Should I Cash in My Stocks & Shares Isa?

An Isa is a tax-free savings scheme.

Stocks and Shares Fluctuate in Value

Stocks and shares Isas should always be looked at as medium to long-term investments because of the risk of stock market fluctuations. Advantages include no capital gains tax on sales below the tax-free allowance and, with few exceptions, no tax on any interest earned. Stocks and shares Isas cannot be transferred into cash Isa accounts.

Cash Investments are Relatively Safe

Cash savings accounts even in times of financial uncertainty offer a positive interest rate. Although often below current inflation rates, this offers some protection for investments. Cash Isas have the advantage of tax relief on contributions and generally offer a higher rate of interest.

Bottom Line

Selling stocks and shares Isas when market prices are low may result in an investment loss. Holding on to the tax advantage until markets recover may be the sensible option if time is not a constraint. Rates on cash savings can also fluctuate, unless you lock into a fixed-interest account.

References

• Money Saving Expert: Cash Isas or Stocks and Shares Isas: What's Best?
• The Guardian: Factsheet---Isas