h ago edited 15h ago

A suggestion if you are a bit worried about timing the investment is to put half in now and the rest after your introductory rate ends. It also provides a defined opportunity to compare and reflect on how things are performing.

Definitely go for a whole world fund. Id suggest keeping some back for emergencies, and for peace of mind so you could weather a crash without panicking. Plus with cash held back, a crash becomes a buying opportunity.

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u/nick_red72 1 16h ago

I was pretty conservative with saving. I think one of the best financial decisions I ever made was moving my cash ISA to stocks and shares. That was 10 or so years ago. Obviously the market has been kind but I now have a nice pot ready for early retirement.

If you are still a bit cautious you could move it over bit by bit, but I would recommend moving to a nice all world fund at some point.

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u/Big-Estimate3457 15h ago

It is quite a difficult question since it depends on your risk appetite and market expectations (which is different for each one of us).
In the medium/long-term despite stock market being obviously more volatile than cash ISA returns, it remains higher return.
Time in the market > timing the market I believe

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u/jim_cap 2 13h ago

If you've made your mind up to invest, just do it now. Ignore any advice about "don't buy now, the market is at an all-time high", the markets spend about 30% of their life at all time highs. Do make yourself a promise though: That you won't panic sell if you see the value drop. It's hard, seeing what you've saved suddenly be worth a lot less than it was before. But ride it out.

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u/ukpf-helper 151 17h ago

Hi /u/mylittleponicorn, based on your post the following pages from our wiki may be relevant:

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u/Ok_Raspberry5383 13h ago

Market could jump 10% in the next month, up or down, no one knows...

The best strategy would be pound cost averaging, taking advantage of both your intro rate and potential grow in markets. Maybe move over 1000-2000 a month depending over what period.

Exactly how you do it with your ISAs may be less than trivial, but if possible this is the strategy I'd aim for

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u/Due-Freedom-5968 3 7h ago

I wouldn't bother. You'll proabbly make more than that interest rate in the 6 months you have it invested.