Is Cash ISA w/5% interest a better investment than a FTSE Global All Cap S&S ISA?

[sanath123]

Hi all,

I'll try and keep it short.

I've been using a SIPP/S&S ISA via Vanguard for around 2 years at this point. I'm happy with it and I put in a fairly healthy amount in my S&S ISA each month now. My Dad basically has a Cash ISA with TSB where he puts in £20,000 and they give you a set amount of tax. I've found out that he just left it in there after his first term and then I don't believe he did anything with it after so what they do is put you on the lowest interest band. So he wasn't receiving 5% but closer to around 1% at best. Not good. We're Muslims, so in essence we shouldn't be dealing with interest according to our religion therefore i'm trying to get away from that and move towards an index fund or something that isn't interest based solely.

He's asked me if I know of anything that would be better. Now, I invest in the FTSE Global All Cap and it's up around 10-13% (more on my SIPP as I moved it before starting a S&S ISA) since I started investing. It's very simple to use and see how well you're doing. I was thinking of getting him into that. The returns aren't exactly sexy but they're basically better than what he was investing in before.

I've got 2 questions -

1) Can I just move his Cash ISA from TSB to Vanguard as a S&S ISA and not be subject to any tax? 2) What do you guys think of my suggestion of moving him to a Vanguard FTSE Global All Cap Accumulation S&S ISA?

Thank you. We have until 13 October 2023 which is when his current Cash ISA matures (or expires) so i'm wanting to begin the process within the next 7 days.

 

[shadow2]

@sanath123 Are underpants better than socks? They're both bunched together as similar products, but serve different purposes.

Beware of offering family members financial advice, if it doesn't work out, you get the blame, even when it's their responsibility to make their own financial decisions.
https://ukpersonal.finance/helping-...ne_who_you_consider_to_be_making_poor_choices

Q1) Yes, your dad will be able have his Cash ISA transferred to a S&S ISA, he simply needs to ask Vanguard (or whichever platform is economical and attractive for him to use, he doesn't need to use Vanguard Investors to buy Vanguard Global All Cap) to initiate a "transfer in" and give them the basic details (not logon and password!) of his TSB Cash ISA.

Q2) See my warning above. Without knowing your dad's risk appetite and goals, or his attitude to Sharia-compliant investments, making a black-and-white recommendation is impossible. Has he got short term (less than 10 year) plans for that money? If so, Halal cash ISAs exist and will likely be better than the TSB default rate, without carrying investment risk.

 

[sanath123]

@shadow2 I agree. I was weary but he always asks me and i've basically shown him a history of the FTSE Global All Cap. There are years where you go into the minus figures. He understands. He's been dipping in the stock market on and off for around 15/20 years. He understands the risk. If he loses all of this, it literally will not affect his standard of living whatsoever thankfully. It's just some money he had laying around that he wanted to do something with.

He's in his late 50's and I don't think he'll need this in the next 10 years. Basically, he'd rather do something that will have it grow rather than leave it sitting in a bank account (no interest)

 

[julia736]

@sanath123 You shouldn't encourage your dad to invest in something if he doesn't understand the risks of it.

Between fall 2007 and spring 2009 stockmarkets worldwide lost 50% of their valuation, and took years to recover.

Watch Lars Kroijer's short video series and read his book or Tim Hale's Smarter Investing. Then, when you've finished reading, hand the book to your dad and get him to do the same.

 

[sanath123]

@julia736 I've shown him the returns of the FTSE Global All Cap historically. He's also dipped into stocks and has some understanding of ISAs as he has been involved in investing for the last 15/20 years on and off loosely.

However, he isn't the most internet savvy so he just used to go into the Bank branch and do it through them. He didn't even renew his Cash ISA which meant he wasn't even earning anything on it hardly for years.