Forget 0.9% from a Cash ISA. I’d pick up 25% risk-free from this ISA!

first_imgForget 0.9% from a Cash ISA. I’d pick up 25% risk-free from this ISA! Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Enter Your Email Address Following the Bank of England’s interest rate cuts earlier this year, lenders across the market have rushed to slash the interest rates they offer on their respective Cash ISA products. The best Cash ISA rate on the market at the moment is just 0.9%. That’s down from around 1.4% at the beginning of the year. Savers can earn a bit more interest if they are willing to lock their money up for longer.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…However, the extra interest received doesn’t compensate for the lack of flexibility that comes with a multi-year Cash ISA. For example, the best three-year fixed rate on the market at the moment is just 1.1%. With this being the case, savers may be better off looking elsewhere if they want to earn a suitable return on their hard-earned money.Cash ISA bonus One of the best alternatives on the market is a Lifetime ISA (LISA). These are very similar to a Cash ISA, in so much as any savings inside the wrapper are not taxable, but they also have some key differences.For example, you can only save £4,000 in a LISA compared to £20,000 for a vanilla Cash ISA. What’s more, you can only use LISA funds for a first time home purchase or retirement.The most significant benefit, however, is a 25% government bonus on any contribution. That means if you contribute the full £4,000, the government will add an extra £1,000.You can do whatever you like with this money. Keep it in cash, or invest in the stock market. Even if you keep it in cash, and receive an interest rate of 0.1%, the government bonus effectively means you will earn a 25% return on your money in the first year. That’s how the LISA beats the Cash ISA.Start investingThe fact that savers can do whatever like like with their funds in a LISA is a big bonus. It also means you can invest the funds in the stock market, which may help you increase the size of your financial nest egg at a rate Cash ISA investors can only dream of.For example, over the past three-and-a-half decades, the FTSE 250 has produced an average annual return for investors of 12%. At this rate of return, a lump sum investment of £5,000 a year may grow to be worth nearly £100,000 after a decade. Over this time frame, you would only need to provide £40,000, while the government would provide an extra £10,000. These are the main advantages of using a LISA over a Cash ISA. The government bonus, as well as the tax benefits and flexibility of the product, means that despite the contribution limit, it could be a much better tool for growing wealth over the long term. Buying a portfolio of single stocks may also help you achieve better returns than the wider market. There are plenty of opportunities available in the market at present after the recent stock market crash.  I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Image source: Getty Images Our 6 ‘Best Buys Now’ Sharescenter_img Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! “This Stock Could Be Like Buying Amazon in 1997” Rupert Hargreaves | Saturday, 4th July, 2020 I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Simply click below to discover how you can take advantage of this. See all posts by Rupert Hargreaveslast_img

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