How to Protect (100% Guaranteed) Your Stocks and Shares ISA Account When the Market Is Falling
By Stephen Sutherland, author of Liquid Millionaire.Posted in the Category of ISAS, Investing, Stock Market, Investment Fund, Financial Advice on 9th July, 2010.
Tags: fidelity, isa, isa investing, isa trend investing.
In Wednesdays blog, I reminded you that one of the rules on ISAs is that, Stocks and Shares ISAs cannot be transferred into a Cash ISA.
I also asked you the question:
When the market gets rocky, how do we at ISACO manage to transfer from a Stocks and Shares ISA into a cash based fund?
I then proceeded to tell you all about a superb wealth protection vehicle that protects your account when the stock market is falling. It’s called a “Cash Park” and Fidelity offer such a vehicle.
Fidelity’s ISA Cash Park offers a temporary haven for all the money in your Stocks and Shares ISAs that you have built up over the years. For example, I have been building my portfolio up since 1997, which means so far I have accumulated 14 separate ISAs. Whenever I want to move all my Stocks and Shares ISA’s into a safe place, I choose to move them all into the Fidelity ISA Cash Park.
Below are some frequently asked questions posted on Fidelity’s website that I think you’ll find useful.
Fidelity’s ISA Cash Park - FAQ
Are there any charges for ISA Cash Park?
When you move money from the ISA Cash Park into a fund that has an initial charge, a charge will be made. No charge will be made when moving money from the Cash Park into a fund that has no initial charge. Fidelity will retain some of the interest earned, typically at a rate of 0.4% of the balance. Fidelity can provide details on request.
Are there any other charges?
When you move money from the ISA Cash Park into a fund that has an initial charge, a charge will be made. Please contact your Adviser for further details. No charge will be made when moving money from the Cash Park into a fund that has no initial charge. Fidelity will retain some of the interest earned, typically at a rate of 0.4% of the balance. Fidelity can provide details on request.
Can I select a cash fund in a stocks and shares ISA?
No. ISA regulations don’t allow for any cash fund investments within a stocks and shares ISA.
How is my money protected?
Your money in the ISA Cash Park is protected, in the unlikelihood that Fidelity defaulted or became insolvent. Creditors of Fidelity wouldn’t be able to access the money because it would not belong to Fidelity*.
*Financial Administration Services Limited is the plan manager of Fidelity’s ISAs and also offers and manages the FundsNetwork service, and so if you are a Fidelity FundsNetwork customer or have an ISA with Fidelity you will deal with Financial Administration Services Limited.
How will the interest I receive be treated?
The ISA manager must deduct a flat rate 20% charge and pay it to HM Revenue & Customs. This is not reclaimable.
If I switch into ISA Cash Park, can I switch back to a cash fund in the ISA?
ISA Cash Park is only available for a stocks and shares ISA. Once you’ve invested in Cash Park, you can’t move the money to a cash ISA
Is the ISA Cash Park a cash ISA?
No, the ISA Cash Park is a temporary cash holding account within a stocks and shares ISA.
What is the maximum I can put in Cash Park?
If you are putting new money into an ISA, you can invest the unused balance of your £10,200 allowance. There is no limit on the amount you can switch from existing ISA holdings into the ISA Cash Park.
What’s the minimum investment in the ISA Cash Park?
You can make the minimum initial investment of £1,000 in the ISA Cash Park if you haven’t used your ISA allowance this tax year. You can’t make monthly payments into the ISA Cash Park and there’s no phased investment or withdrawal plan option available with the ISA Cash Park.
Will Fidelity remind me when I need to switch back to stocks & shares?
Fidelity will send a letter to remind you that you need to reinvest in qualifying funds when they send your statement and valuation.
If you would like to know more about the ISA Cash Park and request a FREE Telephone Consultation (£1,997 value) or obtain a FREE copy of my book Liquid Millionaire, get in touch.
You can email us or call 0870 757 8554 if you prefer.
In both cases you are under no obligation to do anything, buy anything or sign up for anything.
