Investor Views: “I Cashed in my ISA for my Daughter’s 18th”

ISA investor Rob Archer tells Morningstar that he likes the flexibility of individual savings accounts, primarily using them for shorter-term savings goals

Emma Simon 27 August, 2015 | 4:32PM
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Rob Archer is in the fortunate position of having a good pension, thanks to his job with the civil service.

Aside from his workplace pension he has mainly invested in ISAs and cash saving plans, usually to save for short to medium term goal such as holidays, home improvements, or more recently his daughter’s birthday. Aside from his ISA Archer has previously invested through Save as You Earn schemes at work.

The civil servant says in recent years he has held a mixture of cash and equity holdings.

“With interest rates so low the cash savings have not done particularly well,” he said. “But if I know I’m going to need the money in the near future I’d rather keep savings in cash.”

However, he said even his cash savings have done better than his Premium Bonds.

“I like the fact that your money is 100% guaranteed by the Government, and you can access it any any time,” he said of the NS&I savings products.

“I don’t expect the returns to be good – but my winnings are nowhere near the average return they advertise.”

Archer says it is not just him who seems to have below average luck when it comes to collecting Premium Bond prizes. Both his wife and good friend have substantial holdings – but still get nowhere near the £600 average winnings predicted.

“I guess there’s always the change you might win big one month. But if interest rates do ever go up, I think I’ll look to move these to a higher-yielding cash account,” he said.

Insurer Shares Delivery Premium Returns

In contrast to the rather poor returns he’s earned on his Premium Bonds, Archer says his best investment has been his Standard Life (SL.) shares.

“At the time the insurer demutualised I was a customer, so had the option to apply for these shares,” he explained. They have done very well for me and I have continued to hold onto them.”

According to Morningstar data, shares in this Scottish-based insurer group have risen by 20% over the past five years. This compares favourably with the 9.5% rise in the FTSE 100 over the same period.

The general consensus among brokers is that this company remains a ‘hold’.

Its recent annual results showed that last year it delivered impressive returns for shareholders: operating profits were up 19% and the assets under administration were 38% higher. The final dividend was raised, reflecting “a strong investment performance in volatile markets”.

However question marks remain as to how the recent pension reforms may affect Standard Life’s future results.

Will Pension Freedoms Affect Profits?

Investors now have the freedom to cash in their pension funds from the age of 55, or more flexibility if they want a drawdown plan. This has had a major impact on annuity sales, with Standard Life being a major player in this market. The insurer predicts that these changes will knock between £10 million and £15 million off this market this year alone.

Morningstar columnist, Rodney Hobson says it remains to be seen how insurers like Standard Life adapt to this new pensions environment but he believes: “Standard is in good enough shape to absorb these changes.”

“Hopefully My Multi-Asset ISA Will Grow”

As well as a shareholder of Standard Life 47-year old Archer is also a customer having recently taken invested in fund run by Standard Life’s multi-asset team.

“I simply had to say what risk category I saw myself in, and they will manage a portfolio on my behalf. I haven’t been invested in this long, but hopefully it will grow over the longer term,” he said.

Archer says the key for portfolio success him is investing regularly. “I don’t keep an eye on day-to-day stock movements. But if you put money away every month after 10 years you always seem to have a decent return on your money. I certainly have never seemed to have lost money doing this.”

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About Author

Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for