Decluttering your savings

Children's messy chest of drawers


Alistair Hardie

4th July 2014 at 11:18am

Over time we all amass clutter in our lives, whether it’s a load of old documents at home or

sentimental ornaments that you can’t bear to part with.

I moved house recently, and in preparation had a thorough clear out of unnecessary paperwork. As well as feeling more organised, I was surprised by some of the things I found buried deep within the pile.

It’s very easy to accumulate clutter and lose track of things, and the same could be the case for your savings.

With the likes of ISAs and savings accounts, it’s possible that you may have built up quite a collection of different savings amounts over the years. But a disorganised approach to managing them could affect your ability to maximise their potential.

An opportunity to declutter and take control

The new ISA rules from the 1st of July 2014 gives you a good excuse to revisit your savings.

The new higher ISA allowance of £15,000 lets you save more in one place. This increased maximum annual savings limit applies until the tax year ends on 5th April 2015.

The new rules also let you choose how you sort your savings. You can invest the whole allowance in stocks and shares, save in cash, or do a bit of both.

Making your money work harder

Just like tidying out my cupboards, tidying-up your savings can help to make the most of them.

Did you know you can transfer money from your existing Cash ISA from a previous year to a new Stocks and Shares ISA, and it won’t count towards your £15,000 total for this year? there’s a golden rule to be aware of – make sure your provider arranges for the money to be moved across, don’t withdraw the money and move it yourself.So if you’ve built-up a collection of Cash ISAs over the years since they were introduced in 1999, now’s a good moment to review them and see if some de-cluttering is required.

With interest rates at historic lows, cash savings aren’t generating the kind of returns which could help them to grow significantly, so it was no surprise to read that more people in the past year have turned to Stocks and Shares ISAs*. Cash savings still have their place though for things like an emergency fund, or short term goals such as saving for a house deposit.

For longer term savings, moving from cash to stocks and shares means you could benefit from greater potential returns, but as you’re investing in the stock market, you have to be ready for some ups and downs as the markets fluctuate. But when you’re investing for the longer term, you’ve got time on your side to ride these out.

Don’t forget the golden ISA rule

If you’re ready to take control and bring your ISAs together, there’s a golden rule to be aware of – make sure your provider arranges for the money to be moved across, don’t withdraw the money and move it yourself. Follow this rule and you’ll retain all the tax benefits.

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The information in this blog and any comments are not financial advice. A Stocks and Shares ISA is an investment. Its value can go up or down and may be worth less than you paid in. Laws and tax rules can change in the future.