What’s the new ISA cash option all about? Does moving spare cash to this section from self managed ISA affect your annual ISA annual contribution allowance & what’s the interest rate on it?
I have to say, this one confused me a bit too. Would be good to get a more detailed explanation. Until then presuming it’s just moving the cash tab into the isa pot.
Yup confuses me too - same question here…
It might make investing more efficient and alleviate some of the back office stuff that has seemed problematic for some.
Personally I would not expect InvestEngine to pay interest on cash while offering a free service. I would however pay for a premium subscription that offers individual stocks and interest on cash.
What’s the point of the Cash Pot then. May as well just leave it in the ISA.
Fair enough and if InvestEngine could offer interest on cash now then id be over the moon
They sent an email about it earlier and it makes sense to me. Looks like a good feature too, based on the description of its purpose. For those of you that don’t subscribe to emails and stuff like that; they had this to say (copy/paste):
Why have we added this?
Cash flexibility. Want to set some money aside for investing, but biding your time to invest? Account cash gives you the additional flexibility to do just that.
Secure your ISA allowance. Account cash sits within your ISA, giving you the ability to secure your valuable annual tax-free ISA allowance without having to invest immediately.
More investing options & next generation open banking. This update sets us on a path to bring you further handy investing features such as automated ‘drip-feed investing’ and ‘pound-cost averaging’.
It was already possible to leave money in your account until ready to invest it though. Apart from presenting the cash balance more prominently is there any other difference?
The only difference I can see is that it would appear to be a separate account within a particular portfolio.
In the original portfolio cash availability display I have a penny
…but with this new cash account thingy the balance is zero so it appears to be a separate thing within the portfolio / ISA wrapper
Yes could be that. Invest Engine could do with explaining it in more detail.
I also see no point with this thing. To achieve the three objectives stated in the email, I can do exactly the same by transferring cash into my InvestEngine Fund and Stock account, and leave the cash there.
Now, transferring my cash into a separate Cash ISA account offered by InvestEngine in fact beats the purpose - Transferring cash in a Cash ISA to the Fund and Stock ISA needs a separate request procedure, even under the same provider. I have done this in a bank, transferring my money in their Cash ISA to their Fund ISA required me to submit a separate ISA transfer form. You cannot just transfer between the two ISAs like transferring your money between your two non-ISA accounts, as it is regarded as drawing your ISA instead of transferring your ISA - meaning that you are forfeiting some of your ISA quota.
I think InvestEngine must provide further details what is the purpose of setting this new Cash ISA account for users.
I can sort of see where they’re going with this. Currently, we have just one AutoInvest ON/OFF button in each portfolio to control how InvestEngine deals with our cash:
- AutoInvest ON: We add cash to one particular portfolio (or dividends get paid into it), and if the cash exceeds our preset cash buffer, the excess gets invested.
- AutoInvest OFF: Cash just sits in the portfolio as cash, waiting for us to invest automatically (according to portfolio weights), invest manually (buy particular ETFs without regards to portfolio weights) or rebalance.
With a separate cash pot, more fancy stuff can be automated, e.g.
- Distribute available cash among more than 1 portfolio;
- You can do your monthly cash top-up on the cash pot, and then let it further distribute the money into multiple portfolios – thus drip-feed investing;
- If you have a large sum to park into ISA on the eve of the tax year, but don’t know if it’s a good time to invest all of it right away, you can park the sum into the cash pot, and tell it to invest set amounts in each portfolio on a set schedule like once a month – thus pound-cost investing.
- You also get a big account-level AutoInvest ON/OFF button; if you are unsure about investing in the prevailing environment and would like to give it a pause, you hit just one button instead of one in each portfolio.
All this really only makes sense if you have more complex things in your InvestEngine account than just one portfolio. People who have a managed portfolio and a DIY one (or multiple of each) will probably appreciate the prospect of more automation.
I’ve tried to add some more details re Account cash here:
Let us know if they’re any specific question you want answering