Mastodawn

Emeritus Prof Christopher May

As warnings about an impending stock market 'correction' swell, Rachel Reeves once again flies a kite about halving Cash ISA's allowance, to 'encourage' savers to move funds into the stock market...

As the saying goes, 'every market requires a fool' when people want to cash out & Reeves is setting up the public to buy the shares investors want to shed in light of the likely stock market turmoil.

She is not on our side, she's in the pocket of the investment bankers!

#CashISAs #politics
h/t FT

pawkypaul Oct 15

@ChrisMayLA6
The cash ISA limit is £20,000 per year, and has been for some time.

Unpopular opinion: if you can afford to put that kind of money in the bank every year, you can afford to pay a wee bit tax on some of it.

Emeritus Prof Christopher May Oct 15

ah yes, but many put in a lump sum (say from redundancy) & do not put money in each year.... but, really the issue is encouraging those with such lump sums into riskier 'investments' to gain some tax relief, while the rich gain all sorts of tax relief on *their* 'investments'....

pawkypaul Oct 15

@ChrisMayLA6
So half the annual allowance and introduce a maximum total limit for the cash ISA - maybe the equivalent of two years of salary paid at minimum wage level? Perhaps then the establishment would be more interested in paying a reasonable living wage?

Emeritus Prof Christopher May Oct 15

yes, now that *would* be an interesting approach.....

MarjorieR Oct 15

@ChrisMayLA6 @paulb3017 Well you could only put in £20,000 a year from your (tax free) redundancy payment even if you had a large lump sum.

More to the point, at the moment interest rates on cash ISAs barely match inflation (c. 4% pa and that seems to be pretty much the long term position (they were a bit higher recently but for long spells they lagged inflation).

Cadbury Moose Oct 15

@marjolica @ChrisMayLA6 @paulb3017

Only the first £30,000 of a redundancy payment is tax exempt IIRC. (I know this because I put some of mine straight into the pension pot via "Salary sacrifice" when I got the "Golden Boot Award" (18 months ago), and still ended up paying tax on the payout for untaken leave.)

I'm slowly moving it into cash ISAs as (some) protection from inflation.

Stocks & Shares? No Way In Hell! (The trussterfuck wiped 21k off my pension fund - thankfully it recovered.)

Mark Otway Oct 15

@paulb3017
You seem to be misunderstanding.

It's entirely possible to put *less* than 20k in an ISA. Many people do this. The tax break is to encourage them to save, rather than living hand-to-mouth.

The point you're missing is that if you can afford to put *more* than 20k a year into a savings account, then you can afford to pay a bit of tax on it. And you will!

This stuff isn't hard.
@ChrisMayLA6

pawkypaul Oct 15

@markotway
I think you've picked me up wrong. It's people being able to max out the overly generous limit year after year that I have issue with - in just 5 years they could have £100,000 sitting in the bank paying no tax on the interest.

My idea to introduce a maximum overall limit wouldn't impact people who can only afford to squirrel away a little bit of money now and again.

Tim Ward ⭐🇪🇺🔶 #FBPE Oct 15

@ChrisMayLA6 Is she aware that you can hold gilts in a stocks and shares ISA, which with the right gilts are at least as good as a cash ISA? If so, is she going to stop that as well?

Emeritus Prof Christopher May Oct 15

She seems to just be focussing on how she can encourage more people to be exposed to risk via the stick market, as if precarious employment & austerity weren't enough risk for many

Tim Ward ⭐🇪🇺🔶 #FBPE Oct 15

@ChrisMayLA6 Sure. But for anyone who wants zero risk in an ISA, holding gilts in a stocks and shares ISA would appear to be a workaround - has she spotted this, and is she blocking it, and if not is she wasting her time?

Dan Hatton Oct 15

"Gilts" are government bonds, right? I can't see RR objecting to more money being diverted towards those.

Tim Ward ⭐🇪🇺🔶 #FBPE Oct 15

@only_ohm @ChrisMayLA6 Buying gilts doesn't add to risk-taking in the stock market which is apparently what she's aiming at.

(Assuming that you stick to short dated gilts you're essentially doing the same thing as a fixed term building society deposit, except that you can get you money out whenever you like. Long dated gilts not held to redemption have risk, FTAOD.)

Dan Hatton Oct 15

That's what she *says* she's aiming at; but more broadly, Reeves' entire project is "shore up the bond markets even if you have to trash the real economy to do it", so I wouldn't be surprised if that's what she's actually trying to do with this initiative.

Tim Ward ⭐🇪🇺🔶 #FBPE Oct 15

@only_ohm @ChrisMayLA6 But what the bond markets do is irrelevant to real life. They can just do their own thing, and if she doesn't like what they're up to at any point in time she can simply refrain from issuing new bonds for the time being.

Dan Hatton Oct 15

@ChrisMayLA6 I didn't say it was a sensible or achievable project.

Emeritus Prof Christopher May Oct 15

Yes, does sound like a good work around & one I'm actively considering right now... on Reeves, 'wasting her time' sounds about it

Linux and praxis: part of the resistance 🇵🇸 ☮️Oct 15

@ChrisMayLA6 @TimWardCam

I have a cash ISA.I have not added to the initial lump sum (£10k). It's in a credit union account. It assists other people in the credit union. Leave it alone.

Eliza MB Oct 15

@linuxgnome @ChrisMayLA6 @TimWardCam
That's good - my credit union doesn't appear to offer any kind of ISA.

Knud Jahnke Oct 15

Meanwhile Blackrock lobbies for US pension funds to invest people's 401 pension savings into AI companies.

And Berkshire Hathaway is sitting on $350b in cash and US bonds to buy a lot of things in the next few years. But not now.

I think the signs are piling up.

@ChrisMayLA6 A stocks n shares ISA doesn't do the job that probably most of the "normal" ISA holders want - ie to look after cash that can be called on in an emergency.

Emeritus Prof Christopher May Oct 15

@annehargreaves

Exactly & this is what Reeves cannot see.... but that said I've just cashed-in my sticks & share ISA on the basis of an impending 'correction' & it only takes a couple of days to have access to the cash... the man concern is the volatility for those holding cash for emergency

@ChrisMayLA6 I love the idea of a "sticks & share" ISA - it has a whole new flavour of solidarity in hard times😂

Dansk404 Oct 15

@ChrisMayLA6 There's been a lot of people standing and quietly pointing at the AI bubble, and telling people to move money into stocks at this stage is just plain irresponsible. It's all going to go pop very soon.

OldBrushNewPaper Oct 15

@ChrisMayLA6 Thanks to my friend @cstross for boosting this into my timeline - amazing what kinds of snake oil people are willing to try and sell!! 🤬

BoxOfRain Oct 15

@ChrisMayLA6
I was struck by Lucy Rigby’s “We are committed to building a shareholding democracy,”

Channelling Thatcher and Major’s greatest hits there.

@ChrisMayLA6 I love how they spend a year or more telling us there's no money and then propose a massively expensive and unnecessary digital ID card system... As if any government IT Project ever came in under budget.